Economy is getting better for who?

Posted:
in General Discussion edited January 2014
http://www.dailyreckoning.com/home.c...cfm&qs=id=3569



It's apparent that it's not getting better for the average paycheck to paycheck person.



These are the same people who saw little or no tax cut.
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Comments

  • Reply 1 of 30
    trumptmantrumptman Posts: 16,455member
    The average paycheck person has been living beyond their means? Well tell me something I don't know.



    I mean this honestly, and I know that it will probably come across quite callous, but most people I know live a luxury lifestyle on a Walmart paycheck. This is basically because what use to be a luxury is now being installed mostly as original equipment on cars and homes, etc. On top of it they will finance it in as well(you can buy your home entertainment system and include it with your mortgage). Likewise I see people financing items for an insane number of years or basically timeframes that have no business being financed.



    I know my examples are anecdotal and I contribute them as such. I do not claim my experiences represent fed policy. However the article discusses Walmart shoppers on the 15th of the month as a measure of national liquidity, so please don't use the ol'double edges sword. The thread has been started with an attempt to measure the economy in a different fashion. If I use my different fashion don't condemn it as less valid or nonstandard, that is sort of the point of the thread.



    To put it bluntly most people are in debt up to their two income necks. However instead of being frugal and saving or building wealth, I see ever more SUV's with DVD's. Last summer was the first time the number of ever larger, ever faster luxury boats got so large as to be annoying and appeared to be almost the norm rather than the exception on the lakes I enjoy camping at. One happened to be parked at the campsite next to ours. It was easily a $75-80k boat. I asked the owner about it and discovered he was just a typical construction worker who had financed it for over 15 years. The extra large 4x4 Ford Extra-cab pick up was for 6 years and the new trailer was financed as well.



    Homes are a good example as well. Our current home is 2000 sq ft. and is increasingly dwarfed by the homes that have lines of people waiting to buy them. Those homes go for no less than $225k and range to way over $300k. They are between 2500 to 3500 sq ft and often have a family of four. I have no idea how they afford the mortgage on them since my last home purchase was the most expensive I have ever done and it wasn't even 200k. (actually about $170k)



    Everyone of my kiddo's in my class shares with my what they did over the weekend. I would say the everage is about one movie watched or two movies rented per child. About one third take some big ticket trip per weekend.



    The AVERAGE car loan term is 60 months and most include features like power windows, door locks, power seats, along with stereos and rims that would have been expensive aftermarket add-ons.



    I had two friends of mine refinance their houses. Both took money out. One bought a new $6500+ spa/jacuzzi. The other bought a 65 inch HDTV television with surround sound stereo system.



    My teaching assistant just bought a new SUV. It is a Mercedes and she works two jobs to afford it along with their family needs for three children. Why do you need a Mercedes and two jobs, instead of say one job and something that drives... you'll have to ask her.



    It appears to me that most people just no longer wish to believe they are average even when their salary dictates they happen to be. Someone will finance their two cars, their McMansion, their boat ,trailer, ATV's/motorcycles, etc. for ungodly amounts of time justifying it with a say, $50-60k annual income.



    I have no doubt they are up to their neck. I have no doubt that they have no money to buy singing and dancing wall mounted fish at Walmart.



    Nick
  • Reply 2 of 30
    scottscott Posts: 7,431member
    Quote:

    Originally posted by chu_bakka

    ...



    These are the same people who saw little or no tax cut.






    Could you please quantify "little or no tax cut".
  • Reply 3 of 30
    brussellbrussell Posts: 9,812member
    Trumpetman although you know I agree with you about over-spending, the trend chuie is talking about is apparent even if you exclude that problem.



    Just to look at it more broadly, since 1979 the income of the lower classes has barely grown at all, while the wealth of the richest has increased dramatically.





    Another statistic from that same page.



    Share of Total National Income:

    Top 1%

    1979 = 8%

    2000 = 16%



    Bottom 40%

    1979 = 19%

    2000 = 15%



    Data like these say two things to me:

    1. Something has to be done to reduce the influence of big money on politics.

    2. Bush's tax cuts went in exactly the opposite direction than they should have.
  • Reply 4 of 30
    trumptmantrumptman Posts: 16,455member
    Quote:

    Originally posted by BRussell

    Trumpetman although you know I agree with you about over-spending, the trend chuie is talking about is apparent even if you exclude that problem.



