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Inequality

anomaly

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Some, when debating with me, may wonder, what's so bad about increasing levels of inequality? Why worry about it? While many of us on the left see the clear danger of putting a huge percentage of our economy into the hands of a few, others seem to pass inequality off as a 'class warfare' argument. Our GDP is growing, so the economic inequality present doesn't matter, some say. Here's a good article showing the dangers of inequality and also the reasons that inequality will only rise in the USA as long as Republicans hold power: http://www.newsbatch.com/econ.htm .
 

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I wasn't able to get your link to work, however, I did find the google cache of it:
Why is there concern about economic inequality? Hasn't there always been such inequality?

I've got some issues with the article, especially with things like this:
Have changes in government policy caused increased economic inequality?
Not entirely. But the role of federal policy has been significant.
The article then gives a litany of things like globalization, minimum wage, etc as causes for a disparity but then prefaces it by saying that government policy didn't cause it but federal policy did. What? Government policy is federal policy for all intents and purposes.

Here's also the Gini report from the US Census Bureau that the article was referring to.

Sure there is a disparity in wages. I wouldn't doubt that it may be widening as CEOs' salaries keep going up and up, as professional sports, actors, musicians, etc make bigger bucks than ever before creating an even more disparity. But is it a disparity or a bell curve?

I don't understand why the government should be involved in ensuring equity amongst the populace. What it comes down to is that I'd rather not have my physician making as much as the fry cook at McDonald's.
 

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shuamort said:
I wasn't able to get your link to work, however, I did find the google cache of it:
Why is there concern about economic inequality? Hasn't there always been such inequality?

I've got some issues with the article, especially with things like this:

The article then gives a litany of things like globalization, minimum wage, etc as causes for a disparity but then prefaces it by saying that government policy didn't cause it but federal policy did. What? Government policy is federal policy for all intents and purposes.

Here's also the Gini report from the US Census Bureau that the article was referring to.

Sure there is a disparity in wages. I wouldn't doubt that it may be widening as CEOs' salaries keep going up and up, as professional sports, actors, musicians, etc make bigger bucks than ever before creating an even more disparity. But is it a disparity or a bell curve?

I don't understand why the government should be involved in ensuring equity amongst the populace. What it comes down to is that I'd rather not have my physician making as much as the fry cook at McDonald's.
First, I'd like to point out that clearly 'government policy' and 'federal policy' are the same thing, the writer simply uses a synonym. And it says gov't policy is 'not entirely' responsible, but implies that it is mostly responsible.

And I just love your odd thinking that 'more equality' means that a fry cook would have the same wage as a doctor! No one's pushing for that I assure you. I didn't realize that in France or Scandivavia fry cooks made the same amount as doctors, as these places certainly have more equality than the USA. More equality is entirely different than total equality. Our government decreasing spending and Bush's new tax cuts for the rich and other things have lead to the most equality seen in this country since the 1920s. Out ineqaulity is comparable to some latin American countries which have no minimum wage! It continues to amaze me how conservatives, who, like most Americans, probably aren't rich, consistent;y vote for the party that favors the rich. I admit the Dems have let down their defense of labor, and this is exactly why I propose a new party, to ensure the defense and rule for the majority, rather than the few.
 

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I don't get the concept of "more equal". Maybe it's the nitpicky linguist in me but either things are equal or they're not. A better way to phrase it would be to say that less disparate or incongruous. Equality in income would mean that everyone would take an equal part of the pie.

The United States has not been decreasing spending (our deficit is the largest in history and in fact we had to talk to the treasury a couple months ago because we almost hit the deficit cap from spending). Bush's proposed tax cuts of $100 billion dollars has been meeting resistance from even members of the republican party who recognize that the balloon deficit needs to be dealt with first.

I think we both recognize that there is a disparity in the US between the rich and the poor and the middle class as it were and is evident from the US Census Geni report.

The question that I have for you is, what do you feel should be done about it?
 

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shuamort said:
I don't get the concept of "more equal". Maybe it's the nitpicky linguist in me but either things are equal or they're not. A better way to phrase it would be to say that less disparate or incongruous. Equality in income would mean that everyone would take an equal part of the pie.

The United States has not been decreasing spending (our deficit is the largest in history and in fact we had to talk to the treasury a couple months ago because we almost hit the deficit cap from spending). Bush's proposed tax cuts of $100 billion dollars has been meeting resistance from even members of the republican party who recognize that the balloon deficit needs to be dealt with first.

