Home › Forums › Financial Markets/Economics › OT: September 2012 Jobs Report “Very Suspicious”
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an.
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February 11, 2015 at 7:17 PM #782872February 11, 2015 at 7:21 PM #782873
an
Participant[quote=The-Shoveler]Most of the wealth Gap is being caused by wages not keeping up with inflation at the lower end of the wage spectrum.
Of course the ultra rich will still be ultra rich, just that the just that the lower would stop falling behind.[/quote]I actually don’t mind having minimum wage being tied with inflation. However, I don’t think minimum wage will affect wealth gap. I define wealth gap as net worth. People in the bottom quintile will most like spend all that they make, so giving them more will only put more money in the system. I don’t think it will allow them to save more. They will either live better or increase the cost of goods faster (inflation).
February 11, 2015 at 11:46 PM #782882CA renter
Participant[quote=AN]flyer, I understand your concern regarding wealth gap with regards to societal viewpoint. However, I think we’re far from the breaking point, where it would start to result in revolution. I think as long as the middle 3 quintile are employed and have a decent life, things will continue to chug along.
With that said, what would be your proposal to close the gap (meaningfully)? The only solution that I think would work is a wealth tax. I don’t think raising the minimum wage will do it, since it will just put more money into the system and the rich will also benefit from additional money in the system as well. It might end up negatively affect the 2nd & 3rd quintile more than the top 5% and the 4th quintile.[/quote]
1.) Restrict the ratio of highest-paid to lowest-paid people who work for or own a particular corporation (including ALL types of compensation to any individual). If they want the benefits of incorporation (basically spreading the risks), then they should have to pay for those benefits by spreading the rewards, as well.
2.) Tax ALL income at the same, steeply progressive rates.
3.) Eliminate the ability to step-up the cost basis of assets for heirs of large estates. Adjust the cost basis by some sort of inflation factor instead in order to avoid being taxed on “inflation.”
4.) Universal healthcare for all U.S. citizens. Medical costs are one of the leading causes of bankruptcy. Unfortunately, if someone is stricken with a devastating illness, they are often unable to work (and maintain affordable insurance) at the very same time that they need this insurance. We pay the highest medical costs for some of the worst outcomes, respectively. Americans desperately need to wake up and learn more about the different healthcare systems and their outcomes.
5.) Lift the cap on income subject to SS taxes, increase SS contributions from both employees and employers, and increase the benefits with the possibility of adjusting the benefits based on needs.
6.) Consider imposing tariffs on “U.S. companies” (and foreign companies?) that do most of the manufacturing overseas if they want to sell goods in the U.S. These costs should offset any differences in labor and environmental standards between the two countries.
If the company isn’t paying for all of the legal, physical, social, and other infrastructure provided by our government (because they are doing most of their work overseas), they should have to buy the right to be a U.S. company with all of the protections and benefits that this affords them.
Just these steps alone would greatly reduce the income and wealth gaps, while still allowing people the ability to save for retirement and enjoy a decent quality of life.
February 12, 2015 at 12:23 AM #782883Participant[quote=CA renter]1.) Restrict the ratio of highest-paid to lowest-paid people who work for or own a particular corporation (including ALL types of compensation to any individual). If they want the benefits of incorporation (basically spreading the risks), then they should have to pay for those benefits by spreading the rewards, as well.
2.) Tax ALL income at the same, steeply progressive rates.
3.) Eliminate the ability to step-up the cost basis of assets for heirs of large estates. Adjust the cost basis by some sort of inflation factor instead in order to avoid being taxed on “inflation.”
4.) Universal healthcare for all U.S. citizens. Medical costs are one of the leading causes of bankruptcy. Unfortunately, if someone is stricken with a devastating illness, they are often unable to work (and maintain affordable insurance) at the very same time that they need this insurance. We pay the highest medical costs for some of the worst outcomes, respectively. Americans desperately need to wake up and learn more about the different healthcare systems and their outcomes.
