Is Income Inequality Leading To A Crisis For Capitalism?

[itfitzme]

What source did you use to make your statement? Income redistribution is a key element of Socialism and
Communism. How have those types of government done? Too many settle for the jobs they are in and then complain. People who do well have a strong work ethic, willing to sacrifice, get a good education and / or learn every thing they can about the business they want to start or join. Those who do not do this have no one to blame but themselves.
I was middle class and was able to double my salary within 9 years.
Stop the complaining and better your self. It is not the job of government to do it for you.

All economies and governments redistribute wealth and resources. That's the whole point of them. Resource and wealth redistribution isn't unique to Communism or Socialism. The difference is in how it is accomplished. In the USSR, the how was an attempt at centralized planning. Trying to centralize planning for a population in the hundreds of millions just doesn't seem like a good idea, from the outset.

The U.S. military is the largest socialist jobs program in the history of the world. It does a considerable amount of centralized planning. And some of the failings has been the brunt of complaints and jokes by many a person in the military. Sometimes, it doesn't go very well, even for the US military. The military has found considerable utility in taking advantage of the free market system and outsourcing. It has it's successes and failures.

Still, the US military is is funded by taxes, a redistribution of wealth. Government, by it's very nature redistributes income. When it comes to the military, by it's very nature, it redistributes resources.

Military wages are set by pay-grade, not by any free market mechanism. Wages and salaries are higher than the equivalent position in the free market, especially when you consider the benefits. Housing is either provided or subsidized. Employment is not "at will" as in the free market but a fixed term contract with review that nearly guarantees the employee cannot be terminated for anything but exceptional cause. Prices at the PX are capped. In fact, prices are often on a sliding scale, lower for low income enlisted personnel then for higher income commissioned officers.

It is what it is, for whatever reasons.

 

[georgephillip]

its very very simple really. The more productive workers are the more they must be paid [thanks to competition], the more they can buy, and the more jobs created to supply them.

Why have middle-class wages in the US stagnated since the 1970s while US productivity has doubled?

Its very very simple really. There is no stagnation but problems having a lot to do with liberal anti-business policies and a billion or so new workers competing with them plus the end of the virtual business monopoly we enjoyed after WW2 as the only economy left standing.

Was it liberal anti-business policies or a billion new workers that increased the richest 1% of Americans' share of national income from 8% in 1970 to 23% today?

 

[EdwardBaiamonte]

Was it liberal anti-business policies or a billion new workers that increased the richest 1% of Americans' share of national income from 8% in 1970 to 23% today?

you lose one argument and you change to another without knowing that you're fooling yourself don't you? As a liberal it now gets way to complicated for you:

Firstly, the 23.5 % figure is from 2007 at the height of the liberal inspired housing mania. Since then the number of millionaires in 2009 alone , for example declined 39% in just that year. Did you notice that most of liberal crony-capitalism Wall Street went bankrupt??

Additionally:
1) In summary, half of all of U.S. households move from one income quintile to a different income quintile every decade.

2) The average number of people with jobs in a top income quintile household is two, while a majority of bottom income quintile households have no one employed.

3) If there are two adult income earners in a household who are married, their incomes are combined on tax forms. This is very common among top quintile income households.

4) The lowest quintile households, however, include a lot more single-person households, or two unmarried working adults living together, and sharing expenses, but reporting their incomes to the IRS as if they were two separate households.


5) 75% to 80% of the actual income for bottom quintile households is transfer payments (aka “welfare&#8221 that are not included in IRS income data.


(6) The IRS warns against comparisons of pre-1987 and post-1987 income data due to significant changes in the definition of adjusted gross income (AGI) that made top quintile households appear to have large reported income gains, when in fact there was no change to their income at all.

7) In addition to the AGI changes, large marginal tax rate reductions during the Reagan Administration caused another large change in tax reporting. This reporting change appeared to boost top quintile income, when in fact their incomes had not changed.

8) Lastly, income for the bottom quintile does not include welfare entitlement tranfer payments making them seem far poorer than they actually are.

 

[georgephillip]

Why have middle-class wages in the US stagnated since the 1970s while US productivity has doubled?

They haven't.

If you have a point, why do you need to use falsehoods?

The points are simple enough for fabulist fascists to grasp.
For over a generation middle class wages in the US have declined despite strong GDP growth.
Middle class incomes fell marginally from $56,000/year in 1989 to $55,200 in 2010.
During the same time period when the US economy grew by 60%.
For US males working full time their median earnings level was about $49,000 in 1973 and $48,000 in 2010.

 

[EdwardBaiamonte]

Middle class incomes fell marginally from $56,000/year in 1989 to $55,200 in 2010.

of course liberals policies have erased about 40 million jobs. Imagine the upward pressure on wages if they all came back or even half of them?

