Economists say income gap hurts U.S. economy

[A2SG]

It does when you have 2 paychecks instead of one!

No, it actually does not. That's kind of the point.

1. With 2 paychecks it is more pay; and if they couldn't afford it they wouldn't be buying it.

More pay, but less money overall compared to a generation ago, since wages are down.

2. How does buying more stuff add up to less money moving around? You've got it backwards my friend!

1. The stuff is cheaper because it isn't manufactured here, 2. because it isn't manufactured here means less jobs for American workers, so less money being earned, and 3. more credit card debt means more defaults and bankruptcies, which means they money borrowed isn't being repaid.

Overall, less money moving around.

No, being able to buy more with less money means the money is more valuable. That is good for the economy.

Uh, no. Less money moving around is still less money moving around. Also, keep in mind, if stuff is cheaper that comes at a cost. Since no Americans are being paid to manufacture it, that means less money in the system.

Less money is bad, mmmkay?

Actually bankruptcies and defaulting on loans are going down because of stricter standards than just a few years ago.

Home loans, perhaps. Not credit card debt or medical expenses.

I was talking about the number of jobs that exist; comparing today with the 1960's and 1970's. Your chart starts in 1990.

Then check this one out:

Manufacturing jobs, once the mainstay of the working class, have plummeted since the 1970s. Other fields have remained more or less consistent, some a little up, some a little down. But look at where manufacturing jobs STARTED, and look where it is now.

What has taken its place? Where does the average working class person go to for work these days?

You misunderstood me. I said why does the number of PEOPLE spending money make a difference if the same amount of money is spent?

Because of how it's spent. A billion people buying stuff and paying bills moves more money around than one guy paying for a billion dollar bonus for a CEO.

Well since nobody has ever spent a billion dollars on a single Yacht, and a CEO has never gotten a billion dollar bonus, sounds to me like you are admitting the money is spent on employees salery and moves the money around the system; am I understanding you correctly?

Yes. And since corporate profits are up AND WAGES ARE DOWN, the trend isn't toward more money moving around, but less.

maybe that's our problem, you don't know what rich people spend their money on. Bill Gates drives an Audi, Warren Buffet drives a Cadillac; some of the richest people don't feel a need to burn their money, they invest it which is good for the economy.

When the result is more jobs, yes. But that isn't the result, since corporate profits are up and wages aren't.

Are you kidding me??? Do you seriously believe companies separate the money rich people spend from the money the poor spend and spend the pools differently? Are you jokin' or jus making stuff up as you go along....

No, that isn't what I said. I said that when corporate profits are up, as they are, and wages are down, as they are, corporate money stays at the top and doesn't filter down to working class people much.

Okay squash that; let's assume you are correct with your claims; and the money is kept separate.

Where did you get that? I said nothing even remotely like that!

how do you know the money the poor people spend isn't going to the rich CEO bonus and the money the rich spend isn't going to research and development, payroll, and expanding the business to create more jobs?

Some does, as I said:

When the middle class gets paid, they pay bills and buy stuff; if the places that provide those services or things are owned by rich people, they get a cut, and the rest goes to paying employees of the companies that provide those services and things, etc.​

However, the trend these days has been toward HIGHER corporate profits, LESS jobs and LOWER wages.

So it's not working out very well for the working class.

You would have more luck trying to sell your Ford Focus for $4 million dollars.

It's a Fusion, and it just went up. It's worth $5 million now.

Better act quick!

I agree! That's why I say until we the people do a better job policing, we should quit throwing money at the government expecting it to fix the problems

But the problems will persist. Doing nothing won't help, it will only make things worse.

If your car isn't working right, do you fix it, or do you throw away the car and not bother going to work anymore?

Do you really think Bill Gates has $80 billion in a bank somewhere?

No, Bill Gates has a foundation that does charitable works. But other rich people are stashing it away offshore, in places like Switzerland. About $32 trillion bucks worth.

Few rich of the rich carry a lot of cash on themselves; that's why I used the term "creating wealth" instead of "creating US currency"

And I'm sure many of them have credit cards too. The days of J.D. Rockefeller and his pocket full of change is long gone.

Using your logic, all those rich CEO's never even got a bonus, all they got was a bunch of numbers on paper; so what are you complaining about?

Well, considering those "numbers on paper" were preceded by dollar signs and written on checks, they got to cash them!

When something valued at a certain amount is accompanied by a similar check, then you can count the money.

I will buy it when the Government quits wasting our money. (I wouldn't hold my breath if I were you)

Your loss. I have other offers, I was just giving you first crack because I like you.

My point was, people start busines to make money; not to create jobs.

It doesn't matter. They could start a business because they like ordering new business cards, the end result is the same.

-- A2SG, used to work for a company that made business cards, they can be way cool!