I think we both recognize that there is a disparity in the US between the rich and the poor and the middle class as it were and is evident from the US Census Geni report.

The question that I have for you is, what do you feel should be done about it?
Well, I had a quite long response written, and then my computer inexplicably restarted itself. Lets see how much I can remember...

"what do you feel should be done about it"
First, repeal Bush's tax cuts, that obviously help only the rich (trickle down economics don't work, its more of a trickle up effect that we see).

Two, do not use 'free trade' but rather smart trade. Issue a system of protectionism, to protect American workers.

Three, do not privatise SS.

Four, raise minimum wage to 7.25/hr.

Five, reduce defense spending to allow more spending on social policy. Do not think I want an end to defense spending, I simply want it reduced, as we already are, by far, the most powerful country in the world.

Six, most importantly, nationalize healthcare, to ensure all Americans receive healthcare.

Those are rather moderate changes, I propose nationalizing our economy while making our government much more democratic with a multiparty system, thus indirectly giving the economy to the people. Finally the people will own the economy, rather than a select few. While I see this future as inevitable, I realize others do not. I also realize this is a bit radical, which is why I have listed those 6 things that aren't so radical.
 

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anomaly said:
First, repeal Bush's tax cuts, that obviously help only the rich (trickle down economics don't work, its more of a trickle up effect that we see).
Proof? Reagan's tax cuts laid the groudwork for the boom of the 90's.


Two, do not use 'free trade' but rather smart trade. Issue a system of protectionism, to protect American workers.
This is a bad idea. Free trade is what has supported our economy for so long. If we begin protectionist policies, we only invite other countries to do the same.

Three, do not privatise SS.
Then what do you propose to do with it? And speaking of it, what about Medicare and Medicaid, which are actually in greater danger of going bankrupt?


Four, raise minimum wage to 7.25/hr.
This will have the opposite effect of number 2. It will raise the prices of American commidities so that it will become even more profitable to import things from other countries. Also, this will hurt small businesses much more than larger businesses. You think we have problems with outsourcing now? Raise the minimum wage and see what happens.

Five, reduce defense spending to allow more spending on social policy. Do not think I want an end to defense spending, I simply want it reduced, as we already are, by far, the most powerful country in the world.
We were the most powerful country in the world during 2001 too, and that didn't protect us.


Six, most importantly, nationalize healthcare, to ensure all Americans receive healthcare.
Yea, cause this will REALLY help the defecit, making our country into a socialist distopia, and convincing millions of youth not to enter the medical field.

Those are rather moderate changes
In what alternate universe?

I propose nationalizing our economy while making our government much more democratic with a multiparty system, thus indirectly giving the economy to the people. Finally the people will own the economy, rather than a select few. While I see this future as inevitable, I realize others do not. I also realize this is a bit radical, which is why I have listed those 6 things that aren't so radical.
So you propose completely changing the entire foundation of America, it's political system, it's economy, and it's foreign policy.

Wouldn't it be easier to move to Europe?
 

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shuamort said:
I don't get the concept of "more equal". Maybe it's the nitpicky linguist in me but either things are equal or they're not. A better way to phrase it would be to say that less disparate or incongruous. Equality in income would mean that everyone would take an equal part of the pie.

The United States has not been decreasing spending (our deficit is the largest in history and in fact we had to talk to the treasury a couple months ago because we almost hit the deficit cap from spending). Bush's proposed tax cuts of $100 billion dollars has been meeting resistance from even members of the republican party who recognize that the balloon deficit needs to be dealt with first.

I think we both recognize that there is a disparity in the US between the rich and the poor and the middle class as it were and is evident from the US Census Geni report.

The question that I have for you is, what do you feel should be done about it?

Our defecit is the largest in history in absolute dollars, but nowhere near in real dollars. Just like gas is not at it's most expensive. People often forget to think about inflation. Right now our debt is 62.4% of GDP, which is completely average. It's no better nor worse than most European countries, and is nothing compared to Japan's 150%, a country which is often looked at as an economic example.

There's honestly nothing to worry about.
 

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RightatNYU said:
Proof? Reagan's tax cuts laid the groudwork for the boom of the 90's.
Reagan left 8% jobless, and he increased the national debt greatly. If anyone experienced a 'boom' in the 90s, it was the stockholders. The bull market experienced in the 90s was one of the things that lead to the sharp rise in inequality. If anything caused a boom in the 90s, it was the internet.




