Skip to comments.Question about economics(vanity)
Posted on 04/30/2007 3:43:40 PM PDT by aft_lizard
Today a teacher said that the rich are getting richer. I replied that it really doesn't matter how rich the rich get what really matters is everybody underneath. If the rich get richer yet the poor and middle classes wealth increases also, even though its at a slower pace than the only important stat is that the middle classes and poor got richer. I also told her that the rich doesnt effect me because it is me and the rest of the middle class that really drives prices overall because we are the ones that are doing the majority of the shopping at grocery stores and durable goods. I personally feel it is disingenuous for anybody to say that the rich getting richer is necessarilly a bad thing.
Misery loves company. People don’t mind if they are poor, as long as everyone else is poor as well. That explains the attraction of Communism.
You should have asked how much she makes and how much the Dean of the college makes. And how much they both made 5 years ago.
The whole “rich get richer” argument is spurious. It’s not as if we split the population into 3 parts—rich, middle class, and poor, and then keep track of the original people in the groups. People move easily from one group to the next. I was very poor when I was young, was moderately middle class in my twenties, and probably made it into what the statisticians call “rich” by my late thirties. Now I am old and retired, my daughter wants a big wedding, and pretty soon I will be back to being poor. :)
Actually that was a discussion we had last week, the idiotic student paper listed average wages per degree(ie associates, bachelors...), anyways the paper said the average Ph.D. makes something like $700k a year while an associates will make $100k a year. We both found the list possibly incorrect.
I normally make that point but forgot too today.
Tell your teacher, "A high tide raises all ships."
As "the rich (whoever on earth those are) get richer" so do the rest of us. Among a free people, as a previous poster pointed out, the (economic) pie is not finite.
You’re right on target.
You did GOOD! You could also ask her.....who pays the MOST in taxes...ta dum....THE RICH....who does she think is funding programs.
Also...consider the following which was posted on FR a while back....
Who Pays America’s Tax Burden, and Who Gets the Most Government Spending?
Tax Foundation ^ | March 23, 2007 | Andrew Chamberlain, Gerald Prante and Scott A. Hodge
Posted on 03/25/2007 1:35:33 PM PDT by RKV
While many studies answer the ques¬tion of who pays taxes in America, the question of who gets the most government spending is often overlooked. Just as some Americans bear a larger portion of the nation’s tax burden than others, some Americans also receive a larger share of the nation’s government spending.
This report summarizes the key findings of a comprehensive 2007 Tax Foundation study of federal, state and local taxes and government spending. The results show that when we consider the distribution of government spending as well as taxes, it provides a dramatically altered view of how U.S. fiscal policy affects Americans at different income levels than is apparent from the distribution of tax burdens alone.
Overall, we find that America’s lowest-earning one-fifth of households received roughly $8.21 in government spending for each dollar of taxes paid in 2004. Households with middle-incomes received $1.30 per tax dollar, and America’s highest-earning households received $0.41. Government spending targeted at the lowest-earning 60 percent of U.S. households is larger than what they paid in federal, state and local taxes. In 2004, between $1.03 trillion and $1.53 trillion was redistributed downward from the two highest income quintiles to the three lowest income quintiles through government taxes and spending policy.
The rich get richer under socialism. It is why the Kennedys, Rockefellers and Soros's and Buffets all support big government. They get to keep their wealth while government steals from the income earners to subsidize golf course haciendas in Sun City.
Ask your teacher how many homeless or poor people are providing jobs and hiring people?
Agreed. It how someone parses the data.
It turns out that aside from pension plans, few Americans own stocks or mutual funds. Hence, those who hold stocks or MFs will be wealthier if the stock market has risen. On the flipside, those that don’t are relatively worse off.
Then there is wage versus non-wage income, etc. So, it isn’t that the poor are getting poorer, its just that capitalists are getting relatively wealthier.
The Dems in Congress (most of whom are wealthy) would to “level the playing field.” Which is DemSpeak for crushing the economy.
I was just in a meeting with a family and got to deliver the news that they are facing a $600,000+ estate tax hit on their inheritance. In the case of this “rich” family, their wealth shrank by over 20% thanks to our confiscatory tax system.
