The Poor Are the Engine of Prosperity

[MTAtech]

Out of "investment/spending/saving", only one of those contributes to the economy. I'll give you a hint : it's spending.

So ... still not a wash.

Well, not exactly.

GDP is defined as Y = C + I + G + (X − M), where:

GDP (Y) is the sum of consumption (C), investment (I), government spending (G) and net exports (X – M).

"I" is a part of the economy.

 

[DA60]

I do. Because I'm not a greedy person and I earn more than I need. I donate $1,000 each year to our local Helping Hand Community Fund that assists area residents with food and utilities. And on top of that, I volunteer dozens of hours each month to local community activities and events. And while my volunteer hours aren't directly helping the poor, they are helping my community, which is a community where about 25% of the households earn less than $20,000.




My thoughts exactly. Shouldn't be a big deal for someone earning $10k per month to pony up that tiny amount of cash, right?

Oh ... you meant ...



$200 a month when you only bring home $1000 or $1300 a month is like getting an extra paycheck each month. So yes, it will help significantly. And in addition to helping those families, it'd pump $120,000,000 into local economies each year.

To answer your question, the rich don't pay enough in taxes each year to justify spending everything they make in order to nullify their tax burden instead of just paying the taxes and saving the rest for retirement or future generations or whatever they want to save it for.

So what it basically comes down to is you want to take more money from the rich and give it to the poor.

I do not agree..I do not agree to punish people for being successful and good with their money and then give it to people who (in many though not all cases) are terrible with money.

Plus, I believe that everyone should pay EXACTLY the same tax rate (outside of the VERY poor) for both capital gains AND income taxes and that their be no deductions except for charitable contributions. PLUS I think there should be no corporate/business taxes as I think these just hurt business.

Now I am sure you will disagree with almost all of this so further discussion is obviously pointless.

But it was a pleasure debating with you and good for you on the donations (I myself give away enough money that my accountant has said that I am giving away too much - i.e. more then I can use as deductions).

 

[Critter7r]

Well, not exactly.

GDP is defined as Y = C + I + G + (X − M), where:

GDP (Y) is the sum of consumption (C), investment (I), government spending (G) and net exports (X – M).

"I" is a part of the economy.

Except that it's not "investment" in things like Roth IRAs, 401(k)s and the like the way that you seem to be implying. Investments included in the GDP are purchases of goods and equipment.

"Investment expenditures: Investment expenditures can be divided into two categories: expenditures on fixed investment goods and inventory investment. Fixed investment goods are those that are useful over a long period of time. Expenditures on fixed investment goods include purchases of new equipment, factories, and other nonresidential housing as well as purchases of new residential housing. Also included in fixed investment expenditures is the cost of replacing existing investment goods that have become worn out or obsolete. The market value of all investment goods that must be replaced in a single year is referred to as the depreciation for that year. Inventory goods are final goods waiting to be sold that firms have on hand at the end of the year. The year‐to‐year change in the market value of firms' inventory goods is considered an investment expenditure because these inventory goods will eventually yield a flow of consumption or production services."

GDP

 

[brothern]

Out of "investment/spending/saving", only one of those contributes to the economy. I'll give you a hint : it's spending. So ... still not a wash.

Well, not exactly.

GDP is defined as Y = C + I + G + (X − M), where:

GDP (Y) is the sum of consumption (C), investment (I), government spending (G) and net exports (X – M).

"I" is a part of the economy.

You're misunderstanding Critter7r. He's talking about "investments" as in an individual purchasing financial products like a 401K or an individual stock. The "I" in the GDP is not the sum of those investments, but instead is the sum of the investments that businesses make in creating or acquiring capital goods. Whether that's the construction of a factory, or the purchase of a new computer system. The only household spending that is included in "I" is the construction of new homes.

But to this point,

Fine, then there would be less investment/spending/saving, which makes its still a wash. Either the money is used by a rich person, or its used by a poor person. IMO, a rich person using it generates more wealth. And it has the bonus of being morally right, since they are the one who actually EARNED it. Its their property.

We don't want money to be in the hands of just a tiny few super-rich people. The poor are the engines of prosperity, because they're many and the few super-rich are few.

Five thousand poor people who can suddenly afford to build an addition to their home or purchase a car is a 5,000 different financial transactions that can support a company and employ a workforce.

One rich person that can afford to upgrade his home or purchase on expensive car is only 1 financial transaction that does not support a company, and supports only Bob the Builder, a workforce of one.

 

[MTAtech]

Except that it's not "investment" in things like Roth IRAs, 401(k)s and the like the way that you seem to be implying. Investments included in the GDP are purchases of goods and equipment.

