Economic inequality is holding back economy

[ipaps]

a. “…in 1967 only one in 25 families earned an income of $100,000 or more in real income, whereas now, one in six do. The percentage of families that have an income of more than $75,000 a year has tripled from 9% to 27%. But it's not just the rich that are getting richer. Virtually every income group has been lifted by the tide of growth in recent decades.”

The percentage of families breaking a certain income threshold doesn't tell us about wealth and income differences. It just states overall increase.

What I'm trying to point out is that when one gathers the majority of the wealth of the society, he will not be able to gather anymore. He can only spend it thereafter, more investment is useless. The same holds true between countries. No country can keep making money while not spending. (I believe)

Why keep making money and not spending is beyond me.

 

[ipaps]

To suggest that investment has nothing to do with contributing to economic growth is wrong IMHO. Job creation in any country primarily comes from new businesses, which in turn requires capital investment. Banks are not going to fund any business venture without sufficient collateral, simple as that. Even existing businesses thart want to expand will require capital to do that; no capital, no growth.

I do agree that capital investment is very helpful in production. But without consumption there's no need to produce and therefore no need for capital.

 

[Leweman]

welp this has proven to be an inaccurate and worthless post ... as heartfelt as it may be.

 

[ipaps]

In order for consumers to buy a product, don't you think there is a need to actually produce it?

Maybe people have needs first, then someone produce, then comes consumption. But what if they are unable to consume? Like in the case that the one who produced says other don't have anything he want.

Why would "the rich" have idle money? What good would that do them?

I think I mean the money that's not circulating.

So if I buy products from Taiwanese giant Asus, the products I buy today will be more expensive than similar products 10 years ago?

Is that your assertion?

Old models does loss value because people are less willing to buy them, but my point is the distribution of GDP. Inflation impacts working class most, they work the same but can purchase less because their income is rather fixed. Those GDP goes to corporations, owners, the share holders.

Everyone can be both working and investing at the same time. But what's the balance between the value of the two? If investing is so magical, why aren't we all just investing?

 

[ipaps]

How will you fix economic inequality?

Frankly I don't know. I'm just saying what I think the problem is.

 

[whitehall]

Hey paps, go find a european forum and give them bad advice about the Euro. Wait until the Chinese come knocking on Taiwan's door and let us know how you make out.

 

[Wiseacre]

To suggest that investment has nothing to do with contributing to economic growth is wrong IMHO. Job creation in any country primarily comes from new businesses, which in turn requires capital investment. Banks are not going to fund any business venture without sufficient collateral, simple as that. Even existing businesses thart want to expand will require capital to do that; no capital, no growth.

I do agree that capital investment is very helpful in production. But without consumption there's no need to produce and therefore no need for capital.

Capital investment isn't just helpful, it's mandatory. No money, no new businesses, I wish you lefties would accept that truth. And as a result realize that raising taxes on capital investment disincentivizes business creation or expansion.

Sure we need more demand, the question is how to go about increasing it on a permanent basis. Some say redistributing the wealth puts more money into the hands of the less well off, who will then spend it. But that is not substantiated by the facts, many of those people hold onto that money, in case the future does not improve.

Raise taxes on the rich, that's all we hear from the dems. No mention of the possible consequences, nor of the fact that ObamaCare is already raising their taxes. You know what could happen if the Obama tax cuts expire just on the top marginal rate? Their rate goes up to near 50%, and the capital gains taxes more than doubles. How can you possibly think there will be no repercussions?

You do realize that there are other places around the world where those rich people can invest, right? Places that weren't there for investment purposes prior to Reagan? Back in the 50s and 60s when the rate was 90%, where the hell else do you think investors could put their money? China? India? Brazil? I don't think so. You don't think those rich guys found ways to hide much of their earnings to avoid paying taxes on it? You get the picture right? Less money gets invested in our economy.

And it's not just American investors, from the mid 80s to the mid 2000s, foreign investors put their money in American businesses, not in American gov't securities, or not nearly as much. Guess what, they ain't puting any money in american business these days, and they ain't going to until the business climate here becomes competitive again. Which it ain't, in large part due to the policies of the Obama admin.

 

[Uncensored2008]

The percentage of families breaking a certain income threshold doesn't tell us about wealth and income differences. It just states overall increase.

That fact that there has been an overall increase is important, though.

What I'm trying to point out is that when one gathers the majority of the wealth of the society, he will not be able to gather anymore.

