Skip to comments.Rise of the Super-Rich Hits a Sobering Wall
Posted on 08/21/2009 7:35:53 AM PDT by Cheap_Hessian
The rich have been getting richer for so long that the trend has come to seem almost permanent.
They began to pull away from everyone else in the 1970s. By 2006, income was more concentrated at the top than it had been since the late 1920s. The recent news about resurgent Wall Street pay has seemed to suggest that not even the Great Recession could reverse the rise in income inequality.
But economists say and data is beginning to show that a significant change may in fact be under way. The rich, as a group, are no longer getting richer. Over the last two years, they have become poorer. And many may not return to their old levels of wealth and income anytime soon.
For every investment banker whose pay has recovered to its prerecession levels, there are several who have lost their jobs as well as many wealthy investors who have lost millions. As a result, economists and other analysts say, a 30-year period in which the super-rich became both wealthier and more numerous may now be ending.
The relative struggles of the rich may elicit little sympathy from less well-off families who are dealing with the effects of the worst recession in a generation. But the change does raise several broader economic questions. Among them is whether harder times for the rich will ultimately benefit the middle class and the poor, given that the huge recent increase in top incomes coincided with slow income growth for almost every other group. In blunter terms, the question is whether the better metaphor for the economy is a rising tide that can lift all boats or a zero-sum game.
(Excerpt) Read more at nytimes.com ...
Chris Richards for The New York Times
John McAfee is auctioning off this property in New Mexico to pay bills. His worth has fallen to about $4 million from a peak of about $100 million.
McAfee, the computer anti-virus software?
I perfectly understand why his worth dropped.
Start with two people. Bob has $10. Bill has $20. A ten dollar difference. In year one, both Bob and Bill have wealth growth of ten percent.
Bob now has $11. Bill has $22. An eleven dollar difference. The rich get richer.
Sandals are for girls and arabs. Probably voted for zero. Jmo.
A typically misleading comment from a typically bigoted propaganda sheet. Income is not a zero sum game. If the rich get richer, it does NOT mean the poor get poorer. Income can grow for all, then the rich, and the poor, get richer. Or, as the case under Obamanomics, everyone is getting poorer.
The NYT: Lets smear the Evil Rich and Drive them Out of Our Nation. Then we can all be poor and enjoy Obamacare.
Thank the Lord for the Wall!
parsy, who thinks things were getting out of hand
The fact: By 2006, income was more concentrated at the top than it had been since the late 1920
Your comment: A typically misleading comment from a typically bigoted propaganda sheet
My question: How is it misleading?
parsy, who is curious how “facts” are misleading
..as well as many wealthy investors who have lost millions....
They should have invested in the Carbon Credits scheme created by a certain former VP ........
“Bob now has $11. Bill has $22. An eleven dollar difference. The rich get richer.”
That’s a fun game to play. But the reality is, executive pay, the top 10%, went up to 350 times that of the average worker in 2005. That’s up from 122 times in 1990 and 74 times in 1950.
I know the freeper line is, if that’s what they want, that’s ok, they’re running things.
Yep, and that’s one of the reasons we have a creep like Obama as President.
And it will happen again, if some level of restraint isn’t in play.
And this helps my employment prospects how??? Are these people really this stupid? How does a rich person (who chances are is also a business owner and an employer) not making as much money help me get a job? If the boss isn't making money how does the worker make money?
Bottom line I couldn't care less how much the rich make as long as the economy is good and everyone who wants a job has one.
Is there a conservative bone in your body?
Your green envy is most unattractive.
“Is there a conservative bone in your body?”
Yes. I fought bitterly agaisnt the changes in the Pledge of Allegiance sought by the GOP.
The current pldege:
I pledge allegiance to the Flag of the United States of America, and to the Republic for which it stands, one Nation under God, indivisible, with liberty and justice for all.