 

[Jeffwhosoever]

What has Obama or the Democrats done to reverse the outsourcing of jobs? Since you seem to imply that is the reason that real income is down, should that not be the focus more so than raising the minimum wage?

 

[A2SG]

What has Obama or the Democrats done to reverse the outsourcing of jobs?

Nothing, really. What would you suggest they do?

Since you seem to imply that is the reason that real income is down,

One of the reasons; by no means is it the only one.

should that not be the focus more so than raising the minimum wage?

Both need to be done, I'd say, and more besides.

-- A2SG, I've offered several suggestions already...got some more to add?

 

[Jeffwhosoever]

A couple - you might have mentioned them already (you and Ken talk so much, who can read all that?)

Increased R&D tax credits for targeted technologies that would ultimately yield manufacturing jobs.

Decreased corporate tax rates - perhaps tiered to favor those who do business with US workers.

 

[A2SG]

A couple - you might have mentioned them already (you and Ken talk so much, who can read all that?)

I have.

Increased R&D tax credits for targeted technologies that would ultimately yield manufacturing jobs.

Just tax breaks, or would you favor government investment in new technologies as well?

Decreased corporate tax rates - perhaps tiered to favor those who do business with US workers.

We've been down this road before. The problem with that is, many companies, including those who outsource, already pay ZERO taxes. How does decreasing the tax rate help create jobs when a tax rate of ZERO doesn't?

-- A2SG, plus, many of those companies that pay no taxes get rebates too!!!!

 

[JoyJuice]

What do you mean by "multiplier effect"?

Ken

Say I buy a car. It pays the dealerships employees, sales, parts, service, taxes, and what ever services those taxes pays for. Those sales, parts, service employees turn around pay for rent/mortage, gas, food, clothing, and all survival essentials, and that money to whom they buy that from will multiply just the same given their need to pay for rent/mortage, gas, food, clothing, and all survival essentials...it just mulitplies as money is changed hands.

A million people will have more of a mullitiplier because they are going to be many more transactions with a million people than just one.

 

[SolomonVII]

How many more trillions of unfunded government spending before we are talking about real money?

 

[Ken-1122]

No, it actually does not. That's kind of the point.

More pay, but less money overall compared to a generation ago, since wages are down.

When a family of today has 2 paychecks it has more money than the family of yesterday with only 1 paycheck. More money AND more money overall.

Home loans, perhaps. Not credit card debt or medical expenses.

They are putting more restrictions on credit cards too! But if someone defaults on a loan, that is the credit companies problem; if they have a problem with repayment, they will make adjustments on who they allow to have credit.

Because of how it's spent. A billion people buying stuff and paying bills moves more money around than one guy paying for a billion dollar bonus for a CEO.

But if the million people who pay bills have that profit go directly to the CEO, that is less movement than a single person who invests a billion and it goes to research and development, expanding the business and hiring more people. So again I ask; why does the number of people investing money make a difference if the amount of money is the same?

Yes. And since corporate profits are up AND WAGES ARE DOWN, the trend isn't toward more money moving around, but less.
When the result is more jobs, yes. But that isn't the result, since corporate profits are up and wages aren't.

We are comming out of a recession. When this happens corporate profits always grow faster than wages. Just like when the recession happened, and while corporations were losing money, most wages remained the same.

No, that isn't what I said. I said that when corporate profits are up, as they are, and wages are down, as they are, corporate money stays at the top and doesn't filter down to working class people much.

Actually you said something totally different; but it doesn't matter, what do you mean when you say money stays at the top?

Some does, as I said:

When the middle class gets paid, they pay bills and buy stuff; if the places that provide those services or things are owned by rich people, they get a cut, and the rest goes to paying employees of the companies that provide those services and things, etc.
​

Who are the rich that get this cut you are talking about; the shareholders? And you do realize the CEO and the guy working on the line are both employees and get paid from the same pool of money; right?

​

But the problems will persist. Doing nothing won't help, it will only make things worse.

Giving more money to this problem will not fix it either

If your car isn't working right, do you fix it, or do you throw away the car and not bother going to work anymore?

My car is a poor analogy because I have the option of getting rid of my car if I don't like the way it preforms; I don't have that option with the Government

No, Bill Gates has a foundation that does charitable works. But other rich people are stashing it away offshore, in places like Switzerland. About $32 trillion bucks worth.

I am not talking about illegal money hidden in swiss bank accounts; I'm talking about people with legal wealth. Again I ask; do you really think Bill Gates has $80 billion in US currency stashed somewhere?

And I'm sure many of them have credit cards too. The days of J.D. Rockefeller and his pocket full of change is long gone.

Rockefeller had a pocket full of shiney PENNIES that he would hand out to kids no the streets. He didn't keep his millions in the bank, he was worth (Billions in todays economy) because he had a bunch of paper with numbers on them (as you call it) that says he is worth that much, and that is how it is done today.

