Wednesday, December 7, 2016

Where Did the Money Go?

From Laurie


"Stagnant wages have sliced the share of income collected by the bottom half of the population to 12.5 percent in 2014, from 20 percent of the total in 1980. Where did that money go? Essentially, to the top 1 percent, whose share of the nation’s income nearly doubled to more than 20 percent during that same 34-year period."

A Bigger Economic Pie, but a Smaller Slice for Half of the U.S.

So John can continue to blame people buying foreign goods for leaving so many workers behind in our economy and I will continue to blame the greedy top 1%.

31 comments:

Anonymous said...

The argument for foreign trade, and against protectionism is that it permits growth. We are a much richer country than we were, say, in 1950 when the American economy was protected by two oceans. The anti protectionist argument made by people like me is that protectionism works against growth. Protectionism encourages economic, technological and cultural stagnation.

--Hiram

John said...

Technically I think in terms of contributing factors, not blame. Then I try to assign percentages to each of them. So here are the factors I see:

- American Consumers are capitalists who want the best value for themselves. (ie cost, quality, reliability, performance, features, fashion, etc) Many do not include "level of domestic content" in their buying decision.

- American Investors are capitalists who want a good return on their 401K, IRA, College fund and other investments. If a fund or invest underperforms it's peers, people of all wealth levels will move their money out of it.

- The American Government Standard of Living, Regulations, Taxes and Welfare system all contribute making it expensive to operate manufacturing companies here.

Not knowing better, I think they could be assigned equal weight. Did I miss any?

John said...

Laurie,
I only pick on Liberals because they say one thing and do another.
(ie We must support American Unions and Higher Wages !!! I must buy my foreign car / phone !!!)

And they tend to blame everyone else while refusing to look in the mirror.
(ie The 1% and Companies are the evil doers...)

By the way I forgot one more factor:
- Some Americans support free borders and importing cheap labor for different reasons, which depresses incomes for the low academic and low skills workers.
(ie want cheap labor, or want to save them from their home country, etc)

John said...

Per Hiram's comment.

Economist Benefits and Costs

In any case, cheap imports were a windfall for American consumers. Excluding food and energy, prices of goods have fallen almost every year since NAFTA. Clothes now cost the same as they did in 1986; furnishing a house is as cheap as it was 35 years ago. More trade brought more choice, too. Robert Lawrence and Lawrence Edwards, two economists, estimate that trade with China alone put $250 a year into the pocket of every American by 2008. The gains from cheap stuff flowed disproportionately to the less well-off, because the poor spend more of their incomes on goods than the rich.

John said...

Economist China Saved US Consumers $600 Billion

John said...

Economics Benefits and Cost

Anonymous said...

In any case, cheap imports were a windfall for American consumers.

But Trump asks, are they a windfall for American workers?

More trade brought more choice, too. Robert Lawrence and Lawrence Edwards, two economists, estimate that trade with China alone put $250 a year into the pocket of every American by 2008.

How much cash did foreign trade take out of the pockets of American workers? What's the point of low prices if no one can afford to pay them?

There is a consensus among economists that Trump is wrong, that free trade is on the whole good for the economy, and protectionism on the whole is bad for the economy. But no policy choice in this area is without it's costs, and to be fair, without it's benefits. We have as a nation chosen a protectionist economic policy. We just have to hope that most of us share more in the benefits of that policy than we do the costs.

--Hiram

jerrye92002 said...

Again it should be pointed out that slow economic growth INCREASES income inequality, because those whose income derives from capital continue to get paid while those whose income comes from wages see stagnation or even loss.

And there is nothing wrong with income inequality so long as everybody is getting richer and raising their standard of living. In fact, having the rich get richer is a driving force in the economy, but one that government can work against. I've always said that one of the great things Reagan did was to say, in effect, "We are going to change things around to make it easier to do business, and those rules will =stay the same= as long as I am President." Investors hate uncertainty.

And there is nothing wrong with fair trade so long as it is fair trade and the US allows its own businesses to compete, without taking all the "golden eggs" for the themselves.

Anonymous said...

Again it should be pointed out that slow economic growth INCREASES income inequality, b

It certainly can.

