Rich Getting Richer

[ender1]

Its been all over the news today that the rich are getting richer and the poor are getting poorer. I think most will agree that a strong middle class is needed for stability and growth. Thats not really my question. I would like to take this issue on from a different angle. Or two angles.

1) Does anyone really care? If so why or why not.

2) If you do care then what can we do about it. One rule please, I want something new and different. I am not looking for the same old arguments. Please refrain from the "lower the taxes on the rich so they can hire the poor." and no "lets make it fair for everyone so that nobody suffers".

What I am looking for is a fresh idea.

 

[TurtleDude]

what would it mean if the rich were not getting richer?

if you have more money than you spend, you use that money to make money
jacking up taxes on the rich don't give those who are not rich the tools to become more prosperous

 

[Guy Incognito]

jacking up taxes on the rich don't give those who are not rich the tools to become more prosperous

Sure it does! You can jack up taxes on the rich and use that money to provide all sorts of tools for prosperity for the poor. That money could be used to improve education for the poor, to feed clothe and shelter the poor, to provide them with all the basics of life.

 

[washunut]

Its been all over the news today that the rich are getting richer and the poor are getting poorer. I think most will agree that a strong middle class is needed for stability and growth. Thats not really my question. I would like to take this issue on from a different angle. Or two angles.

1) Does anyone really care? If so why or why not.

2) If you do care then what can we do about it. One rule please, I want something new and different. I am not looking for the same old arguments. Please refrain from the "lower the taxes on the rich so they can hire the poor." and no "lets make it fair for everyone so that nobody suffers".

What I am looking for is a fresh idea.

Ask the question, where is the middle class losing out. Look for the answer in the loss of manufacturing jobs. We have been sending these jobs overseas for the last 20 years under the guise of "free trade". A lot of people have talked about the need for fair trade versus what we have now.

So there a number of things that we could do to keep jobs from moving overseas. We could put tariffs on more imported products to level the playing field. For example we have minimum wage, environmental regs, safety regs etc. When we send jobs to a country that does not have environmental regs for example, that country has a competitive advantage over and above the lower cost of labor. Why should we not put a tariff on products from countries that have competitive advantages due to lack of these type of costly regs.

We should also consider manufacturing capacity as a matter of national security. Where would we have been during WWII with so little manufacturing capacity here. There can be special tax credits for building manufacturing capacity in the states. If you don't like the tax carrot, then we could use taxes as a stick and make in very costly to build a factory overseas.

One answer we hear that won't work is send everyone to college. Doing that does not add jobs. It will just mean that we will have college educated clerks like there is in India.

 

[TurtleDude]

Sure it does! You can jack up taxes on the rich and use that money to provide all sorts of tools for prosperity for the poor. That money could be used to improve education for the poor, to feed clothe and shelter the poor, to provide them with all the basics of life.

we spent trillions on the war on poverty and the percentage of poor remain the same

wishful thinking on your part

 

[Josie]

Hello. My name is Mellie.

I once was very poor and now I'm considered upper class in my community.

Thank you.

eace

P.S. That means I don't believe in the "rich get richer, poor get poorer" crappola.

 

[Barbbtx]

I see nothing wrong with the rich getting richer. Good for them. Now we just need to figure out how to get the rest of the country to prosper.
We could start with getting Obama to stop wasting and killing jobs.


Democrat Policies Kill Last Major Incandescent Light Bulb Factory In USA : Stop The ACLU

White House Admits Drilling Moratorium Killed Thousands of Jobs ...

http://lonelyconservative.com/2010/...drilling-moratorium-killed-thousands-of-jobs/

Opinion: Democrats' Health Care Bill Will Destroy Millions of Jobs




http://www.aolnews.com/article/opinion-democrats-health-care-bill-will-destroy-millions-of-joBarack Obama tells
Obama tells Americans not to go to Vegas
Stimulus money goes overseas - Meredith Shiner - POLITICO.com
.
U.S. Pays $50 Mil To Replace Stoves In Poor Countries | Judicial Watch

.
Hot Air » TARP audit claims Obama admin destroyed “tens of thousands” of jobs in dealer closures

 

[TurtleDude]

the wealth stealers never explain what it would mean if the rich were no longer getting any richer

it would mean that this country has gone down the toilet. it also would mean that the rich would leave and all those suckling on the public teat would start starving since the milk would no longer flow

 

[ender1]

I think the point was missed. Only one reply had an idea. The rest were just "More of the same". Its easy to complain about something. Its harder to actually have an idea that will work.

Thank you Washunut.

 

[Grim17]

Ask the question, where is the middle class losing out. Look for the answer in the loss of manufacturing jobs.

