The Rebellion of the French CEOs

[Wiseacre]

You want to know what's going to happen here if Obama gets his way? Just look at France, who is a bit ahead of us on the shift to the left.

snippet:

" Nearly 100 French CEOs, among them the heads of Accor, the hotel chain, Air France, Carrefour, L´Oréal, Peugot, Siemens, SociétéGénerale and Veolia, the giant waste and water utility, are urging socialist President Francois Hollande to reduce government spending by 60 billion euros (about $76 billion) over the next five years, and reduce payroll taxes by 30 billion euros over the next two years. The cost of government, they say, has reached “the limits of what is bearable.”
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" Government spending now amounts to 56 percent of GDP in France, more than double what it is in the United States. To pay for this profligacy, the government's 2013 budget proposes taxing top earners at a 75 percent rate and those earning more than 150,000 euros, or about $191,000 per year, at 45 percent. Other taxes also are going up (on dividend income and certain capital gains, for instance). All of which has pushed France’s wealth and jobs creators – its business leaders – to the point of desperation.

Some are even voting with their feet. Bernard Arnault, head of the luxury brand LVHM (Louis Vuitton-Moet Hennessy) and the country’s richest man, is seeking a Belgian passport. In response to critics, he claims he’ll continue to pay taxes in France, but it’s obvious that he’ll eventually move across the border. "
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"President Hollande thinks the solution to his country’s severe deficits, huge debt, loss of competitiveness and economic stagnation, is more tax revenue, more financial stimulus, and more government generally …. you know the drill. But France’s fiscal problems, like our own, are a symptom of too much, not too little, government. "
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" The correct way to measure France is to compare it to Germany, not to Greece or Spain. In 2000, France’s exports amounted to 55 percent of Germany’s exports. Today the figure is 40 percent.

The reason for this is not difficult to ascertain: The cost of government-mandated benefits –a major complaint of the CEOs – amounts to more than 50 euros for every 100 euros paid in salaries, almost twice as much as in Germany.

France’s decline mirrors that of Europe as a whole. Every decade since the 1970s the economic performance of the 27 countries that make up the European Union has deteriorated. In the 1970s, economic growth averaged 3.1 percent. In the 1980s the figure was 2.5 percent. In the 1990s it was 2.1 percent and in the last decade, 1.4 percent. "

Read more: France: Rebellion of the CEOs | Fox News

 

[oldfart]

Let's see. Fox News is reporting that French executives want lower income taxes on people who make $191,000 or more. And this is important because.........

 

[Wiseacre]

Let's see. Fox News is reporting that French executives want lower income taxes on people who make $191,000 or more. And this is important because.........

Actually they want lower taxes AND less spending because the french economy is going down the drain thanks to the socialist policies over the past several years. Which is why it's important. Cuz under Obama we're going in the same direction. Apparently democrats are too damn stupid to learn from the mistakes of others.

 

[Katzndogz]

It's not just the CEOs, the doctors are protesting too.

French doctors march to protest government efforts to limit health care costs for patients - The Washington Post

These classes should just leave France, their efforts and wealth will be welcome somplace else.

 

[Meister]

Let's see. Fox News is reporting that French executives want lower income taxes on people who make $191,000 or more. And this is important because.........

Actually they want lower taxes AND less spending because the french economy is going down the drain thanks to the socialist policies over the past several years. Which is why it's important. Cuz under Obama we're going in the same direction. Apparently democrats are too damn stupid to learn from the mistakes of others.

Libs think we can take proven failed policies of other nations and make them work.

 

[oldfart]

Let's see. Fox News is reporting that French executives want lower income taxes on people who make $191,000 or more. And this is important because.........

Actually they want lower taxes AND less spending because the french economy is going down the drain thanks to the socialist policies over the past several years. Which is why it's important. Cuz under Obama we're going in the same direction. Apparently democrats are too damn stupid to learn from the mistakes of others.

