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I'm not sure what your point is. My point was what wages don't need to rise to improve peoples standards of living, and that the wealthy making more money does in fact benefit us.
If wages do not rise (which they haven't in about 35 years for the Middle Class), people get poorer. Once again, it is the gap. People who's incomes aren't rising are taking home a smaller piece of the pie, year after year.
Ok, there are few things you are utterly ignoring.
For starters, wages do not need to get higher in order for people to benefit. It's not the wages that matter as much as it is what they will buy you. Thanks to modern technology (which exists only because of investments), modern westerns can now afford life improving technologies and goods that in the past would have been beyond their ability to buy. Take TV's for example. In the past I could NEVER have afforded a big nice plasma, but now lots of people have them because technology has made them cheaper.
Second, you are ignoring all of the indirect ways in which additional wealth generation benefits soceity which don't involve wages themselves getting higher. When companies and individuals make more cash, the taxman gets riches also even if taxes aren't raised. This in return gives the government more chances to either spend that money for society or use it to lower taxes more.
Perhaps you should factor those things in before you say more production makes no difference?
I love it when people are condescending. Put down your copy of Atlas Shrugged and re-read my post. I think you might have misunderstood it.
I didn't say more production makes no difference. I said productivity per person is up, and the people responsible for such production do not make more money even though they are more productive.
Now let's talk about the things you have ignored.
You have a great plasma, but how does it pick up shows? Through cable or satellite. In 1980, TV was free. In 2015, the average cable bill is $123/month or $1476/year.
The average Internet bill (you know, that thing you are using to access this site.) is nearly $50/month. To access the Internet, you need a device that costs somewhere around $360 and up and likely needs to be replaced every two years (works out to $15 month). In 1980 the Internet was not available and computers were a rarity.
Cell phones cost people a minimum of $50/month plus the costs of the phone. Since cell phones have replaced landlines for many people, each person needs a phone not just each house. A four-person household spends at least $200/month on cell phones.
Additionally, health care costs and health insurance prices have gone through the roof putting an additional burden on those making the least money. Many people are one major health event away from bankruptcy.
These expenses are in addition to the food, rent/mortgage, utilities or yesteryear, which have risen because of inflation.
The concentration of wealth is not health for the country. Wealth is not created, it is merely redistributed. The wealthy of this country control more wealth at the expense of the poor. Sooner or later the poor will not be able to survive and major changes must be made. Waiting until the situation is dire is the American way, but maybe we should head this one off at the pass. The poorer the population gets, the better Communism looks to them. It's either that or revolution. Take your pick.
With that in mind, would we better off had they been not allowed to get filthy rich?
Absolutely. Median wages would be nearly double what they are in real terms.
Concentrating the wealth in such an extreme way also reduces aggregate production and wealth. The "investor class" sits on their wealth, or drives up asset prices instead of investing in production, because the consumers cannot afford to buy!
Consumer capitalism requires a symbiotic balance between investment in production and the rising real wealth of consumers. This has been interrupted for the last 40 years via many policies specifically designed to favor a tiny fraction of our population. Globalization was what made it possible.
In our society, there are essentially two ways to make money:
- Work and earn money for your labor;
- Invest your money and get a return on your investment.
Both are noble and appropriate means of earning money. The problem that those of us on the left see is not that the latter of these has done so well; it is that the former has stopped working well, and the savings from that are what are enriching the latter.
Let me address the "you people" comment for a second: my spouse and I are what you would call liberals. We also are hard-working professionals who earn a good household income, live below our means (prepaid cell phones, drive older cars, cut-the-cord on cable, etc.), and save prodigiously. Our goal is to pile money into investments, let our money work for us, and be able to retire, give to charity, leave an inheritance to our heirs. I also have an MBA and have traveled to parts of the world where work is being off-shored. So: we may not fit the stereotype some people have of liberal envy and want.
