The Middle Class Share of Income

[Xerographica]

what in the holy hell are you talking about ?

you actually believe that global warming is a result of declining funds for the EPA?.. for realz?

let me guess...the earth cooled when their budget was increased in 09 and 10

There I was high up in the Andes...surrounded by snow covered peaks...and trying to keep warm by chopping wood. I took a break and looked up just in time to see an Andean condor soaring out of one cloud and into another.

I only spent a month in Chile...but I've lived for many years in Southern California and have never once seen a California condor in the wild. Development comes at the expense of nature...and protecting nature comes at the expense of development.

The ideal balance between the two can't be accurately determined by government planners...it can only be truly determined by everybody's opportunity cost decisions. So...the important question is...why don't you believe that taxpayers should have the freedom to choose which government organizations they give their taxes to? Feel free to answer that question here...

 

[Thrilla]

There I was high up in the Andes...surrounded by snow covered peaks...and trying to keep warm by chopping wood. I took a break and looked up just in time to see an Andean condor soaring out of one cloud and into another.

I only spent a month in Chile...but I've lived for many years in Southern California and have never once seen a California condor in the wild. Development comes at the expense of nature...and protecting nature comes at the expense of development.

The ideal balance between the two can't be accurately determined by government planners...it can only be truly determined by everybody's opportunity cost decisions. So...the important question is...why don't you believe that taxpayers should have the freedom to choose which government organizations they give their taxes to? Feel free to answer that question here...

I have land and a home in Southern Colombia...and the recently decreased budget of the EPA didn't cause global warming.

 

[Xerographica]

I have land and a home in Southern Colombia...and the recently decreased budget of the EPA didn't cause global warming.

Global warming is not my priority...my priority is helping people understand what's wrong with preventing taxpayers from spending their taxes according to their own priorities.

 

[Thrilla]

Global warming is not my priority...my priority is helping people understand what's wrong with preventing taxpayers from spending their taxes according to their own priorities.

that's great... I guess.
just so long as you know that global warming is not a result of EPA funding, we're straight.

 

[Xerographica]

that's great... I guess.
just so long as you know that global warming is not a result of EPA funding, we're straight.

Is cancer a result of cancer research funding? I don't think anybody would make that argument. The argument is that if you want to cure cancer then you should fund cancer research. Same thing with global warming...if you want to cure global warming then you should fund the EPA.

But like I mentioned...the big picture is that taxpayers should spend their taxes on whatever they perceive to be the biggest problems that we face as a society. I just told that to my uncle in response to a video he sent me warning of the dangers of genetically modified foods.

How many known problems does our society currently face? How many unknown problems does our society currently face? We don't increase our chances of spotting problems by all looking in the same direction...and we don't increase our chances of solving problems by tackling them from the same angle. That's why we would all benefit from the natural taxpayer division of labor that would result from pragmatarianism.

 

[Thrilla]

Is cancer a result of cancer research funding? I don't think anybody would make that argument. The argument is that if you want to cure cancer then you should fund cancer research. Same thing with global warming...if you want to cure global warming then you should fund the EPA.

But like I mentioned...the big picture is that taxpayers should spend their taxes on whatever they perceive to be the biggest problems that we face as a society. I just told that to my uncle in response to a video he sent me warning of the dangers of genetically modified foods.

How many known problems does our society currently face? How many unknown problems does our society currently face? We don't increase our chances of spotting problems by all looking in the same direction...and we don't increase our chances of solving problems by tackling them from the same angle. That's why we would all benefit from the natural taxpayer division of labor that would result from pragmatarianism.

nah.. the EPA can't cure global warming.... and pragatarianism sounds like a cluster**** in the making.

 

[jonny5]

That's an astute observation. Now please do me a favor and apply your perspective to the arguments in this thread...

No, thanks. I am here only to add some context to your claim that middle class income is shrinking. The more information we have the better your OP can be answered.

 

[jonny5]

The employees of any business should be respected and not treated like "commodities". Henry Ford found that if you pay your workers well they will buy your products.

But paying them well raises the cost of your products. Where is the profit?

 

[iguanaman]

But paying them well raises the cost of your products. Where is the profit?