"Investment expenditures: Investment expenditures can be divided into two categories: expenditures on fixed investment goods and inventory investment. Fixed investment goods are those that are useful over a long period of time. Expenditures on fixed investment goods include purchases of new equipment, factories, and other nonresidential housing as well as purchases of new residential housing. Also included in fixed investment expenditures is the cost of replacing existing investment goods that have become worn out or obsolete. The market value of all investment goods that must be replaced in a single year is referred to as the depreciation for that year. Inventory goods are final goods waiting to be sold that firms have on hand at the end of the year. The year‐to‐year change in the market value of firms' inventory goods is considered an investment expenditure because these inventory goods will eventually yield a flow of consumption or production services."

GDP

You're misunderstanding Critter7r. He's talking about "investments" as in an individual purchasing financial products like a 401K or an individual stock. The "I" in the GDP is not the sum of those investments, but instead is the sum of the investments that businesses make in creating or acquiring capital goods. Whether that's the construction of a factory, or the purchase of a new computer system. The only household spending that is included in "I" is the construction of new homes.

But to this point,



We don't want money to be in the hands of just a tiny few super-rich people. The poor are the engines of prosperity, because they're many and the few super-rich are less.

Five thousand poor people who can suddenly afford to build an addition to their home or purchase a car is a 5,000 different financial transactions that can support a company and employ a workforce.

One rich person that can afford to upgrade his home or purchase on expensive car is only 1 financial transaction that does not support a company, and supports only Bob the Builder, a workforce of one.

My bad.

 

[Critter7r]

So what it basically comes down to is you want to take more money from the rich and give it to the poor.

Basically. But not so much that it's going to even hardly be noticed. If everyone making over say, 250% of the median income gave 5% of their income to charity we could probably get rid of gov't welfare programs for all but the most destitute. Yes, I totally grabbed those numbers out of the air, but my point is that if those able to afford giving, did so, we'd could reduce government's involvement to a level much more palatable.

I do not agree..I do not agree to punish people for being successful and good with their money and then give it to people who (in many though not all cases) are terrible with money.

Plus, I believe that everyone should pay EXACTLY the same tax rate (outside of the VERY poor) for both capital gains AND income taxes and that their be no deductions except for charitable contributions. PLUS I think there should be no corporate/business taxes as I think these just hurt business.

Now I am sure you will disagree with almost all of this so further discussion is obviously pointless.

But it was a pleasure debating with you and good for you on the donations (I myself give away enough money that my accountant has said that I am giving away too much - i.e. more then I can use as deductions).

Further discussion is never pointless, so long as it can be done in a civil manner.

So I'll disagree (surprise! ) with everyone paying the same tax rate. Because the poor can't pay any more than they already do, so you're basically advocating lowering taxes on everyone to 10%. Now, if we want to do that and then boost corporate taxes to make up for it, then great ... but you don't want that either. I don't have all the answers, but the money has to come from somewhere, and since the poor don't have any, I believe that a graduated tax rate is the fairest way to collect it.

 

[jaeger19]

Basically. But not so much that it's going to even hardly be noticed. If everyone making over say, 250% of the median income gave 5% of their income to charity we could probably get rid of gov't welfare programs for all but the most destitute. Yes, I totally grabbed those numbers out of the air, but my point is that if those able to afford giving, did so, we'd could reduce government's involvement to a level much more palatable.
Further discussion is never pointless, so long as it can be done in a civil manner.

So I'll disagree (surprise! ) with everyone paying the same tax rate. Because the poor can't pay any more than they already do, so you're basically advocating lowering taxes on everyone to 10%. Now, if we want to do that and then boost corporate taxes to make up for it, then great ... but you don't want that either. I don't have all the answers, but the money has to come from somewhere, and since the poor don't have any, I believe that a graduated tax rate is the fairest way to collect it.

Two points. Number one.. the charity issue would not likely be resolved because its not just about the amount of money but about logistics. That's a large part why there needs to be government welfare programs.. because money it not going to flow say it Rural upstate ny, etc..

Second point.

A flat tax makes the most sense.. with a standard deduction of 34-50 thousand. That way , there is no increased taxes on the poor.

 

[MTAtech]

Two points. Number one.. the charity issue would not likely be resolved because its not just about the amount of money but about logistics. That's a large part why there needs to be government welfare programs.. because money it not going to flow say it Rural upstate ny, etc..

Second point.

A flat tax makes the most sense.. with a standard deduction of 34-50 thousand. That way , there is no increased taxes on the poor.

