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Income Disparities Threaten Economy

IT’S TIME TO TILT THE FIELD IN THE OTHER DIRECTION TO PROMOTE HEALTHY GROWTH

Posted: November 4, 2012 at 2:34 a.m.

Alas for those who lie on beds of ivory, and lounge on their couches, and eat lambs from the flock, and calves from the stall; who sing idle songs to the sound of the harp, and like David improvise on instruments of music; who drink wine from bowls, and anoint themselves with the finest oils, but are not grieved over the ruin of Joseph.

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Opinion, Pages 13 on 11/04/2012

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Terrific post, Reverend Grisham!

It's not often we see reference to constipation with regard to income inequality, but I like the analogy. Brings to mind another scatologically relevant idea, i.e., the horse-and-sparrow theory: If you feed the horse enough oats, some will pass through to the road for the sparrows.

Supply side economics, voodoo economics, trickledown economics - all various names for the same idea, ie, tax policy that allows the very rich to be very much richer will somehow benefit low income tax payers, too. It's theoretically attractive to those of a certain ideological persuasion, but it's thoroughly discredited as a functional policy.

The Congressional Research Service has published a report detailing the actual effect of tax policy on economic indicators and "found no correlation between top tax rates and economic growth."

http://www.nytimes.com/2012/11/02/bus...

From the publication:

"Concluding Remarks
The top income tax rates have changed considerably since the end of World War II. Throughout
the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%.
Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s;
today it is 15%. The average tax rate faced by the top 0.01% of taxpayers was above 40% until
the mid-1980s; today it is below 25%. Tax rates affecting taxpayers at the top of the income
distribution are currently at their lowest levels since the end of the second World War.
The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate
and the top capital gains tax rate do not appear correlated with economic growth. The reduction in
the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The
top tax rates appear to have little or no relation to the size of the economic pie.
However, the top tax rate reductions appear to be associated with the increasing concentration of
income at the top of the income distribution. As measured by IRS data, the share of income
accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before
falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the
top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to
how the economic pie is sliced—lower top tax rates may be associated with greater income
disparities."

http://graphics8.nytimes.com/news/bus...

Posted by: FrankLloydLeft

November 4, 2012 at 11:55 a.m. ( | suggest removal )

As usual the Pharisee spouts the usual left-wing tripe about income equality when the focus of our economy needs to be ecomonic growth.

The Pharisee is good at looking at static figures, assuming that people do not move from one income quintile to another when that has clearly not been the case.

The Pharisee knows that the poor in our nation would be considered middle-class in most other socieities with the amount of possessions that they have and the access to information they enjoy.

The Pharisee doesn't bother himself with the fact that the economic policies of the current ruler (which he worships more than Jesus) have been responsible for the increase in inequality because it prevents those who wish to work from improving their standard of living while pushing more into dependency.

FLL purports to support the Pharisee with a biased report that uses cherry-picked statistics in an attempt to prove a falsehood, when anyone capable of observing history can tell you the folly of the pseudo-study.

The unfortunate fact of life for those who live in the Bible Belt is the growth in the number of three-card monte hustlers who attempt to use religion to stroke their ego or feather their nests. They do more to drive people from the faith, but that may be their design, since they believe that they can garner more of the goodies for themselves.

Posted by: IrishMensa

November 4, 2012 at 10:14 p.m. ( | suggest removal )

IrishM: "the focus of our economy needs to be ecomonic growth.">>

I have no idea what "ecomonic growth" is, but it has a nice ring to it.

IR: "[Lowell] is good at looking at static figures,">>

Just imagine if IR could ever cite figures to support his claims? That would be refreshing.

IR: "[Lowell assumes] people do not move from one income quintile to another when that has clearly not been the case.">>

Actually, the US used to do well in offering upward mobility and broad access to the wealth of the nation, but that was before we decided it was more important to concentrate wealth at the very very tip top. Now, 400 individuals have as much wealth as the entire 155 million in the bottom half. A handful of Wal-Mart heirs have as much as the entire bottom third. And we have an idiot candidate for the conservative party that thinks when these wig wearing cake eaters pay 14% on their investment income, that's way too much.