In case you need more confirmation that the US economy is out of balance, here are three charts for you.

1) Corporate profit margins just hit an all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from "too much regulation" and "too many taxes." Maybe little companies are, but big ones certainly aren't).

Wages as a percent of the economy are at an all-time low. This is both cause and effect. One reason companies are so profitable is that they're paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those "wages" are other companies' revenue.

Read more: Corporate Profits Just Hit An All-Time High, Wages Just Hit An All-Time Low - Business Insider

 

[jonny5]

In case you need more confirmation that the US economy is out of balance, here are three charts for you.

1) Corporate profit margins just hit an all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from "too much regulation" and "too many taxes." Maybe little companies are, but big ones certainly aren't).





Wages as a percent of the economy are at an all-time low. This is both cause and effect. One reason companies are so profitable is that they're paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those "wages" are other companies' revenue.


Read more: Corporate Profits Just Hit An All-Time High, Wages Just Hit An All-Time Low - Business Insider

How is that out of balance? You just confirmed my statement. Higher wages equals less profit.

Also, I dont like this second graph, wages as a share of economy. That seems cherry picked.

Another chart shows something different
http://static2.businessinsider.com/...rly-earnings-havent-increased-in-50-years.jpg

 

[iguanaman]

How is that out of balance? You just confirmed my statement. Higher wages equals less profit.

Also, I dont like this second graph, wages as a share of economy. That seems cherry picked.

Another chart shows something different
http://static2.businessinsider.com/...rly-earnings-havent-increased-in-50-years.jpg

That chart shows exactly the same problem, negative wage growth sincr 1979. It is usnsustainable.

It is most interesting that the only wage growth we have seen recently was during the Clinton administration. No wonder he is the most popular political figure today. We are getting the Clinton tax rates back at the beginning of next year. let's hope the wage growth comes with it.

 

[jonny5]

That chart shows exactly the same problem, negative wage growth sincr 1979. It is usnsustainable.

It is most interesting that the only wage growth we have seen recently was during the Clinton administration. No wonder he is the most popular political figure today. We are getting the Clinton tax rates back at the beginning of next year. let's hope the wage growth comes with it.

No your chart shows a constant decline. My chart at the least shows no significant change, and at best an increase since 1964. Actually, since your chart ranges from .50 to .44, that shows no significant change either. Actually again, your chart is all sorts of messed up. Why would it have wages in billions of dollars if its a share of something? And the link to the study in the article goes back to itself.

But to your point, one, we wont get the clinton tax rates back. They have extended the 2001 tax rates for years and will continue to do so. Two, tax rates in 1964 ranged from 16-77% to 14-70% in 1972. Wages went up during that time though rates dropped. Notice my chart also shows wages going up from 2001-2008, during which rates were lower than during the 90s. Wages went up during both Clintons and Bushs terms, at about the same rate. They didnt even go up during Clintons term until 1997.

 

[PrometheusBound]

The class-biased indentured servitude of college education, which not only excludes people who will have to live like teenagers until they are 22, it also includes people who are not any smarter than average but will become successes in the failed economy created by putting inferior people in superior positions. Imagine if the college athletes had to live like the rest of the students. What kind of team would the colleges be able to recruit? One as inferior in sports as the rest of the students are now in academic ability. Failure is caused by not getting the best undeveloped talent to have natural incentives to develop themselves. It works in college sports by giving talented athletes expensive housing, expensive food, expensive entertainment, and free tuition.

The simple-minded suggestion of free tuition, which alone wouldn't recruit many athletes either, is as far as the secretly conformist reformers are willing to go. In order to quit wasting time on irrelevant reforms, college must be seen as the absurdity of Work Without Pay. Until students are rewarded as much as the athletes are, they won't be worth anything, which is no surprise. At $600 a week plus free tuition, everybody will want to go, which will automatically result in the most talented going instead of a random selection irrelevant to talent but based instead on the number of those willing to make a permanently damaging and immediately depressing and childish self-sacrifice. Hiring such people has resulted in an economy kept afloat only by a $15 trillion national debt transfused into an economy drained by managers promoted by this obsolete aristocratic education. The fact that such sacrifice is considered meritorious reveals a system of economics based on bullying. Also those who demand it finance adequate living expenses for their own children, proving that they know unpaid education is a destroyer of talent. They don't want talent, they want obedience and self-sacrifice. Fatcats love mice and place their fatkittens to lord over the mouse factory known as higher education.
.