    Just to look at it more broadly, since 1979 the income of the lower classes has barely grown at all, while the wealth of the richest has increased dramatically.





    Another statistic from that same page.



    Share of Total National Income:

    Top 1%

    1979 = 8%

    2000 = 16%



    Bottom 40%

    1979 = 19%

    2000 = 15%



    Data like these say two things to me:

    1. Something has to be done to reduce the influence of big money on politics.

    2. Bush's tax cuts went in exactly the opposite direction than they should have.




    It says a couple different things to me. First thanks for the link. Informed discussion is always the best discussion. I did take a good look at your chart. Especially the areas where the top fifth was left as a group instead of broken down into three or so groups to create the curve.



    I would argue that it is increasing globalization of business along with record immigration that has held down those lower fifths. I do think that CEO compensation has gotten out of line as well, but your report mentioned it was starting to fall.



    However even all that the effective top rate on the top one percent was just over 33% taxation. How much more progressive can you go without simply stopping the desire to try and earn more?



    Add to this that since 1979 we have had record numbers of women enter the work force, many of them becoming well educated and likewise well-paid. Any trend is going to be doubly compounded. For example my wife and I are both college educated and if she were working we would be earning well over 110k a year. When we as a couple would compete against say a single mother with just a high school diploma, or even another couple with high school diplomas, the trend just worsens. It isn't corporate greed. It is the variables that affect your ability to earn being doubly applied. (All you generalizers out there, I know that there are high school grads that earn plenty, I am speaking of a generalization which says college grads earn about 30%+ more)



    Now we discuss the influence of big money on politics. If I were a large corporation that wanted to policy to pass to help me, here is what I would pass. I would seek record immigration and likewise make it almost impossible for unionize. I would promote open and free borders so the second my workers didn't do what I want, I could move my business a few hundred miles south and do whatever I want.



    This is exactly the position of both major parties today. Through some severe twisting of logic, we consider trade and jobs going over the boarder to be a form of foreign aid. If you stand against it then people claim you are racist. Likewise the same is true with the immigration. I work with these children and parents daily. They will never be able to get off the bottom rung of the ladder because there is too much pressure on them to be able to make any demands regarding pay, training or anything else.



    The upper fifths are just more immune to these pressures, but even they will not be completely immune. We have witnessed the beginning of outsourcing of white collar jobs. How much longer until our X-RAYs are being read in India?



    BTW, one last point. Please never mistake income for wealth. Networth and income are very different things. The anecdotal info I mentioned featured some very high income families that likely are worth next to nothing.



    Nick
  • Reply 5 of 30
    brussellbrussell Posts: 9,812member
    I won't disagree with the reasons you state for the wealth gap. But I think about it a little differently.



    I think the natural tendency is for the wealthy to acquire more wealth at the expense of the lower classes. I hate to sound like a Marxist, but I believe that. I think it occurs naturally via a free market economy, and I think it occurs also through the political process.



    IMO, because the natural tendency is for the wealth gap to increase if left unchecked, the government should be the entity that checks it.



    On your point about net worth, I agree. But I also think you might agree that those gap-between-rich-and-poor graphs would be even more extreme if you used net worth rather than income.
  • Reply 6 of 30
    Quote:

    Originally posted by BRussell

    Trumpetman although you know I agree with you about over-spending, the trend chuie is talking about is apparent even if you exclude that problem.



    Just to look at it more broadly, since 1979 the income of the lower classes has barely grown at all, while the wealth of the richest has increased dramatically.





    Another statistic from that same page.



    Share of Total National Income:

    Top 1%

    1979 = 8%

    2000 = 16%



    Bottom 40%

    1979 = 19%

    2000 = 15%







    Many things have happened.



    I started a thread entitled "Trade Issues" which covers one aspect of one trend that nobody seems to be paying attention to.



    Also the Rich have fewer payments so the income they have can be used solely for making more income. Not to mention the Stock Markets and Real Estate have gone up quite a bit from 79 - 2000.



    Some things do need to be addressed. I would not say class warfare is a meaningful or useful tactic to embrace the changes that our society needs to make.



