29 Aug

It’s Time to Focus on Income Inequality in the United States [Reader Post]

                                       

The selection of Paul Ryan as Mitt Romney’s running mate sent a powerful message – that the economy will be the key issue of this election. As I go back and forth arguing with my lefty pals we naturally disagree over what ails our economy. Their arguments are that we’re not doing enough to tax the wealthy and put it in the hands of our government to spread the wealth around and get our economy moving again. I always point out things like our trillion dollar debt, looming entitlements collapse, ever increasing regulation, and continuous threats of higher taxes from an economically illiterate president that are hurting our economy. The more I think about it though, they have a point – in the US the wealth concentration has become a serious problem and trickle down economics aren’t working.

First off, I immediately separate from the leftists on the issue of wealth concentration. They are more concerned about the concept of the 1% – a group whose membership always changes and statistically must always exist. “The rich get richer and the poor get poorer” argument is bunk, as we’re enjoying higher living standards today than at any time in history, and that is across our society. Here is an illustration of how growing income inequality is not necessarily a problem:

You’re living on your own for the first time, and money is tight. So you find a guy with a room to rent in his house (who we’ll call Bob) and you go to live with your new roommate. Bob has far more money than you do and knows this, and it turns out you are both huge pizza fans. Knowing that you’re strapped for cash when you two decide to order a pizza you decide to share a seven inch pie, and he pays for most of it. In fact, he pays for the whole pie and asks that you only tip the delivery driver. The pizza is not distributed equally, as Bob has a massive appetite for pizza. He eats six of the slices and you only get two, but for tip money this is a good deal. Then one day a breakthrough technology in pizza ovens hits and your local pizza shop can now sell you an 18 inch pizza for what a seven inch pie had cost, and you both eagerly jump on the deal. Of course, Bob is disproportionately benefiting from this deal, but he is still paying the bulk of your tab. Now you have two choices – are you happy that you are now enjoying more pizza than you did before or do you resent that fact that there is a growing gap in pizza distribution in your household?

I’m not as concerned about who the wealth gets distributed to as where the wealth is getting distributed geographically. Where our country’s money is flowing should tell you where the most productive parts of our country are, right? So I looked at the top fifteen counties for household income in the United States, and nine or ten of them are all in the metropolitan are of one city. And what is this city’s chief industry and it’s contribution to our economy? High tech? Auto manufacturing? Mining? Gas drilling? Farming? Nope, this place’s top industry is… government. Of course I am talking about Washington, DC, the city that’s chief contribution to society is taking wealth from the rest of the country and redistributing it (after getting its cut) and providing us with rules to curb economic expansion.

Before any lefties reading this get out their blow torches to attack the obvious straw man, no I am not arguing for the abolition of government. There are functions that we need and want it to do, but it needs to be done intelligently. $16 Trillion in debt is, to quote one of the great orators of modern times, “irresponsible and unpatriotic.” When your nation’s top growth region is one that can only exist off of what it takes from the economically productive ones you have a problem. Or to use a favorite word these days, it is nor sustainable.

Of course, once it has our money the government then proceeds to “spread the wealth”. Or a better way of putting this is having the wealth go up to the government and then “trickle down” to the rest of the economy. Given the high household incomes and high property values in this area it looks like a lot of that money isn’t trickling very far (1). As a result we have a disturbing concentration of wealth that has the power to tax and regulate even more income to it from the rest of the country. It’s not quite Panem from “The Hunger Games”, but it’s still not healthy.

As for how effective the money that Washington trickles down to the rest of the country, we can look at the spectacular results of where the government decided to pick winners of its stimulus funds – unprofitable car companies, poorly planned energy companies whose business model centered around producing inefficient, expensive energy, and other various groups who earned that money by providing that important, critical contribution to our economy of helping President Obama get elected. In fairness to the president this is a bipartisan issue. For all of President Bush’s critics, I almost never hear about the one truly damaging thing he did to this country during his two terms in office – allowing lobbying to take off as a massive growth industry.

Even if the lefties misfired in their analysis, they are on the right track. Personally, I prefer that extremist approach of living within one’s means, allowing wealth to naturally flow to people who contribute to society, and government keeping to basic needs and otherwise allowing us to live freely. So I guess I am alongside the left on this one – down with income inequality and down with trickle down economics!

Cross posted from Brother Bob’s Blog

1. In the interest of full disclosure I happen to work for a contracting company in the DC area whose main income is from government contracts. And yes, I do look forward to eventually returning to the private sector.

This entry was posted in Barack Obama, Class Warfare, Economy, Obamanomics, Politics, Taxes and tagged , , , , , . Bookmark the permalink. Wednesday, August 29th, 2012 at 6:00 am
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48 Responses to It’s Time to Focus on Income Inequality in the United States [Reader Post]

  1. Liberal1 (objectivity) says: 1

    No need to apologize for being a government, by proxy, contractor (unless you’re feeling guilty about being on the dole)—government, not private industry alone, has pretty much always financed a major portion any significant building project (like the convention center in which the Republican Convention is being held).

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  2. mathman says: 2

    The evil 1% argument is class warfare. It is a blatant attempt to appeal to envy for political purposes. Why should you invent something useful that people want, if you can simply demand that the gains from the inventor be given to you? Why should you work, when the government can take the money of others and give it to you?
    Yes, some people get rich. Ever read about the 19th Century? The Gilded Age? The Robber Barons?
    Ever read about India? The Maharajas?
    Ever read about Africa? The billions squirreled away in Switzerland by various Dictators?
    Income inequality is a straw man. Much of the current income inequality is due to the massive unemployment. The middle class has lost over $4,000 per person per year, as a result of the governmental coercion of endless regulation and control. Now that is income inequality.
    We don’t have the idle rich anymore. You could look it up. The term “gentleman” once meant a man of means, who did not need to work, because he had inherited wealth. If one had to work, he was not a gentleman.
    The Democrats are out to eliminate inherited wealth, except for the descendants of crony socialist donors.
    See the inimitable blogger Iowahawk. Take all the money away, and you could pay the yearly Federal deficit for one year. Then there would be no economy, and we could all go to serfhood.
    Thanks, but no thanks.

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  3. Nan G says: 3

    @mathman: The evil 1% argument is class warfare. It is a blatant attempt to appeal to envy for political purposes.

    Mathman, this is WORSE than mere class warfare.
    It is pure deceit.
    Obama has no intention of ”taxing the 1%.”
    His tax hikes are not even aimed at them!
    That is pure rhetoric for his stupid masses.
    His tax hikes are ALL aimed at hard-working Americans whose jobs bring in more than $200,000 a year counting EVERYTHING.
    So, firemen, for instance.
    Policemen, too.
    Registered nurses.
    Some teachers.
    Many, many small business owners.
    Many, many small farmers.