The proposed GOP pledge:
I pledge allegiance, to the Flag of the United States of America, and to the pursuit of the Almighty Dollar, with liberty and justice for all, subject to conditions contained in the supplement to this Pledge, which includes, but is not limited to, justice only if such justice does not include any signifigant tranfer of wealth as is determined by the Insurance compaaies and big businesses within given geographic areas (aka Tort Reform), and only if such justice provides tax breaks for capital gains and signifigant welfare incentives for large corporations.
To be honest, the proposed Pledge did not have much support in Committee.
parsy, who says the GOP needs to examine its image vis a vis the rich and moneyed interests
The good times (1940 to 1970): Low net immigration where those few who were let in had higher skills than average.
The bad times (1970 to today): High net immigration where many of those let in had much lower skills than average.
Income and wealth are different.
Rising asset prices will tend to increase wealth inequality. This does not necessarily increase well-being inequality (e.g., your house does not become bigger because the price went up).
The immigration trends listed above exacerbate the income and wealth inequalities. They lowered wages and increased returns to capital. Illegal immigration reduces wages for blue-collar workers (agriculture, building trades, services, etc.) while H1-B reduced wages for middle class workers (programmers, analysts, etc.). The lower wages and increased demand for property, infrastructure, and services help to increase the return to capital (e.g., more people = higher house prices, lower wages = more profit).
Large income and wealth gaps are not necessarily good. In fact such gaps are probably a sign of a poorly functioning (one with heavy government intervention) “capitalist” system.
Immigration is a government program. It is not something that just happens. It is not something out of “our” control.
(Actually it does seem out of “our” control (i.e., the people) but it is not out of the control of government.)
My dad always said, “It takes money to make money.”
When things get top-heavy they fall down unless they are propped up.
Just to be clear: if Bill's initial worth is exactly the same as Bob's at the start ($10 each), and Bob pays Bill $0.50 annually, over 55 years Bill's pay increases annually over Bob's from negligible to 22x.
I know the freeper line is, if thats what they want, thats ok, theyre running things.
It's basic economics. When person A pays person B even a little bit annually, and their wealth grows by the same percentage annually, B will make more than A each year - over time, a LOT more.
Economic fact: the rich get richer. Doesn't mean the poor get poorer, just that the gap grows ever wider. (Remember: today's "poor" have food, heat, AC, cable, etc; our "poverty line" is 20x the world median income.)
Probably why the Old Testament law mandates a 50-year “Year of Jubilee” where all debts are forgiven and all land returned to original owners. Things WILL get top-heavy, and WILL fall down (even propping up just delays the inevitable); if not content to let chips fall as they may, best to mandate a predictable periodic reset.
"If you have a hundred dollars and want to make two hundred, it is work
If you have ten million and want to make eleven - it is inevitable."
Letsee, what was going on then?
Well, single motherhood was getting a big boost. So the poor were getting poorer since the trend of the single-mother family was becoming permanent. At the other end of the spectrum, the wealthy male was increasingly no longer married to a stay-at-home wife but a woman with impressive earning power herself.
Who was to "blame" for these outcomes? The GOP sure didnt come up with LBJ's Great Society idiocy. And while it has gone along with a lot of feminist iniatives, I would not call it the prime mover behind them.
Of course it never occurs to the left to look in the mirror when seeking villains.
“Well, single motherhood was getting a big boost. So the poor were getting poorer since the trend of the single-mother family was becoming permanent.”
I agree. If we stopped lavishing massive amounts of cash to irresponsible people, then we wouldn’t have everything so top heavy. Things would be better distributed and we would have a thriving middle class. As for chips falling, it happens every so often. Everyone loses everything and then starts with nothing but their brains.
“The GOP sure didnt come up with LBJ’s Great Society idiocy.”
Nope. Any time the American government declares war on something other than foreigners, it fails. What makes the govenrment fail is its lack of practicality. The war on poverty does not make people change the habits that keep them poor.