"And there is nothing wrong with income inequality so long as everybody is getting richer and raising their standard of living."

But everyone can't get richer unless the economy is growing. If the economy isn't growing, we have the Trumpian zero sum game where some can prosper only at the expense of others.

--Hiram

jerrye92002 said...

"Trumpian game"? You mean he never employed anybody to help build his wealth, or after he gained his wealth?

John said...

Maybe all the liberals were brought in a classroom when we were young and indoctrinated to hate wealthy people...

And told that those business owners somehow get people to work for them for free... :-)

Laurie said...

I prefer the economy of 1980, in which adults in the top 1 percent earned on average 27 times more than bottom 50 percent of adults. Today they earn 81 times more. This does not feel like hate to me.

There is also this:

"The diverging trends in the distribution of pre-tax income across France and the United States—two advanced economies subject to the same forces of technological progress and globalization—show that working-class incomes are not bound to stagnate in Western countries. In the United States, the stagnation of bottom 50 percent of incomes and the upsurge in the top 1 percent coincided with drastically reduced progressive taxation, widespread deregulation of industries and services, particularly the financial services industry, weakened unions, and an eroding minimum wage."

I believe it is likely that people from France also buy foreign made cars, phones, and other stuff, yet they have no where near the levels of inequality found in the USA.

Charts of the Day: Income Inequality Doesn't Have to Spiral Out of Control

John said...

How about this chart. French unemployment up to 10%.

John said...

Or this interesting fact

"Around 10,000 millionaires left the country in 2015, according to a report by New World Wealth, which provides analysis on the global wealth sector.

Paris saw the biggest exodus of high net worth individuals, with 7,000 millionaires leaving the city last year. That's roughly 6% of Paris' millionaires, a population of 126,000, according to the new report.

Most millionaire Parisians moved to the U.K., U.S., Canada, Australia and Israel."

John said...

BBC What is Wrong with France

John said...

These confirmed what I thought. The French consumers are pretty nationalistic and/or euro centric. Not many Asian cars on their list, but it is growing slowly.

Best Selling Cars in France

US Car Market shares

John said...

Laurie,
So do these factors make sense to you? And how they have interacted to hold down the income for US workers? Questions?

- American Consumers are capitalists who want the best value for themselves. (ie cost, quality, reliability, performance, features, fashion, etc) Many do not include "level of domestic content" in their buying decision.

- American Investors are capitalists who want a good return on their 401K, IRA, College fund and other investments. If a fund or invest underperforms it's peers, people of all wealth levels will move their money out of it.

- The American Government Standard of Living, Regulations, Taxes and Welfare system all contribute making it expensive to operate manufacturing companies here.

- Some Americans support free borders and importing cheap labor for different reasons, which depresses incomes for the low academic and low skills workers.
(ie want cheap labor, or want to save them from their home country, etc)

- Automation is making some jobs obsolete, and many US workers do not have the academic capability, job skills, flexibility, desire or tenacity to adjust.

John said...

Interesting US News Link

Comment I posted with it at MP Morrison County

"Now how do you think we can improve the USA so all non-cognitive special needs kids have these skills, a sufficient academic capability and a passion for continuous learning?

Currently our society doesn't hold irresponsible Parents, Social Services and/or the Public Education system accountable for this, though they receive trillions of dollars in tax dollars each year from the Local, State and Federal level. Hopefully this changes for the good of the unlucky kids who if things continue will find it real hard to stay employed in the future." G2A

Laurie said...

so which do you think is better- rich people making 27 times more than a charter school teacher or rich people making 81 times more? So who should buy books to teach children to read- rich people through higher taxes or the teachers should continue to supply classrooms out of their paychecks?

and about those "non-cognitive special needs kids" what future do you foresee for one of my typical kids - IQ of 82, hyperactive, several years behind in their reading and math skills?

jerrye92002 said...

I don't think how much a rich guy makes matters. The question is whether you are paid appropriately to your ability and, like divers, "degree of difficulty." From your description of your "typical kid," I doubt you are paid enough. And also from your description, I am wondering how you can possibly prepare these kids for productive citizenship? If they are "several years behind" when you get them, would it have been better, and possible, to KEEP them near grade level all along?