Well, that's certainly a roundabout way to start a discussion of austerity in America. Given the current smashing success of deficit reduction in the Eurozone in general and France specifically, I'm not sure why you would want to start there. Especially with France, which before the financial collapse had no unusual signs of fiscal distress. Until now, France has been a full partner in the austerity craze and has reaped the same results that everyone except Germany has experienced as a result. Since Sept 2009 when unemployment peaked in the US at a bit over 10% and was almost the same in the 17-nation Eurozone, the US unemployment rate has declined to 7.9% while the Eurozone rate soared to over 10.5%. What happened in late 2009--early 2010? The Eurozone adopted austerity. What do you think explains the divergence, other than austerity?


Oh, and guys, this is the CDZ. Lose the invective. Calling names does not support your argument.

 

[Wiseacre]

Let's see. Fox News is reporting that French executives want lower income taxes on people who make $191,000 or more. And this is important because.........

Actually they want lower taxes AND less spending because the french economy is going down the drain thanks to the socialist policies over the past several years. Which is why it's important. Cuz under Obama we're going in the same direction. Apparently democrats are too damn stupid to learn from the mistakes of others.

Well, that's certainly a roundabout way to start a discussion of austerity in America. Given the current smashing success of deficit reduction in the Eurozone in general and France specifically, I'm not sure why you would want to start there. Especially with France, which before the financial collapse had no unusual signs of fiscal distress. Until now, France has been a full partner in the austerity craze and has reaped the same results that everyone except Germany has experienced as a result. Since Sept 2009 when unemployment peaked in the US at a bit over 10% and was almost the same in the 17-nation Eurozone, the US unemployment rate has declined to 7.9% while the Eurozone rate soared to over 10.5%. What happened in late 2009--early 2010? The Eurozone adopted austerity. What do you think explains the divergence, other than austerity?


Oh, and guys, this is the CDZ. Lose the invective. Calling names does not support your argument.

European austerity was and is still mostly tax increases, that's a big reason why it ain't working over there. Interestingly enough, the democrats didn't push through a tax hike here when they had the chance back in 2009; a bit odd don't you think? They had a filibuster proof Senate and a Pelosi-led House, but still didn't do it. Hard to blame the repubs for that, no? Could be the fact that they didn't raise tax rates here kept us from a double dip IMHO. Or at least one factor anyway.

Public spending is so high over there that private industry is crowded out, which is one reason why we're not yet in the same pickle they are. And many of those countries have structural labor problems, which keeps costs too high. We've got that problem here too, in some states. Look at the recent Twinkies saga, in some cases unions are striking themselves out of a job.

 

[oldfart]

European austerity was and is still mostly tax increases, that's a big reason why it ain't working over there.

I don't think the Greeks and Spanish were rioting over tax increases for the wealthy. They were more likely upset with layoffs and pensio reductions. The same can be said of Great Britain. Where did you get the idea the Europeans were relying mainly on tax increases? Just curious, most I've read focused on budget cuts.

Interestingly enough, the democrats didn't push through a tax hike here when they had the chance back in 2009; a bit odd don't you think? They had a filibuster proof Senate and a Pelosi-led House, but still didn't do it. Hard to blame the repubs for that, no? Could be the fact that they didn't raise tax rates here kept us from a double dip IMHO. Or at least one factor anyway.

At the time Democrats were scared shitless the economy was going down the toilet and classic Keynesian theory says that you don't raise taxes in a downturn. Personally I would hve no problem making the timing of tax increases contingent on economic recovery. But that's just me.

Public spending is so high over there that private industry is crowded out, which is one reason why we're not yet in the same pickle they are. And many of those countries have structural labor problems, which keeps costs too high. We've got that problem here too, in some states. Look at the recent Twinkies saga, in some cases unions are striking themselves out of a job.

Oh,boy. So much error, so little space to correct it. Say's Law was refuted two hundred and fifty years ago. Apparently quite a few folks didn't get the memo. If you want to debate the "crowding-out theory", I'm game but I think it's a side issue to this topic. You could be referring to more than one thing by your reference to "structural labor problems". Is this a reference to a theory of structural unemployment, or a labor cost argument? I'll let the Twinkie case stand on its own merits: labor union abuse, bankruptcy law abuse, or really bad management?