NYU said:
This is a bad idea. Free trade is what has supported our economy for so long. If we begin protectionist policies, we only invite other countries to do the same.
Free trade currently allows thousands of workers to lose their jobs because of cheap Chinese goods being traded. Protectionist policies would greatly help these workers.



NYU said:
Then what do you propose to do with it? And speaking of it, what about Medicare and Medicaid, which are actually in greater danger of going bankrupt?
What to do with it? There are many things. We could raise taxes on the rich, or move SS into an independent fund. I'm sure other possibilities exist. As for Medicaid/Medicare, we'll get to that later.




NYU said:
This will have the opposite effect of number 2. It will raise the prices of American commidities so that it will become even more profitable to import things from other countries. Also, this will hurt small businesses much more than larger businesses. You think we have problems with outsourcing now? Raise the minimum wage and see what happens.
Actually, the min. wage has been lowering for a few decades as it has not kept up with inflation. Protectionist measures combined with a rise in minimum wage would help workers.



NYU said:
We were the most powerful country in the world during 2001 too, and that didn't protect us.
You are a college student, you know as well as I the vast amount we spend on defense. We could cut this spending (something the GOP will never do) and still have enough to properly defend us and secure us, all while being able to enact new social programs.




NYU said:
Yea, cause this will REALLY help the defecit, making our country into a socialist distopia, and convincing millions of youth not to enter the medical field.
I highly doubt this will have any effect on the number of doctors. The salary of a doctor alone is enough to make many want to go into the field. The only thing needed for this measure is a slight increase in taxes, and if you wish to oppose this plan, I suggest you use that route, by complaining about taxes. But I feel the results, of all Americans having healthcare, will more than make up for this increase.



NYU said:
In what alternate universe?
Apparently not at NYU lol. But many leftists and left leaners will find these proposals a good idea.



NYU said:
So you propose completely changing the entire foundation of America, it's political system, it's economy, and it's foreign policy.

Wouldn't it be easier to move to Europe?
Wanna pay for my plane ticket lol? But seriously, the USA is my native country, my home, and I want what's best for it and the American people, and the people of the world. Socialism, not capitalism, is the way to help the majority of people in this world, rather than submitting them to the will of CEOs of American companies. These changes will soon become not just a good idea, but neccesary, as capitalism does what it always does: help the rich, and forget the poor.
 

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anomaly said:
Reagan left 8% jobless, and he increased the national debt greatly. If anyone experienced a 'boom' in the 90s, it was the stockholders. The bull market experienced in the 90s was one of the things that lead to the sharp rise in inequality. If anything caused a boom in the 90s, it was the internet.
What the hell are you talking about? When Reagan entered office, the unemployment rate was 7.5%. When he left, it was 5.4%. You just made up a number that sounded good. Reagan also lowered the poverty rate from 14% to 11.6%, thus decreasing inequality.

http://www.rescueamericanjobs.org/articles/pdfs/usa_1964-2003_unemployment.pdf

Free trade currently allows thousands of workers to lose their jobs because of cheap Chinese goods being traded. Protectionist policies would greatly help these workers.
...and also make most of the products we buy more expensive, thus erasing the gains that could be made by restricting trade.

What to do with it? There are many things. We could raise taxes on the rich, or move SS into an independent fund. I'm sure other possibilities exist. As for Medicaid/Medicare, we'll get to that later.
This is such a typical liberal solution. "Oh, this program is failing? RAISE TAXES ON THE RICH!" Can you propose an actual solution for SS? And why get to Medicare/aid later? It's going to go bankrupt before SS.

Actually, the min. wage has been lowering for a few decades as it has not kept up with inflation. Protectionist measures combined with a rise in minimum wage would help workers.
The laws of economics argue otherwise.

I highly doubt this will have any effect on the number of doctors. The salary of a doctor alone is enough to make many want to go into the field. The only thing needed for this measure is a slight increase in taxes, and if you wish to oppose this plan, I suggest you use that route, by complaining about taxes. But I feel the results, of all Americans having healthcare, will more than make up for this increase.
My point is that many enter the medical field for the money. If you institute a national health plan, one of two things will happen:

a) Less people will become doctors, because they would make significantly less money.
b) The best doctors would opt out of the plan, working on their own, catering to the rich, thus lowering the quality of healthcare for the rest of the US, creating an even more class based system than we have now.