5.) Lift the cap on income subject to SS taxes, increase SS contributions from both employees and employers, and increase the benefits with the possibility of adjusting the benefits based on needs.
6.) Consider imposing tariffs on “U.S. companies” (and foreign companies?) that do most of the manufacturing overseas if they want to sell goods in the U.S. These costs should offset any differences in labor and environmental standards between the two countries.
If the company isn’t paying for all of the legal, physical, social, and other infrastructure provided by our government (because they are doing most of their work overseas), they should have to buy the right to be a U.S. company with all of the protections and benefits that this affords them.
Just these steps alone would greatly reduce the income and wealth gaps, while still allowing people the ability to save for retirement and enjoy a decent quality of life.[/quote]
1)What would that ratio be? I wonder how this will affect CEO’s decisions, especially regarding inversions to bypass this all together.
2)This wouldn’t matter if the company is non-American (inversion).
3)What would be considered large?
4)This a whole other debate, but sure, reform of our healthcare system. There is a reason why the rich people from other countries come here for healthcare.
5)So, what you’re saying is, the richer you are, the more you pay, but the less you’ll get and the poorer you are, the less you pay into the system but they more you’ll get. How can such system be sustainable?
6)So, you’re imposing tarriffs on most companies. Most tech products are made overseas. Wouldn’t this give companies one extra reason to invert? Since they’ll have tarriffs imposed on them anyways?
Wouldn’t this also cause a trade ware against other nations? How does this help the little guys in the bottom rung if everything they buy becomes more expensive? Wouldn’t that eat up any gain their get from income increase?February 12, 2015 at 5:02 AM #782884flyer
ParticipantAN, yes, my friends are well protected with insurance, but their net worth has suffered due to some investments and other financial moves they, unfortunately, happened to make at the wrong time. They are doing OK–just not at the level they would prefer to be.
Although we’re involved in real estate, and other investments–we’re quite conservative–and are making every effort to keep what we have, long-term.
As far as exploring the possible options available in closing the “wealth gap,” I’m very much enjoying reading the in-depth analysis both you and CAr are providing. This is a big issue, and one that I believe will effect more and more people as time goes on.
Just from the varying responses each of you have posted, it is clear that there will be no easy answers.
February 12, 2015 at 7:16 AM #782885livinincali
Participant[quote=flyer]
As far as exploring the possible options available in closing the “wealth gap,” I’m very much enjoying reading the in-depth analysis both you and CAr are providing. This is a big issue, and one that I believe will effect more and more people as time goes on.
[/quote]The answer to closing the wealth gap is super simple. When the next crash occurs, DON’T BAIL ANYBODY OUT. The end. It’s really that simple. In most cases one man’s wealth is another man’s debt. Let the bad debt go bad and the wealth gap resolves itself.
February 12, 2015 at 7:25 AM #782886
CoronitaParticipant[quote=livinincali][quote=flyer]
As far as exploring the possible options available in closing the “wealth gap,” I’m very much enjoying reading the in-depth analysis both you and CAr are providing. This is a big issue, and one that I believe will effect more and more people as time goes on.
[/quote]The answer to closing the wealth gap is super simple. When the next crash occurs, DON’T BAIL ANYBODY OUT. The end. It’s really that simple. In most cases one man’s wealth is another man’s debt. Let the bad debt go bad and the wealth gap resolves itself.[/quote]
I totally agree. Don’t even try to do a loan mod or moratorium for underwater/overleveraged homeowners.
Foreclose and short sales immediately. That way, the rest of us can buy them at 30-40+% off with cash, rent them back out with positive cash flow, wait for people to complain about not being able to qualify for a loan to buy, wait for banks to offer subprime loans again, and wait for subprime borrowers with very little skin in the game overpay for a home they can’t afford with borrowed money they really can’t afford.
