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Old 03-20-2009, 02:36 PM
 
Location: Under a bridge.
3,196 posts, read 5,003,724 times
Reputation: 979

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Quote:
Originally Posted by chuck22b View Post
Things have to change or there won't be much of a middle class - which is at the heart of what makes America and most other Developed countries what it is
With all due respect, it is EACH of our responsibilities to change it for ourselves. Nobody is going to do it for you. You have to do it for yourself--or it won't get done. (Personal responsibility and all that is included therein).
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Old 03-20-2009, 03:07 PM
 
14,048 posts, read 20,276,944 times
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Quote:
Originally Posted by Randomdude View Post
Wealth cannot be defined as anything other then basic capital resources. At the end of the day, those are the only things of value. In your example, the $100 is a representation of "capital assets", since money has been accepted as some sort of medium of exchange. You did not "create any wealth", you simply are extracting more wealth from some one else ($10 instead of $100... I could pay you in potatoes, from my capital asset, but in that exchange, you actually lost wealth, unless you can trade the potatoes for more capital then it cost you to build the vacuum. If you consume the potatoes, then you have no wealth..
Well, see, I think you answered your own question - indirectly. Wealth is a measure of an individual, or a society. That individual creates wealth if the vacuum is worth more in potatoes than the scrap pile, our country likewise creates wealth if we sell the vacuums to another country for more potatioes than the scrap metal is worth. What do we do with the potatoes? We consume them - sell it to dig up more scrap metal, we pay the citizens of the country to convert more scrap to vacuums, we use them to invest in more wealth creation activities. We don't let the potatoes sit to rot, otherwise we would not accept them as payment.

Now let me get back to what you are getting at. I think you are saying an individual or society simply transfers it, from another person or society who will in turn loses wealth. That isn't true either, not in all cases. A change in wealth is simply income minus expenses. If A sells a vacuum to a B cheaper than B can himself convert the scrap metal to a vacuum, he is creating wealth for this person as well. That's assuming the other person needs it. Same with an employee to the vacuum maker. The employee would not make a profit making his own vacuum cleaner out of scrap metal becuase he maybe doesn't have the tools or marketing, but he can make a profit, in terms of salary, by making it for the employee using his tools.

"Creation of wealth" is not a theory anymore than gravity is. It simply an economic concept.

Let me extend the definition of wealth to be a little more clear - its the combination of materials, resources, labor, land, technology, etc. Income itself has nothing to do with wealth - which in theory is the problem with our tax code any income distrubution in the first place. A person can be "wealthy", abbundant with wealth, but not creating wealth and have little income - and not be taxed at all. Another person can have a high income, be only moderately wealthy but creating wealth, but get a very high tax rate. Which leads into the original argument - lets not punish those that are creating wealth (enterpanuers, etc), instead we need to punish those that are wealthy but not creating wealth or producing negative wealth for our country (politicians, "old money" elitists, greedy CEOs with poorly performing companies). It seems we are heading in the exact opposite direction.
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Old 03-20-2009, 03:17 PM
 
Location: Virginia Beach, VA
5,517 posts, read 9,415,446 times
Reputation: 2547
Quote:
Originally Posted by dcashley View Post

Oops...I forgot to point out that these income statistics were adjusted for inflation and are posted in constant 2006 dollar values.

Household income huh.......well then, your graph certainly accounts for the fact that about 60% of married households have two incomes in 2008, compared to about 30% in 1969. Oh wait, Im sure it doesn't, because that fact accounts for all but a couple percent of the median increase in household income. However, since the lack in parental care, and rise in cost of childcare doesnt effect standard of living.........

Why dont we just go over to another source of data

Historical Income Tables - People (http://www.census.gov/hhes/www/income/histinc/p05AR.html - broken link)

Where we find that for males, the median income is about $1000 dollars more in real income in 2007 then 1969. This is dispite the fact, that about 20% more males have bachelors degrees then in 1969, which also carries plenty of personal debt load.

What is the bottom line you ask? It has taken todays generation FAR more work, debt, expense and risk, to get to, essentially, the EXACT same income level as their parents. That "work, debt, expense, and risk", is exactly what is leading to the lower standard of living.