I agree with you, but I think you are a bit lost on why that is.

We have been sending these jobs overseas for the last 20 years under the guise of "free trade". A lot of people have talked about the need for fair trade versus what we have now.

Free trade might have provided a means for our manufacturing companies to move overseas, but it wasn't the reason they left. That would be like saying a family in California would have never relocated to Arizona if U-Hauls and moving companies didn't exist.

So there a number of things that we could do to keep jobs from moving overseas. We could put tariffs on more imported products to level the playing field.

Those extra tariffs would just be passed on to us, the consumer, through higher prices. Is that what you want?

For example we have minimum wage, environmental regs, safety regs etc. When we send jobs to a country that does not have environmental regs for example, that country has a competitive advantage over and above the lower cost of labor. Why should we not put a tariff on products from countries that have competitive advantages due to lack of these type of costly regs.

Here's an Idea... Instead of socking it to companies that export their goods here, which ends up forcing consumers to pay more for those goods, why don't we become more competitive? Why don't we lower the minimum wage so companies can afford to either hire more people or lower their prices? Why don't we scale back on the amount of costly government regulations that make it so costly for American companies to do business in the US?

We all know how much cheaper it is to do business in many of the 3rd world countries, but did you know Europe is even kicking our butt? The average corporate tax rate in the EU is around 24%, while it averages 40% here. Combine that with the never ending list of costly government regulations and red tape, sky rocketing labor costs and lower production rates resulting from labor unions, and it's a wonder we have any manufacturing here at all.

I realize that what I just said might get an argument from some, that if we did away with unions and lowered the minimum wage, the average middle class paycheck in America might go down. But if we want the jobs to come back to America, along with our prosperity as a nation, what choice do we have? I don't know about you, but I'd rather see the average wage go down a little with full employment in America, than see a higher average wage with 10% of the people out of work and living off the government.

 

[ender1]

I agree with you, but I think you are a bit lost on why that is.

I wont take up the whole quote. To much room.

I do beleive there is something to what washunet is saying. Macro econ. Whenever you have a high per capita income country trading with a low per capita income in a free trade system then things will try to ballance out. Jobs and income will flow from the wealthy country to the less wealthy one. Just as they are with China. The hope is that at some point things will become even and both benefit. IF they are both playing by the rules. Which China is not. They are playing the "Give me everything you have and I will keep it" game.

Washunut, I very much like the idea of focusing on our trade practices. We need to be smarter with how we deal with our trade partners.

 

[washunut]

I agree with you, but I think you are a bit lost on why that is.




Free trade might have provided a means for our manufacturing companies to move overseas, but it wasn't the reason they left. That would be like saying a family in California would have never relocated to Arizona if U-Hauls and moving companies didn't exist.



Those extra tariffs would just be passed on to us, the consumer, through higher prices. Is that what you want?



Here's an Idea... Instead of socking it to companies that export their goods here, which ends up forcing consumers to pay more for those goods, why don't we become more competitive? Why don't we lower the minimum wage so companies can afford to either hire more people or lower their prices? Why don't we scale back on the amount of costly government regulations that make it so costly for American companies to do business in the US?

We all know how much cheaper it is to do business in many of the 3rd world countries, but did you know Europe is even kicking our butt? The average corporate tax rate in the EU is around 24%, while it averages 40% here. Combine that with the never ending list of costly government regulations and red tape, sky rocketing labor costs and lower production rates resulting from labor unions, and it's a wonder we have any manufacturing here at all.

I realize that what I just said might get an argument from some, that if we did away with unions and lowered the minimum wage, the average middle class paycheck in America might go down. But if we want the jobs to come back to America, along with our prosperity as a nation, what choice do we have? I don't know about you, but I'd rather see the average wage go down a little with full employment in America, than see a higher average wage with 10% of the people out of work and living off the government.

When you say Europe is kicking our butt, the place where manufacturing is growing is largely Eastern Europe due to low wage rates. Germany does a good job because of their reputation for precise workmanship, so they get a premium even here in the states.

Getting away with the minimum wage will just move more people from the middle class to lower incomes. The question on the table was how to do the opposite.

You are correct that tariffs would mean higher prices. That is the tradeoff to having a stronger middle class. By allowing the jobs to move overseas, we turn our middle class into Wal Mart greeters at minimum wage. We also have huge trade deficits that is a constant wealth transfer as we pay the interest on the debt.

It is almost like the U.S. is becoming a colony of China. We send raw materials over to China and they send back finished goods.

You have come up with why politicians like the free trade gambit. It keeps inflation artifically low. Which allows us to low interest rates so the government can afford to borrow more. Remember when Greenspan talked about the condundrum of why money supply has caused increased inflation, it was exactly because of this trade imbalance and cheap foreign goods.