    Fellowship
  • Reply 7 of 30
    midwintermidwinter Posts: 10,060member
    Quote:

    Originally posted by BRussell

    I think the natural tendency is for the wealthy to acquire more wealth at the expense of the lower classes. I hate to sound like a Marxist, but I believe that. I think it occurs naturally via a free market economy, and I think it occurs also through the political process.



    It doesn't just happen naturally in a capitalist system; the system itself necessitates it, just as it necessitates unemployment.



    If this trend keeps going, we might as well have never gotten out of the nineteenth century.



    Cheers

    Scott
  • Reply 8 of 30
    Quote:

    Originally posted by midwinter

    It doesn't just happen naturally in a capitalist system; the system itself necessitates it, just as it necessitates unemployment.



    If this trend keeps going, we might as well have never gotten out of the nineteenth century.



    Cheers

    Scott




    This is the biggesest pile of well.... uhhh crap I have read in some time.



    Fellows
  • Reply 9 of 30
    trumptmantrumptman Posts: 16,455member
    Quote:

    Originally posted by BRussell

    I won't disagree with the reasons you state for the wealth gap. But I think about it a little differently.



    I think the natural tendency is for the wealthy to acquire more wealth at the expense of the lower classes. I hate to sound like a Marxist, but I believe that. I think it occurs naturally via a free market economy, and I think it occurs also through the political process.



    IMO, because the natural tendency is for the wealth gap to increase if left unchecked, the government should be the entity that checks it.



    On your point about net worth, I agree. But I also think you might agree that those gap-between-rich-and-poor graphs would be even more extreme if you used net worth rather than income.




    I don't think there is any sort of natural tendency for the wealthy to acquire more wealth. I have watched some very wealthy people lose it all. I have likewise watched everyday folks become millionaires via some prudent saving and investing. The last stat I read on millionaires said that over 80% were self made.



    However you are correct that there are a lot of misinformed people with regard to what is wealth and how you acquire it.



    I mean in the U.S. it is still incredibly easy to become wealthy. It is incredibly easy to find capital here for businesses for example. The main issue of course is what people choose to use this flood of credit to do. Very few (in my opinion) choose to use their own income or their own credit opportunities to do anything more than consume all they can.



    Nick
  • Reply 10 of 30
    trumptmantrumptman Posts: 16,455member
    Quote:

    Originally posted by FellowshipChurch iBook

    Also the Rich have fewer payments so the income they have can be used solely for making more income. Not to mention the Stock Markets and Real Estate have gone up quite a bit from 79 - 2000.



    Some things do need to be addressed. I would not say class warfare is a meaningful or useful tactic to embrace the changes that our society needs to make.



    Fellowship




    However the rich really don't have to have fewer payments. That is what is so ironic. I've seen plenty of couples who have combined incomes of well over $100k. They could easily be saving to buy a business, an investment building, something, anything to begin building wealth. Instead they are in debt up to their necks. They could easily live modestly and likely save 30-40k a year to invest. Instead they just spend, spend, spend in proportions often larger than those who have actual wealth.



    Nick
  • Reply 11 of 30
    i have to wonder how the .com implosion affected that top 1%.....



    didn't Bill alone lose tens of billions of dollars in a year long span?
  • Reply 12 of 30
    brussellbrussell Posts: 9,812member
    I've always heard that the US has lower economic mobility than other countries.



    Sample from this article.



  • Reply 13 of 30
    Quote:

    Originally posted by BRussell

    chart



    Well BRussell? What would you be leaning towards to solve the issue of poverty? I hope you do not do what LA did in CA. If you click this LINK you will see that LA (the city) is worse off than california and the nation. You will also notice the nation is not as bad off as your link indicates according to the link above.



    So would you do what exactly?



    From your link BRussell:

    Quote:

    Recent research by Bruce Bradbury (UNICEF) and Markus Jantti (Abo Akademi University in Finland), for example, found that the United States has more of its population living in poverty (20.7%) than does any other advanced economy. Poverty rates in most advanced economies were less than half those of the United States: Spain (10.3%), France (9.4%), Germany (8.5%)



    That is funny because if you click my link their figures for the US are nothing close to 20.7%. The question then becomes whose data do you buy?



    Numbers can be manupulated by anyone. So I go back to my original question and ask you what you would do? LA does not seem to have the answers.



