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That is right at the number who in the end pay less in taxes than services they receive. Its quite understandable that government which runs on its portion of GDP favors those providing it. Its like going to bankrupt court to look for financial advice; plain and simple.
Ultimately, our financial system does have a problem. The 1% have achieved a sort of "critical wealth mass" and are beginning to operate like black holes. Sure, they may lend money out/invest, but the wealth is still theirs and comes back to them at the end of the day. Barring some really huge financial missteps, the only way a 0.1%'er will ever be poor is by their own choice. With $1 billion, you could put that in a checking account and earn $1million a year in interest(at 0.1%). And that's the absolute worst case scenario. They have the wealth to ride out the markets ups and downs, so a 5% return isn't really difficult to imagine. That's $50 million a year in income, all taxed at a rate lower than anything the average person pays.
The average person makes money, and then feeds the majority of it back to corporations and the government, ultimately some of that money comes back down to the lower people through government intervention and salaries, but if you think about it, everything the lower people spend their money on eventually makes it's way back to the top. And once the money gets there, the only way it leaves is in the form of an investment that is still destined to come back to the top. Even if a rich person goes and buys an expensive toy, that just goes over to another rich person ultimately.
The wealth of this country is now stuck in a black hole at the top, and there's no real way for it to work it's way down.
Ultimately, our financial system does have a problem. The 1% have achieved a sort of "critical wealth mass" and are beginning to operate like black holes. Sure, they may lend money out/invest, but the wealth is still theirs and comes back to them at the end of the day. Barring some really huge financial missteps, the only way a 0.1%'er will ever be poor is by their own choice. With $1 billion, you could put that in a checking account and earn $1million a year in interest(at 0.1%). And that's the absolute worst case scenario. They have the wealth to ride out the markets ups and downs, so a 5% return isn't really difficult to imagine. That's $50 million a year in income, all taxed at a rate lower than anything the average person pays.
The average person makes money, and then feeds the majority of it back to corporations and the government, ultimately some of that money comes back down to the lower people through government intervention and salaries, but if you think about it, everything the lower people spend their money on eventually makes it's way back to the top. And once the money gets there, the only way it leaves is in the form of an investment that is still destined to come back to the top. Even if a rich person goes and buys an expensive toy, that just goes over to another rich person ultimately.
The wealth of this country is now stuck in a black hole at the top, and there's no real way for it to work it's way down.
We are entering a phase in our country's economy where the negatives of Big Business Capitalism and Banking are tilting the returns away from the broad middle class.
Capitalism IMO is the best economic pathway, but it cannot be perfect forever.
Thomas Piketty is presently raising a bunch of this sort of ruckus:
We need to distinguish between investment, earnings and consumption. The bottom 70% (just to select some hypothetical number) do very little investing, whether in equities, bonds, infrastructure, or whatever else. So from an investment viewpoint, they are indeed insignificant. No so from an earning viewpoint. Yes, they are getting stunningly outstripped in income-growth by their wealthier counterparts, but 70% is big number. The annual income commanded in aggregate by this cohort is substantial. Lastly, consumption. Here the impact of that bottom 70% is enormous, for reasons already cited.
Certainly the consumer-habits of that bottom 70% impact the US economy. But it's a global world. Consumers elsewhere in the world - who likely have even less money than the American bottom 70% - are nevertheless starting to consume more. That rise in consumption can more than offset the decline in American consumption from our consumers retrenching, because profits from around the world are harnessed by the wealthiest sliver of Americans at the top. For this reason, the relatively poor consumers in India, China and Brazil matter more than the middle-class consumers in Indiana or California.
Wrong. Give everybody a raise in the country, and all prices on everything would be raised to cover the raises. That in turn, would mean that everything had to be raised in price to cover the wage raises. More money comes into every families budget, but cost increases would eat up or nearly all if not all the raises. Right back to where we were before the raises.
Except it is not proportional. For example, giving everyone a 10% raise doesn't mean all prices go up by 10% since that would only be true if the ONLY factor in the cost was paying employees, which it is not.
Heck, raising the minimum wage, a current hot-button topic, doesn't even seem to cost jobs
I mean, sure, a company could be a jerk and lay people off after minimum wage goes up just to make a political point, but there's no evidence that doing so is an economic necessity.
Wrong. Give everybody a raise in the country, and all prices on everything would be raised to cover the raises. That in turn, would mean that everything had to be raised in price to cover the wage raises. More money comes into every families budget, but cost increases would eat up or nearly all if not all the raises. Right back to where we were before the raises.
you did not follow my argument. If you are maxed out on debt you have no extra money. So if you do a 2X on wages and a 2X on prices and you haven't done a 2X on debt then you have extra money. You are better off. By the reduction in the value of your debt. We have 350% of total debt in the US. That is personal, corporate, and government debt.
Please verify this statement: The bottom 70% of American income earner's spending has little impact on our economy.
I read this one time.
What they were trying to say, I believe, is the top 30% of Americans as far as income and assets pretty much control our economy. They do 95% of the spending and investing. So translated, it says: that if the middle class and poor people in America are not doing well, it has very little impact on our economy because the top income earners and investor and foreign capital dominate our economy.
I had read that 80% of our income tax revenue comes from the top 10% of income earners and investors. That is why there is no real concern about the middle class and poor people, the economy does not really need them to prosper.
Agree or disagree?
That's because the bottom 70% of Americans are BROKE lol. Something like 40% of Americans make less than $14.00 an hour. Hell, it takes at least 2 Americans to make 50,000 a year. 1 in 6 Americans are on Food Stamps, I mean shall I continue lol.
what i got out of studying it is that 2.2% spend 11.2% of the consumer spending but that the vast majority of americans drop about $10000 a year on consumer items. credit card spending is a problem so many are running over the estimated 30% disposable income figure.
in other words spending above their means.
Last edited by Huckleberry3911948; 04-21-2014 at 11:06 PM..
you have posted something in bold that is not accurate.
please provide a link. i know of no such quote or stat.
It makes sense...the working and middle class are getting hammered right now by inflation and the decreasing value of their wages. Many of the high income earners however benefit from the inflation as they tend to make their income in overpriced stocks and real estate..things that are out of reach to much of the bottom 70% he's speaking of.
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Quote:
Originally Posted by ContrarianEcon
you did not follow my argument. If you are maxed out on debt you have no extra money. So if you do a 2X on wages and a 2X on prices and you haven't done a 2X on debt then you have extra money. You are better off. By the reduction in the value of your debt. We have 350% of total debt in the US. That is personal, corporate, and government debt.
Except that with the 2X on wages and 2X on prices you will also have an increase in income taxes, so that "extra money" is not as much as it looks like.
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