“Economic fact: the rich get richer. Doesn’t mean the poor get poorer, just that the gap grows ever wider. (Remember: today’s “poor” have food, heat, AC, cable, etc; our “poverty line” is 20x the world median income.)”
And since it’s an “economic fact” it’s how things should be? Executive pay is a hot button issue. It’s not tied to performance, and in public companies, it’s not controlled by the shareholders as it should be. The relationship of the board to the executive staff is incestuous.
In a private company, I don’t care if the CEO is paid 1000000 times what a worker is paid. Don’t care, doesn’t matter, doesn’t affect me.
In public companies, some form of control or restraint should be employed. First, I seriously doubt there are more than a handful of CEOs that deserve the compensation they make. Second, how can it be equitable when the rate of compensation is decided by a small close knit group, and decidedly not tied to performance.
The average American doesn’t pay attention to much, but they do see the corporate disasters with executive staff floating away from the wreckage on golden parachutes. I’ve been told many, many times here, that those people earned it, and deserve it. I don’t believe that, and the average American doesn’t believe it. The status quo, executives with ever increasing pay gaps with their staff, will net you an electorate that is fed up and pretty ok with a socialist.
It’s what we have now. This wasn’t hard to see coming.
Your assumption is that these are "facts". Like most of your emotion based political assumptions Parsy, you are wrong.
Like most knee jerk Democrats, you are buying into notion that the most repeated Democrat Party lie in US political discourse is "a fact". Nope, it is just another lie told by the Democrat Party machine as part of their "class warfare" dogma.
To start with MOST "Super rich" take very little of their wealth as income. Income is taxable, thus you have people, (such as mutli millionaire Leftist blogger Adreianna Huffington, the Kenndy clan, Democrat Senator Rockerfeller et al), who have almost NO actual income to pay taxes on. Instead they has various trust funds they draws off off that they do not have to pay taxes on. You might argue WEALTH is concentrated but INCOME is not.
Thus for the NY Times to suggest that "income" was being concentrated in the hands of the Super Rich is misleading at best. I was being polite, truth be told it is an out and out lie. It not even true if you claim WEALTH is being concentrated
The over all distribution of wealth in US society is a bell curve. Some on one end or the other, the bulk in the middle. That has not changed at all.
There are not massive numbers of "new poor" with a few very super rich out at the other end profiting from their poverty. Income is not being taken away from some and given to others, or "concentrated" in a few hands. What IS happening is over all wealth of this society has massively expanded for the last 3 decades. Thus at one end you have people making massively more. Since it not possible for the lower end of the graph to move, that distorts the image of the graph. What is missing is the fact that this is still a bell curve, it just cover more ground now. Basically US wealth is spread 15% poor, 15% "Rich", rest in the middle.
In order to "Concentrate" something, you have to take something away from item x and add it to item y. That is not happening here at all.
It is possible, as has been happening since WW2 in this country for everyone standard of living to rise year after year.
Well at least it use to be our standard, not any more. Those just now entering the work force can look to being the 1st generation who will have a significantly lower standard of living then their parents given all the damage being done to the US Economy by the misguided fiscal policies of the Bush/Obama era.
Nor the habits that keep them less than well. So much of what is called lack of access to healthcare is in fact failure to use care that is available.
Merely posting, as you do, the most screaming hysteric, emotion based benightedly ignorant snarky responses is not at all useful.
Sorry you are a total loser who made a complete mess of your life. That is YOUR fault, not any "Evil Araho-Capitalists" "the GOP" or anyone else.
So quit blaming everyone else for the mess YOU made of your life, get off your ass, and fix it. Go do that rather then wasting our time with your arrogantly ignorant posts.
Well, what's the solution? Have people not related to the situation dictate it (as you imply support for governmental interference)? That's socialism, and paints you as one.