    Fellowship
  • Reply 14 of 30
    midwintermidwinter Posts: 10,060member
    Quote:

    Originally posted by FellowshipChurch iBook

    Well BRussell? What would you be leaning towards to solve the issue of poverty? . . . So would you do what exactly?





    I love this tactic. I LOVE it. It's become a fairly stock move among political pundits lately.



    I mean, I'm really, really glad doctors and mechanics don't operate this way:



    You: "Doc, I notice that I have this burning when I pee"

    Doctor: "Well, what would you do about it?!?!"



    You: "Hey, my car is making this weird noise when I turn left."

    Mechanic: "Well, what would you do about it?!?!"



    As if the inability to come up with a solution for a complex problem disqualifies someone from pointing it out.



    Cheers

    Scott
  • Reply 15 of 30
    Quote:

    Originally posted by midwinter

    I love this tactic. I LOVE it. It's become a fairly stock move among political pundits lately.



    I mean, I'm really, really glad doctors and mechanics don't operate this way:



    You: "Doc, I notice that I have this burning when I pee"

    Doctor: "Well, what would you do about it?!?!"



    You: "Hey, my car is making this weird noise when I turn left."

    Mechanic: "Well, what would you do about it?!?!"



    As if the inability to come up with a solution for a complex problem disqualifies someone from pointing it out.



    Cheers

    Scott




    Change the subject Scott



    I was just asking BRussell what he would lean towards to solve the issue. If he has no idea that is fine. I have no idea either but I would not suggest we do what LA did. That was my only point really. My other point was that his link has one set of numbers and my link has another set of numbers for US poverty rates.



    Which numbers are we to believe and why?



    Just asking questions. It is not agaisnt the law.



    Fellows
  • Reply 16 of 30
    midwintermidwinter Posts: 10,060member
    Quote:

    Originally posted by FellowshipChurch iBook

    Change the subject Scott

    . . .

    Just asking questions. It is not agaisnt the law.



    Fellows




    Yeah, but you said this:



    Quote:

    So I go back to my original question and ask you what you would do?



    What does it matter what he would do? Why does he have to have a solution in order to complain about something he perceives as unjust or wrong?



    Cheers

    Scott
  • Reply 17 of 30
    trumptmantrumptman Posts: 16,455member
    Quote:

    Originally posted by BRussell

    [B]I've always heard that the US has lower economic mobility than other countries.



    Sample from this article.




    Actually that isn't an article, it is a "snapshot."



    If you could find the actual study though I would be interested to read it. I interested in how they define poverty, or perhaps if they let the countries themselves define poverty, and the overall trend of poverty exit. That graph shows annual. We what if the majority exit at 6 months or 18 months?



    Most studies I have read basically indicate that the destruction of marriage is pretty much the single biggest destroyer of wealth we have among normal folks and families by that I mean we have more divorce and more single mom's than ever. I'm not saying they are terrible people, just that they become disproporationately poor and cannot quickly remedy what is keeping them that way.



    Nick
  • Reply 18 of 30
    sdw2001sdw2001 Posts: 17,037member
    I'm sorry, but this thread is ridiculous. From the standard class warfare to out and out idiotic assessments of "the economy"...it's just ridiculous.



    The economy must me measured by certain indicators. The big ones are GDP and it's growth, unemployment, the direction and trend of the markets, consumer confidence, inflation, etc. You can't go running around pointing at "Wal-Mart customers with lots of debt" screaming "the people! The poor people are starving!", all the while blaming it on Bush economic policy.



    As for increases in personal income, I cannot believe the attitudes I've seen here. The creation of wealth is a GOOD thing. Yes, the top 1% have gotten richer, but so too has everyone from the middle fifth up. And more to the point, what some fail to understand is that anyone who makes more than 55,000 a year is considered to be in the top 25% of income earners. Anyone who makes more than 92,000 is in the top 10%. That's like a household with two teacher's incomes, folks.



    What the charts posted really show is the enormous esplosion in middle income and middle upper income since 1979. Yes, the rich have gotten richer...and why is that bad?