I see. So when they get all the money out of the pot, then they hoard it leaving none for anyone else.

He can only spend it thereafter, more investment is useless.

Right, because when Gaia was spawned she brought forth a pot of wealth for all people to share, that is all the wealth there is or ever will be and can only be divided between the good little boys and girls...

The same holds true between countries. No country can keep making money while not spending. (I believe)

Well, they can't actually "make" money, they can only take more than their fair share from the magic pot of wealth, right?

Why keep making money and not spending is beyond me.

You voted for Obama, didn't you?

 

[EdwardBaiamonte]

I do agree that capital investment is very helpful in production. But without consumption there's no need to produce and therefore no need for capital.

Supply side versus liberal lunacy:

Say's Law ( the origin of supply side economics) says that supply(production) generates its own demand9consumption) and so simultaneously increases ones standard of living.

First, you have two farmers each growing enough to just sustain themselves, then one invents a tool so the other can trade for it, with his food, to more than double his production. Then you have one farmer, one tool maker, and two people with a higher, broader standard of living.

Democrats lack the IQ to understand this and so don't encourage supply. This diminishes our standard of living. In fact, by interfering with suppliers through taxes, regulations, and demand side economics, they actually diminish productivity and therefore everyone's standard of living.

 

[ipaps]

Capital investment isn't just helpful, it's mandatory. No money, no new businesses, I wish you lefties would accept that truth. And as a result realize that raising taxes on capital investment disincentivizes business creation or expansion.

Sure we need more demand, the question is how to go about increasing it on a permanent basis. Some say redistributing the wealth puts more money into the hands of the less well off, who will then spend it. But that is not substantiated by the facts, many of those people hold onto that money, in case the future does not improve.

Raise taxes on the rich, that's all we hear from the dems. No mention of the possible consequences, nor of the fact that ObamaCare is already raising their taxes. You know what could happen if the Obama tax cuts expire just on the top marginal rate? Their rate goes up to near 50%, and the capital gains taxes more than doubles. How can you possibly think there will be no repercussions?

You do realize that there are other places around the world where those rich people can invest, right? Places that weren't there for investment purposes prior to Reagan? Back in the 50s and 60s when the rate was 90%, where the hell else do you think investors could put their money? China? India? Brazil? I don't think so. You don't think those rich guys found ways to hide much of their earnings to avoid paying taxes on it? You get the picture right? Less money gets invested in our economy.

And it's not just American investors, from the mid 80s to the mid 2000s, foreign investors put their money in American businesses, not in American gov't securities, or not nearly as much. Guess what, they ain't puting any money in american business these days, and they ain't going to until the business climate here becomes competitive again. Which it ain't, in large part due to the policies of the Obama admin.

I think you have points. Competition among regions makes things complicated.

By the way, when I made the post I though I was posting on "Economy" board, not "US Economy. I'm not really making advise to US economy.

 

[gallantwarrior]

...I don't really have a solid background in Economics, nevertheless here's what I want to say...

Welcome to the forum and thank you for your ideas. You say you don't know economics very well. When you don't know about something it's better to ask questions. After you learn about it then you'll have "something to say" that will make much more sense.

I love your avatar, is that a howler?

 

[ipaps]

Supply side versus liberal lunacy:

Say's Law ( the origin of supply side economics) says that supply(production) generates its own demand9consumption) and so simultaneously increases ones standard of living.

First, you have two farmers each growing enough to just sustain themselves, then one invents a tool so the other can trade for it, with his food, to more than double his production. Then you have one farmer, one tool maker, and two people with a higher, broader standard of living.

Democrats lack the IQ to understand this and so don't encourage supply. This diminishes our standard of living. In fact, by interfering with suppliers through taxes, regulations, and demand side economics, they actually diminish productivity and therefore everyone's standard of living.

I don't agree with that. You are saying that when something haven't been invented, there's no demand for it. Sure they don't have the demand for that specific tool, but they still have the need to "farm more efficiently" in general.

Suppose the tool has already been invented and both farmers have enough, making more makes no sense.

 

[asterism]

To suggest that investment has nothing to do with contributing to economic growth is wrong IMHO. Job creation in any country primarily comes from new businesses, which in turn requires capital investment. Banks are not going to fund any business venture without sufficient collateral, simple as that. Even existing businesses thart want to expand will require capital to do that; no capital, no growth.