What we see are people who are being displaced by technology, automation, and globalization. All of those can be good trends that have their place; the problem is when the people left-behind have nowhere to go. My uncle, for instance, a staunch conservative/Tea Partier whose work in procurement was impacted by automation and eliminated. He never found another job except working retail until he died. Only a sizable inheritance (thanks to the generosity of his father's post-WW2 stable employment at a power company) kept him from destitution. Still, that experience destroyed him personally, not just professionally.
Others have similar stories: work gone to China or Mexico, never to return; computers making post office workers, manufacturing employees, and the like unnecessary.
Naturally, economic progress causes the buggy-makers and telegraph operators and rail conductors to go away. But, they're historically been able to find more new job in their wake. We are seeing jobless recovery after jobless recovery, and most sobering of all, no inflation-adjusted increase in middle-class wages since the 1970s.
Companies exist to earn a profit, as well they should. But we are stuck in a dangerous cycle of externalities:
- Firms earn a profit, but face pressure to increase their profit margins
- The natural method is to reduce costs; e.g., cap-ex like technology or automation to reduce op-ex; or, offshore work to lower-cost production companies
- Firms reduce headcount due to automation; with surplus labor in the market, wages are sticky-downwards;
- The excess profit companies earn from reducing their costs is greater than the net loss in sales their downsizing costs (if their laid-off workers are less likely to buy their goods); while in the long-run this is a negative factor to all firms in the market, there is a "tragedy of the commons" incentive system
- Companies increase profits and returns to shareholders through dividends and stock price appreciation
- Other competitive public companies, when same-size analysis is done, now are uncompetitive for costs, and the market pressures them to align
Right now, our economic and political system has strong pressures to incentivize companies to do exactly this: reduce costs, at the expense of America's middle-class and working-class, to drive profits to shareholders.
What this does, though, is cause a rise in externalities -- failing communities when work disappears, increases in public spending on Medicaid and food stamps, and pressure to bend over backwards to give economic incentives to steal or retain companies ("cause if you don't, those jobs are moving to Some-Other-State-or-Country.")
As an investor, this is great for my bottom line. My equities accounts are up nearly 50% in the past few years, and we're seeing the power of compounding investments.
As a citizen, though, I recognize that if the middle-class is not strong, then instability happens. What happens as this trend continues -- as it accelerates, which it likely will? Will our society tolerate having tens of millions of long-term unemployed, subsisting on meager transfer payments and benefits? Will those individuals be docile, quiet poor -- or will they be rioting in the streets for jobs or economic justice?
It's not just abstract liberalism that worries me about this. As an investor, I am self-interested: if there is economic turmoil, my investments, my future, is ruined. (Compare the annualized returns of the US and Russian capital markets from the late 19th century through 1919. The St. Petersburg exchanges were a much better investment ... until this little communist revolution happened.)
I do not want to see some massive tax hike on the rich, or wealth confiscation. But I do think that if we don't balance out the scales, we will see that, or worse, eventually. We are a richer country when we all have a realistic chance of getting richer... when the average American knows that if they get a job, work hard, and keep their head down, they will be able to give their kids a better life, to retire someday.
That system is broken. I strongly suspect that most Tea Partiers see that as strongly as I do. It's just that I think most of them are looking to the wrong source to blame -- buying into the "job creator" myth, or into easy stereotypes that have long worked in the US (see: Civil War riots in NYC, 1860s) about immigrants or minorities. Me, I see a system where there's a thumb on the scales.
We do have to put in place the systems -- taxes, benefits, stock market regulation, etc. -- that ensure that all the economic gain from our current paradigm shift gets shared fairly. Fair means that workers and investors both benefit.
As a citizen, though, I recognize that if the middle-class is not strong, then instability happens. What happens as this trend continues -- as it accelerates, which it likely will? Will our society tolerate having tens of millions of long-term unemployed, subsisting on meager transfer payments and benefits? Will those individuals be docile, quiet poor -- or will they be rioting in the streets for jobs or economic justice?