    It is not the government's job to resdistribute wealth....no matter how much some of you want it to be.
  • Reply 19 of 30
    trumptmantrumptman Posts: 16,455member
    Quote:

    Originally posted by SDW2001

    I'm sorry, but this thread is ridiculous. From the standard class warfare to out and out idiotic assessments of "the economy"...it's just ridiculous.





    If it's too ridiculous then don't participate. People are welcome to consider alternative means of measuring economic progress and growth for their own personal views and judgements. That doesn't mean they will be setting policy.



    Honestly SDW, you are being a little rigid here. Being able to see things from a different angle can be very important, especially with regard to wealth generation.



    Don't be like some around here and complain about the existance of a thread or that people are discussing things from an unconventional view. That is sort of the point.



    Quote:

    The economy must me measured by certain indicators. The big ones are GDP and it's growth, unemployment, the direction and trend of the markets, consumer confidence, inflation, etc. You can't go running around pointing at "Wal-Mart customers with lots of debt" screaming "the people! The poor people are starving!", all the while blaming it on Bush economic policy.



    People can blame who they want. Some blame Bush, I was blaming the people themselves. As for the indicators you mentioned, they are good for the economy as a whole. However they don't help you find economic opportunities. Tech is still in the toilet and is going to be for quite a while, probably at least 4-5 more years in my opinion. Housing in white hot and becoming impossible to make money in with regard to building and buying. However there are areas you can pick and choose for some gains. I don't like the stock market much myself so it might be a business I pick up.



    Quote:

    As for increases in personal income, I cannot believe the attitudes I've seen here. The creation of wealth is a GOOD thing. Yes, the top 1% have gotten richer, but so too has everyone from the middle fifth up. And more to the point, what some fail to understand is that anyone who makes more than 55,000 a year is considered to be in the top 25% of income earners. Anyone who makes more than 92,000 is in the top 10%. That's like a household with two teacher's incomes, folks.



    You are not seriously equating income with wealth are you? That is exactly what I have been arguing against. There are plenty of people who, as you mentioned are in the top 20-25% of income earners who are basically generating NO WEALTH. They just consume. The lower income groups have far to much easy credit available to them and never save a dime that would allow them investment experience or to actually own something instead of just owe on something. The true measure of wealth is networth. While it may be somewhat related to income, there are plenty of high income folks who have NO networth. In fact I would prefer to use that as a measure. I was talking with Fellowship the other day and he mentioned an article where the average networth of an American was something like $89k. I mean it isn't frightening to imagine someone making $100k. It is frightening to consider them making that, and owing $25k in credit cards, $40 in car loans, $275k in mortgages and having no savings.



    In actuality this person would be no better off than the poverty line person. They would be one paycheck away from disaster and they don't have to be. Worse still, them knowing that they are likely to vote for programs that make them "safe" instead of just assuming control of their own finances and well being. When you have 100k folks ready to cry poor, it doesn't bode well for freedom.



    Quote:

    What the charts posted really show is the enormous esplosion in middle income and middle upper income since 1979. Yes, the rich have gotten richer...and why is that bad?



    You are right that the government has no right to redistribute wealth. However it seems even the Republicans have forsaken American interests with regard to the borders and American sovereignty. Likewise multinational corporations and their wealth are not acting in American interests when they just shift their wealth off-shore.



    Nick
  • Reply 20 of 30
    brussellbrussell Posts: 9,812member
    I don't think it's that hard to figure out what you do to reduce poverty. Obviously there's some debate about what works, but there are some basic things on which I think everyone agrees.



    Keep on expanding the earned income tax credit. It's basically welfare contingent upon working. So even if you get a crummy job, you'll have access to benefits that will effectively increase your wages. Simply giving money in the form of traditional welfare, except of course in cases of disability and such, is probably not a good idea because it discourages work.



    But if there are incentives to work, we should make sure they don't provide disincentives to get education. People make more money when they get more educated. Maybe have grants that replace income for X amount of time to get a degree, contingent upon grades etc.



    I think trumptman is right that not being married is a cause of poverty; so policies that discourage marriage should be changed. But I also think child care programs like Head Start that permit a single parent or even both parents to work before a child starts school would provide more incentive to work.



    Health insurance is probably a big problem especially with borderline cases - maybe families making $20,000 with no health insurance from work. Universal health care coverage would improve that situation.



    I'm sure there are lots of other things that could be done.
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