The interesting thing about this CEO pay issue is that it is mostly driven by people who have no business therein, or do but don't make use of the means they have. Most shareholders just want to buy a magic talisman for making money: buy the stock, wait for it to go up, sell; they have no interest in becoming involved in improving the company operations, but whine when they don't make a buck off it. That leaves only the executive board to decide what gets done and who makes how much - and make sure that if they screw up they CAN float safely to earth on parachutes which may as well be gilded. Shareholders COULD control the pay issue if they wanted to, but they don't.
If you're tasked with managing billions of dollars to make money for thousands of people, darn straight yer gonna take a tidy cut of the profits. Yes, some of those at the top just know the right people and "get away with it"; most actually do work for it, if only to take responsibility for simple but very big decisions. Are YOU willing to manage $10,000,000,000? really? for a paltry salary?
You can complain about how painful the law of gravity is, but there it is. If you try to manipulate/beat it, that's gonna cost you, and the law will win out in the end anyway (and with more pain than just following it in the first place).
You can complain about how unfair the law of economics is, but there it is. If you try to manipulate/beat it, that's gonna cost you, and the law will win out in the end anyway (and with more pain than just following it in the first place).
That would not be nearly so offensive if you realized your utter ignorance. Instead your arrogantly posture in your every post as if you had some sort of intellectual super ability that you were condescendingly coming here to share with us "poor dumb Conservatives".
Unfortunately for us, you have yet to demonstrate the slightest hint of intellect in any post. How about you try ONE time try putting some FACTS into your posts rather then mindlessly regurgitating the leftist propaganda fed you by fringe wacko websites like "Common Dreams"?
The executive fat cats have created a clique of elites that can do no wrong. With their excessive pay and perks, they steal money rightfully belonging to the stockholders, but stockholders have little say about it because most corporate rules favor the board of directors in voting. The worst that can happen to the CEOs is they get fired, collect their multi-million dollar severance package and get rehired into another plush CEO position in another firm. Upward mobility for others? Not unless you're a member of the club!
I'm completely in favor of maximum pay for executives; not as an absolute dollar figure, but as a percentage of what the individual firm’s lowest paid employees are paid. I also think eliminating the minimum wage in favor of the same system is a good idea. That way both beginning wages and executive wages are based on the conditions within an individual firm, and the stockholders can once again reap the rewards of their investments.
Some of you might say I'm envious of the rich; I'm not. I'm very comfortable. However, it really p!sses me off when I hear about CEOs getting multi-million dollar bonuses the same year they lay off tens of thousands of employees. Their arrogant elitism was no better exemplified than last year when those receiving taxpayer bailouts gave themselves bonuses and threw parties at resorts!
I wouldn’t say you are envious, but you are promoting a band-aid solution that won’t fix the problem. By not allowing the free market to accurately allocate resources, the result will always be distortions in the market like excessive CEO pay. An arbitrary pay cap will provide little benefit for anyone to produce more wealth.
“Well, what’s the solution? Have people not related to the situation dictate it (as you imply support for governmental interference)? That’s socialism, and paints you as one. “
The relationship between the board and the executive staff should be regulated. If I’m on the board of company A and CEO of company B and you are on the board of company B and CEO of company A... do you think we’d vote each other nice compensation packages?
If you go public with your company, you will necessarily have intrusion. Don’t like it? Stay private and do as you wish.
Harrison Bergeron by Kurt Vonnegut (1961)
Ya know...you’d think it would eventually dawn on the dimwits at the Times...that for the rest of us, jobs and opportunity simply parallel rich men’s wealth...
“Their arrogant elitism was no better exemplified than last year when those receiving taxpayer bailouts gave themselves bonuses and threw parties at resorts!”
You have some good thoughts on redefining wages for all based on company performance.
I’ll say it one more time, we’re talking public companies with stockholders. A private company is the owner’s company to run as he or she sees fit. Pay the CEO $10B a year and the average worker minimum wage? Fine, I don’t care. Your company will fare according to the wisdom of your decisions.