Oh wait, that sort of already happened… Most people can’t afford/qualify for a home, a much smaller percentage of the population owning even more real estate and assets… While paychecks continue to remain stuck in neutral, asset prices have not..So those with assets and counting less on a “wage” paycheck enjoying the now larger wealth gap.
February 12, 2015 at 7:45 AM #782887Participant[quote=livinincali][quote=flyer]
As far as exploring the possible options available in closing the “wealth gap,” I’m very much enjoying reading the in-depth analysis both you and CAr are providing. This is a big issue, and one that I believe will effect more and more people as time goes on.
[/quote]The answer to closing the wealth gap is super simple. When the next crash occurs, DON’T BAIL ANYBODY OUT. The end. It’s really that simple. In most cases one man’s wealth is another man’s debt. Let the bad debt go bad and the wealth gap resolves itself.[/quote]I agree 100%. No more bail out. I’d love to pick up some rentals pennies on the dollar the next time around.
February 12, 2015 at 8:06 AM #782891Anonymous
Guest[quote=AN]
1)What would that ratio be? I wonder how this will affect CEO’s decisions, especially regarding inversions to bypass this all together.
2)This wouldn’t matter if the company is non-American (inversion).
3)What would be considered large?
4)This a whole other debate, but sure, reform of our healthcare system. There is a reason why the rich people from other countries come here for healthcare.
5)So, what you’re saying is, the richer you are, the more you pay, but the less you’ll get and the poorer you are, the less you pay into the system but they more you’ll get. How can such system be sustainable?
6)So, you’re imposing tarriffs on most companies. Most tech products are made overseas. Wouldn’t this give companies one extra reason to invert? Since they’ll have tarriffs imposed on them anyways?
Wouldn’t this also cause a trade ware against other nations? How does this help the little guys in the bottom rung if everything they buy becomes more expensive? Wouldn’t that eat up any gain their get from income increase?[/quote]In other words, we live in a global economy.
If one country outlaws wealthy people and the things they do to be wealthy, they will just go somewhere else.
February 12, 2015 at 8:07 AM #782890Participantflyer, in that case, aren’t you describing the exact example of high risk = high return? Your friends took the high risk route, which didn’t work out and they lost a lot. But if it did work out, then they would have been a lot better off than if they took the safer investment route. There’s no right or wrong. Everybody have their own style and desire. This has nothing to do with income vs expense btw.
I agree with you that there is no easy answer. Especially if you want to make the bottom 95% richer and not the top 5% poorer. While CAR’s suggestion would definitely close the wealth gap by making the top 1-5% poorer. I don’t foresee it making the bottom richer or making the top .99% poorer. The top .99% will find away to move their money/income offshore. In this day and age, you don’t have to physically be in any specific location to do a lot of the business. Especially the headquarter.
February 12, 2015 at 8:21 AM #782893Guest[quote=livinincali]
The answer to closing the wealth gap is super simple. When the next crash occurs, DON’T BAIL ANYBODY OUT. The end. It’s really that simple. In most cases one man’s wealth is another man’s debt. Let the bad debt go bad and the wealth gap resolves itself.[/quote]The vast majority of wealth at the top tier was never bailed out.
It sucks that a bunch of people got a pass on irresponsible behavior after the housing bust, but most of them were in the middle tier. There were some at the top tier, but they only represent a small portion of the extreme wealth at the top.
I’ve mentioned this before many times and it is generally overlooked because it doesn’t fit anybody’s narrative, but take a look at who actually has the money:
http://www.forbes.com/forbes-400/list/#tab:overall
Almost none of these people received bailouts.
February 12, 2015 at 8:43 AM #782895Participant[quote=harvey]
The vast majority of wealth at the top tier was never bailed out.It sucks that a bunch of people got a pass on irresponsible behavior after the housing bust, but most of them were in the middle tier. There were some at the top tier, but they only represent a small portion of the extreme wealth at the top.