John said...

First of all, we have a progressive taxation system and the wealthy people are paying for most of your salary and all the other school expenses.

Please note that your source and others pick before tax comparisons for a good reason. Also, those "rich folks " are a very small percentage of the population. I may like Bill Gate's house and lifestyle, but I sure am not going to compare my income to his... There is no point.

I have no idea what will happen to the adults with an IQ of 82. I assume they will be receiving disability checks like the couple of adults that I know do. Ironically the one is pretty high functioning and smart enough that he decided getting disability was better than working for the surrounding farmers. (which he had been doing for years with no problem)

John said...

Now you know that I am happy to give your school the same $22K per student that the Mpls schools get. It is your friends at Ed MN and the DFL who are blocking that from happening.

John said...

Jerry,
Which part of "the Parents" DO NOT have them Kindergarten ready have you been missing?

Do you think we are advocating early childhood education for unlucky kids just because we like to spend money?

The facts are very clear kids from families with questionable parenting come to school far behind where they should be. This includes short comings in social, physical, self control and other skills. And worse yet... Modern neuroscience shows that their brain is not fully developing due their limited stimulation.

John said...

Medscape Article

Effects of Poverty

Anonymous said...

. The question is whether you are paid appropriately to your ability and, like divers, "degree of difficulty."

Well, people aren't. Donald Trump's wealth is largely based on his huge tax losses occurred in the 1990's which means he pays no taxes giving him a huge advantage over his competitors.

Lots of difficult jobs don't pay well, and lots of easy jobs do pay well. Rate of payment depends on a lot of factors.

--Hiram

jerrye92002 said...

"Do you think we are advocating early childhood education for unlucky kids just because we like to spend money?"

Yes. I've never understood giving the public schools more to do when they are so obviously failing to do what they are already responsible for doing.

And again I would point out that these parents are NOT preventing the schools from educating their kids. Their kids present challenges, certainly, but the irresponsible parties in this arrangement are those being paid to do a job that they are not successfully doing. And other than the front line teachers, they don't seem to give a rodent's rump.

John said...

Back to your inconsistency...

You say you want to ensure that irresponsible people who have sex and make a baby bear the burden of their irresponsible behavior.

So many of these irresponsible / unprepared people fail to perform their basic parental duties. As a result the 5 year old's brain is not normally developed and their social, language, physical, self control, etc and other basic skills are way behind those of their peers.

Instead of calling these irresponsible people out for their failure and working to hold them accountable... You expect tax payers and our public schools to raise their children for them, undoing all the years of neglect and bad role modeling.

And if these people fail to show up at school, collaborate with the Teachers, ensure their child's homework is done, or provide a stable environment / school for the child... Somehow it is society's fault that the child failed to become a stable, knowledgeable well round citizen.

Do you have even ONE idea on how to actually hold "people who make babies" accountable for being responsible Parent(s)?

Or do all your ideas include transferring their consequences / responsibilities to some other person?

John said...

Hiram,
Which would you rather do?

Lose $1 BILLION or pay much less in taxes?

Anonymous said...

Lose $1 BILLION or pay much less in taxes?

Donald did both. As a responsible and accountable person, I have never done either.

There is this notion out here that wealth is related to competence. But let's not forget that Donald's wealth is based in large part of losing vasts sums of cash, both his own and cash entrusted to him by others. For this he should get a tax break?

--Hiram

jerrye92002 said...

"And if these people fail to show up at school, collaborate with the Teachers, ensure their child's homework is done, or provide a stable environment / school for the child... Somehow it is society's fault that the child failed to become a stable, knowledgeable well round citizen."

OK, let's take what I consider a typical scenario. Teen mom didn't finish high school and Boyfriend is worthless. She lives on welfare, but sometimes picks up an odd job while Gramma looks after the kid. She signs the kid up for school as required by law, sends the kid every day to the public school assigned, and goes to parent conferences though it's not really helpful. So, except for the unprotected sex, she has (though barely) met your standard for "responsible." Now, do you guarantee that the school system will properly educate her child?

jerrye92002 said...

Sorry, did we wander off-topic again?