    THOSE are who get hit with Obama’s tax hikes.
    Not those wealthy, sit-on-their-bums-all-day-collecting-dividend folks.
    They are spared.

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  4. bwax says: 4

    Brother Bob, you missed an obvious example.

    The democrats have been taking money from the taxpayers, skimming off their 35% and redistributing the remaining booty to the unproductive members of society. In effect they are buying the votes of the unproductive welfare recipients (100 million of them at last count) by sending them our money! They have a word for that, it’s called theft!

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  5. Greg says: 5

    @mathman:

    There will always be an upper 1%. That’s not bad, and that’s not the issue. The issue is this: How much of the total income and wealth that exists in the nation at any particular point in time can the upper 1% posses, without society or the economy becoming dysfunctional?

    Wealth and income inequality issues have to do with that question–not with whether it seems fair or not for some people to have more than others. It’s really not a question having to do with jealousy or envy.

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  6. Mike O'Malley says: 6

    @Greg:

    There will always be an upper 1%. That’s not bad, and that’s not the issue. The issue is this: How much of the total income and wealth that exists in the nation at any particular point in time can the upper 1% posses, without society or the economy becoming dysfunctional?

    Yes, this is a question about concentration of power. In this case disproportionate power due to disproportion wealth. But once we clarify the question so it becomes obvious that wealth is not the only foundation of disproportionate power. Government, MSM, the great foundations and NGOs are arguably responsible for far greater social dysfunction in American society than the current 1%.

    Madison addressed this by the way …

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  7. Greg says: 7

    @bwax, #4:

    I totally disagree with that characterization. The federal government responded to one of the worst and most prolonged downturns in the U.S. economy since the Great Depression. How would people who were out of work have survived, without food stamps and unemployment benefit extensions? By getting another job? As I recall, the fact that some 3.6 million American jobs had simply vanished during the course of 2008 was the problem. Another 4.9 million jobs were lost the following year. It wasn’t until 2010 that we actually had a net gain of over a million jobs.

    Contrary to the GOP’s allegations–repeated again last night by Rick Santorum–the Obama administration has done absolutely nothing that could be characterized as waiving the work requirement for welfare. That claim simply has no basis in reality. Among politically motivated b.s., this story is the pure product. It’s 99.999% pure manure.

    Rick Santorum repeats Romney claim that Obama is ending work requirement in welfare

    Does Obama’s Plan ‘Gut Welfare Reform’?

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  8. Nan G says: 8

    @Greg: FactCheck.org, greg?

    FactCheck.org had gone left, falsely attacking Republican ads and providing cover for Democrats.
    One example:
    http://www.factcheck.org/elections-2008/tax_tally_trickery.html
    the debunk:
    http://albanymediabias.blogspot.com/2008/07/factcheckorg-turns-left.html

    The Annenberg Public Policy Center (APPC), the sponsoring agency behind FastCheck.org, is supported by the Annenberg Foundation that Bill Ayers secured the 49.2 million dollars from to create the Chicago Annenberg Challenge “philanthropic” organization in which Barack Obama was the founding Chairman of the Board for and Ayers served as the grant writer of and co-Chair.

    Obama really got mad when Factcheck.org found that his ads about Romney ”outsourcing” jobs was a lie.
    He expected silence on their part.

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  9. johngalt says: 9

    @Greg:

    It’s really not a question having to do with jealousy or envy.

    Oh, but it IS about either THAT question, or the question of how much one really understands about income inequality, Greg.

    The site that I most frequently go to, when considering the question of income inequality, is this one;
    http://taxfoundation.org:81/article/summary-latest-federal-individual-income-tax-data-0

    At that site you will find many useful data items, some of which may seem to support your line of thinking, and others that clearly show that you don’t understand the income inequality question as well as you think you do.

    For example, if one considers table 5, the Adjusted Gross Income Shares table, one can see very clearly that the higher in income one gets, the shares of total US income that group gets is always in a high state of flux, while those in the bottom 50% retain a fairly stable share, going down a little during good economic times, and increasing slightly during bad economic times.

    Furthermore, if one goes up to table 3, one sees that at every point, except for the latest downturn/recession/depression in the economy, that the bottom 50% have gained in income. Even during the dotcom bust. Or the 1990 recession. Or the end of Carter’s term/beginning of Reagan’s first term. Meanwhile, the top 1% sees it’s actual income drop dramatically during economic downturns.

    So the real question shouldn’t be about shares of total income, but rather, what that income one receives can actually purchase. As the cost of living increases, a static income buys less, correct? But that certainly isn’t the case with the bottom 50% in the US.

    Indeed, since the Carter/Reagan transition, the annual average inflation rate has hovered around 3%. But if one looks at the income increase by the bottom 50% from year to year, that increase beats out inflation in most years, and some years it far outstrips it. What does this mean? That even if our bottom 50% are losing in income shares, that they are still gaining in economic buying power, living better and better as the years go by.

    So, the question becomes, when considering total income shares, does that really matter? In one area, I’d agree with you that it does, to a point. That is the area of political influence that money can buy. But that is only valid if one believes that there is a large disparity between the economic classes and who they represent. In reality, both major political parties are represented quite well across the spectrum, with perhaps a majority of the bottom 50% leaning left, a majority of middle income earners leaning right, and most likely a dead heat amongst the highest income earners. All in all, I’d state that economic buying power, politically speaking, is a wash.

    I fail to see how a dysfunction can exist, let alone that it DOES exist. Especially if one considers those two tables I referenced, and sees that as far as income shares are concerned, they are, and have been, relatively stable since around 1996 or so.

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  10. johngalt says: 10

    @Greg:

    The problem with your #7, Greg, is that during Obama’s term thus far, the federal government has gained over 6% in federal workers, while private industry is just now getting back to the level it was at when Obama was inaugurated. That 6% gain started happening almost immediately upon his assuming the WH, and much of it came about due to his two biggest “achievements”. The Stimulus and Obamacare. The Stimulus itself created a large number of federal jobs, permanently, that keep adding to our annual deficits.

    Obama has grown the size of the federal government, Greg, and if anything will lead to a dysfunction in society, it’s when the government continues to grow beyond what the population can support, let alone need. We are at that point now, and have been for quite some time. It’s time to put a stop to it. Unfortunately, I don’t feel that Romney is up to that task, so the federal government will most likely continue it’s growth if Romney is elected, demanding even more wealth transferred from private citizens to the government coffers. And it still won’t be enough revenue.