So I guess the question can be posed, will we as a society prefer some inflation to allow domestic industries to prosper or do we keep growing the welfare state as more people fall into poverty.

 

[Grim17]

When you say Europe is kicking our butt, the place where manufacturing is growing is largely Eastern Europe due to low wage rates.

I was speaking of the average corporate tax rates for the European Union.

Getting away with the minimum wage will just move more people from the middle class to lower incomes. The question on the table was how to do the opposite.

Personally, I don't think it can be done, but I will say this. The wages of the American worker will never go up, as long as the cost of doing business here remains as high as it is. I'm not saying that lowering that cost will increase wages for everyone, but some will definitely benefit. Employers are the ones who provide wages, so it stands to reason that decreasing their costs would increase the likelihood that workers would reap some financial benefits.

You are correct that tariffs would mean higher prices. That is the tradeoff to having a stronger middle class. By allowing the jobs to move overseas, we turn our middle class into Wal Mart greeters at minimum wage. We also have huge trade deficits that is a constant wealth transfer as we pay the interest on the debt.

That's why we need to be a more business friendly nation. It's the only chance we have of getting some of that manufacturing back, and not losing what we have left.

 

[Kali]

I have not read whole thread so forgive me if this has been said:

Yes! I CARE!

The rich should pay say amount of taxes as middle class (what is left of it) and the poor.

 

[RightinNYC]

The rich should pay say amount of taxes as middle class (what is left of it) and the poor.

Yea, that'd be great.

The Tax Foundation - Summary of Latest Federal Individual Income Tax Data

Average federal income tax rates as a percentage of AGI:

Top 1%: 22.45%
Top 1-5%: 20.53%
Top 6-10%: 12.66%
Top 11-25%: 9.43%
Top 26-50%: 7.01%
Bottom 50%: 2.99%

 

[obvious Child]

jacking up taxes on the rich don't give those who are not rich the tools to become more prosperous

That doesn't seem to be fundamentally true.

Take USC for instance. Back in the early 90s it was a joke school, where anyone could get in with half a brain and a heart beat. The school essentially reformed itself by charging rich students high rates while giving smart, motivated poor students free rides. By effectively "taxing" the rich it gave the poor the tools to become prosperous.

Are there cases where increased revenue from the rich doesn't help the poor? Absolutely. But that does not mean that this is a binary outcome. Your arguments are poor because you are always an absolutist with no capacity to see any shades of gray. Your arguments almost always binary. But reality is rarely so.

 

[obvious Child]

That's why we need to be a more business friendly nation. It's the only chance we have of getting some of that manufacturing back, and not losing what we have left.

You do realize the US is still the largest manufacturer by significant margins no?

You appear like many to have not accounted for automation. Replacing 10 workers with 1 supervising an automated machine producing the same amount of goods is not a lost of manufacturing. The same amount of goods get produced. It's like arguing replacing 50 men digging with teacups with 1 man in a backhoe results in less material removed.

Fewer Jobs =/= Less production.

 

[Solidus]

I assume the OP is referring to Census Income data released this month. [1]

If you turn to Table A-1 of that document you will find a breakdown of household incomes over time. The obvious conclusion of the trends in that table is that while the rich are getting richer, the poor are NOT getting poorer, nor is the middle class "disappearing" it is in fact moving up. [1, pg 41 Table A-1]

In light of this evidence, no I don't particularly care that the rich are getting richer. I do care that the poor are not moving out of poverty more easily, but government policies haven't appeared to make much of a difference. I think we need more private innovation on this front, see for example Grameen Bank in India (no, I don't think that particular idea will translate directly to the poor in the US).

Obvious Child beat me to the punch on the continuing dominance of US manufacturing, but the above evidence disproves some of washunut's other assertions. If it were true that "By allowing the jobs to move overseas, we turn our middle class into Wal Mart greeters at minimum wage" then why does the census data show the middle class steadily migrating to higher income brackets?

ender1, if you think that China is playing the "give me everything and I will keep it game" when it comes to trade, how do you think they will react to washunut's proposed tariffs? With tariffs of their own on US goods? How would that affect our "balance of trade" with China? Imports may fall but exports would as well. This of course is entirely aside from the fact that any losses from lost jobs or lower income are more than made up by the benefits of lower priced goods ... especially for the poor. This is evident from the steady upward migration of middle class incomes, and rising standard of living for even the poorest households.