It's not just abstract liberalism that worries me about this. As an investor, I am self-interested: if there is economic turmoil, my investments, my future, is ruined. (Compare the annualized returns of the US and Russian capital markets from the late 19th century through 1919. The St. Petersburg exchanges were a much better investment ... until this little communist revolution happened.)
I do not want to see some massive tax hike on the rich, or wealth confiscation. But I do think that if we don't balance out the scales, we will see that, or worse, eventually. We are a richer country when we all have a realistic chance of getting richer... when the average American knows that if they get a job, work hard, and keep their head down, they will be able to give their kids a better life, to retire someday.
That system is broken. I strongly suspect that most Tea Partiers see that as strongly as I do. It's just that I think most of them are looking to the wrong source to blame -- buying into the "job creator" myth, or into easy stereotypes that have long worked in the US (see: Civil War riots in NYC, 1860s) about immigrants or minorities. Me, I see a system where there's a thumb on the scales.
We do have to put in place the systems -- taxes, benefits, stock market regulation, etc. -- that ensure that all the economic gain from our current paradigm shift gets shared fairly. Fair means that workers and investors both benefit.
If we don't do that, we are ALL majorly screwed.
You want to know what's funny? I'm a life long conservative, yet I agree with every word you said. Growth is good, but cancer is bad. It seems our economic system is quickly turning into a cancer and if we don't fix it, we, or our children, will be faced with a communist revolution or something akin to the French version. Wonder if all the "let them eat cake" job creator's recall what happened? We conservatives and liberals have to recognize that feel good political emotions are not the same as good business decisions. And now is the time to make the decisions that are good for the long term.
It's not the dollars that makes one rich, it is the gap.
Absolutely correct.
The former Soviet Union had the greatest inequality gap I had ever seen!!
Even worse, in the "socialist" paradise the "gap" was in your face everyday with the special privileges for the elites in that society. Like America today, that gap was based on your political connections and privileges granted by the government.
This is ALL you need to know about Elites in any culture.
The southern United States became a slave country because the Elites found that the SEVEN YEAR indentured servant program did not make them enough money. No they wanted a human for LIFE. So they imported slaves.
It is not any different today. Except, that slavery is no longer acceptable in the west.
However, note that Germany became a slave holding nation in the 1940's. I hope that the last western slave nation is Germany in the 1940's.
But you never know what the future holds for the mass of humanity.
Ahhhh you left out the Koch bros hahahaha and Democrats have NEVER Screamed for redistribution of Wealth.. Thats Been Faux News and other Bought and Paid For Talking Heads..
Quote:
Originally Posted by treasurekidd
No it's not. A common selling point for liberals is to spread the wealth/money around to people who will vote for them and strengthen their power base. Liberals screaming for redistribution of wealth are either looking to spread it around to build a voter base, or looking to be on the receiving end themselves.
from Wilkipedia......Economics and politics are NOT two separate topics....NEVER HAVE BEEN. Well, at least when it comes to macro-economics.
Political economy was the original term used for studying production and trade, and their relations with law, custom, and government, as well as with the distribution of national income and wealth. Political economy originated in moral philosophy. It was developed in the 18th century as the study of the economies of states, or polities, hence the term political economy.
In the late 19th century, the term economics came to replace political economy, coinciding with the publication of an influential textbook by Alfred Marshall in 1890.[1] Earlier, William Stanley Jevons, a proponent of mathematical methods applied to the subject, advocated economics for brevity and with the hope of the term becoming "the recognised name of a science."[2][3]
Today, political economy, where it is not used as a synonym for economics, may refer to very different things, including Marxian analysis, applied public-choice approaches emanating from the Chicago school and the Virginia school, or simply the advice given by economists to the government or public on general economic policy or on specific proposals.[3] A rapidly growing mainstream literature from the 1970s has expanded beyond the model of economic policy in which planners maximize utility of a representative individual toward examining how political forces affect the choice of economic policies, especially as to distributional conflicts and political institutions.[4]
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