    While calling everyone who would have addressed this issue “extremists”, because of their tendencies towards tax policy, you liberal/progressives have done this country a great disservice by focusing on something that isn’t quite the problem you would have everyone believe it is, as I pointed out in #9.

    That left us with a “choice” between a far left ideological fool, whose rainbow words and unicorn dreams are overshadowed by reality, and a left-leaning GOP pol who doesn’t have the guts, nor probably the inclination, to address the true problem facing our country, despite what Gov. Christie had to say on the matter.

    Thank you, Greg, and your fellow liberal/progressives, for continuing the fallacious arguments, and redirecting the attention of the electorate, to everything but the most immediate, pressing, problem we citizens are facing.

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  11. johngalt says: 11

    @Nan G:

    Are you claiming incest between the WH and a private, “independent” fact checking group?

    It seems that is going on around the country now, regarding politicians, and the Democrats don’t hold a monopoly on it either.

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  12. Greg says: 12

    @Nan G, #7:

    What Rick Santorum said about the Obama administration and welfare has absolutely no basis in reality. If it does, I presume someone can provide a source that presents specific factual details supporting his accusations.

    People can’t just make things up and expect no one to point out that they’re doing so.

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  13. johngalt says: 13

    @Greg:

    What Rick Santorum said about the Obama administration and welfare has absolutely no basis in reality.

    Really, Greg? I direct you to this;
    http://www.acf.hhs.gov/programs/ofa/policy/im-ofa/2012/im201203/im201203.html

    It is an internal policy directive for Health and Human Services, dated July 12 of this year. The important, and factual evidence, follows;

    While the TANF work participation requirements are contained in section 407, section 402(a)(1)(A)(iii) requires that the state plan “[e]nsure that parents and caretakers receiving assistance under the program engage in work activities in accordance with section 407.” Thus, HHS has authority to waive compliance with this 402 requirement and authorize a state to test approaches and methods other than those set forth in section 407, including definitions of work activities and engagement, specified limitations, verification procedures, and the calculation of participation rates. As described below, however, HHS will only consider approving waivers relating to the work participation requirements that make changes intended to lead to more effective means of meeting the work goals of TANF.

    Now, despite all of the colorful language contained within that policy directive, HHS DOES have the authority to grant waivers to the work requirements contained within the welfare reform legislation passed and signed into law by Gingrich and Clinton. In effect, HHS is given the ability to gut that particular requirement, if so desired.

    Now, what were you saying?

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  14. Greg says: 14

    @johngalt, #10:

    During George W. Bush’s first term of office the public sector expanded, with a net gain of 900,000 government jobs; the private sector had a net loss of 931,000 jobs.

    During Obama’s first term, there’s been a net gain of around 35,000 private sector jobs, while the public sector has had a net decline of 607,000 government jobs.

    Against that backdrop the federal government has picked up around 123,000 employees, which are included in the previous statistics. The increases were largely in Homeland Security, Justice, the VA, and the DoD. The reasons for growth there should be obvious, and presumably involve activities that republicans would normally approve of.

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  15. Greg says: 15

    @johngalt:

    “HHS is encouraging states to consider new, more effective ways to meet the goals of TANF, particularly helping parents successfully prepare for, find, and retain employment. Therefore, HHS is issuing this information memorandum to notify states of the Secretary’s willingness to exercise her waiver authority under section 1115 of the Social Security Act to allow states to test alternative and innovative strategies, policies, and procedures that are designed to improve employment outcomes for needy families.”

    The federal government has just expanded the ability of individual states to experiment with their own strategies and programs for getting their residents off of welfare and back into the work force. Do republicans find that objectionable? Do they think state authorities aren’t able to come up with better approaches than the federal government?

    Rick Santorum should be smart enough to understand the provisions. So, I imagine, are most republicans. Strategists are apparently counting on the fact that a majority of republican voters will never actually read TANF-ACF-IM-2012-03, and think for themselves about what it really says.

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  16. johngalt says: 16

    @Greg:

    During Obama’s first term, there’s been a net gain of around 35,000 private sector jobs, while the public sector has had a net decline of 607,000 government jobs.

    I notice that you conveniently muddle the discussion by the purposeful omit of federal when relating to government, or public sector, jobs. That is an important distinction to be made, when one is concerned with the federal workforce, Greg. Most conservatives actually lament, to some degree, the loss of state and local public sector jobs, although much of those have happened due to shedding the fat, so to speak. Conversely, the federal government, which no one could ever accuse of being slim, gained jobs at an extremely high rate, considering the economic times we were, and still are, in.

    As for the federal jobs gained themselves, take a look at this site;
    http://www.opm.gov/feddata/HistoricalTables/ExecutiveBranchSince1940.asp

    Those are just the federal gains up to 2010. As such they include only the first two fiscal year ends of Obama’s term. Notice anything in particular? Like the massive increases seen within the Executive branch itself, which includes all of the various departments and agencies? Not all of them can be accounted for via the Dept. of Defense or Homeland Security.

    What’s more, the salary growth of the federal workforce continues to outpace private industry, creating an even bigger bloat on the federal budget. Kind of hard to justify taking more from the private sector when the public sector relating to the federal workforce is at such high salary numbers already. Time to trim the fat, before any more moves are made fiscally.

    And yes, some of that growth is obvious, and consistent with what Republicans would generally approve of. I’ll just point out one other thing. Notice that during most of Bush’s terms in office, the federal workforce was relatively stable, only growing by very small percentages, and including the DoD? Obama, his policies, directives, and signed legislation has been a catalyst for federal workforce growth, unneeded, and arguably disastrous, especially when one considers the economic and fiscal state the government is operating in.

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  17. johngalt says: 17

    @Greg:

    The federal government has just expanded the ability of individual states to experiment with their own strategies and programs for getting their residents off of welfare and back into the work force. Do republicans find that objectionable? Do they think state authorities aren’t able to come up with better approaches than the federal government?

    As I said, despite the colorful and innocuous seeming language that directive contains, it still gives HHS the authority to grant waivers for work requirements. If you don’t think that this can lead to abuses of power and increased pandering to certain groups, then you are extremely naive, Greg.

    Of course, this is exactly how liberal/progressives operate. Dress up the power grab in innocuous language, and hope the rubes in the population are either too stupid to see what you are doing, or too preoccupied with who Kim Kardashian is dating now to pay attention.

    One of the most successful pieces of legislation in the past half century was the Gingrich/Clinton welfare reform. In 1995 75 out of every 100 families below poverty level received government aid. In 2009, that ratio had been reduced to 28 out of every 100 families. And considering the steady growth in income for the bottom 50%, they didn’t lose anything because of it. More families had more people actually working to earn a living, rather than be on the government handout rolls.

