Obama says the previous economic model has failed [Reader Post]

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Saying stuff like that… is just dishonest. Allow me a couple observations I realized over the last few years.

The middle class had metrics for success:
– House ownership
– College education
– Nice cars

But the above metric, doesn’t necessary mean you have the skill set to be middle class. The brutal truth: given these metrics doesn’t ensure you are successful.

Milton Friedman made a brilliant observation: we want equality at the starting line while the proverbial “they” want equality at the finishing line.

– Enter the Community Reinvestment Act. What was the end result, equality at the finishing line, everyone gets a house.

– College, blue ribbons, and the New Class; college just is; blue ribbons the millennium hover mom gen; New Class being the groups that form in post-modern-industrial societies for their pursuit of political and social goals (protesting boomers, OWS, PETA types).

There are really no longer any barriers to a college education. Anyone who wants it can get credit and attend. Everyone gets blue ribbons, ahem a degree anymore.

If you don’t want to pursue a math, science, or business degree for whatever reason, you have a choice of traditional academia or now a New Class degree. Both being overwhelming dependent on gov’t funds to float their industry.

Academia gets somewhat of a free pass as we want educators (although I would like to see schools be 100% for-profit with no moneys received from state or federal gov’ts, and school vouchers used to ensure schools try to capture competitive advantages). And I’ll add academia was usually reserved for the intellectual class however watered down with ideology it is today, it still has respect.

But the New Class, their degrees offer a professional path to learn how to 1.) Use gov’t to appropriate funds from wealth producers, 2.) How to access these funds (via grant) in the pursuit of political and social goals.

The Stimulus was a masterful play and execution of this type thinking by the New Class. May I coin a term – professional volunteerism.

– Another facade being sold is believing that having a degree equates an entitlement to earning a living for the rest of your life. You have blue ribbon, everyone has blue ribbon, try selling “everyone’s blue ribbon” on ebay.

– Cash for Clunkers. Destroying Capital Assets for pure cosmetics and what-not. If it wasn’t a useful asset, the “clunker” would have been discarded and replaced well before hand.

The premise that C4C was an environmental plus is ludicrous. Someone will celebrate the fact the people could trade a 15mph suv for a 20mph one; I’d lament it was more a subsidy for the car companies we just nationalized than an “environmental win reduce our dependence on oil” type slogan.

Also again, hey guys, golden stars & blue ribbons all around – you all get to upgrade to nicer cars too. Stimulus!

What was once earned by people who could pull themselves up is now readily accessible because of regulations.

Fannie Mae, Freddie Mac, and the Student Loan Industry are more or less nationalized by the gov’t. GM nationalized, unions preferred over bond holders.

The metrics for participation in the middle class has been artificially adjusted by pols. Results… Obama saying our economic model has failed.

But hurdles were legislatively lowered/enforced and the red-flags were much ignored by said pols. Entrance was much easier, yet it is still failure.

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This is a pretty good, original blog post, but it doesn’t address the whole story. The whole story would compare opportunity for upward mobility in the USA versus that in other countries. It would also compare average incomes of the non-upwardly mobile (the large majority of Americans) over the past 30 years.

It would also address the issues of what are the most promising ways to (1) improve opportunities for upward mobility and (2) to offer average Americans the opportunity to see their share of total national income not continue to shrink, as it’s been shrinking for the past 30 years.

The blog post would appear to suggest that it’s the fault of average Americans that they have no achieved upward mobility and it’s the fault of average Americans that their share of the total national income has shrunk so drastically. I don’t think that the reasons offered in the blog post begin to explain these factors. I’m all in favor of selecting more rigorous/economically relevant college majors, but stuff like this is only a tiny part of the whole story.