Why is this you ask?

Well, the answer is simple, while MEDIAN income went up about $1000 for males over that period, MEAN income

Historical Income Tables - People (http://www.census.gov/hhes/www/income/histinc/p06AR.html - broken link)

went up about $11,000 dollars for males.

We learn from any freshmen stats class that, when median does not follow mean, it usually means that the numbers at the TOP END of the sample have risen exponentially, while those towards the middle, have risen little to none. Then again, if you paid attention to the GINI index, you would have already known thats whats happening in the good ol' US of A.
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Old 03-20-2009, 03:26 PM
 
Location: Virginia Beach, VA
5,517 posts, read 9,415,446 times
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Quote:
Originally Posted by Dd714 View Post
Well, see, I think you answered your own question - indirectly. Wealth is a measure of an individual, or a society. That individual creates wealth if the vacuum is worth more in potatoes than the scrap pile, our country likewise creates wealth if we sell the vacuums to another country for more potatioes than the scrap metal is worth. What do we do with the potatoes? We consume them - sell it to dig up more scrap metal, we pay the citizens of the country to convert more scrap to vacuums, we use them to invest in more wealth creation activities. We don't let the potatoes sit to rot, otherwise we would not accept them as payment.
You missed the point completely, but thanks for playing. However, check somewhere around the "consume them" part of your paragraph, start there.


Quote:
Originally Posted by Dd714 View Post
Now let me get back to what you are getting at. I think you are saying an individual or society simply transfers it, from another person or society who will in turn loses wealth. That isn't true either, not in all cases. A change in wealth is simply income minus expenses. If A sells a vacuum to a B cheaper than B can himself convert the scrap metal to a vacuum, he is creating wealth for this person as well. That's assuming the other person needs it. Same with an employee to the vacuum maker. The employee would not make a profit making his own vacuum cleaner out of scrap metal becuase he maybe doesn't have the tools or marketing, but he can make a profit, in terms of salary, by making it for the employee using his tools.
No, he is not creating wealth. He is extracting it from B, and distributing it to himself and his employee.


Quote:
Originally Posted by Dd714 View Post
"Creation of wealth" is not a theory anymore than gravity is. It simply an economic concept.
Wealth cannot be created. Those who argue it can simply are defining "wealth" incorrectly, or cannot grasp the premise of the argument I presented.


Quote:
Originally Posted by Dd714 View Post
Let me extend the definition of wealth to be a little more clear - its the combination of materials, resources, labor, land, technology, etc.
This is not the definition of wealth, this is the definition of product.

Quote:
Originally Posted by Dd714 View Post
Income itself has nothing to do with wealth - which in theory is the problem with our tax code any income distrubution in the first place. A person can be "wealthy", abbundant with wealth, but not creating wealth and have little income - and not be taxed at all.
I agree, income has nothing to do with wealth, I never argued to the contrary. Income is a means to accumulate wealth, since in itself, it is worthless outside of the value of the paper its printed on.

Quote:
Originally Posted by Dd714 View Post
Another person can have a high income, be only moderately wealthy but creating wealth, but get a very high tax rate. Which leads into the original argument - lets not punish those that are creating wealth (enterpanuers, etc), instead we need to punish those that are wealthy but not creating wealth or producing negative wealth for our country (politicians, "old money" elitists, greedy CEOs with poorly performing companies). It seems we are heading in the exact opposite direction.
Again, wealth is not created, just transfered.
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Old 03-20-2009, 03:28 PM
 
Location: southern california
61,305 posts, read 79,601,165 times
Reputation: 55458
no, lower class and lower middle is going away fast, the middle which is much higher is waddling to the rush limbaugh rally dressed all in black with their balding hair plastered back
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Old 03-20-2009, 03:37 PM
 
Location: Chino, CA
1,458 posts, read 3,059,480 times
Reputation: 555
Quote:
Originally Posted by dcashley View Post
Data come from the census bureau. ... this shows household income over the last 40 years. ... The bottom line: over this period the household size has declined 21% while household income has increased 31% ...combined together this shows a 65% INCREASE in income over this period.
Um, why are you combing these figures? They aren't correlated enough to add them up like that. Household size may have decreased, but the number of dual income households have increased.