So, if I make $250,000 or $250,000,000 I pay the same rate? Under your plan, will capital gains be the same as ordinary income? If I get a 34-50 thousand standard deduction, what if I lose $100,000 on an investment, do I only get to deduct the standard deduction?

 

[minnie616]

Just an interesting fact from the last census.
The food stamp Capitol of the nation is 99.9% white and 95 % Republican.

In spite of the prevailing stereotypes and assumptions about who uses SNAP Food Stamp benefits the most in the United States, the highest usage is not in Compton, Queens, nor the South Side of Chicago. Instead, a city that is 99.22% white and 95% Republican comes in the lead. Owsley County, Kentucky is a community of about 5,000, residents earning the lowest median household income in the country outside of Puerto Rico, according to the U.S. Census.

http://politicalblindspot.com/the-food-stamp-capital-of-the-u-s-is-white-and-republican/

 

[minnie616]

From a December 2013 Economic Policy Institute article:

The Minimum Wage Used To Be Enough To Keep Workers Out Of Poverty—It’s Not Anymore
Raising It to $10.10 Would Lift a Family of Three Above the Poverty Line
By David Cooper | December 4, 2013

http://www.epi.org/publication/minimum-wage-workers-poverty-anymore-raising/

 

[cpwill]

Not if the congress has a say.
The Army does not want Tanks yet congress says they need to keep producing tanks the army does want and does not need.

Talk about government waste!

Agreed. Congress is remarkably bad at making supply/demand decisions. We should limit their ability to do so.

If the "pushing on a string" analogy is apt for anything, it's supply. As I have pointed out, there is obviously an excess of supply. It's right there, all over the shelves.

On the contrary - we have less supply on the shelves than at any other time in our economic development due to the improvements in our supply chain and the savings realized by reducing on-hand-inventory.

The missing ingredient here is just a bit more demand.

Demand as expressed is a function of supply. You have to have something before you can trade it for something else.

 

[Critter7r]

Agreed.

...
On the contrary - we have less supply on the shelves than at any other time in our economic development due to the improvements in our supply chain and the savings realized by reducing on-hand-inventory.

Demand as expressed is a function of supply. You have to have something before you can trade it for something else.

And somebody has to want what you have before they will trade something for it.

I will never understand this philosophy that supply creates demand. The only way supply increases demand is if it's stacked high and priced low. If your grocer has 10 pallets of Frosted Flakes in the storeroom but has only the normal amount on the shelves and it's priced the same as always, NOBODY is going to increase their purchases of Frosted Flakes. ONLY if those pallets are out in the isles and/or the price is reduced will the demand increase.

The exception is obviously new, innovative products that come out of nowhere: iPhone, Segway ... some other stuff I can't think of off the top of my head. But guess what, if you went and made a million Atari 3200 clones right now, you wouldn't be able to sell them, even though you had plenty of supply.

 

[JohnfrmClevelan]

Demand as expressed is a function of supply. You have to have something before you can trade it for something else.

That's a great point to make on a chalkboard, but in the real world, there is plenty of production (and the capacity to produce more) that is waiting on demand. If you have some dollars in your pocket, you have already produced more than you have consumed, and this is true for the economy as a whole. Demand isn't waiting for more production - the production is already here, all over the shelves. It's the other way around. Business is always trying to pry dollars out of our hands.

 

[jonny5]

Live like poor people in a 1st world country and contribute more to the general economy while not living in filth.




The satisfaction of knowing that they're helping poor people avoid living in filth and contributing to the economy (which directly benefits many of them -the rich, that is).

So, nothing. Thats not balance.

 

[jonny5]

Out of "investment/spending/saving", only one of those contributes to the economy. I'll give you a hint : it's spending.

So ... still not a wash.

As mentioned above 2/3 of GDP is consumer spending. Whats the other 1/3?

 

[cpwill]

And somebody has to want what you have before they will trade something for it.

True enough; but that is theoretical demand. Demand as expressed

I will never understand this philosophy that supply creates demand.

:shrug: Supply does not create theoretical demand. For example, I have a demand for a safe, self-driving car with Wi-Fi, a drinks bar, and flight capability so that I can travel in comfort, but also avoid traffic. There is no such vehicle, but I still want one. My wanting one, however, isn't going to build one - you need supply in the form of parts, factories, cash, labor, and really smashing powerpoint presentations to do all that. You have to have Supply before Demand will be of any use for you. I can't buy my vehicle until A) someone makes one and B) I have the excess resources to spend on one. What supply does is allow trade, it allows demand to express itself. Trying to create more demand hoping that that will create more supply through the mechanism of taking resources from the market and having them allocated by the government instead is self-defeating.