Well I don’t know if she had any particular point to the statement, as she tends to be a soft left lean, I think her hubby straightens her political views a little as she makes him out to be a bit conservative. I really basically wanted to not let that blank statement hang out there without context because as we know most college kids are full of mush and liberalism.
The rich repeat the behavior that made them rich. The poor repeat the behavior that made them poor.
Buy Low, Sell High.
"Tax the rich, feed the poor, 'til there are no rich no more..."
Thomas Sowell, “Basic Economics” and “Applied Economics.” Live it, learn it, love it!
(p.s., Your comments reflect an accurate understanding of our economy.)
I would have thrown up right then and there after taken a stomache punch in the wallet like that.
Blaming the rich for achievement is ludicrous. The teacher should be blaming the poor for underacgievemrnt and in many cases plain ol’ every day laziness. Laziness is harmful to the GNP.
What is the estate tax % these days in Oregon?.....we’ll likely be faced with it in the next few years...
It’s not so much the poor that are screwed as the stupid, lazy and uneducated.
Their pay has dropped in real terms (they have to compete with illegals for the worst jobs).
If someone planned to have a middle class life knowing that @#$% flows downhill, payday is Friday and to keep his fingers out of his mouth he’s SOL.
Times change. Life is rough.
What Should We Do About the Income Gap?
Written By: John Semmens
Published In: Heartland Perspectives
Publication Date: February 19, 2007
Publisher: The Heartland Institute
One expects the political left to point to income inequality as a defect of our capitalist system. But when President George W. Bush expresses alarm over a “growing income inequality gap” and urges corporations to rethink the compensation packages they offer to top executives, we would be wise to pay attention.
In the past 15 years, incomes in each of the five quintiles (i.e., 20 percent shares of the population) tracked by the government rose in real, inflation-adjusted dollars. Incomes in the top quintile rose by slightly more than 20 percent. Incomes in the bottom quintile rose by 21 percent. Incomes in the middle quintiles rose between 13 percent and 20 percent. So, in terms of purchasing power, every income grouping gained ground.
Of course, a 20 percent gain on a million-dollar income is a gain of $200,000. A 20 percent gain on a $10,000 income is a gain of $2,000. As a result, the gap between these two income levels has widened by $198,000. This mathematical calculation feeds the indignation of those whose political ideal is focused on equality. For them it is not enough that all are better off if the result is greater inequality.
America has already taken substantial measures to boost the chances of those not born to wealth. A free education is provided to all through grade 12. Scholarships based on need are available for those able to handle a college education. Student loans are available at favorable rates for those who don’t land a scholarship. A poor person with talent can make use of this education to improve his lot in life.
Education, though, cannot overcome all inequalities. Talent is unequally distributed. A person may inherit a low IQ through no fault of his own. He may lack the motor skills or good looks essential to success in other fields. He may, in fact, turn out to be an average person who ends up in an average job at an average rate of pay. This is the fate of the vast majority of us.
America also has a social safety net providing basic necessities for those unable to earn their own way. Persons incapable of performing an average job do not starve to death, dressed in rags, and shivering in the cold unless they refuse the help offered by government and charities. Nevertheless, they are still going to be in the lowest income quintile.
What more could be done to reduce inequalities? Those railing against income inequality often suggest penalties and regulations to keep the upper echelons down. Caps on incomes and taxes on “excessive” earnings are frequently advocated. The problem with this punitive approach, though, is it will likely slow the rate of economic growth.
The carrot of profit and financial return is what motivates the talented to undertake the efforts and bear the risks that lead to economic growth. The fabulous standard of living we enjoy today isn’t because average people are devotedly putting in a full day’s work. It’s because extraordinarily talented individuals have invented better products and more efficient ways of producing them.
Does this mean there are never errors resulting in undeserved rewards for corporate executives? Of course not. However, while it may be easy to spot the errors in hindsight, it is not so easy to spot them ahead of time.
It is implausible in the extreme to place our faith in government’s foresight in this matter. Government has no special expertise along these lines. If it did, societies like Cuba that rely heavily upon government to make economic decisions would be models of prosperity instead of the impoverished prisons they are.
The vast majority of us are the beneficiaries of the genius of a talented minority. We ought not allow envy of their rewards lead us to tie down the golden geese with taxes and regulations and thereby reduce their incentives to continue laying golden eggs. Doing so will hurt us more than it will hurt them.