I do agree that capital investment is very helpful in production. But without consumption there's no need to produce and therefore no need for capital.

It's all about balance. How much consumption versus production. It all starts with food and shelter then transport then comforts. There is a persistently growing demand worldwide for food, shelter, transportation and comforts. Therefore there is a persistently growing need for investment.

But suppose you're correct and a "demand side" policy is best. Who manages the demand?

 

[asterism]

Supply side versus liberal lunacy:

Say's Law ( the origin of supply side economics) says that supply(production) generates its own demand9consumption) and so simultaneously increases ones standard of living.

First, you have two farmers each growing enough to just sustain themselves, then one invents a tool so the other can trade for it, with his food, to more than double his production. Then you have one farmer, one tool maker, and two people with a higher, broader standard of living.

Democrats lack the IQ to understand this and so don't encourage supply. This diminishes our standard of living. In fact, by interfering with suppliers through taxes, regulations, and demand side economics, they actually diminish productivity and therefore everyone's standard of living.

I don't agree with that. You are saying that when something haven't been invented, there's no demand for it. Sure they don't have the demand for that specific tool, but they still have the need to "farm more efficiently" in general.

Suppose the tool has already been invented and both farmers have enough, making more makes no sense.

Then why are you on a computer right now? You ate today right?

 

[EdwardBaiamonte]

I don't agree with that.

sadly as a liberal it will be over your head

You are saying that when something haven't been invented, there's no demand for it.

no no no I'm saying there is always demand for new things that improve our lives. Demand has always been a constant.

Sure they don't have the demand for that specific tool, but they still have the need to "farm more efficiently" in general.

yes exactly there is always demand for a better standard of living. Demand is always a constant; we don't need Democrats to stimulate what naturally exists

Suppose the tool has already been invented and both farmers have enough, making more makes no sense.

then of course they want or demand a better tool and they want or demand other new things they can afford with the extra money they made from the original new tool.

 

[Wry Catcher]

Hi, I'm from Taiwan. I don't really have a solid background in Economics, nevertheless here's what I want to say.

I my opinion. Economic inequality...

Stopped reading right there.

Willful ignorance; a sure sign you have been afflicted by conservativitis.

 

[ipaps]

I don't agree with that.

sadly as a liberal it will be over your head

You are saying that when something haven't been invented, there's no demand for it.

no no no I'm saying there is always demand for new things that improve our lives. Demand has always been a constant.

Sure they don't have the demand for that specific tool, but they still have the need to "farm more efficiently" in general.

yes exactly there is always demand for a better standard of living. Demand is always a constant; we don't need Democrats to stimulate what naturally exists

Suppose the tool has already been invented and both farmers have enough, making more makes no sense.

then of course they want or demand a better tool and they want or demand other new things they can afford with the extra money they made from the original new tool.

In that case I think it's better to look at the invention of the tool as a different kind of service, which is done only one time. And analyze it differently. Putting resources in research and putting them into produce a large quantity of product is different.

New and more efficient tools are not always welcome, there're people who don't like new technology. Creating them doesn't mean they're guarantee a demand. It's more like the other way around: People have the need, then they invent.

But yes, if there's a constant demand for advancement, it's worth putting money into it.

 

[ipaps]

The percentage of families breaking a certain income threshold doesn't tell us about wealth and income differences. It just states overall increase.

That fact that there has been an overall increase is important, though.

What I'm trying to point out is that when one gathers the majority of the wealth of the society, he will not be able to gather anymore.

I see. So when they get all the money out of the pot, then they hoard it leaving none for anyone else.



Right, because when Gaia was spawned she brought forth a pot of wealth for all people to share, that is all the wealth there is or ever will be and can only be divided between the good little boys and girls...

The same holds true between countries. No country can keep making money while not spending. (I believe)

Well, they can't actually "make" money, they can only take more than their fair share from the magic pot of wealth, right?

Why keep making money and not spending is beyond me.

You voted for Obama, didn't you?

In a sense it's like a pot of gold. Most of the stuff nowadays is created through collaboration, and people share that pot of gold.

 

[expat_panama]

...your avatar, is that a howler?

Sure is. Primates that can seize and defend territory simply by sounding off; I admire that.

 

[expat_panama]

...stuff nowadays is created through collaboration, and people share that pot of gold.

Not everyone wants the same amount of gold so people decide to collaborate differently. People are different so people need different incomes. Making everyone's income the same is impossible and trying to do it is impossible.