To drive the manufacturing point home, I direct you to the breakdown of the iPhone 4 bill of materials [2]. For each iPhone assembled in China they get $6.54, while Apple gets $360, and parts suppliers (outside China) get $187.50. Clearly the US leads in value added (primarily knowledge based) despite the increase of "telecommunication devices" imports from China. How much would the manufacturing element cost if it was performed in the US? Would the iPhone be profitable for Apple? Would the price increase beyond it's $600 (pre network provider subsidy) tag?

J

[1] http://www.census.gov/prod/2010pubs/p60-238.pdf
[2] Apple iPhone: Designed in U.S., Assembled in China -- Seeking Alpha

 

[washunut]

I was speaking of the average corporate tax rates for the European Union.



Personally, I don't think it can be done, but I will say this. The wages of the American worker will never go up, as long as the cost of doing business here remains as high as it is. I'm not saying that lowering that cost will increase wages for everyone, but some will definitely benefit. Employers are the ones who provide wages, so it stands to reason that decreasing their costs would increase the likelihood that workers would reap some financial benefits.



That's why we need to be a more business friendly nation. It's the only chance we have of getting some of that manufacturing back, and not losing what we have left.

I agree that if we were more business friendly it would be good for business. I just do not think that either party would materially change the regulation problem so I tried to move to something that we might actually be able to do.

 

[jambalaya]

I think a social welfare system strongly directed at the people who actually need help rather than a system structured so that many of the people who use it become dependent and/or scam the system would be a good start. We've got to get rid of the governments massive vote buying schemes. A revitalization of our industrial base would be good for creating jobs for unskilled workers. Let's stop basing our economy mostly on good produced cheaply by third world countries and accept higher prices for goods produced here.

 

[TurtleDude]

That doesn't seem to be fundamentally true.

Take USC for instance. Back in the early 90s it was a joke school, where anyone could get in with half a brain and a heart beat. The school essentially reformed itself by charging rich students high rates while giving smart, motivated poor students free rides. By effectively "taxing" the rich it gave the poor the tools to become prosperous.

Are there cases where increased revenue from the rich doesn't help the poor? Absolutely. But that does not mean that this is a binary outcome. Your arguments are poor because you are always an absolutist with no capacity to see any shades of gray. Your arguments almost always binary. But reality is rarely so.

your arguments are poor because your main goal is trying to convince yourself you are smarter than me rather than focusing on making rational points

 

[TurtleDude]

an economist I had in college-the Late Ray Powell of Yale (not as famous as his Nobel winning Colleague James Tobin but a better professor IMHO) noted that life in America was like a poker game-those who win might be purely lucky, purely skilled or a combination of both but the longer the game is played the more money those with both luck and skill will amass. SO its not surprising that as our nation gets older, those who play the game the best win more.

Ray also noted (and he was hardly a conservative) that if all the wealth in the USA was gathered up and redistributed equally, within 50 years the wealth stratification would be almost the same as it was in 1977 (the year I took his class).

 

[samsmart]

what would it mean if the rich were not getting richer?

if you have more money than you spend, you use that money to make money
jacking up taxes on the rich don't give those who are not rich the tools to become more prosperous

You're absolutely right. That really helps out the sweatshops in Mexico and Southeast Asia and Africa.

 

[TurtleDude]

You're absolutely right. That really helps out the sweatshops in Mexico and Southeast Asia and Africa.

that is a rather stupid post from you. You normally make an effort to be responsive.

did it ever occur to you that a company is founded to make money for its investors, not to provide jobs for people who feel that they are entitled to jobs even if the cost of their labor is overpriced? I find this sort of argument by liberals funny since liberals tend to whine about AMerica having too high a standard of living while the third world is too poor. Having spend a fair amount of time in SOuth American and Kenya, I know that what US directed corporations pay people is better than what they are paid by local employers and that increases the standards of living in those countries. it also transfers some american wealth there

so why are you acting butt hurt about us raising the standards of living in places like China or bangladash (seems like half the baseball hats I own-including a couple US Shooting team caps are made there)

 

[samsmart]

that is a rather stupid post from you. You normally make an effort to be responsive.

did it ever occur to you that a company is founded to make money for its investors, not to provide jobs for people who feel that they are entitled to jobs even if the cost of their labor is overpriced? I find this sort of argument by liberals funny since liberals tend to whine about AMerica having too high a standard of living while the third world is too poor. Having spend a fair amount of time in SOuth American and Kenya, I know that what US directed corporations pay people is better than what they are paid by local employers and that increases the standards of living in those countries. it also transfers some american wealth there

so why are you acting butt hurt about us raising the standards of living in places like China or bangladash (seems like half the baseball hats I own-including a couple US Shooting team caps are made there)

I didn't say anything butthurt at all. I was just pointing out how the wealthy in the United States to raise the middle class of foreign nations at the expense of the American middle class. Something you yourself agree to.