US household income disparity

[pjorourke]

Originally Posted by discreetgent

My most immediate concern is not the Fed. It is that deficit hawks will gain enough momentum that serious cuts will happen now which is what we don't need. Extending unemployment benefits seems to be a no-brainer at the moment, the entire fight over it - aside from the political hay each side wanted to make - in terms of deficit was IMHO simply absurd but indicative of a big potential problem if that view gains the upper hand.

As you and I have discussed previously, I have no issue with generous unemployment benefits (to US citizens, non-citizens can get the hell out). I think that is a reasonable response to economic downturns and the presence of same can make them snap back a lot faster. And I very much prefer unemployment benefits to the kind of crap we saw in the Spendulus bill that did nothing but isolate the governing class from the effects of their own incompetence. Fucking worthless pork fest. A payroll tax holiday would have done much more to jump start the economy. (but then the Mandarin's would get to control the spending.)

But it is an economic fact that the more you pay in unemployment benefits, the longer displaced workers put off changing jobs/industry to something new that has more opportunity. I think we should have a program where you get maybe 6-9 months as we do now. But any extra-ordinary unemployment benefits should be conditioned on attendance at a job retraining program. It is insanity to pay people to wait around for jobs that aren't coming back.

[UNDER THE RADAR]

As the debate about disparity in income, income tax paid etc. continues there is no shortage of people spending like there is no tommorrow. It is unbelieveable the people out here eating in restaurants ie. not BK, MCD. There is no shortage in the lines at Disney World, Universal studios, and all of the so called summer vacation destinations. I was at a gulf coast casino last night where you have a buffet at $22/head and you had a line of people waiting all night til 10p to get in.

I think the so called tough economy is B.S., the news in general is B.S. because they put the spin on everything according to who is backing them and paying the money. You have a macro national economy, but you also have micro regional and metropolitan economies, and wheather you are doing better than others depends heavily on where you live, but from what I see out here, and I have travelled quit a bit the past several weeks people are spending money eating out, and entertaining themselves with no hesitation and this shows me people who are not worried about the economy, jobs, and future income. Part of the mind set may be the fact that they feel the government may continue to extend their unemployment benefits, and gaurantee policies against banks foreclosing their homes, increase their foods stamps, provide medical cards for their dependant children and be able to reap all the necessary benefits without working, so that their weekly unemployment check is pure disposeable income. No matter what the answer is there is no shortage of people spending to enjoy themselves.

[Laurentius]

Originally Posted by UNDER THE RADAR

I think the so called tough economy is B.S., the news in general is B.S. ... You have a macro national economy, but you also have micro regional and metropolitan economies, ...

Don't forget that our federal government alone employs about 5 million people directly in jobs so safe you practically have to kill your boss to get fired; and many of these jobs pay as much as 50% more than equivalent jobs in the private sector.

Then there are similar jobs at the state and municipal level; though municipalities are having some trouble.

THEN there are companies whose sole purpose is to fulfill government contracts. Again, jobs where they can't go out of business. (And lets not forget industries that are deemed "too big to fail" and collect billions in government loans.)

Just government employees, whose jobs are secure because they can always jail you if you refuse to pay taxes, make up a huge sector of spending.

Then there are industries that are equivalently secure. Electrical utilities for example.

And, of course, there are the mega-rich -- those 35,000 Americans with a net worth exceeding 20M and the 500+ with net worth exceeding 1B. Their spending is unlikely to abate.

The mere fact that some of those millions of people in super-secure jobs go on vacation doesn't mean that other sectors aren't hurting.

Next time you are waiting in line for the buffet, ask these people what they do for a living and for whom they work.

And, if our economy is doing so well, please explain why the appraised value of houses in my town has declined by 30-50% over the past 4 years.

[discreetgent]

Originally Posted by pjorourke

I think we should have a program where you get maybe 6-9 months as we do now. But any extra-ordinary unemployment benefits should be conditioned on attendance at a job retraining program. It is insanity to pay people to wait around for jobs that aren't coming back.

Most of the extended benefits are tied into the unemployment rate in a state. So if it is higher than say 8.5% some kick in, if not they don't. It does take a macro look at the state economy. Job retraining is another thing that stimulus packages should have money for. This time it was money added to WSA; the problem with WSA is that it gets passed to the county and if you thought allocating money to states to spend was a bureaucratic nightmare, counties are even worse.

[Texas Contrarian]

Originally Posted by discreetgent

Extending unemployment benefits seems to be a no-brainer at the moment...

Given the extraordinarily high unemployment rate, I agree -- it's just that I believe we should pay for it by cutting wasteful spending in other areas. For example, by cancelling the remainder of the "stimulus" package, which is comprised mostly of politically motivated patronage spending and bailouts for public employee unions. Of course, congressional porkmeisters will have none of that!

Originally Posted by TexTushHog

Krugman and I are still right on the stimulus...

Really?

If you seriously believe that, can you point to an instance where adding massive new spending to an economy that already has large structural deficits has ever increased a nation's prosperity?

Of course not. One doesn't exist, even though it's been tried many times.

Krugman has argued that it would actually be acceptable to run our federal debt (held by the public, not "gross debt") all the way up to about 110%, since we did that in order to finance World War II, and we ended up handling it OK. But that would be flirting with disaster for a couple of reasons:

Despite the Great Depression of the 1930s, we were still a very wealthy country in 1941 with a deep pool of savings. We were also the world's largest creditor nation. Now the reverse is the case; we're the biggest debtor nation in history.