Well, considering those "numbers on paper" were preceded by dollar signs and written on checks, they got to cash them!

Do you really believe someone wrote the CEO a check for 10 million dollars? No! The $10 million is in company shares and unless he sells all his shares, he has nothing but (as you call it) a bunch of paper with numbers on it.
So again I ask you, where did the additional wealth of $4 million come from?

When something valued at a certain amount is accompanied by a similar check, then you can count the money.

The question is not about counting your money, it is about accumulating wealth.
When you improve your property, and it becomes more valuable, wealth is created and there is a place in San Francisco California who prints extra money to account for the increased value you made to your property. That is what I meant when I said "creating wealth".

Ken

 

[Ken-1122]

Say I buy a car. It pays the dealerships employees, sales, parts, service, taxes, and what ever services those taxes pays for. Those sales, parts, service employees turn around pay for rent/mortage, gas, food, clothing, and all survival essentials, and that money to whom they buy that from will multiply just the same given their need to pay for rent/mortage, gas, food, clothing, and all survival essentials...it just mulitplies as money is changed hands.

A million people will have more of a mullitiplier because they are going to be many more transactions with a million people than just one.

When you buy a car, the money spent on the car is split a hundred different ways; paying for parts, employee sales, taxes, etc. but that money is already spent so it doesn't grow anymore after that; the only money that has the potiential to grow is the profit from the sale of that car. When an invester invests money in a company, all that money is treated like profit and is able to grow, that is why I said investing money is more effective than paying bills.

Ken

 

[Viren]

What do you mean by "multiplier effect"?

Ken

The money would reach more people who will spend it and reach even more people.

 

[Viren]

When you buy a car, the money spent on the car is split a hundred different ways; paying for parts, employee sales, taxes, etc. but that money is already spent so it doesn't grow anymore after that; the only money that has the potiential to grow is the profit from the sale of that car. When an invester invests money in a company, all that money is treated like profit and is able to grow, that is why I said investing money is more effective than paying bills.

Ken

There are two sides to the equation. Investing helps production and it's been doing great for the past 30 years. What we're lacking now is demand and paying bills helps with that.

 

[Ken-1122]

The money would reach more people who will spend it and reach even more people.

As long as all the money is spent, it doesn't matter how many people spend it.

K

 

[Ken-1122]

There are two sides to the equation. Investing helps production and it's been doing great for the past 30 years. What we're lacking now is demand and paying bills helps with that.

How did you come to that conclusion?

K

 

[Viren]

How did you come to that conclusion?

K

Production is way up and wages, the largest portion of demand, are flat.

 

[Ken-1122]

Production is way up and wages, the largest portion of demand, are flat.

But people are buying more stuff than ever before! (mainly because there is a lot more stuff avaliable to buy) There isn't a huge stockpile of unsold products waiting to be sold.

K

 

[Viren]

But people are buying more stuff than ever before! (mainly because there is a lot more stuff avaliable to buy) There isn't a huge stockpile of unsold products waiting to be sold.

K

Not yet anyway. People and the government have been able to delay this by taking out more and more debt.

 

[Ken-1122]

Not yet anyway. People and the government have been able to delay this by taking out more and more debt.

So wouldn't that suggest there isn't a problem with demand....yet? Weather or not there will be in the future is up for debate, but for now; weather it is because of increased debt as you suggested or some other reason; there is no problem with demand.

Ken

 

[Viren]

So wouldn't that suggest there isn't a problem with demand....yet? Weather or not there will be in the future is up for debate, but for now; weather it is because of increased debt as you suggested or some other reason; there is no problem with demand.

Ken

There's a problem with "real" demand. There's no problem with artificial demand which is what we have now.

 

[Ken-1122]

There's a problem with "real" demand. There's no problem with artificial demand which is what we have now.

What is the difference?

 

[JoyJuice]

When you buy a car, the money spent on the car is split a hundred different ways; paying for parts, employee sales, taxes, etc. but that money is already spent so it doesn't grow anymore after that; the only money that has the potiential to grow is the profit from the sale of that car. When an invester invests money in a company, all that money is treated like profit and is able to grow, that is why I said investing money is more effective than paying bills.

Ken

No, there is profit made when that sales, part, service staff pays for mortage, food, gas, etc etc...and when who they buy that, those who they bought that from turn around and do the same thing, it mulitplies by the same type of purchases. So there is profit at every point of sales; mulitiplied.

With the investor invests money in a company it depends on what kind of company is being invested in; as most start up small businesses fail, while a lager established company; that investment money is spent on the whim of that company and may even not be spent right away. Again, it has a slower multiplier effect as they do not make as many purchases to exhaust that billion as a million people do.