1) Make unions illegal ( 10 million new jobs) Democrats oppose

2) make minimum wage illegal ( 5 million new jobs) Democrats oppose

3) end business taxation; especially tax incentives to off-shore jobs ( 5 million new jobs) Democrats oppose

4) make inflation illegal ( 2 million new jobs) Democrats oppose


5) make Federal debt illegal( 2 million new jobs) Democrats oppose

6) send illegal workers home(8 million new jobs) Democrats oppose

7) Pass Balanced Budget Amendment to Constitution( 3 million new jobs) Democrats oppose

8) cut pay of government workers in half( 4 million new jobs) Democrats oppose

9) Make health insurance competition legal( 6 million new jobs) Democrats oppose

10) end needless business regulations ( 2 million new jobs) Democrats oppose

11) restrict Federal spending to 15% of GNP( 2 million new jobs) Democrats oppose

12) support unlimited free trade( 2 million new jobs) Democrats oppose

13) reduced unemployment compensation, welfare, food stamps, medicaid.( 2 million new jobs) Democrats oppose

14) privatize education, social security ( 4 million new jobs) Democrats oppose

15) end payroll taxes ( 1 million new jobs) Democrats oppose

Since Democrats always oppose wisdom and common sense the only serious option is to make them illegal as the Constitution intended.

 

[uscitizen]

Middle class incomes fell marginally from $56,000/year in 1989 to $55,200 in 2010.

of course liberals policies have erased about 40 million jobs. Imagine the upward pressure on wages if they all came back or even half of them?

1) Make unions illegal ( 10 million new jobs) Democrats oppose

2) make minimum wage illegal ( 5 million new jobs) Democrats oppose

3) end business taxation; especially tax incentives to off-shore jobs ( 5 million new jobs) Democrats oppose

4) make inflation illegal ( 2 million new jobs) Democrats oppose


5) make Federal debt illegal( 2 million new jobs) Democrats oppose

6) send illegal workers home(8 million new jobs) Democrats oppose

7) Pass Balanced Budget Amendment to Constitution( 3 million new jobs) Democrats oppose

8) cut pay of government workers in half( 4 million new jobs) Democrats oppose

9) Make health insurance competition legal( 6 million new jobs) Democrats oppose

10) end needless business regulations ( 2 million new jobs) Democrats oppose

11) restrict Federal spending to 15% of GNP( 2 million new jobs) Democrats oppose

12) support unlimited free trade( 2 million new jobs) Democrats oppose

13) reduced unemployment compensation, welfare, food stamps, medicaid.( 2 million new jobs) Democrats oppose

14) privatize education, social security ( 4 million new jobs) Democrats oppose

15) end payroll taxes ( 1 million new jobs) Democrats oppose

Since Democrats always oppose wisdom and common sense the only serious option is to make them illegal as the Constitution intended.

Is this post sarcasm or serious?

 

[georgephillip]

its very very simple really. The more productive workers are the more they must be paid [thanks to competition], the more they can buy, and the more jobs created to supply them.

Why have middle-class wages in the US stagnated since the 1970s while US productivity has doubled?

1900 was the beginning of the age of mechanization which has resulted in continuous improvements in efficiency. In 1940, a bit less than ten percent of the labor force could produce enough food for everyone. By 2010, one percent of the workforce could produce enough for everyone.

The same thing is true across all markets. This is apparent, even at the grocery store, where fewer cashiers are needed. Mechanization had improved efficiency to a level that there is always an excess of labor.

It is very very simple, really. Over all, the competition for jobs in the labor market have continued to drive wages down.

The data is available from the BLS at ftp://ftp.bls.gov/pub/special.requests/lf/aat1.txt

I posted a longer version of this at Agricultural Efficiency 1940 to present: Quick Data « Itfitzme's Blog

Has the machine freed some US workers from the need to toil?

Possibly the time is right for an economic philosophy like that of CH Douglas's Social Credit?

"The policy proposals of Social Credit attracted widespread interest in the decades between the world wars of the twentieth century because of their relevance to economic conditions of the time.

"Douglas called attention to the excess of production capacity over consumer purchasing power, an observation that was also made by John Maynard Keynes in his book, The General Theory of Employment, Interest and Money.[4]

Social Credit - Wikipedia, the free encyclopedia

 

[georgephillip]

Middle class incomes fell marginally from $56,000/year in 1989 to $55,200 in 2010.

of course liberals policies have erased about 40 million jobs. Imagine the upward pressure on wages if they all came back or even half of them?