– Larry Weisenthal/Huntington Beach CA

Larry has a point.
The spirit of entrepreneurship has been breed and ”educated” right out of younger people.
Even in my day belonging to the “Young Achievers” club was looked down on.
But that club forced you into dealing with a payroll and meeting cost predictions or making cuts, all sorts of business-necessary mind sets.
In our circle of friends and acquaintances we were literally the only couple who sought being in business for ourselves.
It was a rocky road.
Sometimes we were treated to “I told you so’s” from friends who are now struggling.
We looked at the long haul.
You cannot become ”upwardly mobile” without taking risks.
When we look at our non-upwardly mobile population we MUST remember how they made their own choices all the way through.
We saved and scrimped while our friends bought new this and new that.
They don’t laugh at us now.
They wish they had had the guts to do what we did back then.

@openid.aol.com/runnswim:

I have to ask you to define “upwardly mobile.”

American incomes seem to be dropping for a number of reason, one of them being that average income figures include the incomes of families who receive in-kind contributions compliments of the American taxpayer. If the value of rent subsidities, food stamps, Medicare/Medicaid/TANF/free cell phones and other utility subsidities were included in those lower income brackets as income, the average income per capita would increase substantially.

Also, I think this nation puts too much stress on obtaining a college degree. A degree in Nigerian Women’s Basket Weaving is totally useless, as is many of the degrees now offered to students. But a two year trade school training in automotive repair is worth $80-150/hour, not a shabby income. We are educating ourselves out of having tradesmen that really know how to earn a living with their hands. Plumbers earn $40-90/hr, depending on the region of the nation they work in. If we want to build things, and be an industrial nation once again, we have to have people who know how to use a screw driver.

Is it the fault of Americans that they have no “upward mobility?” Why, yes, in many cases it is. When you decline to take advantage of a free K-12 education, and chose instead to take the easy way out, living off the largess of others, it is your fault.

@Nan G:

Obama wasn’t referring to anything but our capitalist society, which he abhors. But he was correct in one aspect; the economic model of LBJ’s Great Society has been a major failure.

@Nan G:

Larry has a point.

Oh really? Does his statement “…to offer average Americans the opportunity to see their share of total national income” not sound collectivist to you? You know, like there’s such a thing as an “economic pie” which the government elite should divvy up among special interest groups?

Hi John,

Oh really? Does his statement “…to offer average Americans the opportunity to see their share of total national income” not sound collectivist to you? You know, like there’s such a thing as an “economic pie” which the government elite should divvy up among special interest groups?

I understand what you are implying, but this presumes that there is a reasonably fair and level playing field.

Let me give you an example: In medieval Europe, up to fairly recent times, ownership of all the land was divided up among only a small nobility class. Everyone had to pay rents to these landowners. For generation after generation, the landowners and their progeny enjoyed a “to the manor born” advantage over everyone else.

For the last 30 years, there’s been a growing disparity between the income of the top and the income of everyone else. Educational quality is uneven and college education is increasingly difficult to finance. Private sector unions are virtually extinct. I’d argue that it’s likely that the income disparity will continue to grow.

Along with the above, there’s been an emasculation of the estate tax. When my wife’s father died, in 1999, he left an estate of $1.4M, of which $600,000 went to estate tax. Today, the first $5,120,000 of an estate are exempt from any taxes whatsoever. This provides a huge leg up for the fortunate heirs; so it’s a certainty that we’ll migrate even more rapidly to a “to the manor born” economic model.

Now, is the concept of an estate tax “collectivist?” Is a strong labor union movement “collectivist,” in an economic environment where employers hold most of the cards?

It’s way too complicated a topic to hash out here; my original comment was mainly a caution not to oversimplify whatever economic model one happens to support.

– Larry Weisenthal/Huntington Beach CA

openid@#2 says:
“The blog post would appear to suggest that it’s the fault of average Americans that they have not achieved upward mobility and it’s the fault of average Americans that their share of the total national income has shrunk so drastically…”

So, what are you trying to say?? – Exactly? and Just who do we pin this blame game on?? Exactly?? I am curious…

@openid.aol.com/runnswim:

“In midieval Europe, up to fairly recent times, ownership of all the land was divided up amoung only a small nobility class.”