 

[Wiseacre]

European austerity was and is still mostly tax increases, that's a big reason why it ain't working over there.

I don't think the Greeks and Spanish were rioting over tax increases for the wealthy. They were more likely upset with layoffs and pensio reductions. The same can be said of Great Britain. Where did you get the idea the Europeans were relying mainly on tax increases? Just curious, most I've read focused on budget cuts.


Gonna have to back to you on this, don't have the time at the moment. Expect my response sometime monday.

PS: I'm going to start a new thread on this.

Interestingly enough, the democrats didn't push through a tax hike here when they had the chance back in 2009; a bit odd don't you think? They had a filibuster proof Senate and a Pelosi-led House, but still didn't do it. Hard to blame the repubs for that, no? Could be the fact that they didn't raise tax rates here kept us from a double dip IMHO. Or at least one factor anyway.

At the time Democrats were scared shitless the economy was going down the toilet and classic Keynesian theory says that you don't raise taxes in a downturn. Personally I would hve no problem making the timing of tax increases contingent on economic recovery. But that's just me.


Me too, I could support a tax increase when economic growth is sustained at 3% or better. That's the ideal time to make hay so to speak, maybe even run a surplus and pay down some debt.

Public spending is so high over there that private industry is crowded out, which is one reason why we're not yet in the same pickle they are. And many of those countries have structural labor problems, which keeps costs too high. We've got that problem here too, in some states. Look at the recent Twinkies saga, in some cases unions are striking themselves out of a job.

Oh,boy. So much error, so little space to correct it. Say's Law was refuted two hundred and fifty years ago. Apparently quite a few folks didn't get the memo. If you want to debate the "crowding-out theory", I'm game but I think it's a side issue to this topic. You could be referring to more than one thing by your reference to "structural labor problems". Is this a reference to a theory of structural unemployment, or a labor cost argument? I'll let the Twinkie case stand on its own merits: labor union abuse, bankruptcy law abuse, or really bad management?

First of all, Say's Law has never been refuted; Keynes disputed it back in the 1930s, but that doesn't mean Say's Law should be considered as false or in error. Most of economics is theory with very little proof, and BTW that wasn't 250 years ago. And BTW when did I mention Say's Law?

I was primarily referring to labor costs as being too prohibiting to economic growth. Labor laws in many European countries are so restrictive that many companies deliberately hold down the number of employees to below a certain number to avoid exorbitant costs in other areas than wages. That don't help grow the economic pie.

 

[oldfart]

PS: I'm going to start a new thread on this.

Good idea. Separate threads are much easier to follow.

Me too, I could support a tax increase when economic growth is sustained at 3% or better. That's the ideal time to make hay so to speak, maybe even run a surplus and pay down some debt.

Agreed. As a first approximation, I like the cyclically balanced budget where deficits in hard times are offset by surpluses in good times.

First of all, Say's Law has never been refuted; Keynes disputed it back in the 1930s, but that doesn't mean Say's Law should be considered as false or in error. Most of economics is theory with very little proof, and BTW that wasn't 250 years ago. And BTW when did I mention Say's Law?

I was winging it from memory and got a bit off on the dates. Say published hiswork in 1803 and James Mill expanded on it in 1808, so it's a little over 200 years old. With the additions of John Stuart Mill and David Ricardo, Say's work became the foundation of Classical macroeconomics until 1930. I admit to having misspoken by referencing Say's Law from which the "crowding out" theory arises as if the two were synonymous. You did not mention Say's Law.

Say's formulation was that production also created its own demand, so that a general glut of goods (or an overall lack of demand)could not happen. Descended from this were a number of further implications including Walras Law which was first expressed by John Stuart Mill in 1844. This held that in a general equilibrium model that the sum of all excess market demand and excess market supply must tend to zero and that efficient markets therefore drive prices to levels where the ultimate equilibrium solution has no net excess demand or supply. Thus long-term involuntary unemployment was not possible in the Classical model. The best source on the formulation and critique of Say's Law remains Oscar Lange's 1942 article "Say’s law: A restatement and criticism" found in "Studies in Mathematical Economics and Econometrics, in Memory of Henry Schultz, pages 49–68. University of Chicago Press.