1) Make unions illegal ( 10 million new jobs) Democrats oppose

2) make minimum wage illegal ( 5 million new jobs) Democrats oppose

3) end business taxation; especially tax incentives to off-shore jobs ( 5 million new jobs) Democrats oppose

4) make inflation illegal ( 2 million new jobs) Democrats oppose


5) make Federal debt illegal( 2 million new jobs) Democrats oppose

6) send illegal workers home(8 million new jobs) Democrats oppose

7) Pass Balanced Budget Amendment to Constitution( 3 million new jobs) Democrats oppose

8) cut pay of government workers in half( 4 million new jobs) Democrats oppose

9) Make health insurance competition legal( 6 million new jobs) Democrats oppose

10) end needless business regulations ( 2 million new jobs) Democrats oppose

11) restrict Federal spending to 15% of GNP( 2 million new jobs) Democrats oppose

12) support unlimited free trade( 2 million new jobs) Democrats oppose

13) reduced unemployment compensation, welfare, food stamps, medicaid.( 2 million new jobs) Democrats oppose

14) privatize education, social security ( 4 million new jobs) Democrats oppose

15) end payroll taxes ( 1 million new jobs) Democrats oppose

Since Democrats always oppose wisdom and common sense the only serious option is to make them illegal as the Constitution intended.

Is this post sarcasm or serious?

Must be an election year.
Can't wait for Labor Day!

 

[TakeAStepBack]

:yawn:

 

[ilia25]

That is a total bullshit -- a notion that increasing government spending by $1 always reduces private sector spending by $1.

Government spending has a geometric impact on productive spending by the private sector. $1 spent on "stimulus' by the government will reduce private spending by about $4.

Why? Because to pump $1 into the economy by the government costs about $4. We need to pay politicians and media demagogues to create and hype increases. We need to bribe public sector unions to motivate the public sector workers to action. We need to pay a thousand agencies from the tax collectors to the ones doing impact studies on how spending increases affect the sex lives of tutsi flies in Bora-bora. Then the funds for 98% highest paycheck pensions after 20 years of service. So to pump $4 trillion in "stimulus," $16 trillion needs to be extracted from the private sector.

No worries though, we'll just borrow it so no one can trace the crumbling economy back to the deficit spending.

That may be true in boom times, but not in a recession, when private sector cuts on spending in order to reduce its debt. There are tons of idle capital in the economy.

That is the most idiotic thing I've ever heard - even from a leftist.

Well since you are an idiot, how can you tell?

The economy is in a depression for a single reason -- businesses see no reason to expand their production capacity because they see lackluster demand for their goods and services. And the customers cut on demand because businesses are not hiring.

That means that a big share of business profits are not invested in anything -- they are sitting as an idle cash:
http://www.nytimes.com/interactive/2011/10/25/business/banks-are-swimming-in-cash.html
http://www.huffingtonpost.com/2011/...es-investing-not-future-growth_n_1107360.html

There are only two ways break this circle. One of them if the government borrows some of those idle money and spends them -- causing the companies to hire new workers and giving the customers reasons to spend.

That is how $1 of government spending can rise GDP by $2 or $3 -- because it stimulates spending and investment in the private sector.

 

[ilia25]

1) In summary, half of all of U.S. households move from one income quintile to a different income quintile every decade.

Well, that is great, but the income is stagnating an all lower quintiles.

2) The average number of people with jobs in a top income quintile household is two, while a majority of bottom income quintile households have no one employed.

3) If there are two adult income earners in a household who are married, their incomes are combined on tax forms. This is very common among top quintile income households.

4) The lowest quintile households, however, include a lot more single-person households, or two unmarried working adults living together, and sharing expenses, but reporting their incomes to the IRS as if they were two separate households.

That is very, very interesting point. But can you prove that the median household income is stagnating over 30 years only because it is more likely to have a single working adult?

 

[kiwiman127]

They haven't.

If you have a point, why do you need to use falsehoods?

Is it a falsehood? Facts show otherwise.

Chart 1 is the levels of income after inflation. (Census Bureau)
U.S. Household Incomes: A 43-Year Perspective

Chart 2 is the productivity levels. (Department of Labor)
Productivity Growth by Major Sector, 1947-2011. Bar Chart

You are, of course, correct in presenting actual data. The data itself is correct. Income data is available from the IRS and the Census Bureau. Productivity data is available from the BEA and Department of Labor. And, it's way easier when someone else combines it into a nice graph. Thank you for posting them.

You present objective data. Someone replies with opinion, changing the subject from the data to you. At that point, the subject changes from objective positive economics to the psychology of dysfunctional reasoning. What they post is all they know. They don't have anything more to present than simply, "They haven't." That is it.

The only question you have to ask yourself is "What good is the response to me?"

To answer your question, please note posts 98 and 100, I was simply clearing the air between the two posters with objective data to take the exchange from a gray area to black and white. So what good was the response to me? It depends if the response was beneficial to other posters.