I liked that your proposed solution was again, raise taxes.
 

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RightatNYU said:
What the hell are you talking about? When Reagan entered office, the unemployment rate was 7.5%. When he left, it was 5.4%. You just made up a number that sounded good. Reagan also lowered the poverty rate from 14% to 11.6%, thus decreasing inequality.

http://www.rescueamericanjobs.org/articles/pdfs/usa_1964-2003_unemployment.pdf

...and also make most of the products we buy more expensive, thus erasing the gains that could be made by restricting trade.



This is such a typical liberal solution. "Oh, this program is failing? RAISE TAXES ON THE RICH!" Can you propose an actual solution for SS? And why get to Medicare/aid later? It's going to go bankrupt before SS.



The laws of economics argue otherwise.



My point is that many enter the medical field for the money. If you institute a national health plan, one of two things will happen:

a) Less people will become doctors, because they would make significantly less money.
b) The best doctors would opt out of the plan, working on their own, catering to the rich, thus lowering the quality of healthcare for the rest of the US, creating an even more class based system than we have now.

I liked that your proposed solution was again, raise taxes.
Again, my comp is screwing up, my last response was erased. Let's see if I can make this fast:

My mistake on the 8%, you were right. Reagan's problem was his increasing of the deficit.

And I doubt protectionist measures would be all gloom and doom as you suggest. Certain protectionist measures will help Americans workers while keeping trade mostly free. But continuing free trade is to hand over the world's economy to China.

Throughout, you seem to despise any tax increases. But you fail to realize that tax increases are sometimes neccesary. If Bush goes through with his SS plan, either SS benefits will be reduced, or taxes will be increased. And for a 'real solution', I've suggested moving SS to an independent fund, and creating new programs to fund things the SS fund is currently funding. This may actually lead to a decrease in SS taxes.

Again, I think you present a gloom and doom version of national healthcare. I doubt healthcare will become so poor, and I surely guarentee we will not see a decrease in doctors.

At the end of my other response, before my comp gliched, said that I believe this debate shows that capitalism can only run well if there is vast inequality, meaning that it's time for something new, it's time for socialism to replace this old system, and I think it's time we debate capitalism and socialism.
 

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RightatNYU said:
Our defecit is the largest in history in absolute dollars, but nowhere near in real dollars. Just like gas is not at it's most expensive. People often forget to think about inflation. Right now our debt is 62.4% of GDP, which is completely average. It's no better nor worse than most European countries, and is nothing compared to Japan's 150%, a country which is often looked at as an economic example.

There's honestly nothing to worry about.
Japan is often regarding as an economic example because they've built their economy not only on forward debt but also on the fact that they have no natural resources (except people).

The deficit is the largest in absolute dollars that do have to be paid back and with interest. Back in October we near reached the debt ceiling and then Bush signed a law to increase it another 800 billion. Spending has gone out of control since the 80s with the debt ceiling limit being constantly pushed over and over and that is not keeping in tandem with inflation as you're suggesting.

National Debt by President
The national debt peaked at 120% of GDP in 1946 due to the war effort, but Roosevelt, Truman, Ike, Kennedy, LBJ, Nixon and Carter all did their part to bring the national debt back to pre-war levels. By the beginning of 1981, the national debt had fallen to 32.5% of GDP. Then, Reagan took office and the national debt took off. It rose non-stop for 12 years to 66.3% at the end of Bush's term, erasing 25 years of progress in paying down the national debt. Percent contributed by president.


National Debt under Clinton
Clinton stopped the bleeding in just three years and then dropped the debt from 67% to 57% in his last five years. Bush wasted no time in reversing this progress and is now forecasting that he will achieve the highest ratio of debt to GDP in 50 years.
And now you're claiming that it's back up to 62.4%. Sorry, I'm still waiting for some fiscal restraint in the government.
 

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anomaly said:
If Bush goes through with his SS plan, either SS benefits will be reduced, or taxes will be increased.
Not true. That's a claim made by opponents of the plan.

You and I have debated the rest of this topic to death.
 

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shuamort said:
Japan is often regarding as an economic example because they've built their economy not only on forward debt but also on the fact that they have no natural resources (except people).

The deficit is the largest in absolute dollars that do have to be paid back and with interest. Back in October we near reached the debt ceiling and then Bush signed a law to increase it another 800 billion. Spending has gone out of control since the 80s with the debt ceiling limit being constantly pushed over and over and that is not keeping in tandem with inflation as you're suggesting.