Entertaining story, but noticing executive pay in a public company that is exorbitant is not quite a call for universal equality.
Those who produce should be paid according to their contribution. And a CEO who fails, shouldn’t be richly rewarded.
If you fail to see that point, then there can be no meaningful exchange between you and I.
Do the shareholders care enough to do something about it? They DO have a vote in such matters, ya know...
Who are you to determine what executive pay should be? How are you harmed?
“Do the shareholders care enough to do something about it? They DO have a vote in such matters, ya know...”
Oh yeah, I know, it’s the same kind of vote that we have with our elected officials. That’s working out well, isn’t it?
The term “going public” is misleading in this context. All they’re doing is allowing anyone to buy a share of a PRIVATE company. Don’t confuse “public” with “government controlled”. If the private company decides to allow anyone to buy in, that’s still a private matter, and the owners are doing with it as they wish.
Most of the worlds poor live on a dollar a day or less. How many times greater is your pay than this? Why shouldn’t the same standard apply to you?
Is your physical effort 150 times the person living in a third world nation harvesting food for export? If we are striving for egalitarianism, why be selective? If egalitarianism is good for some, it must be good for all. Right?
The never-addressed problem is: the theory and most economic calculations ASSUME perfect knowledge of the marketplace on the part of both buyers and sellers.
Of course, the reality is such perfect knowledge never exists. In the case of the price of labor, the workers have poor information about what their labor is worth both in the overall market and even within their own company. Most firms have strict rules about employees discussing their pay, which is about the only way they could figure out if they’re being paid the same as others doing the same job. In the broader market, there’s precious little information about pay scales among different companies.
The same problem exists to greater or lesser extent throughout marketplace. Commodities markets can be manipulated because of this.
Unregulated capitalism leads to the kind of excesses seen in the late nineteenth century; with workers not being paid enough to support their families, and robber baron industrialists rich enough to buy the government. This was a real danger to the country, and the reason Teddy Roosevelt championed the estate tax (to prevent an American aristocracy based on inherited wealth.)
We have regulated the “free” market for over a century, and for the most part, it has been beneficial. Enacting a law that stipulates that maximum and minimum wages are to be set as percentages of each other within an individual company, would not be a “band-aid” as you said, but a solution that allows maximum freedom to the market to set prices for labor, while ensuring abusive wage dispararities are ended.
see post #40
I would also say that the government has had a role in creating a situation where market forces/competition are unable to overcome the inefficiently run corporation. They can crush any competition thanks to the over reaching unconstitutional powers that our federal government has granted themselves.
Humm? Wonder if Obama had a chance to bid on that property?
If you think this book can rewrite the history of the latter half of the nineteenth century, you’re sadly mistaken. (Yes, I know there were some NOBLE industrialists as well, Andrew Carnegie, and Milton Hersey immediately come to mind.)
I won’t talk about the railroads, mines, factory-working conditions, etc; how about where it effects people like you most?: your pocketbook.
Do support the idea that monopolies are a good thing and represent survival of the fittest??
The market can be and IS manipulated by both the participants therein as well as government. Most of government intervention is aimed at preventing adverse manipulation by unscrupulous market entities!
The book mentioned does a fair job of covering the industrialists that were bums. It really is worth the read to counteract the 95% propaganda that is being fed to our college students today. Propaganda that has been spewed for 50 years. Sure you didn’t get some in college?
“Most of government intervention is aimed at preventing adverse manipulation by unscrupulous market entities!”
They do? Then how do you explain the data at these links?
“Most of government intervention is aimed at preventing adverse manipulation by unscrupulous market entities!
They do? Then how do you explain the data at these links?”
I realize I wasn’t clear; I meant “manipulation of the market”.
As for business manipulation of our government: I agree, it’s a problem, the same kind we had/have with super rich individuals! I admit, I don’t have a foolproof solution to that problem.
BTW, you never addressed the issues I raised with you.