Regarding your mobility claim, it's rubbish. Observe:

***
"Harder for Americans to Rise From Lower Rungs"

"WASHINGTON — Benjamin Franklin did it. Henry Ford did it. And American life is built on the faith that others can do it, too: rise from humble origins to economic heights...
But many researchers have reached a conclusion that turns conventional wisdom on its head: Americans enjoy less economic mobility than their peers in Canada and much of Western Europe." ...

"At least five large studies in recent years have found the United States to be less mobile than comparable nations. A project led by Markus Jantti, an economist at a Swedish university, found that 42 percent of American men raised in the bottom fifth of incomes stay there as adults. That shows a level of persistent disadvantage much higher than in Denmark (25 percent) and Britain (30 percent) — a country famous for its class constraints.

Meanwhile, just 8 percent of American men at the bottom rose to the top fifth. That compares with 12 percent of the British and 14 percent of the Danes.

Despite frequent references to the United States as a classless society, about 62 percent of Americans (male and female) raised in the top fifth of incomes stay in the top two-fifths,... Similarly, 65 percent born in the bottom fifth stay in the bottom two-fifths." --NYT's http://tinyurl.com/assl28c

Which means, dear IrishMensa, if you wish to live your American dream, upward mobility and all, you might want to move to Denmark.

Posted by: fayfreethinker

November 5, 2012 at 12:57 a.m. ( | suggest removal )

Lowell: "The top 1 percent of households now holds a larger share of overall wealth than the bottom 90 percent does. And they don’t seem to be investing it in creating new jobs.">>

Indeed. Warren Buffet has an observation here:

http://sphotos-a.xx.fbcdn.net/hphotos...

And here is a useful chart as well:

http://29.media.tumblr.com/tumblr_lto...

Consider the argument says we have a problem or an unfair situation because taxes are too low on the individuals contained within that red dot, and two high on all of the others.

Posted by: fayfreethinker

November 5, 2012 at 1:03 a.m. ( | suggest removal )

Jobs are only created when increasing supply is needed to meet growing demand. People need to spend money to create job growth. The accumulation of wealth does not create job growth, if anything it stymies it by keeping the money from being spent. 1 person with $1 million will spend less than 20 people with $50k. That 1 person only needs 1 house, 1 car, and has 1 body to feed and clothe. The 20 people have the same needs, but there are 19 more of them. It takes more supply to meet their demand.

Posted by: TheHunter

November 5, 2012 at 9:03 a.m. ( | suggest removal )

Every stockman knows this; if ya put to many cows on a piece of land every cow suffers with need. It's called carrying capacity and we have exceeded ours. Obomba care will address this problem. Volunteer to die and you will have done your part.

Posted by: JailBird

November 5, 2012 at 4:44 p.m. ( | suggest removal )

MoneyM: "Volunteer to die and you will have done your part.">>

That's the system we have now. The National Academy of Science (but really, what do they know?) says about 19,000 Americans die each year because of lack of access to care. Our peer countries don't put up with nonsense like that.

Consider the example of Nikki White:

“If Nikki WHite had been a resident of any other rich country, she would be alive today.

Around the time she graduated from college, Monique A. "Nikki" White contracted systemic lupus erythematosis; that's a serious disease, but on that modern medicine knows how to manage. If this bright, feisty, dazzling young woman had lived in, say Japan--the world's second-richest nation--or Germany (third richest), or Britain, France, Italy, Spain, Canada, Sweden, etc., the health care systems there would have given her the standard treatment for lupus, and she could have lived a normal life span. But Nikki White was a citizen of the world's richest country, the United States of America. Once she was sick, she couldn't get health insurance. Like tens of millions of her fellow Americans, she had too much money to qualify for health care under welfare, but too little money to pay for the drugs and doctors she needed to stay alive. She spent the last months of her life frantically writing letters and filling out forms, pleading for help. When she died, Nikki White was thirty-two years old.