National Debt by President

And now you're claiming that it's back up to 62.4%. Sorry, I'm still waiting for some fiscal restraint in the government.

My point is this: It is 62.4% now, which was the average during the 90's. The economy boomed then, so why do people keep implying that this will hurt the economy?

There's no empirical evidence to support that claim.

The fact that Japan has no natural resources doesn't change the fact that it is booming with a debt much worse than ours.

My whole point is that these claims about the impending terror of the debt are mistimed and alarmist.
 

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RightatNYU said:
My point is this: It is 62.4% now, which was the average during the 90's. The economy boomed then, so why do people keep implying that this will hurt the economy?

There's no empirical evidence to support that claim.

The fact that Japan has no natural resources doesn't change the fact that it is booming with a debt much worse than ours.

My whole point is that these claims about the impending terror of the debt are mistimed and alarmist.
Japan's economy has been teetering since the 1950s (post war). Read the full article (article not full here, but in link):
Tick! Tick! Tick! - Japanese public debt market
It's only a matter of time before the Japanese public debt market blows up, causing a financial calamity.

The Japanese public debt market is still a time bomb. Public debt now exceeds 135 percent of Japan's gross domestic product. If state pension liabilities are included, the ratio rises to over 240 percent. There is worse to come.

The central government budget for FY2000, prior to any supplementary budgets, calls for 84 trillion yen in spending, against 48 trillion yen in revenues. This leaves a gap of 36 trillion yen to be financed with new debt. Of the 84 trillion yen in planned spending, debt servicing accounts for 22 trillion yen, legally required transfers to local governments for 15 trillion yen, and central government civil service salaries for 11 trillion yen. These mandatory expenditures amount to 48 trillion yen, which means that all other spending must be financed with debt. If we add the local government deficit and the deficits of government-backed organizations to the central government deficit, the general government deficit approaches 10 percent of GDP in FY2000. Sadly, there is no sign of improvement going forward.

To date, this deficit has been financed surprisingly smoothly, and the currency and bond markets have remained stable. Adding to the false sense of security, Japan's economy has posted recent rises not only in industrial production and exports, but also in capital expenditures and corporate profits. To the casual observer, the Japanese economy, having grown by 0.5 percent in FY1999 in real terms, appears to be on the mend.

In Japan's present deflationary circumstances, however, these "real" figures have little meaning. What is more significant is that the Japanese economy actually declined by 0.7 percent in FY1999 in nominal terms. Including Q2 2000, the Japanese economy has declined year-on-year in nominal terms on a quarterly basis for eight of the past ten quarters. Financial stability has not come as a result of the Japanese economy being strong or sound. On the contrary, Japan remains mired in a deflationary recession. Ironically, the Japanese Government Bond (JGB) market has remained stable only because the Japanese financial sector is still so weak.

Japanese savers, risk averse as ever, are still keeping the bulk of their money in the bank deposits and life insurance products which make up Japan's traditional "indirect financing" system. At the same time, Japan's current account surplus continues to mount. Japanese financial institutions, if able to fulfill their original function, would be recycling this surplus by investing overseas. However, the normal cycle has been interrupted by the delayed recovery of Japanese financial institutions' balance sheets following the collapse of the bubble economy.

Banks and insurance companies have been weakened by an effective lack of shareholders' equity, and are unable to take on risk, particularly exchange rate risk. Indeed, Japanese financial institutions are perhaps in worse shape now than ever, and are hence more risk averse than ever. Rather than recycling Japan's current account surplus into international financial markets, the banks and insurance companies have ploughed funds into "risk-free" JGBs. This has kept the yen overvalued and interest rates at rock bottom in spite of the huge accumulated government debt and rising deficit.

Perhaps the worst consequence of this warped flow of funds structure has been the postponement of restructuring. Ultra-low interest rates have allowed the weakest and least efficient Japanese firms to continue to survive. At the same time, the ongoing low-interest-rate environment has allowed the government to maintain its wasteful pork barrel-spending, thereby propping up the lamest of Japan's lame-duck industries.
 

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RightatNYU said:
Not true. That's a claim made by opponents of the plan.