    The reasoning behind doing this, by the Obama administration, is very clear. Lessen the requirements for receiving government aid, making more people dependent upon the government for their subsistence, and increasing the dependent class. Despite your rhetoric, and that of other liberal/progressives, Greg, that is exactly what is going to happen.

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  18. Nan G says: 18

    Obama doesn’t want to focus on his faulty concept of income inequality any more than Greg does.
    It too easily is destroyed.
    OBAMA:

    “What drags our entire economy down is when the benefits of economic growth and productivity go only to the few, which is what’s been happening for over a decade now, and gap between those at the very, very top and everybody else keeps growing wider and wider and wider and wider.” http://www.whitehouse.gov/the-press-office/2012/04/10/remarks-president-economy

    (Based on economists Piketty and Saez.)

    But it’s just not true, according to a new study in National Tax Journal from researchers at Cornell University. The academics, led by economist Richard Burkhauser, don’t say the findings of Piketty and Saez are wrong — just incredibly, massively incomplete. According to the Cornell study, median household income – properly measured – rose 36.7%, not 3.2% like Piketty and Saez argue. That’s a big miss.

    All income levels got richer.
    The very rich did exceptionally well, mostly due to technology and globalization.
    Incomes rose 63% for the top 5%,
    56% for the top 10% and
    52.6% for the top 20%.
    But everyone else made out pretty well, too.
    Incomes rose 40.4% for households between the 60th and 80th percentiles,
    36.9% for the next quintile, 25.0% for the next, and
    26.4% for the bottom 20%.

    http://www.nber.org/papers/w17164.pdf

    There’s the “shared prosperity” Obama says he wants, right in front of his eyes.

    Income inequality has actually been shrinking since 1989, with the Gini index falling to 0.362 from 0.372. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CC0QFjAA&url=http%3A%2F%2Fen.wikipedia.org%2Fwiki%2FGini_coefficient&ei=sqaGT4rSHKaH8AGKiam3CA&usg=AFQjCNF0SsGLq7tkwg2-pJo_t7UV4YcaLg

    Obama is selling pie-in-the-sky, not reality.
    Only those truly ignorant of how wealth works even thinks Obama is onto something.
    He is playing them for all they are worth.
    Apparently that means $2, $3 or even $5 a pop to get a chance to eat with him.

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  19. Greg says: 19

    @johngalt, #16:

    Not all of them can be accounted for via the Dept. of Defense or Homeland Security.

    Right. Only the vast majority of them. The chart you’ve linked shows a total increase of 173,000 jobs. The Department of Defense alone accounts for 103,000 of that. Homeland Security, another 11,000. The Department of Justice, 9,000. The VA, 31,000. Between the 3, that’s 154,000 of the total.

    What’s more, the salary growth of the federal workforce continues to outpace private industry, creating an even bigger bloat on the federal budget.

    The problem isn’t federal salaries, which have been adjusted over time to compensate for the increasing cost of living. The problem is that real private sector wages have essentially remained stagnant for well over a decade, or have actually declined. With actual pay cuts and the continuous erosion of work-related pensions and worker benefits, and increased competition from overseas work forces, the private sector situation isn’t likely to improve much. So, basically, republicans are advocating the soundness of the principle that federal and state employees should be forced down into the same hole their private sector neighbors have been pushed into. That’s their version of achieving income equality. It’s what disempowerment of public employee unions is all about.

    Are people so damned stupid that they won’t notice how and where income and wealth have been redirected? The really aren’t that stupid. Consequently, diversions and distractions are in order. You can play public sector workers off against private sector workers; union workers against non-union workers; the middle class against the poor; blacks against Hispanics against whites, and everybody against illegal immigrants. Whatever works.

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  20. Greg says: 20

    @johngalt, #17:

    Now, despite all of the colorful language contained within that policy directive, HHS DOES have the authority to grant waivers to the work requirements contained within the welfare reform legislation passed and signed into law by Gingrich and Clinton.

    Yes, the Secretary of HHS does have the authority to grant waivers, per 42 U.S.C. 1315. The Obama administration didn’t confer such authority upon the Secretary. That provision was already part of the law. If you look at the history of revisions to §1315, approximately halfway down the page, you’ll see that none of them date subsequent to the year 2000.

    Santorum et al. are totally full of it, both on where the Secretary’s authority for granting waivers comes from, and on the purpose of the Obama administration’s willingness to entertain state-level demonstration programs. The idea is to allow state governments more flexibility in exploring ways to help people to get off of welfare, not to help more people get on it. That’s abundantly clear if you read the document.

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  21. johngalt says: 21

    @Greg:

    Whatever works.

    Yes, Greg, whatever works. That is the motto of Obama. All of those divisions you just cited, along with quite a few more, have been put out there by Obama since he first started campaigning for the Senate seat in Illinois, and continue on to this day. Or do we need to list the applicable quotes to you showing just that?

    We aren’t interested in making those divisions, Greg. All we are doing is defending whats right against what Obama and the liberal/progressives say is right. This seems like another case of a lefty accusing the right of doing EXACTLY what the left is doing, and has done, for decades.

    The problem isn’t federal salaries, which have been adjusted over time to compensate for the increasing cost of living.

    You have got to be kidding me, Greg.

    This is an old article, but the trend is the important point;
    http://www.usatoday.com/news/nation/2010-11-10-1Afedpay10_ST_N.htm

    Pertinent quotes from the article;

    •Government-wide raises. Top-paid staff have increased in every department and agency. The Defense Department had nine civilians earning $170,000 or more in 2005, 214 when Obama took office and 994 in June.

    Yeah, 780 more civilians within the DoD from the time Obama took office until the article date of Nov 10, 2010.

    Federal workers earning $150,000 or more make up 3.9% of the workforce, up from 0.4% in 2005.

    Since 2000, federal pay and benefits have increased 3% annually above inflation compared with 0.8% for private workers, according to the Bureau of Economic Analysis. Members of Congress earn $174,000, up from $141,300 in 2000, an increase below the rate of inflation.

    You are right, Greg. Federal worker’s salaries aren’t the problem. It’s political blindness by people such as yourself.

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  22. johngalt says: 22

    @Greg:

    That provision was already part of the law.

    No, Greg, it has been a bunch of legal wrangling and word gnashing by Obama’s admin in order to apply that authority to the HHS Secretary. Obama and his admin have done this legal maneuvering before, in order to stipulate certain authorities to Executive Branch Secretaries, or Agency heads.

    The idea is to allow state governments more flexibility in exploring ways to help people to get off of welfare, not on it.

    That is laughable, considering that more people are receiving government assistance since Obama was inaugurated.