 

[Xerographica]

Failure is caused by not getting the best undeveloped talent to have natural incentives to develop themselves. It works in college sports by giving talented athletes expensive housing, expensive food, expensive entertainment, and free tuition.

This sounds a lot like awesomeness spotting.

 

[RGacky3]

It's the natural progression of Capitalism ... Socialists have been predicting this forever.

 

[PrometheusBound]

This sounds a lot like awesomeness spotting.

The rich make all their money by underpaying talent. As long as education is designed for their benefit, it must humiliate the talented. By taking away their pride, it tames them to let the parasites get rich off them. So education has become the Goose That Lays the Golden Eggheads.

 

[PrometheusBound]

Just to further expound on Jet's thoughts, should I also assume that global warming is a result of declining union membership?

That's the silliness of logic chopping and its "correlation is not causation" mantra. The two factors must have some obvious relationship, which de-unionization and the decline of the middle class do. That makes the burden of proof on the one who objects to the conclusion. The fact that there is also no causation without correlation is conveniently ignored and proves that the mantra only sounds intelligent but is really nonsense if used to evade the burden of disproving the claim.

 

[PrometheusBound]

i have had people want to pay me to go through college to learn java programming because there werent enough people to do it.


and why todays college system and vocational training fails.

That's the way it should have been all along. Preparation is an integral part of production, so class-biased college education should be replaced with paid professional training.

The shortage of educated employees is not the reason for our long economic decline. It is about quality, not quantity. The present absurdity of unpaid education is compatible only to a random assortment of people irrespective of their talent. These Diplomaed Dumboes are put in the most responsible positions and drag the economy down, destroying the middle class in the process. College education is a fraud and should not be rewarded. It is for bluebloods and brown-noses, who hate the middle class and want to crush it.

 

[PrometheusBound]

Is cancer a result of cancer research funding? I don't think anybody would make that argument. The argument is that if you want to cure cancer then you should fund cancer research.

All the billions spent on cancer research have been wasted because the money thrown at the problem was not spent on those with the potential to cure cancer. An oncologist has to spend 12 years in college and doesn't earn a living until he is 30 years old. What kind of childish escapist freak does that? What percentage of people would put up with it? More important, it is the same tiny percentage of those with the potential to cure cancer. Geniuses have the same normal human desires that everybody else has. It's not as if we can afford to humiliate them like this because they are the type of people who wouldn't mind working 12 years without pay in college, living like 14-year-olds or like slackers because they are afraid to grow up.

 

[PrometheusBound]

But paying them well raises the cost of your products. Where is the profit?

So Henry Ford didn't make a profit? A model whom all capitalists should have to live up to or lose their place in the economy, Ford became one of the richest men of his time while paying the highest wages and charging low prices for a high-quality product. An increase in prices does not inevitably come from an increase in labor costs. Instead of passing it on to the consumer, the wage raise can also be taken out of the owner's profit margin, which is not set in stone as the voodoo economists want us to believe. This exaggerating scare story that the owner will shut his business down if he can't keep all of the high profits he sucked out of low wages shows what sneaky liars such economists are. They are merely toy rats for the fatcats to play with.

 

[jonny5]

So Henry Ford didn't make a profit? A model whom all capitalists should have to live up to or lose their place in the economy, Ford became one of the richest men of his time while paying the highest wages and charging low prices for a high-quality product. An increase in prices does not inevitably come from an increase in labor costs. Instead of passing it on to the consumer, the wage raise can also be taken out of the owner's profit margin, which is not set in stone as the voodoo economists want us to believe. This exaggerating scare story that the owner will shut his business down if he can't keep all of the high profits he sucked out of low wages shows what sneaky liars such economists are. They are merely toy rats for the fatcats to play with.