"Nikki didn't die from lupus," Dr. Amylyn Crawford told me. "Nikki died from complications of the failing American health care system. It was a lack of access to health care that killed Nikki White."
--The Healing of America: The global quest for better, cheaper, and fairer health care, pg. 1

And then:

"I heard a peal of delight and turned around — that’s the picture at the top of this post. Hilary Matfess, a young policy analyst, was jumping up and down, yelling out details.

“The mandate is constitutional! It was upheld! Roberts went for the swing vote! Yes! Oh my God! The individual mandate survives as a tax!”

Did you work on passing the bill? I asked.

“No!” said Matfess. “I just have lupus!”
-- David Weigel at Slate, http://stfuconservatives.net/post/260...

So while Moneymyst ignorantly quips about Obamacare killing people, the adults in the room know it is working effectively to accomplish the exact opposite of that for the American people.

Posted by: fayfreethinker

November 5, 2012 at 7:16 p.m. ( | suggest removal )

Thats bad, too many peoples around now.

Posted by: JailBird

November 6, 2012 at 7:01 a.m. ( | suggest removal )

You can talk a subject to death, you know.

It ought to be pretty clear by now that the money at the top is not trickling down, and the "job creators" have created the jobs overseas. They have not created them at home. Why would any average citizen support a continuation of this dysfunctional situation?

Posted by: SPA

November 6, 2012 at 8:51 a.m. ( | suggest removal )

thanks Rev Grisholm for that inspiring and accurate analogy. Woo to us all if Romney/Ryan cut the throats of american middle class and the poor class.
roosevelt said after the world war that he understood that their are republicans who just see the world differently, but beware there is a small number of extreme right republicans who are just plain NUTS! he was referring to those who were against the united nations. it seems there is a radical and NUTTY group called the Tea Party now that is scary. I bet there are those in every party and every church. and every blog? i see one here. .

i agree with frankloydleft and fayfreethinker, but it may be too late to educate Arkansas on economics. you two have tried and enlightened alot of us on the blogs, you were the think tanks and got us to think before we vote. thank you frank, FREE, even J. Brummett for all your time and research into facts that were true and good.
so sad to see the good folks in arkansas vote with those radicals rights! Arkansas has lost this opportunity to get it right. Good bye.

Posted by: ladyLiberty

November 6, 2012 at 8:58 a.m. ( | suggest removal )

I is a Tea drinker and Tea Party voter and I think Lowell Grisholm is a heretic.

Posted by: JailBird

November 6, 2012 at 3:20 p.m. ( | suggest removal )

Irish: "FLL purports to support the Pharisee with a biased report that uses cherry-picked statistics in an attempt to prove a falsehood, when anyone capable of observing history can tell you the folly of the pseudo-study."

Quite wrong, as usual, Irish. You have no credibility here, because your posts consist only of unsubstantiated opinion. You seem to think that delivering a sneering criticism is equivalent to making an organized, credible argument

To make a credible argument against the Congressional Research Service, you'd be required to show that you know something about it. They have a website, of course.

"The Congressional Research Service (CRS) works exclusively for the United States Congress, providing policy and legal analysis to committees and Members of both the House and Senate, regardless of party affiliation. As a legislative branch agency within the Library of Congress, CRS has been a valued and respected resource on Capitol Hill for nearly a century.
CRS is well-known for analysis that is authoritative, confidential, objective and nonpartisan."

You've failed to point out a single example of a "cherry picked statistic." Don't you see? Why would any thinking person be persuaded by such empty assertions? Thinking people are persuaded by data and critical analysis of data. You've fallen far short.

Posted by: FrankLloydLeft

November 7, 2012 at 10:18 p.m. ( | suggest removal )

FrankLloydLeft--

RE "You've fallen far short."
You have to understand that IrishMensa has been a little verklempt since that woman in New York state suddenly stopped talking to him. Perhaps he will be able to think straight (or at all) when he finds a girlfriend-- or at least a woman who will talk to him directly instead of through intermediaries.

It's been three-and-a-half years, but there's always hope and change.

Posted by: AlphaCat

November 7, 2012 at 11:44 p.m. ( | suggest removal )