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  23. Greg says: 23

    @johngalt, #21:

    What the U.S.A. Today article neglects to mention is that all it takes for that to happen is to apply a statutory cost of living increase to an executive level pay grade that was only marginally below $150,000. All of the people who had salaries a bit under $150,000 can suddenly become people with salaries a bit over $150,000.

    Don’t blame Obama. He had nothing to say about federal pay raises as President for 2009. For 2010 and 2011, he imposed a federal pay freeze, remember? Take it up with Congress. (Of course, it’s some of the people in Congress who are publicly complaining.)

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  24. Mike O'Malley says: 24

    @Greg: @johngalt:

    CBO says federal employees rake in much more pay

    Buoyed by generous benefit packages, federal workers earn significantly better compensation than similarly educated workers in the private sector, according to a report released Monday from Congress‘ chief scorekeeper that threatens to reignite at the national level last year’s state battles over public-employee rights.

    Overall, federal workers earn 16 percent more in total compensation — including wages and benefits — than comparable private-sector employees, according to the Congressional Budget Office. Only private-sector workers with the highest levels of education, such as doctors and lawyers, earn more than their public counterparts…

    The CBO said federal workers do better in wages at the low education end, are about equal in the middle, and fall behind the private sector at the top end.

    But the key difference is in benefits, where federal workers average more than $20 per hour in compensation — 48 percent higher than the $13.60 in prorated hourly benefits in the private sector. Added together, CBO said, that means significantly higher pay for government employees.

    “For workers at all education levels, the cost of total compensation averaged about $52 per hour worked for federal employees, compared with about $45 per hour worked for employees in the private sector with certain similar observable characteristics,” CBO analysts said in their report.

    Read more: CBO says federal employees rake in much more pay – Washington Times

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  25. Greg says: 25

    @johngalt, #22:

    No, Greg, it has been a bunch of legal wrangling and word gnashing by Obama’s admin in order to apply that authority to the HHS Secretary.

    Hey, it’s right there in the U.S.C. in black and white, and it’s been there for a lot longer than Obama has been in the White House. All he did was cite it as authority. Once again, take any complaints up with the people who wrote the law.

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  26. Greg says: 26

    Read more: CBO says federal employees rake in much more pay – Washington Times

    Indeed, many private sector workers are being screwed by corporate America. I think it has has been widely observed that the American middle class is in serious trouble.

    ReplyReply
  27. Greg says: 27

    Like U.S.A. Today articles? Here’s a different one, from last December: Federal workers’ pay gains are the slowest in 10 years:

    Federal workers made an average $75,296 in pay last year, plus $28,323 in medical, pension and other benefits, the USA TODAY analysis found. That’s about 60% more than the average private wage, a difference explained largely by higher education levels and more professional jobs in the federal workforce.

    There aren’t may federal workers who flip hamburgers for a living. A far higher percentage do technical and complex administrative work that requires more training, more experience before attaining proficiency, and a more extensive skill set.

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  28. Mike O'Malley says: 28

    @Greg:

    Why would an informed person of good judgment cite USA Today over the CBO as an authority? I’m scratching my head on that one. Gheez!

    ReplyReply
  29. Mike O'Malley says: 29

    @Greg:

    Indeed, many private sector workers are being screwed by corporate America. I think it has has been widely observed that the American middle class is in serious trouble.

    Private sector workers are being “screwed” by whom?

    Professor Lawrence Kotlikoff of Boston University has been monitoring the growth of these debts for several years. He relies on the statistics published by the Congressional Budget Office. This is legally a nonpartisan organization that is set up to provide information on various aspects of the government’s budget.

    Early in August 2012, Kotlikoff and financial writer Scott Burns published an article on the increase of the unfunded liabilities of the US government. According to the figures issued by the Congressional Budget Office, Kotlikoff concluded that there had been an increase in unfunded liabilities over the past 12 months of $11 trillion.

    The total obligation of the federal government to voters that is not funded at the present time is now $222 trillion. This does not mean that, over the entire life of the program, the government will be short $220 trillion. It means that the present value of the unfunded liability is $220 trillion. This means that the government would have to set aside $220 trillion immediately, invest this money in nongovernment projects that will pay a positive rate of return, and will therefore fund the amortization of this debt. I have written about the estimate here.

    The federal government at the present time is running annual on-budget deficits of about $1.2 trillion. It spends something in the range of $3.7 trillion. But it needs to have $222 trillion immediately to invest in private markets. It of course does not have this money. There is also the question of which markets could absorb a total of $222 trillion overnight and be able to gain a constant rate of return of, say, 5 percent per annum? It simply is not possible.

    Kotlikoff’s figures indicate that the federal government at some point will have to default on large portions of the long-term debt. The numbers do not lie. Kotlikoff’s numbers are larger than most estimates, but other economists have estimated the total unfunded liability in the range of $90 trillion. This number is as unmanageable as $222 trillion.

    [Emphasis mine]

    Yah, screwed by the private sector! LOLZ!

    Hyperinflation Is Not Inevitable (Default Is)

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  30. Greg says: 30

    @Mike O’Malley, #28:

    Why would an informed person of good judgment cite USA Today over the CBO as an authority?

    Uh, because the other informed person of good judgement quoted it first?

    Private sector workers are being “screwed” by whom?

    Follow the money, and see where it goes.

    From the NY times, November 25, 2011–For Business, Golden Days; For Workers, the Dross:

    IN the eight decades before the recent recession, there was never a period when as much as 9 percent of American gross domestic product went to companies in the form of after-tax profits. Now the figure is over 10 percent.

    During the same period, there never was a quarter when wage and salary income amounted to less than 45 percent of the economy. Now the figure is below 44 percent.

    For companies, these are boom times. For workers, the opposite is true.

    The government’s first estimate of corporate profits in the third quarter was released two days before Thanksgiving, at the same time it revised the rate of G.D.P. growth in the quarter down to an annual rate of 2.0 percent.

    The report showed that effective tax rates, both corporate and personal, are well below where they were during most of the post-World War II era.

    Corporate profits after taxes were estimated to be $1.56 trillion, at an annual rate, during the quarter, or 10.3 percent of the size of the economy, up from 10.1 percent in the second quarter. Until 2010, the government had never reported even a single quarter in which the corporate share was as high as 9 percent, as can be seen in the accompanying charts.

    The government began calculating the quarterly figures on corporate profits in 1947, but it has annual figures back to 1929. Until last year, the record annual share was 8.98 percent, set in 1929. For all of 2010, the figure was 9.56 percent.

    Wage and salary income was only 43.7 percent of G.D.P., the lowest number for any period going back to 1929. That figure first fell below 45 percent in 2009.

    Do you think there’s anything about the republican agenda intended to turn this situation around?