You and I have debated the rest of this topic to death.
Ok then let's debate this now. Tell me how this is not true! Bush is trying to spend 2 trillion dollars to privatise SS. He is going to allow people to not pay their taxes! As SS is apparently somewhat close to not being able to pay all its benefits (we're 40 years away), how do you think not paying taxes will help this? If people are allowed to not pay a third of their taxes, SS will inevitably become underfunded much, much faster than it's on schedule to. I feel that the best solution is to either make the rich pay their fair share of taxes (most people pay 6.2%, but people making 400,000 a year pay closer to 1 or 2% in taxes) or move SS into an independent fund, rather than a general fund. With private accounts, there is no way of avoiding raising taxes and/or decreasing benefits.
 

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anomaly said:
Ok then let's debate this now. Tell me how this is not true! Bush is trying to spend 2 trillion dollars to privatise SS. He is going to allow people to not pay their taxes!
Okay. Neither of those is true. You've obviously only looked at one side's claims.
As SS is apparently somewhat close to not being able to pay all its benefits (we're 40 years away), how do you think not paying taxes will help this? If people are allowed to not pay a third of their taxes, SS will inevitably become underfunded much, much faster than it's on schedule to.
People aren't "not paying" a third of their taxes, their taxes are still being paid, into an account that odds say will do better than normal SS.

I feel that the best solution is to either make the rich pay their fair share of taxes (most people pay 6.2%, but people making 400,000 a year pay closer to 1 or 2% in taxes) or move SS into an independent fund, rather than a general fund. With private accounts, there is no way of avoiding raising taxes and/or decreasing benefits.
Everyone pays 6.2%, but only on the first 90,000. The claim that there is no way to avoid either is fallacious.
 

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shuamort said:
Japan's economy has been teetering since the 1950s (post war). Read the full article (article not full here, but in link):
Tick! Tick! Tick! - Japanese public debt market
People claim that our economy is on the brink too, but I have yet to see any proof. Teetering on the brink since 1950? How is that teetering? For most countries, 50 years of unprecedented economic growth is unimaginable. This strikes me as alarmist.
 

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RightatNYU said:
Okay. Neither of those is true. You've obviously only looked at one side's claims.


People aren't "not paying" a third of their taxes, their taxes are still being paid, into an account that odds say will do better than normal SS.



Everyone pays 6.2%, but only on the first 90,000. The claim that there is no way to avoid either is fallacious.
So Bush is not going to spend 2 trillion to privatize? Have you seen the reported costs of the transition? And what Bush is allowing is to have people opt out of the pay as you go system, so their taxes will not go towards today's retirees but into a private investment account. And that people only pay 6.2% on 90,000 is part of the problem. The poor pay a greater percentage of their salary in SS taxes than the rich. It's a regressive tax.

So, if Bush allows people to stop paying a third of their taxes towards the pay as you go system, obviously shortcomings will develop. You and me, NYU, will be fine. But if you are 40-55, this plan screws you. Obviously they will not be able to see any kind of return on an investment, and they will be the first retirees to see benefits lower. If SS is scheduled to stop being able to pay its benefits in 2042, don't you think having people opt to take a third of their taxes out of the SS pay as go system will bring this date much closer? I doubt Bush will raise taxes, but he will lower benefits.
 

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RightatNYU said:
People claim that our economy is on the brink too, but I have yet to see any proof. Teetering on the brink since 1950? How is that teetering? For most countries, 50 years of unprecedented economic growth is unimaginable. This strikes me as alarmist.
I'm sure it seems alarmist if you're not familiar with how the main part of Japan's economy is going under. A quick education for you: Companies in Japan band together and form a matsui, which is similar to a conglomeration but they're still independent. The banks form up around these matsui and began lending billions of dollars to these companies, a lot of which was based on real estate prices in Japan. The real estate market is very comparable to the internet boom that happened here in the United States. A lot of overconfidence in the real estate, the banks loaned a lot of money to the members not based on viability, but rather on the friendships that these matsui had. The real estate market's bubble burst, the companies dissolved or went bankrupt and the banks are getting stuck with billions of dollars of unrecoupable debt because the properties are so devalued.
 

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anomaly said:
So Bush is not going to spend 2 trillion to privatize? Have you seen the reported costs of the transition? And what Bush is allowing is to have people opt out of the pay as you go system, so their taxes will not go towards today's retirees but into a private investment account. And that people only pay 6.2% on 90,000 is part of the problem. The poor pay a greater percentage of their salary in SS taxes than the rich. It's a regressive tax.