The only way supply increases demand is if it's stacked high and priced low. If your grocer has 10 pallets of Frosted Flakes in the storeroom but has only the normal amount on the shelves and it's priced the same as always, NOBODY is going to increase their purchases of Frosted Flakes. ONLY if those pallets are out in the isles and/or the price is reduced will the demand increase.

I agree demand will increase if price is reduced, but, assuming that the store owner replaces sold boxes on the shelf, what makes you think that demand will increased from increased shelvage?

The exception is obviously new, innovative products that come out of nowhere: iPhone, Segway ... some other stuff I can't think of off the top of my head. But guess what, if you went and made a million Atari 3200 clones right now, you wouldn't be able to sell them, even though you had plenty of supply.[/QUOTE]

 

[jonny5]

You're misunderstanding Critter7r. He's talking about "investments" as in an individual purchasing financial products like a 401K or an individual stock. The "I" in the GDP is not the sum of those investments, but instead is the sum of the investments that businesses make in creating or acquiring capital goods. Whether that's the construction of a factory, or the purchase of a new computer system. The only household spending that is included in "I" is the construction of new homes.

But to this point,



We don't want money to be in the hands of just a tiny few super-rich people. The poor are the engines of prosperity, because they're many and the few super-rich are few.

Five thousand poor people who can suddenly afford to build an addition to their home or purchase a car is a 5,000 different financial transactions that can support a company and employ a workforce.

One rich person that can afford to upgrade his home or purchase on expensive car is only 1 financial transaction that does not support a company, and supports only Bob the Builder, a workforce of one.

And lets assume those 5000 transactions are equal to one rich persons transactions. That means more bang for your buck with the rich person, who actually earned the money. Its not like the federal bank is handing out dollars to people, rich or poor. The rich person is doing something to earn it. The poor person isnt (thats why theyre poor). So if the you take it from the person who earned it and hand it to the person who didnt, then the person who earned it will simply stop earning, which means no more money to redistribute.

So again, a rich person who starts a business is better for the country than 5000 poor people simply consuming food.

 

[jaeger19]

So, if I make $250,000 or $250,000,000 I pay the same rate? Under your plan, will capital gains be the same as ordinary income? If I get a 34-50 thousand standard deduction, what if I lose $100,000 on an investment, do I only get to deduct the standard deduction?

Yep.. same rate...

First say 34 to 50 thousand. ( I am flexible here I would base it on poverty level/inflation) is tax free. It makes no sense to tax someone and then turn around and have to give them assistance.

No deductions except possible for charity. and that tightly limited to true charity.. for example.. only contributions to churches to provide charitable giving counts. Not building a new home for the minister

All income taxed equally.

If you lose 100,000 on an investment.. then its just that much less income you have that year.

the rate should be set with a balance budget law.. so that the tax rate would vary depending on the budget. Want to increase spending? Great.. make sure the taxes are there to pay for it.

Deficit spending only in time of war.. (congressionally declared war, no endless "wars on terror"..) or in recession... or natural disaster.

 

[cpwill]

As mentioned above 2/3 of GDP is consumer spending. Whats the other 1/3?

That is a false figure. You cannot trade what you have not produced. The money that people actually pull out of their paychecks and bank accounts to pay for domestically-produced goods and services drives about 40% of economic activity

 

[jaeger19]

And lets assume those 5000 transactions are equal to one rich persons transactions. That means more bang for your buck with the rich person, who actually earned the money. Its not like the federal bank is handing out dollars to people, rich or poor. The rich person is doing something to earn it. The poor person isnt (thats why theyre poor). So if the you take it from the person who earned it and hand it to the person who didnt, then the person who earned it will simply stop earning, which means no more money to redistribute.

So again, a rich person who starts a business is better for the country than 5000 poor people simply consuming food.

Not true.

The 5000 people spending money in general has a much larger positive impact on the economy than 1 person spending that money. Its economy of scale.

The poor work to earn money by the way.

And also by the way.. if you take a portion of money that a rich person makes.. and give it to a poor person.. the rich person is NOT going to stop making money... that would be stupid.

Please explain it to me. I own several businesses. So lets say in my medical business.. I profit 5 million dollars... the government then takes as much as 2 million dollars from me (40% roughly), leaving me with 3 million dollars....

NOW please tell me why, if the government takes that money.. I should stop earning money and decide that I would rather have ZERO income than 3 million in my pocket each year?

 

[Critter7r]

So, nothing. Thats not balance.

If you refuse to see the positive impact of reducing poverty, then there's nothing I can say that will make a difference. We'll have to agree to disagree.