True, yet you fail to mention that the Founders created a system of government whereas a person could start out poor, and through hard work and ambition, create great wealth. Acheivement was not punished, but rewarded. Now we have a system whereas we reward those who are non-productive because of their own decisions, and feel we should punish acheivement by making the acheivers pay for the non-productive.

“For the last 30 years, there’s been a growing disparity between the income of the top and the income of everyone else.”

And why would that be, Larry? Could it have to do with the fact that more and more Americans are on the lower scale of the income bar because they DON’T WORK, and live off the largess of the taxpayer where their income comes simply in the form of in-kind contributions from the coffers of the federal government fueled by the productive? A family of four in Mississippi, that relies totally on welfare and all it entails, would have to earn over $30K/yr to break even. Why work when you can make bad decisions, not be held responsible for those decisions, and have other taxpayers support you?

“Now, is the concept of an estate tax “collectivist?” Why, yes, it is. It is double taxation (taxed once when earned and again when you die) in order to redistribute wealth.

“Is a strong labor union movement “collectivist?” Why, yes, it is, in a nation that was designed to reward the individual on merit, and not the collective. Labor unions also punish the acheivers and give equal pay to those who are lazy. Obviously, you have never belonged to a modern day U.S. union, or you would know that. Everyone is paid equally, no matter how hard they work. The slacker receives the same pay as the guy who busts his tail everyday.

Sorry, guys.
I should have been more specific.
THIS is the point that Larry made that has merit:

The blog post would appear to suggest that it’s the fault of average Americans that they have no achieved upward mobility and it’s the fault of average Americans that their share of the total national income has shrunk so drastically. I don’t think that the reasons offered in the blog post begin to explain these factors. I’m all in favor of selecting more rigorous/economically relevant college majors, but stuff like this is only a tiny part of the whole story.

MY point was to add to Larry’s that people need to be taught that competition is a healthy and good thing IF they ever want to succeed.
IF all they want is to float by on an average-to-middling amount then by all means be a worker not a business owner.
The trophies for EVERYTHING is a way on undermining our competitive spirit.
Then Obama comes along with his 99%ers and declares competition ”evil.”
Yeah, Larry bought into that part.

@openid.aol.com/runnswim: Yes Larry, but it was the Bush tax cuts that changed the death tax and it is ready to fall off the cliff with the doubling of student loan interest and ending of Bush tax cute on Dec. 31.

@openid.aol.com/runnswim:

This … blog post…doesn’t address the whole story.

Good sir, there was an element to my style to spur conversation.

What are the most promising ways to offer average Americans the opportunity to see their share of total national wealth increase

Nonsense, first off because the pie ain’t fixed.

But having fun – Want more pie. Create or produce value. Create the f! pie. Create labor of value. Labor in your efforts my father told me…

@openid.aol.com/runnswim:

“For the last 30 years, there’s been a growing disparity between the income of the top and the income of everyone else.”

I’ve actually spent the time to research the actual data on that subject and the statement as you posted it is very misleading at best. First of all, both the low and high income quintiles are much better off than they were 30 years ago. The “pie” has gotten much bigger, IOW. Secondly, the income figures do not include welfare, food stamps, medicaid, and other government handouts as income. The “poor” today in America are wealthier than “the rich” in many other countries.

~~80 percent of poor households have air conditioning. In 1970, only 36 percent of the entire U.S. population enjoyed air conditioning.
~~92 percent of poor households have a microwave.
~~Nearly three-fourths have a car or truck, and 31 percent have two or more cars or trucks.
~~Nearly two-thirds have cable or satellite TV.
~~Two-thirds have at least one DVD player, and 70 percent have a VCR.
~~Half have a personal computer, and one in seven have two or more computers.
~~More than half of poor families with children have a video game system, such as an Xbox or PlayStation.
~~43 percent have Internet access.
~~One-third have a wide-screen plasma or LCD TV.
~~One-fourth have a digital video recorder system, such as a TiVo.