Another implication of Say's Law and Walras Law is that since the economy in general equilibrium has no involuntary unemployment, any increase in demand (especially government demand) will cause prices to rise and interest rates to rise (assuming a gold standard). This is the theory that public spending for any purpose "crowds out" private investment.

Of course the presence of persistent unemployment caused many, most notably Marx, to question the validity of this approach. So by the mid-eighteenth century both the Classical formulation and the critique of the "crowding out" theory were established and many writers were attempting to explain the presistence of unemployment by resort to blaming government action such as poor relief, wage stickiness, labor unions, and monopoly power in industry for the failure of the market to tend to full employment. The arguments were much the same as we see today.

But if general equilibrium does not automatically asure full employment, then increases in government demand may result in firms hiring labor and expanding production rather than raising prices. And if there is no gold standard the monetary authority could exercise accomodating monetary policy to keep interest rates stable, thus short curcuiting the mechanism that purportedly created "crowding out". This was the essence of Keynes argument in 1930.

My view is that the assumptions needed to make the "crowding out" effect work are so restrictive as to be mostly a curiosity. You have to assume full employment, which Classical economists did by invoking Say's Law. You also have to fix the money supply, which is what the gold standard did. I would put this situation on one end of the spectrum and the liquidity trap on the other. Most of the time (but not now) we are somewhere inbetween and the degree of "crowding out" is dependent on the elasticity of the I--S and L--M curves of Hicksian analysis. The basis of my remark that Say's Law was refuted almost from the start was the vast amount of intellectual energy expended on explaining why it was at odds with observed fact (poor laws, unions, monopolies, sticky wages and all). If you are up to some heavy lifting, the go-to book in this area of general equilibrium and Keynesia theory is Axel Leijonhufvud, 1968. "On Keynesian Economics & the Economics of Keynes: A Study in Monetary Theory", Oxford University Press.

I was primarily referring to labor costs as being too prohibiting to economic growth. Labor laws in many European countries are so restrictive that many companies deliberately hold down the number of employees to below a certain number to avoid exorbitant costs in other areas than wages. That don't help grow the economic pie.

Thanks for clarifying. My one comment is that theory of international trade rests not on absolute advantage but on comparative advantage. Thus countries that cannot produce as efficiently as others can still be competitive in the world market as long as their prices encourage other countries to purchase from them and concentrate on more profitable sectors where they have larger comparative advantage. Europe has been on both sides of the equation and the current crisis o the Eurozone is more of a trade imbalance than a fiscal problem, brought on by the introduction of a common currency without enough thought to the trade and investment consequences. A good subject for another day!

 

[Wiseacre]

PS: I'm going to start a new thread on this.

Good idea. Separate threads are much easier to follow.

Me too, I could support a tax increase when economic growth is sustained at 3% or better. That's the ideal time to make hay so to speak, maybe even run a surplus and pay down some debt.

Agreed. As a first approximation, I like the cyclically balanced budget where deficits in hard times are offset by surpluses in good times.

First of all, Say's Law has never been refuted; Keynes disputed it back in the 1930s, but that doesn't mean Say's Law should be considered as false or in error. Most of economics is theory with very little proof, and BTW that wasn't 250 years ago. And BTW when did I mention Say's Law?

I was winging it from memory and got a bit off on the dates. Say published hiswork in 1803 and James Mill expanded on it in 1808, so it's a little over 200 years old. With the additions of John Stuart Mill and David Ricardo, Say's work became the foundation of Classical macroeconomics until 1930. I admit to having misspoken by referencing Say's Law from which the "crowding out" theory arises as if the two were synonymous. You did not mention Say's Law.

Say's formulation was that production also created its own demand, so that a general glut of goods (or an overall lack of demand)could not happen. Descended from this were a number of further implications including Walras Law which was first expressed by John Stuart Mill in 1844. This held that in a general equilibrium model that the sum of all excess market demand and excess market supply must tend to zero and that efficient markets therefore drive prices to levels where the ultimate equilibrium solution has no net excess demand or supply. Thus long-term involuntary unemployment was not possible in the Classical model. The best source on the formulation and critique of Say's Law remains Oscar Lange's 1942 article "Say’s law: A restatement and criticism" found in "Studies in Mathematical Economics and Econometrics, in Memory of Henry Schultz, pages 49–68. University of Chicago Press.