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  31. mossomo says: 31

    @Greg:

    many private sector workers are being screwed by corporate America

    Fallacy. Unless the screwing and comparison is to the sweet heart deals public sector unions negotiate with the help of pocket politicians and the demo-lobby.

    Labor is supply and demand. Demand for labor reacts to free market principles. The more we have workers with the same skillset, the lower those with redundant skills get paid. Conversely, the less available a certain skillset – the more those who have that skill gets paid. Blue collar plumbers gets paid.

    People who create wealth have a profit motive. Labor is key to the expansion of profits. Jobs aren’t a right; whimsically creating jobs to satisfy a Maslow want – hi, I’m alive and need a job to feed my face, gimme; that’s not the path to running a succcessful business. No. You hire labor at market prices to expand your business.

    ^^^ That’s the smart thing to do with any venture. Any grocery shopper will admit this. And it’s really as simple as that. Until laws get passed that distort the market. But in the end, its all about value shopping. That comes down to supply and demand. /greg

    ****
    Back to DC.

    DMV native (district, maryland, virginia). In the 90’s, a gov’t job paid less than the private sector but there was an implicit promise of longevity. Hardly anyone gets fired in DC. No one really. My family, friends, and associates are all up on the GS’s tit (general schedule – civil service pay scale). Grew up with it. BUT now. Wow. I know people with small skillsets and high salaries closer to $90K than $40K.

    Public sector pay/benefits parity with the private sector is way off; I don’t know anyone in private sector with a pension unless they are top of management. The private sector realized that pensions are unsubstainable in the 80’s. Resulting in a huge private sector hair cut, corporate America had a shaking in the 80’s. Cradle to grave corporate job was no longer reality.

    Money not there, wont exist. Unless the pension is 100% funded when announced, past promises that a 8% future return and no mission creep nor excessive or non-funded rolls will result in certain returns to 100% fund the past promise. Hmmmmm.

    I have to remind my DMV family and friends that in SD, I have what can pass as co-workers/office mates at many stop lights asking for help. Begging. Middle class. Fam friends don’t see it back in the Belt Way Area. Simply not exposed. I have to reinforce the reality of things. Then’s there this, I get contacted frequently by DC headhunters (a dc resume @ monster.com) but only a small few have reached out to me over the last few years here in SoCal (since 2008).

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  32. Greg says: 32

    @mossomo, #31:

    Labor is supply and demand. Demand for labor reacts to free market principles. The more we have workers with the same skillset, the lower those with redundant skills get paid.

    Apparently supply and demand includes an inexhaustible overseas labor supply willing to do any working American’s job for less than 1/4 the wages and no benefits whatsoever. That’s where around 3 million of our jobs have gone, so far.

    Maybe the “wealth creators” who made those decisions in search of higher profits should have gone overseas with the jobs. And then maybe we should have closed and locked the door behind them.

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  33. johngalt says: 33

    @Greg:

    Don’t blame Obama.

    I didn’t blame Obama for the federal worker’s pay, Greg. Read back through the postings and tell me where I did that. I blamed Obama for the 6+% increase in overall federal government workforce since his inauguration. He is responsible for that.

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  34. mossomo says: 34

    @Greg:

    Apparently supply and demand includes an inexhaustible overseas labor supply willing to do any working American’s job for less than 1/4 the wages and no benefits whatsoever.

    Ha. Didnt one of the Kennedy’s change immigration law to allow unskilled workers in, as opposed to skilled workers? How many people from that law change have resulted on the govt dool. And what is their voting block. Don’t forget – they work 1/4 the wage.

    Maybe the “wealth creators” who made those decisions in search of higher profits should have gone overseas with the jobs.

    Profits are good. Smart people value shop; when I save a dollar on asparagus, I profit a dollar to my future spending.

    And then maybe we should have closed and locked the door behind them.

    Fascist? When I do work, that labor belongs to me. Not you or state. You are not entitled to my labors. I pay tax voluntarily. I will vote with my feet and if I can get a better rate overseas, then be it. Value shopping. There’s a notition in business 101: competitive advantage.

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  35. johngalt says: 35

    @Greg:

    There aren’t may federal workers who flip hamburgers for a living. A far higher percentage do technical and complex administrative work that requires more training, more experience before attaining proficiency, and a more extensive skill set.

    There is one thing that their education and experience don’t do, Greg. It doesn’t help federal workers create wealth. Instead, they destroy it. Not all at once. Not by large amounts. But little by little, the inefficiency of the government destroys wealth that other people have poured their heart and soul into to create.

    And you want to help them do that at a higher rate than they are, by supporting the re-election of Obama. Who promises to increase, again and again, the size of government until all of us private citizens are no longer private, but public assets for the state to use as they see fit.

    ReplyReply
  36. Ditto says: 36

    Unfortunately the Washington DC, Wall Street and Big Finance crowd prefer concentrating wealth at the top while taking advantage of cheap labor. So they forced us into a multinational corporate global free market system, where the concept of “support your local business” was set aside. American labor was also cast aside by big manufacturing in favor of lower wage workers overseas who could make goods cheaper. US manufacturing began to drop off as they could not compete with the bulk purchased bargain-basement imports pricing at chain stores. Similar practices began to take place in agriculture as those producers were forced to lower their wholesale prices to compete (although grocery chains did not lower their consumer prices).

    This has resulted in lost jobs, and local business began to suffer unable to compete. This is one of the reasons that middle-class small-town America is dying. Those who could not find employment in their local areas often relocated to the big urban cities where some found middle-class employment while others remained stuck in the underclass morass of despair. The “American Dream” is being bled away from the hopes and promise of the past, into depressing growth of cities which have become Gothic conglomeration of gloomy blight, tightly squeezed bourgeois, opulent government palaces and expensive towers of the wealthy.

    Rather than “trickle down” or “entitlement” economics, what we really need is to focus on is what I’ll call “localized circulation” economics. When money circulates within a community, it continues to build on that circulation. From local consumers to local businesses who are also consumers, the longer the funds circulate, the better for the local economy. Of course you also have to have production via manufacturing or agriculture that will also be sold outside of the community, creating new infusions of wealth and more jobs to keep the local economy growing. This is the best way to “spread the wealth,” and the way it used to be. It is what helped build America’s economic situation into the envy of the world. We need to rebuild the “red states” economic situation into ones that encourage entrepreneurship, and which reforges the old concepts of citizenship, self-discipline and community pride. There must be ways to revitalize small-town America and make it the vital and viable again. (Aside from serving as “quaint” little hustings for the elite to snobbishly disdain as they drive to their vacation homes.)

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  37. Mike O'Malley says: 37

    @Greg:

    OK let’s see if this adds up.