The U.S. Department of Agriculture collects data on these topics in its household food security survey. For 2009, the survey showed:

~~96 percent of poor parents stated that their children were never hungry at any time during the year because they could not afford food.
~~ 83 percent of poor families reported having enough food to eat.
~~82 percent of poor adults reported never being hungry at any time in the prior year due to lack of money for food.

Television newscasts about poverty in America generally portray the poor as homeless people or as a destitute family living in an overcrowded, dilapidated trailer. In fact, however:

~~Over the course of a year, 4 percent of poor persons become temporarily homeless.
~~Only 9.5 percent of the poor live in mobile homes or trailers, 49.5 percent live in separate single-family houses or townhouses, and 40 percent live in apartments.
~~42 percent of poor households actually own their own homes.
~~Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
~~The average poor American has more living space than the typical non-poor person in Sweden, France, or the United Kingdom.
~~The vast majority of the homes or apartments of the poor are in good repair.

By their own reports, the average poor person had sufficient funds to meet all essential needs and to obtain medical care for family members throughout the year whenever needed.

Source for the above facts: Understanding Poverty in the United States: Surprising Facts About America’s Poor…

@openid.aol.com/runnswim:

It’s way too complicated a topic to hash out here; my original comment was mainly a caution not to oversimplify whatever economic model one happens to support.

Larry, that is exactly what you did with this statement;

For the last 30 years, there’s been a growing disparity between the income of the top and the income of everyone else.

It has actually been quite a bit longer than 30 years, AND, more importantly, it has happened irregardless of the particular tax policy at the time. What’s more, during times of high taxation rates on the upper income groups, they lose less, or even gain income shares, during times of economic downturns or recessions.

Your statement implies, by being an oversimplification, that since Reagan, lower taxation on the upper income brackets is the cause of the disparity. This is not the case at all.

I recently worked for an upstart Online Retail business last year, was good work, but the Business failed due to Marketing Investment interests from investors feeling very skitterish or sour towards Government taxation policies being debated and the Business side having to be liquidated to meet taxations on New Business start up, property taxes, income taxes, and asset taxes on vendor goods to be re-sold. Pretty much, any new small or large business coming into existance already has a pretty extensive operation cost when they open their door just by Government Regulations and Taxations slapped against the new business and we’ve not even gotten to material purchasings and employee hirings. For most upstarts across the Nation, the fees to start a new business can be as low as 20,000 dollars (currently a male in their 20’s yearly income) or as high as 100,000 for small businesses pending regulation fines, license fees (various by state and market of focus) and taxes.

And since 2009, I’ve seen my hourly wages deflate from 18.56 an hour from my time at Cessna (Machinst Union member contract wage for 3 year senority) to that of now just 10 dollars an hour or less before income taxes, medical expense and car insurance are deducted. I’m looking at about maybe 6 t0 7 dollars an hour after deductions from my paycheck working for Hawker Beechcraft for logistics. So explain to me liberals how more regulations and more regulation fines punishment on businesses or trying to force minimal wage up on businesses are going to save jobs when the businesses have to operate on a limited amount of money from net profits made by ever decreasing sales of services or product?

“For the last 30 years, there’s been a growing disparity between the income of the top and the income of everyone else.”

^^^ Was cliche well before the French Revolution. This one’s older than Milton Friedman himself and he did a fine job destroying it, pointing out:

Societies which aim for equality before freedom will end up with neither. A society that aims first for freedom before equality will get a higher degree of both, more so than any other system the world has ever developed [which the historical body of evidence well supports].

You can only aim for equality by giving some people the right to take things from others. And what ultimately happens when you aim for equality is that A and B decide what C should do for D.

To JohnGalt and Mossomo:

The only specific issues I raised, with regard to growing income disparity, were (1) the demise of labor unions and (2) the effective demise of the estate tax. I’m not up for renewing the general debate on any of this stuff, at the present time. Goodness knows, we’ve done a ton of it in the past. Thanks for reading and for responding.

– Larry W/HB