Another implication of Say's Law and Walras Law is that since the economy in general equilibrium has no involuntary unemployment, any increase in demand (especially government demand) will cause prices to rise and interest rates to rise (assuming a gold standard). This is the theory that public spending for any purpose "crowds out" private investment.

Of course the presence of persistent unemployment caused many, most notably Marx, to question the validity of this approach. So by the mid-eighteenth century both the Classical formulation and the critique of the "crowding out" theory were established and many writers were attempting to explain the presistence of unemployment by resort to blaming government action such as poor relief, wage stickiness, labor unions, and monopoly power in industry for the failure of the market to tend to full employment. The arguments were much the same as we see today.

But if general equilibrium does not automatically asure full employment, then increases in government demand may result in firms hiring labor and expanding production rather than raising prices. And if there is no gold standard the monetary authority could exercise accomodating monetary policy to keep interest rates stable, thus short curcuiting the mechanism that purportedly created "crowding out". This was the essence of Keynes argument in 1930.

My view is that the assumptions needed to make the "crowding out" effect work are so restrictive as to be mostly a curiosity. You have to assume full employment, which Classical economists did by invoking Say's Law. You also have to fix the money supply, which is what the gold standard did. I would put this situation on one end of the spectrum and the liquidity trap on the other. Most of the time (but not now) we are somewhere inbetween and the degree of "crowding out" is dependent on the elasticity of the I--S and L--M curves of Hicksian analysis. The basis of my remark that Say's Law was refuted almost from the start was the vast amount of intellectual energy expended on explaining why it was at odds with observed fact (poor laws, unions, monopolies, sticky wages and all). If you are up to some heavy lifting, the go-to book in this area of general equilibrium and Keynesia theory is Axel Leijonhufvud, 1968. "On Keynesian Economics & the Economics of Keynes: A Study in Monetary Theory", Oxford University Press.

I was primarily referring to labor costs as being too prohibiting to economic growth. Labor laws in many European countries are so restrictive that many companies deliberately hold down the number of employees to below a certain number to avoid exorbitant costs in other areas than wages. That don't help grow the economic pie.

Thanks for clarifying. My one comment is that theory of international trade rests not on absolute advantage but on comparative advantage. Thus countries that cannot produce as efficiently as others can still be competitive in the world market as long as their prices encourage other countries to purchase from them and concentrate on more profitable sectors where they have larger comparative advantage. Europe has been on both sides of the equation and the current crisis o the Eurozone is more of a trade imbalance than a fiscal problem, brought on by the introduction of a common currency without enough thought to the trade and investment consequences. A good subject for another day!

With regard to Say's Law, I will simply say that assumptions notwithstanding, a country that has too many public employees and too many people dependent on gov't support cannot achieve the maximum level of economic growth they might otherwise enjoy. It seems obvious that under such circumstances that country will have fewer entrepeneurs and a lower rate of productivity growth, if for no other reason than they'd have less people in the private workforce. Most European countries with a large public sector have boxed themselves into a corner; it's very hard to cut back on pensions and benefits that were promised but now cannot be delivered. That's one reason why we're seeing the protests and riots, gov'ts are trying to scale back but it ain't going over too well with the general populace.

So what do the politicians do? The only alternative to spending cuts is higher taxes. But if you raise 'em high enough the rich guys sell out, pack up, and leave. It's happening right now and has been happening for some years now. Money flows to where it gets the best return, there's no getting around that. And money is the lifeblood of capitalism; if you have fewer rich guys who are willing to invest, then you got a problem.

 

[The Rabbi]

Let's see. Fox News is reporting that French executives want lower income taxes on people who make $191,000 or more. And this is important because.........

