Wealth Gap Unsustainable

[rjd970]

America's wealth gap 'unsustainable,' may worsen: Harvard study | Reuters

"Shortsighted executives may be satisfied with an American economy whose firms win in global markets without lifting U.S. living standards. But any leader with a long view understands that business has a profound stake in the prosperity of the average American," according to the report.

"Thriving citizens become more productive employees, more willing consumers, and stronger supporters of pro-business policies," it said. "Struggling citizens are disgruntled at work, frugal at the cash register, and anti-business at the ballot box.

I found that last line interesting. As it applies to the middle class, if trickle down was working (or working enough) do you think we would be seeing less anti-business rhetoric from political leaders on the left? I wonder if the inevitable result of a widening wealth gap will lead to socialist leaning policies gaining support.

 

[McDad]

America's wealth gap 'unsustainable,' may worsen: Harvard study | Reuters



I found that last line interesting. As it applies to the middle class, if trickle down was working (or working enough) do you think we would be seeing less anti-business rhetoric from political leaders on the left? I wonder if the inevitable result of a widening wealth gap will lead to socialist leaning policies gaining support.

Socialst leaning policies have been gaining support since the early 1900's.

 

[bamacheats]

I don't give a sh!t about how much more money other people have than me.

 

[red butler]

Socialst leaning policies have been gaining support since the early 1900's.

I'm afraid we're more likely to get fascism than socialism.

 

[SamRebel35]

The fallacy of zero sum economics.

 

[Velo Vol]

I don't give a sh!t about how much more money other people have than me.

Really?

Do you care how much money you make?

 

[lawgator1]

America's wealth gap 'unsustainable,' may worsen: Harvard study | Reuters



I found that last line interesting. As it applies to the middle class, if trickle down was working (or working enough) do you think we would be seeing less anti-business rhetoric from political leaders on the left? I wonder if the inevitable result of a widening wealth gap will lead to socialist leaning policies gaining support.

Not only are you seeing "anti-business rhetoric" from the left, you are seeing genuine concern about the wealth gap from the right, and what is even more startling is a lack of defense from the right of the old trickle down theories.

I don't think anyone believes trickle down, anymore. Our economy hasn't been wired that way since the 50s.

The investment game used to be about long term holding of stock and promoting expansion and building of infrastructure for a company you invested in, measured by solid long term growth and dividend reinvestment.

Now there are managed funds that hold onto stock through lunch.

 

[red butler]

I don't give a sh!t about how much more money other people have than me.

Would you give a sh!t if you found out the money is practically being stolen from you and your descendants?

 

[#VFL__]

I don't give a sh!t about how much more money other people have than me.

Well yeah I hope not because there is nothing you and I can do about it.

But to the OP, look at the French revo. Socialist policies always thrive when the people that "till the land" do not benefit from the "crops". Thomas Piketty's new book is a really great read on this topic.

Just wait twenty years from now. I can't even imagine the road we are about to go down.

 

[rjd970]

I don't give a sh!t about how much more money other people have than me.

Not the point.

 

[Gramps]

America's wealth gap 'unsustainable,' may worsen: Harvard study | Reuters



I found that last line interesting. As it applies to the middle class, if trickle down was working (or working enough) do you think we would be seeing less anti-business rhetoric from political leaders on the left? I wonder if the inevitable result of a widening wealth gap will lead to socialist leaning policies gaining support.

History shows trickle down economics only work for the wealthy and has increased our nations debt.

The separation between the rich and poor has drastically grown since Reaganomics started.

We had very little debt before Reaganomics, our debt has soared since the 1980's.



Flame away... the truth is the truth.

 

[VolsNSkinsFan]

You know what else has soared since Reagan? GDP, the Stock Market and Home Values

 

[rjd970]

Not only are you seeing "anti-business rhetoric" from the left, you are seeing genuine concern about the wealth gap from the right, and what is even more startling is a lack of defense from the right of the old trickle down theories.

I don't think anyone believes trickle down, anymore. Our economy hasn't been wired that way since the 50s.

The investment game used to be about long term holding of stock and promoting expansion and building of infrastructure for a company you invested in, measured by solid long term growth and dividend reinvestment.