    Corporate profits after taxes were estimated to be $1.56 trillion, at an annual rate, during the quarter, or 10.3 percent of the size of the economy, up from 10.1 percent in the second quarter. Until 2010, the government had never reported even a single quarter in which the corporate share was as high as 9 percent, as can be seen in the accompanying charts.

    OK so after tax corporate profits were up [in the 3th Qtr. 2010] on an annualized basis to 10.3% of GDP. Hmmm, on an annualized basis? [no risk if cherrypicking evidence here, right?] In 2010, after two horrendous years for corporate profits 2008 ans 2009. Oddly the NY Times does not address the impact of NOL’s Net Operating Loss carryfowards from 2008 and 2009 on 2010 after tax corporate profits. NOLs had a significant impact lowering actual reported corporate tax obligations in 2010. They had an even greater impact on reported after tax corporate profits than that because businesses were able to substantially reduce previously recorded deferred tax valuation allowances thereby boosting reported net income. Odd, isn’t it that the impact NOLs and reduction in deferred income tax allowances on these numbers is unaddressed by the New York Times. Odd ….

    As the NYT writer said:

    The report showed that effective tax rates, both corporate and personal, are well below where they were during most of the post-World War II era.

    Seems to me that the New York Times is engaging in selective reporting … once again.

    Wage and salary income was only 43.7 percent of G.D.P., the lowest number for any period going back to 1929. That figure first fell below 45 percent in 2009.

    Yes wage and salaries declining during a time of unusually high unemployment in the deepest longest extended recession since the Great Depression. More evidence of cherrypicking evidence? Or evidence of that the high Obama unemployment rates have had a real world impact on the US economy? … or both? I say: both.

    OK so in the 3rd Qtr 2010 after tax corporate profits made up 10.3% of GDP and Wage and salary income was “only” 43.7 % of G.D.P.

    Let’s see:
    10.3%
    43.5%
    xx.x%
    ___
    100.0%

    It seems to me that an awful lot has been left out of that analysis. Say 46.2% So Greg that missing 46.2%? What is it? Just just did the New York Times choose not to tell us about?

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  38. Mike O'Malley says: 38

    @Greg: @Greg: @mossomo:

    Yah, screwed by the private sector! LOLZ!

    Let’s see Pres. Obama added $11,000,000,000,000 to the long-term unfunded federal deficit last year. @Mike O’Malley:

    That is $11 trillion divided by 313 million people for an increase in per cap debt of say $35,143.76 per person!

    And as the total present value of the projected unfunded federal deficit is $222,000,000,000,000 we can figure thus; $222 trillion divided by 313 million people for an allocated per cap debt of say $709,265.18 per person!

    [sarc] Why yes! It is the private sector that has screwed the American middle class! [/sacr]

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  39. Mike O'Malley says: 39

    @Greg: @Greg: @mossomo:

    Pres. Obama added $11,000,000,000,000 to the long-term unfunded federal deficit last year. The entire total private wealth held by the top 1% of American taxpayers is around $2-1/2 to $3 trillion. If we were to CONFISCATE it ALL, everything!, from the 1% it would cover around three months of Pres. Obama’s contribution of $11,000,000,000,000 to the long-term unfunded federal deficit last year.

    Yah, the American middle class is being screwed by the private sector! LOLZ!

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  40. johngalt says: 40

    @Ditto:

    I still maintain that the best way to re-energize America’s economy is to do away completely with the current income and corporate tax structures in place of the FairTax. And I’m not just talking about the most recent recession, but rather, the manufacturing and industrial sector, which has been declining in America for quite some time now.

    Let’s assume, for a minute, that either Obama wins and does away with his class warfare rhetoric to approve of extending the entirety of the Bush tax cuts, or, Romney wins and extends them. At that point, the apprehension over possible higher taxes will evaporate, and some to most who have it will release their capital they have been holding onto. The economy itself will start growing again at rates that indicate a real “recovery” is present.

    So, that’s done. But what have we, as a country, really accomplished? Nothing more than a return to modest growth in the economy, but still headed down the same road we were on before. That is, a decline in manufacturing, with the economy becoming ever more service job oriented. In effect, less actual wealth is created, because no tangible wealth is created. And as we’ve seen from government, they can evaporate wealth faster than you can blink. The economy, while still growing modestly, will never be on solid, stable footing as long as government itself continues to eat away at the wealth private individuals are creating.

    So, how do we change that? Either shrink government drastically, which the liberal/progressives have shown they will fight tooth and nail against, OR, inject a major change of philosophy into the who, what, and how, taxes are levied.

    The most striking thing about the FairTax, to me, isn’t the “fairness” inherent in the plan, but rather, in who gets taxed. Only the end users of products and services get taxed on the items or services they purchase. Meaning, an auto manufacturer only is taxed on the tools they buy, the services rendered to the maintenance of their facilities, the administrative tools they use(such as computers and paper), etc. The materials they buy, such as steel, or the individual components they do not, themselves, manufacture, such as headlights, they do not pay taxes on. Those taxes are levied on the consumer who purchases the vehicle from the dealer. The reduction in taxes that businesses pay would be staggering, to say the least.

    America would become the haven for manufacturing interests from other countries, not to mention the mass return of American business back to our shores. America would return to an industrial based economy, and actually build tangible wealth here at home, that wouldn’t be so easily destroyed by government interests or economic downturns.

    As a tool, the FairTax is the only viable way of returning to what you described above in #36.

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  41. john says: 41

    Corporate profits are at all time highs and the Dow has gone up 50% under Obama, Caoitalists are doing quite well, thank you, the workers well not so good. BUT hey who cares about the working class except for the SOCIALISTS. Shareholders love Obama

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  42. johngalt says: 42

    @john:

    BUT hey who cares about the working class except for the SOCIALISTS.

    If you believe that you should really study history more.

    In effect, there is very little difference between socialism and corporate cronyism practiced by the Democratic party(and the GOP).

    Both practices lead to elitism where a few gain massive power over the masses, who are kept in metaphorical chains and bonds by a “benevolent” government. True conservatism, or classical liberalism, is quite different than what is being practiced politically in America today. And, as well, much more congenial to the working class than any other political ideology thus invented.

    ReplyReply
  43. Mike O'Malley says: 43

    @Ditto:

    Unfortunately the Washington DC, Wall Street and Big Finance crowd prefer concentrating wealth at the top while taking advantage of cheap labor. So they forced us into a multinational corporate global free market system, where the concept of “support your local business” was set aside.

    You are, we are in a global market whether we like it or not. We must import various resources from overseas and therefore we must sell overseas. It is inescapable. Moreover, American protectionism is recognized by economists generally as one of the three primary causes of the Great Depression. If you think Obamanomics is bad, try protectionism and be prepared to welcome back breadlines.