I’ve mentioned this before many times and it is generally overlooked because it doesn’t fit anybody’s narrative, but take a look at who actually has the money:
http://www.forbes.com/forbes-400/list/#tab:overall
Almost none of these people received bailouts.[/quote]
Of course they were. All of these people have most of their wealth associated with their stock holdings. MSFT was around $16/sh in 2009. It’s 42 and change today. Do you think that price recovery in MSFT stock would have been possible without a variety of Bailouts, QEs and accounting rule changes. If the big investment banking housing like Goldman and others were allowed to blow up then wall street today would likely be trading at a lower multiple. Would that have impacted some people in the middle and upper middle class. Yeah it would, but it would have hit those at the top harder than those in the middle.
You’re probably happy that you 401K more than doubled from some hypothetical 100K to 250K but Bill Gates went from 30 billion to over 75 billion at the same time.
February 12, 2015 at 9:19 AM #782896The-Shoveler
ParticipantI think you guys are missing the point,
It really does not matter HOW MUCH money Bill Gates has,
What matters is what the Guy earning minimum wage can afford, can he rent an apartment and eat on 35 hours a week, or does he need to work 60 hours etc…
THAT is what matters, because it determines what the guy on the next rung can afford.
February 12, 2015 at 11:02 AM #782897Guest[quote=livinincali] Would that have impacted some people in the middle and upper middle class. Yeah it would, but it would have hit those at the top harder than those in the middle.[/quote]
[quote]You’re probably happy that you 401K more than doubled from some hypothetical 100K to 250K but Bill Gates went from 30 billion to over 75 billion at the same time.[/quote]
Your second point completely refutes the first.
When Bill Gates only has “only” $30 billion, he still has incredible power, more net worth than literally millions of people combined, and tremendous opportunity to make more. He can take all sorts of risks, make all sorts of investments (and has access to the choice ones.)
When someone else who is Bill Gate’s age only has $100K, they are essentially trapped, unable to do anything but earn wages to get by and have almost no realistic opportunity to grow their wealth. If they have $250K, they may at least have a few more options.
There are reasons that “the rich get richer.” Making everybody poorer doesn’t change those reasons, it actually makes them more pronounced.
And of course there’s the fact that most of the very wealthy made their wealth long before any bailouts. Sorry, bailouts have nothing to do with the wealth gap. If anything they probably diminished it.
February 12, 2015 at 11:42 AM #782898Participant[quote=harvey][quote=livinincali] Would that have impacted some people in the middle and upper middle class. Yeah it would, but it would have hit those at the top harder than those in the middle.[/quote]
[quote]You’re probably happy that you 401K more than doubled from some hypothetical 100K to 250K but Bill Gates went from 30 billion to over 75 billion at the same time.[/quote]
Your second point completely refutes the first.
When Bill Gates only has “only” $30 billion, he still has incredible power, more net worth than literally millions of people combined, and tremendous opportunity to make more. He can take all sorts of risks, make all sorts of investments (and has access to the choice ones.)
When someone else who is Bill Gate’s age only has $100K, they are essentially trapped, unable to do anything but earn wages to get by and have almost no realistic opportunity to grow their wealth. If they have $250K, they may at least have a few more options.
There are reasons that “the rich get richer.” Making everybody poorer doesn’t change those reasons, it actually makes them more pronounced.
And of course there’s the fact that most of the very wealthy made their wealth long before any bailouts. Sorry, bailouts have nothing to do with the wealth gap. If anything they probably diminished it.[/quote]
Just do the math. If you the average paycheck to paycheck american with a net worth of $20K of saving who cares what happens to the stock market. Say the top 10% have a net worth of $1 million with 50% of that in stocks. So the wealth gap is a ratio of 50/1 or $980K. Say the stock market gets cut by 50%. Now the wealth gap is 750/20 = 37.5/1 or $730K. The wealth gap just shrunk right.
Or just look at this chart. Notice the time frames when wealth inequality shrunk a lot. What happened during those times?
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