Now there are managed funds that hold onto stock through lunch.

I think there is a sweet spot where trickle down works, and is preferable to bottom up, or even middle out. The issue drives from the business lobby driven policies combined with forced wealth re-distribution. What ends up happening is those at the lower end have no incentive to pick themselves up, and those at the higher end gain more wealth with no incentive to trickle down. The middle class shrinks, and the wealth gap increases.

A strong middle class is good for everybody, and trickle down works. It isn't working now because those at the top and bottom have benefited the most over the last half century...whether it be strong business policies or increasing handouts and safety net programs.

 

[rjd970]

History shows trickle down economics only work for the wealthy and has increased our nations debt.

The separation between the rich and poor has drastically grown since Reaganomics started.

We had very little debt before Reaganomics, our debt has soared since the 1980's.



Flame away... the truth is the truth.

Would be interesting to add another line to that first chart showing inflation adjusted social program spending.

 

[McDad]

History shows trickle down economics only work for the wealthy and has increased our nations debt.

The separation between the rich and poor has drastically grown since Reaganomics started.

We had very little debt before Reaganomics, our debt has soared since the 1980's.


By
Flame away... the truth is the truth.

Your charts also illustrate the boondoggle the ineffectual war on poverty has been. There is nothing any politician can do, besides getting out of the way, that will effect a rise in the lowest 5th.

 

[rjd970]

.

 

[rjd970]

You know what else has soared since Reagan? GDP, the Stock Market and Home Values

I would use different examples.

Debt to GDP Ratio Historical Chart | MacroTrends

What has the ratio of GDP to debt done? And bubbles have gotten worse and the housing market is nothing more than casino gambling right now.

 

[red butler]

History shows trickle down economics only work for the wealthy and has increased our nations debt.

The separation between the rich and poor has drastically grown since Reaganomics started.

We had very little debt before Reaganomics, our debt has soared since the 1980's.

Flame away... the truth is the truth.

I'm not sure Reagan should get the blame for the wealth gap or the debt. This is my take. If you look at each chart, they start taking off in the 70s. Guess what happened in the 70s -- the US ended the Bretton-Woods agreement that kept currencies relatively stable. Why? Because the gov. printed more dollars than they had gold to back it up. Other countries figured it out and started turning in dollar reserves for physical gold and we could no longer pay up.

Since the ending of Bretton-Woods, the value of the dollar has dropped like a rock affecting everyone on a wage/fixed income. At the same time, the value of assets (stock market/housing market etc.) have soared thus the rich get richer. Note: you could make the argument that the value of assets have remained relatively stable, but the devaluation of the dollar creates the illusion of wealth creation

The only way to sustain GDP growth was through debt, both private and public. But that won't last.

 

[rjd970]

I'm not sure Reagan should get the blame for the wealth gap or the debt. This is my take. If you look at each chart, they start taking off in the 70s. Guess what happened in the 70s -- the US ended the Bretton-Woods agreement that kept currencies relatively stable. Why? Because the gov. printed more dollars than they had gold to back it up. Other countries figured it out and started turning in dollar reserves for physical gold and we could no longer pay up.

Since the ending of Bretton-Woods, the value of the dollar has dropped like a rock affecting everyone on a wage/fixed income. At the same time, the value of assets (stock market/housing market etc.) have soared thus the rich get richer. Note: you could make the argument that the value of assets have remained relatively stable, but the devaluation of the dollar creates the illusion of wealth creation

The only way to sustain GDP growth was through debt, both private and public. But that won't last.

So....those that invest are doing fine, those that work are doing worse. Still doesn't seem like a sustainable trajectory.

 

[n_huffhines]

I found that last line interesting. As it applies to the middle class, if trickle down was working (or working enough) do you think we would be seeing less anti-business rhetoric from political leaders on the left? I wonder if the inevitable result of a widening wealth gap will lead to socialist leaning policies gaining support.

A wealth gap can only be unsustainable if there is enough envy out there for people to put down the satellite TV remote, leave their air conditioned homes, and take to the streets to riot.