We utilized that deep pool of savings to fight WWII, which cost about $3.5 trillion in terms of 2010 dollars. Patriotic Americans bought vast quantities of war savings bonds. Therefore we owed the debt "to ourselves."

Since that was the case, we were also able to inflate away much of the debt over the next decade or two. I doubt that would go over very well with PBOC officials and other foreign debtholders.

But the biggest reason we were able to deal with all that debt was that most of the industrial capacity of what would otherwise have been our global competitors had been blown away! We represented about half the world's GDP and we were a manufacturing and exporting colossus.

By contrast, just look at us today, after years of deficit spending and de-industrialization. Pretty pathetic sight, isn't it?

I believe the main reason the large increase in government spending will act as an economic retardant, not a stimulant, is that it creates an uncertainty overhang that gives managers and entrepreneurs real angst. Everyone knows that policymakers will soon be forced to confront what more and more people feel is a looming fiscal crisis. Tinkering around the edges won't be good enough; whatever "solutions" emerge will have to be very big -- and they'll clearly create headwinds for the economy.

No one should be surprised if the unemployment rate remains very high for an extended period of time in the face of this anti-growth policy agenda.

Want a real stimulus package? Here's a better plan:

http://money.cnn.com/2010/06/24/news...tune/index.htm

Of course there's not the slighest chance this will happen, so I think we're at risk of suffering a Japanese-style "lost decade."

[pjorourke]

Originally Posted by CaptainMidnight

so I think we're at risk of suffering a Japanese-style "lost decade."

Nah! It won't take a decade to get rid of this clown act.

[Texas Contrarian]

Originally Posted by pjorourke

Nah! It won't take a decade to get rid of this clown act.

Maybe so, but we're gonna have a whole lotta stuff that's gotta be unwound.

We'll need the government equivalent of a superstar corporate turnaround specialist; someone good at clearing away giant piles of wreckage!

[pjorourke]

Well, Romney has actually done that.

[discreetgent]

Originally Posted by pjorourke

Well, Romney has actually done that.

Is he still running for President? lol

He didn't have to work with Congress when he did corporate turnarounds.

[..]

Originally Posted by pjorourke

I'm sure you'll correct me if I'm wrong, but that graph looks to me like the lower level lines (i.e., "the poor") have stayed relatively constant in relation to the median, while the upper lines have drifted up. In other words, the rich have gotten richer, but the poor haven't gotten poorer.

Yes, the poor haven't gotten neither richer nor poorer. The rich also haven't gotten neither richer nor poorer. Hence btwn. the poor and the rich there's equitable income growth but not income equality.

However there's a small but still significant group of super-rich who have a significantly higher income growth than the poor or the rich. Such financial oligarchy can easily lead to plutocracy.

[..]

Originally Posted by atlcomedy

Early in my career I had a boss scream at me (a day before a review with the Board) , "Just get me some God Damn data that I can cite. I can make it say whatever the hell I want!"

hehe, know what you mean

In this case (US income growth) you can massage the data pretty much any way, and the result is still the same.

However, in recent years certain kinds of income tax evasion have become more difficult, even for super-rich. This is an effect that is hard to measure objectively but probl. contributes to the extraordinary income growth of the super-rich.

[WTF]

Originally Posted by pjorourke

Well, Romney has actually done that.

http://www.huffingtonpost.com/sahil-kapur/mitt-romneys-breathtaking_b_489247.html

Don't take my word for it. The conservative Wall Street Journal editorial board proclaimed that "commonwealth's 2006 program" -- as "championed by former GOP Governor Mitt Romney" -- "closely resembles what Democrats are trying to do in Washington." Still not convinced? Here's the conservative/libertarian Cato Institute: "In 2006, the Bay State enacted a slate of reforms that almost perfectly mirror the plan of Obama and congressional Democrats."

Here is a good endorsement.

http://www.newsweek.com/2010/03/28/m...alth-czar.html

[charlestudor2005]

Originally Posted by CaptainMidnight

We'll need the government equivalent of a superstar corporate turnaround specialist; someone good at clearing away giant piles of wreckage!

Originally Posted by pjorourke

Well, Romney has actually done that.

Originally Posted by discreetgent

Is he still running for President? lol

He didn't have to work with Congress when he did corporate turnarounds.

Actually, the only one who has done it is Clinton. And he did it with Congress. But, I don't expect the conservatives and T-Partiers on this board to admit it or bring it up.

[Tiffany Cums]

Originally Posted by Marcus Aurelius

May have been said in jest but there is history to back it up.

I can back it up...hubby is in a great job with great pay, and with the increased taxes, and sky high child support (a whopping $900/month, + all medical costs, insurance, co-payments, braces...) for only 1 child, if I didn't do what I do then I would have no spending money!

AND don't forget the family members that come into need...of course they are helped out! YOU are the one expected to help, since YOU are the one who has the good paying job.

We are always paying out for something...it's not as great as some would think!

[pjorourke]

Originally Posted by charlestudor2005

Actually, the only one who has done it is Clinton.

WTF are you talking about? Actually, on second thought never mind.