So if household size has decreased from 3.7 to 3.4 or something like that... then there is still more household earners generating income (perhaps people are having fewer children which is resulting in smaller households but two people are still working).

If in 40 years median household incomes only rose 31%... then that is less than .78% per year. WOW! Meanwhile, the upper 20 percentile has seen over 300% rise in real incomes or a 7.5% per annum increase.

Anyhow, median personal income is a better measure compared to median household incomes because it eliminates dual incomes and according to the Census median personal incomes has only risen 34% in the last 32 years or at the rate of 1.06% increase per annum. Still by far pales to 7.5% for the upper 20 percentile.
Historical Income Tables - People (http://www.census.gov/hhes/www/income/histinc/p10ar.html - broken link)

Meanwhile, productivity has increased on average 2% per annum and GDP growth has averaged about 3% growth per annum.
Productivity Growth by Major Sector, 1947-2007. Bar Chart

So, basically, most of this growth and efficiency and wealth has been concentrated toward the upper classes. People are more productive, more efficient, and more educated... but the primary benefactors has been the upper 10/1 percentile.

-chuck22b
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Old 03-20-2009, 03:41 PM
 
14,048 posts, read 20,276,944 times
Reputation: 23622
Quote:
Originally Posted by Randomdude View Post
You missed the point completely, but thanks for playing. However, check somewhere around the "consume them" part of your paragraph, start there.... Wealth cannot be created. Those who argue it can simply are defining "wealth" incorrectly, or cannot grasp the premise of the argument I presented...This is not the definition of wealth, this is the definition of product.
OK well, we won't agree. Maybe I did miss your point. I assure you, that my definition of wealth is accurate, and "creation of wealth" was something we learned in our first macro-economics class during my business degree program. I'm confused at this line of argument because it's simply an economic concept, not a subject I would expect to be debated. But anyways refer to "New World Encycopeia" on their explanation of wealth and it has an area describing wealth creation:
Wealth - New World Encyclopedia
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Old 03-20-2009, 03:48 PM
 
Location: Chino, CA
1,458 posts, read 3,059,480 times
Reputation: 555
Quote:
Originally Posted by dcashley View Post
With all due respect, it is EACH of our responsibilities to change it for ourselves. Nobody is going to do it for you. You have to do it for yourself--or it won't get done. (Personal responsibility and all that is included therein).
No problem. I always try to better myself and will be trying my best in clawing my way up to "game" the system. But, the problem is that the system itself is flawed. And that will require fundamental changes.

Too much concentration of incomes and wealth at the top while feeding off of the bottom is bound to fail in a democracy... at least I hope we're still a democracy.

-chuck22b
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Old 03-20-2009, 03:55 PM
 
Location: Under a bridge.
3,196 posts, read 5,003,724 times
Reputation: 979
too many amatuer economists.
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Old 03-20-2009, 03:55 PM
 
Location: Virginia Beach, VA
5,517 posts, read 9,415,446 times
Reputation: 2547
Quote:
Originally Posted by Dd714 View Post
OK well, we won't agree. Maybe I did miss your point. I assure you, that my definition of wealth is accurate, and "creation of wealth" was something we learned in our first macro-economics class during my business degree program. I'm confused at this line of argument because it's simply an economic concept, not a subject I would expect to be debated. But anyways refer to "New World Encycopeia" on their explanation of wealth and it has an area describing wealth creation:
Wealth - New World Encyclopedia
Did you even read the first line of this definition?

Wealth refers to some accumulation of resources

My definition, and the definition used by many, is that in its most literal sense. The accumulation of vacuums, potatoes, hair nets, fishing polls, that is NOT WEALTH, and it does not have a "wealth value", until it is exchanged for WEALTH and not a minute before. Some would argue knowledge is wealth, since it can be accumulated, and used to produce a product, but, it cannot be readily measured, so its often discounted for purposes of measurement of wealth.
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