So, if Bush allows people to stop paying a third of their taxes towards the pay as you go system, obviously shortcomings will develop. You and me, NYU, will be fine. But if you are 40-55, this plan screws you. Obviously they will not be able to see any kind of return on an investment, and they will be the first retirees to see benefits lower. If SS is scheduled to stop being able to pay its benefits in 2042, don't you think having people opt to take a third of their taxes out of the SS pay as go system will bring this date much closer? I doubt Bush will raise taxes, but he will lower benefits.
The money you and I pay to SS doesn't actually get set aside for us, it pays people now, with a promise that others will pay us later. Whether or not our money gets "put" into a private investment account, it doesn't actually get set aside. Benefits will NOT decrease for those preparing to reach SS age.

It's not really a regressive tax, it's just a normal tax. The outpay rate is a lot lower than many see it as. Bill Gates isn't going to be receiving 500,000 checks from SS.
 

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shuamort said:
I'm sure it seems alarmist if you're not familiar with how the main part of Japan's economy is going under. A quick education for you: Companies in Japan band together and form a matsui, which is similar to a conglomeration but they're still independent. The banks form up around these matsui and began lending billions of dollars to these companies, a lot of which was based on real estate prices in Japan. The real estate market is very comparable to the internet boom that happened here in the United States. A lot of overconfidence in the real estate, the banks loaned a lot of money to the members not based on viability, but rather on the friendships that these matsui had. The real estate market's bubble burst, the companies dissolved or went bankrupt and the banks are getting stuck with billions of dollars of unrecoupable debt because the properties are so devalued.
A common claim: That our economy crashed. If you look at a long term trend of growth, our economy had a false boom, followed by a false crash. The overall trend of growth remained constant.

So you can see why despite claims of turmoil, until I see actual effects, I am loath to believe it.
 

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RightatNYU said:
The money you and I pay to SS doesn't actually get set aside for us, it pays people now, with a promise that others will pay us later. Whether or not our money gets "put" into a private investment account, it doesn't actually get set aside. Benefits will NOT decrease for those preparing to reach SS age.

It's not really a regressive tax, it's just a normal tax. The outpay rate is a lot lower than many see it as. Bill Gates isn't going to be receiving 500,000 checks from SS.
Wait, wait, are you saying that Bush's plan doesn't involve private accounts? I think I'm not following you here. As I understand it, right now we have a pay as you go system, with our taxes paying for current retirees. With Bush's new idea, money will indeed be set aside into private accounts. With this money going out of the system, a short coming is inevitable. And all Bush has said is that those over the age of 55 will se no benefit cuts. I'm talking about the age group just under that, the 40-54 year olds.

And yes, SS is a regressive tax. Let's imagine that it was a progressive tax. Gates pays into it 6.2% of his 46 billion dollar salary. Not only would that most likely basically solve this so called crisis, but also Gates wouldn't be doing badly just because of the tax. It's win-win. Does this then constitute Gates getting higher benefits? I'd say no, and make this a collectivist program, the likes of which you'd have an obvious problem with.
 

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RightatNYU said:
A common claim: That our economy crashed. If you look at a long term trend of growth, our economy had a false boom, followed by a false crash. The overall trend of growth remained constant.

So you can see why despite claims of turmoil, until I see actual effects, I am loath to believe it.
Saying that 'the economy is growing' is a half truth, actually not even that. The economies of the world have said to be 'growing' for the past twenty years. Growing for whom? The rich have seen their salary rise, while the poor have seen theirs drop. Inequality is growing worldwide, as are poverty levels. This obviously contradicts capitalism's promise that 'things will always get better', that when capitalism is left to itself, it will help everyone. So, what effect does this 'growing' economy have? Inequality, polarization; the economy is growing for the rich, at the expense of the global poor.
 

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anomaly said:
The rich have seen their salary rise, while the poor have seen theirs drop. Inequality is growing worldwide, as are poverty levels. This obviously contradicts capitalism's promise that 'things will always get better', that when capitalism is left to itself, it will help everyone. So, what effect does this 'growing' economy have? Inequality, polarization; the economy is growing for the rich, at the expense of the global poor.
Is it that rich people's salaries are increasing or is it that they are investing wisely and using their money to make money. The fact is that in capitalism anyone can make it, whether it involves risk, hard work or the like, and to believe that anyone is holding the poor down other than themselves is not a fair or true statement. Long story short, monetary "inequality" will always exist and there is no way to change that which would be fair or just, why should people who are better off be forced to "share" a large percentage of their earnings just to make someone else feel better?
 
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