Actually they want lower taxes AND less spending because the french economy is going down the drain thanks to the socialist policies over the past several years. Which is why it's important. Cuz under Obama we're going in the same direction. Apparently democrats are too damn stupid to learn from the mistakes of others.

Well, that's certainly a roundabout way to start a discussion of austerity in America. Given the current smashing success of deficit reduction in the Eurozone in general and France specifically, I'm not sure why you would want to start there. Especially with France, which before the financial collapse had no unusual signs of fiscal distress. Until now, France has been a full partner in the austerity craze and has reaped the same results that everyone except Germany has experienced as a result. Since Sept 2009 when unemployment peaked in the US at a bit over 10% and was almost the same in the 17-nation Eurozone, the US unemployment rate has declined to 7.9% while the Eurozone rate soared to over 10.5%. What happened in late 2009--early 2010? The Eurozone adopted austerity. What do you think explains the divergence, other than austerity?


Oh, and guys, this is the CDZ. Lose the invective. Calling names does not support your argument.

France has never adopted austerity. That is a joke. SPending as a percentage of GDP is enormous.
France adopted confiscatory tax rates on the wealthy. Exactly what Obama is advocating. The CEOs are rightly protesting this and much more. It is impossible to run a business in France. Workers are guaranteed like 2 weeks paid vacation to start. It is almost impossible to fire them.
With little incentive to work hard, and less incentive not to screw up French workers suck. The country is an economic basket case. And Hollande's policies will make it worse.

If what you said were true then stimulus would have brought the economy to new heights, as French spending has been out of control for some time. But it isn't true. It isn't true in France and it isn't true here. Stimulus never works. It failed in Japan for 20 years. Its failed here. It failed in France. Liberal policies are gross failures, causing misery and poverty every place theyre tried.

 

[oldfart]

a country that has too many public employees and too many people dependent on gov't support cannot achieve the maximum level of economic growth they might otherwise enjoy.

I differ here. First look at the "too many public employees" argument. What do public employees do? Most are state or local employees and the largest categories are law enforcement, education, and public health and safety. Of course we could turn government functions over to private contractors, and I suppose this would magically convert the slothful to the virtuous. What's the main category of federal employees? The military. You can look under all of the beds for those useless bureaucrats, but its actually pretty hard to find them. Do we really want to ditch food safety inspection, patent inspectors, and prison guards? This is just a straw man. Yes, we need to abolish jobs that serve no useful purpose or can be combined and get rid of public employees who cannot perform their jobs adequately; but that is not going to be accomplished by bashing public service.

As to "too many people dependent on government support", whose grandmother do you waqnt to throw under the bus? And does that include corporations who rack up billions in profits each quarter and get refunds and subsidies from the government?
Corporate welfare runs tens of billions each year.

Finally let's talk about growth theory. A lot of research suggests that large and increasing income inequality such as exists in America today lowers growth. I look forward to having a discusson about growth theory some time!

 

[oldfart]

France has never adopted austerity. That is a joke. SPending as a percentage of GDP is enormous.

I misspoke. I should have said that France has been an enthusiastic supporter of Germany (until the recent election) in suggesting austerity for others.

What can I say about the French economy? It's run by Frenchmen. What do you expect? The savior of the French economy has always been the French peasant farmer with his hoard of gold coin in his sock. And the French regretably are running out of rural peasants.

 

[Wiseacre]

a country that has too many public employees and too many people dependent on gov't support cannot achieve the maximum level of economic growth they might otherwise enjoy.

I differ here. First look at the "too many public employees" argument. What do public employees do? Mos are state or local employees and the largest categories are law enforcement, education, and public health and safety. Of course we could tur government functions over to private contractors, and I suppose this would magically convert the slothful to the virtuous. What's the main category of federal employees? The military. You can look under all of the beds for those useless bureaucrats, but its actually pretty hard to find them. Do we really want to ditch food safety inspection, patent inspectors, and prison guards? This is just a straw man. Yes, we need to abolish jobs that serve no useful purpose or can be combined and get rid of public employees who cannot perform their jobs adequately; but that is not going to be accomplished by bashing public service.