 

[Critter7r]

As mentioned above 2/3 of GDP is consumer spending. Whats the other 1/3?

Consumer spending (consumption and capital investments in equipment, buildings, etc), gov't spending, exports. I don't know the "ratio", but those are the 3 main parts.

 

[Critter7r]

True enough; but that is theoretical demand. Demand as expressed



:shrug: Supply does not create theoretical demand. For example, I have a demand for a safe, self-driving car with Wi-Fi, a drinks bar, and flight capability so that I can travel in comfort, but also avoid traffic. There is no such vehicle, but I still want one. My wanting one, however, isn't going to build one - you need supply in the form of parts, factories, cash, labor, and really smashing powerpoint presentations to do all that. You have to have Supply before Demand will be of any use for you. I can't buy my vehicle until A) someone makes one and B) I have the excess resources to spend on one. What supply does is allow trade, it allows demand to express itself. Trying to create more demand hoping that that will create more supply through the mechanism of taking resources from the market and having them allocated by the government instead is self-defeating.



I agree demand will increase if price is reduced, but, assuming that the store owner replaces sold boxes on the shelf, what makes you think that demand will increased from increased shelvage?

If the store owner puts the pallets on the sales floor without any other enticement, sales probably won't increase much. But if the price is lowered or the product is advertised as "discontinued" or whatever, it will sell more due to the psychology of humans.

As to your middle paragraph, if you don't DEMAND a car, then no amount of supply is going to make you buy one. Obviously if nobody makes a car, it can't be sold, but if nobody buys the car, it's wasted production. If enough people (or in the case of auto safety features, the gov't) demand that your "safe, self-driving car with Wi-Fi, a drinks bar, and flight capability" be built, it will happen.

Barring a shortage of materials, an increase in demand WILL entice producers to create more supply. If there's demand and potential profit, then somebody will supply it. But if somebody anticipates a profit and produces the supply, it gathers dust until there is demand for it.

More demand will create more supply not thru any "mechanism of taking resources from the market and having them allocated by the government" (I'm not even sure what you mean by that), but thru entrepreneurs capitalizing on the profit potential of that demand.

 

[Fenton]

Just an interesting fact from the last census.
The food stamp Capitol of the nation is 99.9% white and 95 % Republican.



The Food Stamp Capital of the U.S. is WHITE and REPUBLICAN : Political Blind Spot

California has the HIGHEST POVERTY RATES in the Country and is home to 1/3 of the Nation's Welfare recipients even though its home to only 1/8 of the Nation's population

Americans aren't moving TO left wing states like California, Michigan, Illinois and New York.

They're moving away from left wing states by the millionsn

 

[cpwill]

If the store owner puts the pallets on the sales floor without any other enticement, sales probably won't increase much. But if the price is lowered or the product is advertised as "discontinued" or whatever, it will sell more due to the psychology of humans.

Ah, so yes, perception of reduced price will increase realized demand, but increasing shelvage will not.

As to your middle paragraph, if you don't DEMAND a car, then no amount of supply is going to make you buy one.

True enough. So?

Obviously if nobody makes a car, it can't be sold, but if nobody buys the car, it's wasted production.

Agreed. And?

If enough people (or in the case of auto safety features, the gov't) demand that your "safe, self-driving car with Wi-Fi, a drinks bar, and flight capability" be built, it will happen.

Maybe. We've had "demand" for flying cars for decades now - it doesn't seem to have happened.

Barring a shortage of materials, an increase in demand WILL entice producers to create more supply

No. Barring a shortage of materials, a perception of increased demand or likely future demand can motivate producers WHO ALREADY HAVE THE NECESSARY SUPPLY to create more supply. You don't build flying cars out of thin air - you have to invest other supply and hope for a return.

If there's demand and potential profit, then somebody will supply it

So where is my flying self-driving car then?

But if somebody anticipates a profit and produces the supply, it gathers dust until there is demand for it.

Agreed. In no way does that obviate the fact that you cannot produce until you have the supply necessary to do so, and you cannot trade until you have something to trade with. You are assuming supply and then attributing the activity to demand.

More demand will create more supply not thru any "mechanism of taking resources from the market and having them allocated by the government" (I'm not even sure what you mean by that)

Increased public expenditures with the intent of "stimulating demand". An idiots process - like taking water out of a pond, walking it around a short track while carrying it in a leaky bucket, and then pouring it back into the pond in order to raise the ponds' water level.

but thru entrepreneurs capitalizing on the profit potential of that demand.

And what do entrepreneurs need in order to do that?

supply.