Except that business owners dont take it out of their profit margins, and they DO pass it on to consumers. The reason Fords employment practices worked is because employees were more productive. Thus Ford could produce the same number of cars in less hours, which means less labor costs. If raising wages doesnt increase productivity (or produce some other savings), then its not logical to raise wages. But the whole Ford legend is mostly misleading and partly untrue in any case. For example:

The $5-a-day rate was about half pay and half bonus. The bonus came with character requirements and was enforced by the Socialization Organization. This was a committee that would visit the employees’ homes to ensure that they were doing things the “American way.” They were supposed to avoid social ills such as gambling and drinking. They were to learn English, and many (primarily the recent immigrants) had to attend classes to become “Americanized.” Women were not eligible for the bonus unless they were single and supporting the family. Also, men were not eligible if their wives worked outside the home.

and

Car production in the year before the pay rise was 170,000, in the year of it 202,000. As we can see above the total labour establishment was only 14,000 anyway. Even if all of his workers bought a car every year it wasn’t going to make any but a marginal difference to the sales of the firm.

We can go further too. As we’ve seen the rise in the daily wage was from $2.25 to $5 (including the bonuses etc). Say 240 working days in the year and 14,000 workers and we get a rise in the pay bill of $9 1/4 million over the year. A Model T cost between $550 and $450 (depends on which year we’re talking about). 14,000 cars sold at that price gives us $7 3/4 million to $6 1/4 million in income to the company.

It should be obvious that paying the workforce an extra $9 million so that they can then buy $7 million’s worth of company production just isn’t a way to increase your profits. It’s a great way to increase your losses though.

The Story of Henry Ford's $5 a Day Wages: It's Not What You Think - Forbes

 

[imagep]

Except that business owners dont take it out of their profit margins, and they DO pass it on to consumers.

Depends, sometimes pay increases for the workers does come at the expense of executive compensation and/or profits, sometimes it doesn't, but I do agree that during the past 30 years or so for the most part, worker wage increases have been passed along to the consumer. Up until the early eighties, business profitability was shared more with the workers.

Thats a good argument to have a more progressive income tax system - like we did until 1981 or so when worker compensation stopped increasing at the same rate as executive compensation, and CEO compensation started climbing from about 30 times worker compensation to something like 500 times worker compensation today.

 

[Aunt Spiker]

Who's responsible for the declining share of middle class income?

Your 2nd graph is amiss . . . it states "size of government" but provides the "gov expenditure as % of GDP" - that's not 'government size'

But damn - this is a zinger - OBVIOUSLY "As gov expenditure as % of GDP increases participation in unions decreases"

So the government better back the **** up so the unions can increase in size again! OR is it the other way around? The unions better up the anti on their own so the government can reduce it's GE % of GDP?

 

[jonny5]

Depends, sometimes pay increases for the workers does come at the expense of executive compensation and/or profits, sometimes it doesn't, but I do agree that during the past 30 years or so for the most part, worker wage increases have been passed along to the consumer. Up until the early eighties, business profitability was shared more with the workers.

Thats a good argument to have a more progressive income tax system - like we did until 1981 or so when worker compensation stopped increasing at the same rate as executive compensation, and CEO compensation started climbing from about 30 times worker compensation to something like 500 times worker compensation today.

I dont see the connection to a progressive tax system. The purpose of taxes isnt to control wages.

 

[imagep]

I dont see the connection to a progressive tax system. The purpose of taxes isnt to control wages.

While funding our government may be the main purpose of taxation, taxation also has other consequences which are usually referred to as "unintended" by libertarian types. By recognizing the unintended consequences, we can harness those consequences.

By making our income tax system more progressive, we create a disincentive for exceptionally high salaries, and thus an incentive to pay lower wage workers more as every dollar that is not paid to some overpaid executive is a dollar that remains in the income pool for lower paid workers.

By the way, the purpose of ANYTHING is whatever we choose to make it. If I purchase a hair dryer, the cashier may assume that the "purpose" of the hair dryer is to dry my hair, but maybe I am going to use it to to help me apply vinyl graphics or to light my cigarette with. It's my hair dryer, I can make it's purpose to be whatever I choose to. The purpose of taxation, or even the government, is whatever we choose to make it. If we decide that one of the purposes of government is to create a better life for all of us, then THAT is it's purpose.