    But here is a problem which wasn’t around in 1929. We import much of over investment capital from overseas. We done so since Social Security destroyed America’s traditionally high savings rates. If you want a ticket to American poverty, try protectionism.

    American labor was also cast aside by big manufacturing in favor of lower wage workers overseas who could make goods cheaper. US manufacturing began to drop off as they could not compete with the bulk purchased bargain-basement imports pricing at chain stores.

    And you the consumer didn’t have a part to play it this? Did you consistently check the content label and buy 100% American? I doubt it. It wasn’t just big business. Multitudes of American consumers looked the other way time and time again while American contractors out competed their rivals with low wage illegal immigrant labor. Did you always buy American? Low cost illegal labor employed by American businesses domestically has had a far more significant impact on American labor than has corporate outsourcing.

    Similar practices began to take place in agriculture as those producers were forced to lower their wholesale prices to compete (although grocery chains did not lower their consumer prices).

    And how did that happen? Did they export US farmland overseas? No, California farmers were using low cost Mexican migrant labor since the 1950s.

    The “American Dream” is being bled away from the hopes and promise of the past, into depressing growth of cities which have become Gothic conglomeration of gloomy blight, tightly squeezed bourgeois, opulent government palaces and expensive towers of the wealthy.

    The American dream is being bled away because America’s working and America’s middle class have become dysfunctional. You can’t enjoy the benefits of middle class life unless you are willing and able to live prudently like America’s traditional middle class. Marriage failure, divorce and illegitimacy need to be rolled back toward 1950’s levels if you want to renew the American Dream.

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  44. Ditto says: 44

    @Mike O’Malley:

    I did not call out for protectionism, I simply pointed out that that when currency continues to circulate within an area, it sustains the community and it grows. It is of course also necessary for there to be production of goods that can be sold within and exported, just as much as it is necessary to import goods that can not be produced locally. Tourism also brings in money to the community. The problem comes when an bustling local economy is transformed into a service economy. The community will continue so long as production of goods does. As more goods are purchased from outside importers that money leaves the community. Unless the local producers can export their goods for a profit, and pay their workers so that the community economic situation is stabilized, that community will eventually wither and die. Borrowing funds from outside financiers only prolongs the decline. If you can entice outside investors to to set up new production, then the community can get an infusion of vitality, but only so long as production continues.

    And how did that happen? Did they export US farmland overseas? No, California farmers were using low cost Mexican migrant labor since the 1950s.

    Mike, you seem to want to place far too much of the blame on illegal immigration and the breakdown of the family. While these do make things worse, they are not the chief causes of the middle-classes problems. Surly you know that many of our agricultural goods are imported? And that these imported goods are often purchased at lower price than the the local producers can ask? Yes, of course low wage migrant and some illegal workers are sometimes used by producers so that they can try to compete, but it can be still be very difficult because of the main thing that makes it ever more expensive.

    That thing is ever expansive government and it’s cost. Government laws, regulations, fees and taxes. Part of the reason why imported goods are less expensive is because they don’t have the overhead costs and rules that local producers have to follow. These costs and policies are what usually makes it cheaper to move production overseas and import the goods. This is part of the reason why we still had tariffs in place until the free trade crowd joined forces with the progressives of both parties.

    As John pointed out, most of the Wall Street types will continue to profit no matter where the goods are made, so long as they have buyers. The wealthy don’t need more money or favors. The problem that must be faced is how to create jobs and restore the financial situation of the middle class and the communities of the red states. Unless you want to go the Obama/”Occupy” socialist Robin Hood route, the only way to do that is to return America to a production economy. We must also downsize local, state and national government to financially sustainable levels. Perhaps, in addition, any company that is “Too big to fail” should be treated as a monopoly, and broken-up into such a size that it’s failure will never again threaten the economy.

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  45. Mike O'Malley says: 45

    @Ditto:

    I did not call out for protectionism,

    Thanks for clearing that up :-)

    I simply pointed out that that when currency continues to circulate within an area, it sustains the community and it grows.

    That is your choice in a free market and even if you are wrong, in a free market I can’t imagine that it will do much harm. Is there a school of economics or such that supports your views about shifts from a manufacturing based economy to a service based economy?

    Mike, you seem to want to place far too much of the blame on illegal immigration

    Often, as in our situation, it pays to bring up the impact of illegal immigration on the American labor market because that impact is substantially greater than the impact of outsourcing. According to the reports in the Wall Street Journal the rate outsourcing American jobs overseas has been declining for year and has a diminished impact on the American job market. The negative impact of illegal immigration overwhelms that of outsourcing. Illegal immigration however primarily impacts the US labor market for workers with less than a 8th grade reading level, American workers who have a lesser impact on the American political system. Outsourcing affects our middle class and stokes middle class insecurities.

    I expect that the re-incorporation of American companies overseas to avoid high US corporate income tax rates and the loss of our financial sector to London, Singapore, Abu-Dhabi et cetera due to domestic over-regulation will have a far more negative impact than job outsourcing going forward. Worry about what has impact. ;-)

    Mike, you seem to want to place far too much of the blame on … the breakdown of the family. While these do make things worse, they are not the chief causes of the middle-classes problems.

    I think you are wrong. The negative impact of marriage failure, divorce and illegitimacy is substantial and not generally appreciated. For example marriage failure and divorce drives up American energy consumption 15% overall. Without the negative impact of marriage failure and divorce America’s balance of trade problems would be significantly reduced and perhaps eliminated.

    As John pointed out, most of the Wall Street types will continue to profit no matter where the goods are made, so long as they have buyers. The wealthy don’t need more money or favors.

    One may offer words of caution: there will always be self interested elites, and to focus upon Wall Street is to misunderstand the problem and to play into the hand of the Socialists. In my understanding Wisconsin Avenue types did more damage to the US economy in the last 20 years than did Wall Street types

    Who were the Wisconsin Avenue types? They were the politically well connected officers and fraudsters of Fannie Mae:
    See on Wisconsin Avenue here:
    http://upload.wikimedia.org/wikipedia/commons/thumb/d/d9/Fannie_Mae_Headquarters.JPG/700px-Fannie_Mae_Headquarters.JPG

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  46. Brother Bob says: 46

    @All: Thanks for the comments, everybody – great discussion!

    @john galt, mike o’malley & mossome – great comments, thanks! I’ve been busy over the last few days and haven’t been able to respond to everyone and you all did a great job of stepping up to argue our case. Johngalt, I always get the best comments out of you when I blog on economics. I need to write on the subject more!

    ReplyReply
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