John Semmens (firstname.lastname@example.org) is an economist and policy advisor to The Heartland Institute.
You'll have to do your homework, but IIRC you will find that over two decades, about half of "the rich" wind up being new people, some coming from the lowest quintile.
Also, any comparison of rich and poor is a waste of paper if it does not allow for the ages of people. Those who are at the very beginnings of their careers are almost always "poor" compared to those at the end of their careers, when they own their houses, have put aside something for retirement, have their cars paid off, and no longer have any children in college.
This is the Duh! factor, that your professor probably has not paid any attention to.
Rates range from .8% starting on taxable estates greater than $40,000 to 16% on taxable estate amounts over $10M. The key here is that Oregon only excludes the first million rather than the $2M under federal tax law.
“...anyways the paper said the average Ph.D. makes something like $700k a year while an associates will make $100k a year.”
Holy crap...I want to teach at that school.
"Imagine that a genie magically appeared and offered to grant you one wish -- and, being a decent sort, you wished that everyone's income would be doubled. That could bring down on you the wrath of the political left, because it would mean that the gap between the rich and the poor had widened. That is basically their complaint against the American economy."
The correct answer is: So?
Why does she have a problem with people getting rich? What you find out is that the think that the rich didn't earn their money and that they just take it from the poor.
But here's what really happens:
"the rich" are not the same people every year. There is in fact a huge amount of mobility between the classes, but that does not show up in the statistics. For example, some poor kid gets a basketball contract; that doesn't show up as the poor getting richer, because now the kid is rich, it shows up as the rich getting richer, when in fact it was the poor getting richer. Now, that is not a common scenario, but a small businessman making 60-75K per year jumping into the millionaires bracket for a few years is quite common.
Another thing to point out is that in a free society the gap between the richest and the poorest will always widen because there will always be bums at the bottom who will not work.
Well, it takes a lot of people to make, sell, install and repair these things. Take a yacht for example. A bunch of people get put to work making it. Then the salesperson sells it and more people are required to customize it for delivery. Then you need people to repair it and keep it in good working order. Not to mention a skipper to pilot it and depending on how large it is, a crew to sail with it.
Rich people also like to eat and dress well. Chefs and tailors are put to work. Upscale restaurants are opened creating even more jobs. Rich people like to build wine cellars so wineries thrive as well.
I'm just scratching the surface here. "Rich" people drive the economy. If our rich people ever stopped spending (or stopped being rich), our economy would collapse. Thousands and thousands of companies would be put out of business overnight.
I remember one family gathering years ago when a family member (one of those idealistic young people) went on a rampage about rich people who "flaunt their wealth" with their conspicuous consumption. Now ironically, she worked at one of those upscale clothing stores at the mall where even a pair of pre-ripped jeans cost over $100. I reminded her that if everybody decided to shop for their clothes at Wal-Mart or K-Mart so as not to flaunt it, that her store would be out of business. She didn't come around totally but she seemed to tone down the rhetoric a bit after that.
You’ve got a lot of good answers. You’re certainly right that it makes no difference how much someone else makes. In the US, people are very mobile in where they fall in the wealth range. Grow up in a poor neightborhood and you can still make it rich. Grow up in luxury and you can end up poor. Compare that with many socialist countries, where income mobility is almost nonexistent.
One of the biggest benefits of great wealth is the concept of concentrated capital. Let’s say you have a great idea. Everyone you meet thinks it is a great idea, and knows your idea will make billions of dollars. Only problem is, you need $20 million is startup costs. Where are you going to get that money? Rich people, that’s where. Investment bankers who manage the money of very rich people and run around looking exactly for people like you. Try piecing together that much money in a country where every last person makes $40,000 a year.
One thing to remember, the day the rich DON’T get richer is the day everyone starts to starve.
The rich pay most of the taxes, buy most of the goods, and hire most of workers in this country.
Poor people pay no income taxes, buy very few things, and hire no one. The poor drain the country of money and resources, the rich produce money and resources, which the government confiscates in part and redistributes to the poor.
Of course, the first thing to demand when someone brings up the rich is: Define rich. Teachers enjoy a higher retirement income than about 80% of the rest of the country. Government workers enjoy the best retirement of all for their income level. Teachers are rich retirees compared to most retired Americans.