That's all I'm asking for, to begin with anyway. How many duplicate gov't programs do we have within the federal gov't? How many are serving no effective purpose and could be abolished? How many could be done better by privatizing them, starting with the US Postal Service? I still maintain that a larger force of public employees means less innovation and less vigor in the private sector. No doubt many of those in the public arena have important jobs; but I'm thinking many of them don't.

As to "too many people dependent on government support", whose grandmother do you waqnt to throw under the bus? And does that include corporations who rack up billions in profits each quarter and get refunds and subsidies from the government?
Corporate welfare runs tens of billions each year.

C'mon now, let's not get into demagoguery here. We don't need to be throwing anybody's grandma under a bus or over a cliff, but how much money are we giving to people who don't need it? Or deserve it? As for corps, hell yeah let's reform that crap. What kind of nonsensical tax system has a monster corp like GE paying no taxes, they're even racking up tax credits for the future. I see no reason for tax breaks and subsidies to anybody; if we can't compete on a level playing field with the rest of the world then wqe need to be using our resources to do something else. And if the playing field ain't level then we need to make it level, whatever it takes. No favoritism, no crony capitalism, make it on your own or go bust.

Finally let's talk about growth theory. A lot of research suggests that large and increasing income inequality such as exists in America today lowers growth. I look forward to having a discusson about growth theory some time!

Fine by me. You can start with this: the periods of time when income inequality increased the most was also the times when economic growth was at it's best.

snippet:

A related point that Saez makes in his paper, which underscores today’s broader economic challenge, is that “during the Great Recession, from 2007 to 2009, average real income per family declined dramatically by 17.4%, the largest two year drop since the Great Depression. Average real income for the top percentile fell even faster (36.3 percent decline).” Saez reviews how dramatic the swings have been during recessionary and expansionary environments over some of the past administrations. For example, during the Clinton years (1993–2000), incomes of the top 1 percent went up 98.7 percent, and then down 30.8 percent in the 2001 recession. Incomes climbed 61.8 percent during the Bush years of 2002 to 2007, and then fell 36.3 percent in the most recent recession, only to go back up 11.6 percent during this nascent recovery (see column 2 of table 1 from the Saez paper, which Rattner references as well).

Measured Inequality: Fallacies and Overstatements | e21 - Economic Policies for the 21st Century

 

[The Rabbi]

I'll let Lady Thatcher explain it. Socialists are happy with the poor making less as long as the wealthy also make less.
[ame=http://www.youtube.com/watch?v=rv5t6rC6yvg]Thatcher's Last Stand Against Socialism - YouTube[/ame]

 

[oldfart]

Fine by me. You can start with this: the periods of time when income inequality increased the most was also the times when economic growth was at it's best.

I'm working on it. I've read the Saez paper and it's pretty interesting. More soon.

A related point that Saez makes in his paper, which underscores today’s broader economic challenge, is that “during the Great Recession, from 2007 to 2009, average real income per family declined dramatically by 17.4%, the largest two year drop since the Great Depression. Average real income for the top percentile fell even faster (36.3 percent decline).” Saez reviews how dramatic the swings have been during recessionary and expansionary environments over some of the past administrations. For example, during the Clinton years (1993–2000), incomes of the top 1 percent went up 98.7 percent, and then down 30.8 percent in the 2001 recession. Incomes climbed 61.8 percent during the Bush years of 2002 to 2007, and then fell 36.3 percent in the most recent recession, only to go back up 11.6 percent during this nascent recovery (see column 2 of table 1 from the Saez paper, which Rattner references as well).

You might read this again. What it says is that mean income of the top 1% is more volatile than the mean of all households, which is true. That doesn't say anything about the relationship of the two measures which would be a measure of inequality.

There's a good CBO report on this issued May 16, 2012 called "Trends In The Distribution Of Household Income, 1979-2007" CBO | Trends in the Distribution of Household Income Between 1979 and 2007
I don't seem to be able to copy the cool looking graph, but you can get that from the link to the report.

CBO finds that, between 1979 and 2007, income grew by:

275 percent for the top 1 percent of households,
65 percent for the next 19 percent,
Just under 40 percent for the next 60 percent, and
18 percent for the bottom 20 percent.