 

[Gramps]

I'm not sure Reagan should get the blame for the wealth gap or the debt. This is my take. If you look at each chart, they start taking off in the 70s. Guess what happened in the 70s -- the US ended the Bretton-Woods agreement that kept currencies relatively stable. Why? Because the gov. printed more dollars than they had gold to back it up. Other countries figured it out and started turning in dollar reserves for physical gold and we could no longer pay up.

Since the ending of Bretton-Woods, the value of the dollar has dropped like a rock affecting everyone on a wage/fixed income. At the same time, the value of assets (stock market/housing market etc.) have soared thus the rich get richer. Note: you could make the argument that the value of assets have remained relatively stable, but the devaluation of the dollar creates the illusion of wealth creation

The only way to sustain GDP growth was through debt, both private and public. But that won't last.

You blame this on Nixon because of his "Nixon shock" economic policy?

 

[n_huffhines]

Not the point.

It kind of is...wealth gap is only a problem if people perceive it to be a problem. Relative wealth shouldn't matter...it's all about absolute wealth.

 

[lawgator1]

I don't blame Reagan, but as you all know I am no economist. Speaking strictly from my personal historical view, having been through all of that and watched it, and having what I hope is a somewhat decent sense of observation, the single biggest reason for the current state of the wealth gap is technology. Technology, and specifically automation and speed of communication, has eliminated chunks of jobs, entire segments of employment are obsolete.

In my own firm, we used to have three secretaries, an office administrator, a receptionist, and two paralegals. That was just 5 years ago. Now? Two secretaries and a paralegal and that's plenty. The courts are all now digitized. Everything comes in by email, everything goes out that way. Gone are the days of having to have someone just manage the paper. Gone are the days of needing someone to calendar it, file it in the right spot, and go find it for me when I needed to look at something.

Those were solid middle class jobs right there. And what's more, our need for space was cut in half, so when it was time to renew we had them wall off the back and that still sits empty. So that's less revenue to the owner of the building.

Meanwhile, my 401k funds have 30-50 stocks in each of them. And I know they trade on a daily basis on my behalf. Maybe hourly. And I know from dealing with accounts for large forfeitures that they can be traded in a matter of seconds, when the computer says to.

I'm not saying long term this is bad. Maybe in 50 or 100 years the freeing up of so many people's time will turn into something grand for all society. But right now, if I have a kid about to go to college, and he's thinking about being a doctor or a lawyer or managing a business, I am threatening him to within an inch of his life if he doesn't go into small business IT.

 

[bamacheats]

Not the point.

Yes. It is. Our economy is run on emotion, not currency.

Accept that, and you'll prosper just fine.

 

[n_huffhines]

I don't blame Reagan, but as you all know I am no economist. Speaking strictly from my personal historical view, having been through all of that and watched it, and having what I hope is a somewhat decent sense of observation, the single biggest reason for the current state of the wealth gap is technology. Technology, and specifically automation and speed of communication, has eliminated chunks of jobs, entire segments of employment are obsolete.

In my own firm, we used to have three secretaries, an office administrator, a receptionist, and two paralegals. That was just 5 years ago. Now? Two secretaries and a paralegal and that's plenty. The courts are all now digitized. Everything comes in by email, everything goes out that way. Gone are the days of having to have someone just manage the paper. Gone are the days of needing someone to calendar it, file it in the right spot, and go find it for me when I needed to look at something.

Those were solid middle class jobs right there. And what's more, our need for space was cut in half, so when it was time to renew we had them wall off the back and that still sits empty. So that's less revenue to the owner of the building.

Meanwhile, my 401k funds have 30-50 stocks in each of them. And I know they trade on a daily basis on my behalf. Maybe hourly. And I know from dealing with accounts for large forfeitures that they can be traded in a matter of seconds, when the computer says to.

I'm not saying long term this is bad. Maybe in 50 or 100 years the freeing up of so many people's time will turn into something grand for all society. But right now, if I have a kid about to go to college, and he's thinking about being a doctor or a lawyer or managing a business, I am threatening him to within an inch of his life if he doesn't go into small business IT.

But the thing is this happens in every industry over time, all time. Excel may have cut out a few jobs, but so did the invention of the filing cabinet. They move into other areas where they are needed more, and often to better jobs (almost always, in the long run).