You migtht point out to her that the most famous time the Rich got poorer, was October 1929.
Of course that led directly into the glory years of FDR, 1932 to 1939. Perhaps she would consider that a price well paid to take a step closer to her envisioned socialist nirvana.
Here’s a true story for you: quite a few years ago, when the huge fire happened in the hills above Berkeley, CA, there were comments made such as, “Who cares if a bunch of rich white people’s homes burned down”. Then, starting the very next week, there were articles about how “Juanita the housekeeper didn’t have work because the houses she cleaned had burned down, and Manuel, he didn’t have any gardens to take care of, and Jose the dry-cleaner delivery guy didn’t need to pick-up or deliver because there weren’t any houses or clothes left in the neighborhood, and gee, Freida the dog walker wasn’t needed, and Harriet the interior decorator could kiss those gigs goodby, and...well, you get the drift. Your teacher just doesn’t realize two things:
1. The ‘rich’ provide lots and lots of jobs
2. The ‘rich’ include folks that in her wildest dreams she wouldn’t recognize as ‘rich’. These include folks who live in small houses but happen to have stocks and bonds that they have slowly and steadily purchased over years, adding up to a tiddy sum
3. She herself is richer than anyone in her profession has ever been before, both in salary and benefits
The list is endless. And oh yes, by the way, does your teacher work year round? Does she read any self-help books about how to become ‘rich’ and does she, a teacher, educate herself on how to add to her wealth? Probably not. It’s always the ones who don’t make any effort to utter that ridiculous platitude. As you can tell, this hit a hot button with me. Tell your teacher to read the book “The Millionaire Next Door”. She might be surprised.
the USA prints money EVERYDAY!!!
it's up to YOU as to how much or how little you get of it.
If you want to see her apoplectic, tell her that you agree with Rush that the poor need to be taxed at a higher rate because they require more government services. After all, libs are supposed to believe in “fairness.”
Right. A finite pie wouldn’t allow for any technology advances. Rising tide raises all boats.
In history, how many working class people have worked for poor people?
It has been my experience that working class people work for people who have money.
It is my experience that people work for people who have more money than themselves.
Ditto for the poor, but in reverse.
My aunt is a super lib, primarily because she has a tremendous amount of guilt over being successful and fairly wealthy while others "have so little". I remember several years ago she was very opposed to eliminating the death tax for reasons I am sure you know.
Having done a good bit of financial work for them I know a good deal about their finances and amount of their wealth. I asked her how her two daughters, who were in college at the time would come up with the more than $1 million in taxes they would have to pay if her and her husband died in a car accident tomorrow.
She thought I was crazy that she and her husband would be subject to the "death tax". After all, that is only for the RICH!
Like the AMT, which was implemented to make 155 people who didn't pay taxes one year pay taxes after that. Now we are looking at it snaring 20 million+ middle class families.
The lesson, anytime the liberals institute something to "get the rich", it will in quick order get you!
I prefer, "Why don't we feed the homeless to the hungry?"
Your history teacher has a very narrow view of life. If you look at the whole world, all Americans are “rich”. Almost all of us have access to safe water and sewage systems. Our food problem is obesity, not starvation. Almost all of us have electricity, telephones, tvs and cars.
Even the American people who depend on the generosity of others have these things.
Ask your teacher why Americans who don’t work deserve these things while people in other countries can’t get them.
They're either talking pesos, not dollars, or they are smokin some good stuph. If PhD's were making even a quarter of that, I'd be back in grad school tomorrow.
“Now I am old and retired, my daughter wants a big wedding, and pretty soon I will be back to being poor. :)”
I could always elope, if that’s what you want ...
Think of all the wealth - meaning, to my mind anyway, the more convenient lifestyles we lead thanks to technological advances - that exists today. If economics is a zero-sum game, then why in the past were so many (actually, probably everyone) poor compared to so many today? If that were how an economy worked, wouldn't someone have to have been hiding away some great wealth, to balance out the poverty (as we'd call it today) of all the others?
Obviously, then, there is a general growth of wealth - and anyone who gets alarmed over one person or group getting wealthier at a faster rate than everyone else (esp. in the USA!) just doesn't seriously know or understand this fact.