The upshot is that over the last 28 years real income has grown faster for the top 1% than everyone else, which is why I conclude that income inequality is increasing.

 

[Wiseacre]

" A related point that Saez makes in his paper, which underscores today’s broader economic challenge, is that “during the Great Recession, from 2007 to 2009, average real income per family declined dramatically by 17.4%, the largest two year drop since the Great Depression. Average real income for the top percentile fell even faster (36.3 percent decline).” Saez reviews how dramatic the swings have been during recessionary and expansionary environments over some of the past administrations. For example, during the Clinton years (1993–2000), incomes of the top 1 percent went up 98.7 percent, and then down 30.8 percent in the 2001 recession. Incomes climbed 61.8 percent during the Bush years of 2002 to 2007, and then fell 36.3 percent in the most recent recession, only to go back up 11.6 percent during this nascent recovery (see column 2 of table 1 from the Saez paper, which Rattner references as well). "

Check it out: during the Great Recession from 2007-2009, the average real income for the top income percentile dropped more than twice as much as the average per family. Since the summer of 2009 when the recession officially ended, I'm pretty sure the real incomes for them has risen a lot more than the middle and lower income groups. Joe Biden thinks so anyway.

Look at the increase in income for the top 1% during the Clinton years, almost 100% (1993-2000) and 51.8% during 2002-2007; I'm thinking that's a lot better than the average family incomes did. And during the 2001 recession the top 1% lost 30.8%, which I believe is a lot more than the average. All of which supports my contention that income inequality grows the most when the economy is booming and declines during downturns.

 

[PaulS1950]

The reason the the top income is more volitile is that the risk takers (those who generate new ideas and jobs) are the ones who make the most money. They are also the ones that lose the most when things go bust. Consider that 36% of multi-millions of dollars is a great deal larger amount than the 18% of $35000 income. Those who make the most, risk the most and those who risk the least, lose the least. Not only in percent but the gap is much wider when you calculate in dollars instead of percent of income.

 

[Wiseacre]

Fine by me. You can start with this: the periods of time when income inequality increased the most was also the times when economic growth was at it's best.

I'm working on it. I've read the Saez paper and it's pretty interesting. More soon.

A related point that Saez makes in his paper, which underscores today’s broader economic challenge, is that “during the Great Recession, from 2007 to 2009, average real income per family declined dramatically by 17.4%, the largest two year drop since the Great Depression. Average real income for the top percentile fell even faster (36.3 percent decline).” Saez reviews how dramatic the swings have been during recessionary and expansionary environments over some of the past administrations. For example, during the Clinton years (1993–2000), incomes of the top 1 percent went up 98.7 percent, and then down 30.8 percent in the 2001 recession. Incomes climbed 61.8 percent during the Bush years of 2002 to 2007, and then fell 36.3 percent in the most recent recession, only to go back up 11.6 percent during this nascent recovery (see column 2 of table 1 from the Saez paper, which Rattner references as well).

You might read this again. What it says is that mean income of the top 1% is more volatile than the mean of all households, which is true. That doesn't say anything about the relationship of the two measures which would be a measure of inequality.

There's a good CBO report on this issued May 16, 2012 called "Trends In The Distribution Of Household Income, 1979-2007" CBO | Trends in the Distribution of Household Income Between 1979 and 2007
I don't seem to be able to copy the cool looking graph, but you can get that from the link to the report.

CBO finds that, between 1979 and 2007, income grew by:

275 percent for the top 1 percent of households,
65 percent for the next 19 percent,
Just under 40 percent for the next 60 percent, and
18 percent for the bottom 20 percent.

The upshot is that over the last 28 years real income has grown faster for the top 1% than everyone else, which is why I conclude that income inequality is increasing.

You do realize that the turnover at the top is quite significant? It's not the same people who enjoyed the growth in wealth over the last 28 years. Nor it is the same people on the bottom all those years living on the edge or below the poverty line. The people who risked the most in those years are the ones who benefited the most; those who risked nothing or did nothing to increase their worth ended up with the least. In both cases, as it should be.