 

[kiwiman127]

You do understand inflation adjusted income in Real Dollars (constant dollar) don't you?

You do understand purchasing power per hour of labor, don't you?

Of course, it is 100% affected by inflation. Thus the utilization of Real Dollars as the most accurate measuring tool of income growth which correlates with purchasing power per hour labor.

 

[editec]

Income inequity that depresses marco-economic activity is a symptom of a poorly designed social contract.

And the changes in the way we do business right now only exacerbate that problem.

 

[usmcstinger]

You are eluding to the Keynesian Theory of Economics. This economic system has never worked. Yet, Obama continues to believe he will achieve a different out come. The only thing he has achieved is to bring the national debt to the highest of highs, resulting in a B rating for the USA.
Obama Care, the Dodd-Frank Act, and the fate of the Bush Tax Cuts creates so much uncertainty that small and Big businesses have no choice but to sit on their cash. Innovations in technology, continue to reduce their costs. Many jobs no longer exist. Cloud Computing does away with the need for Large IT Staffs. IT people are now needed in the cloud computing companies. Those who do not have a Cloud Computing Education will not get see many former IT jobs.

 

[Uncensored2008]

Of course, it is 100% affected by inflation. Thus the utilization of Real Dollars as the most accurate measuring tool of income growth which correlates with purchasing power per hour labor.

If wages for the lower half have dropped as you claim, how is it that lifestyles have so dramatically improved?

Lifestyle can only improve if income increases relative to a constant cost of living, or cost of living decreases relative to a constant income.

 

[ilia25]

Of course, it is 100% affected by inflation. Thus the utilization of Real Dollars as the most accurate measuring tool of income growth which correlates with purchasing power per hour labor.

If wages for the lower half have dropped as you claim, how is it that lifestyles have so dramatically improved?

Who said that they did? The median household has a similar living standards now as it had 30 years ago.

 

[Uncensored2008]

Who said that they did?

Well, lets see...

What was the average size of a new home in 1970?

What is it now?

How many hours, at minimum wage were needed to buy that home in 1970?

What is it now?

A new car?

Hours then, vs now?

How many cars did a lower to middle class family own in 1970?

How about now?

Televisions?

Washers and Dryers?

Power lawn mowers?

The median household has a similar living standards now as it had 30 years ago.

That is a complete lie.

Lives lived now are at a level of luxury not even imagined 30 years ago.

As a child we would call Gramma twice a year, and then each could talk for 3 minutes. Long distance was really expensive. About half the middle class in the 1960's didn't own a TV, almost no one had a color model. No one had air conditioning, or dishwashers. "Going Out" was a couple of times a year, on birthdays.

I would LOVE to make you leftists live a 1970 lifestyle, just for a month, then have you bullshit about how much worse it is now...

 

[kiwiman127]

Of course, it is 100% affected by inflation. Thus the utilization of Real Dollars as the most accurate measuring tool of income growth which correlates with purchasing power per hour labor.

If wages for the lower half have dropped as you claim, how is it that lifestyles have so dramatically improved? Credit
Lifestyle can only improve if income increases relative to a constant cost of living, or cost of living decreases relative to a constant income.

The middle class is primarily the consumer class that drives the US economy, they basically overextended themselves by using credit. So in today's world, the middle class has been paying down their debt and actually saving some of their money. In a consumer driven economy, for the short term that isn't good news as it slows down the economy and drives demand down. But for the long-term, the middle class in general, are improving the long-term economy.

 

[kiwiman127]

Who said that they did?

Well, lets see...

What was the average size of a new home in 1970?

What is it now?

How many hours, at minimum wage were needed to buy that home in 1970?

What is it now?

A new car?

Hours then, vs now?

How many cars did a lower to middle class family own in 1970?

How about now?

Televisions?

Washers and Dryers?

Power lawn mowers?

The median household has a similar living standards now as it had 30 years ago.

That is a complete lie.

Lives lived now are at a level of luxury not even imagined 30 years ago.

As a child we would call Gramma twice a year, and then each could talk for 3 minutes. Long distance was really expensive. About half the middle class in the 1960's didn't own a TV, almost no one had a color model. No one had air conditioning, or dishwashers. "Going Out" was a couple of times a year, on birthdays.

I would LOVE to make you leftists live a 1970 lifestyle, just for a month, then have you bullshit about how much worse it is now...

You are lying to yourself. Facts are facts and I'm sorry the facts disrupt all the BS that has been fed to you.

The far right is about the only group that think there is no income/wealth inequality, so naturally they don't believe what about every non-ideologue economist believe. There is truly income/wealth inequality and wages have been basically flat for over three decades.

Also, I don't believe that you understand the concept of Real Dollars/constant dollars.