Economists say income gap hurts U.S. economy

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Ken-1122

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Of course they are! It's called a salary!

But, beyond that, it's been well established that corporate profits are up, up, UP! Where are these profits going? Sure, some go to CEOs in the form of large bonuses, but where are the rest of them going? Not to taxes, and not toward paying all their employees a better wage.

Where is it going?



So tell me where it's going, then. We already know it's not going toward taxes, nor is it going toward better wages for working stiffs. And precious little of it is going toward creating jobs, as the job rate is still stagnating.
First of all, CEO's are employees too! Their pay, their bonus or what-ever does not come from the profit; that is part of the expense of doing business; as well as corporate taxes. So you ask where does all this profit go? The same place I have been telling you since day one; to whoever owns the company; which is usually the shareholders.


Nope. A stock certificate can be sold if someone is interested in buying it; but a check represents a fixed amount of legal tender, payable upon demand. There is no sale involved.
Same thing, just a different way of getting there; it all leads to money.


How many companies went out of business during the Great Depression because people couldn't afford to buy their products?

-- A2SG, 20,000 businesses went bankrupt, and over 1600 banks...
companies have always gone out of business. The point is, there is always a group of people who can afford your products.

Ken
 
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A2SG

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First of all, CEO's are employees too! Their pay, their bonus or what-ever does not come from the profit; that is part of the expense of doing business; as well as corporate taxes.

I know. And if we add in those high bonuses (we can ignore the corporate taxes, since those aren't actually being paid), that still means that Corporate America is doing very, very well.

Working America, not so much.

So you ask where does all this profit go? The same place I have been telling you since day one; to whoever owns the company; which is usually the shareholders.

Exactly. It stays at the top, it doesn't go toward creating new jobs or paying employees better, either of which would help our struggling economy.

Same thing, just a different way of getting there; it all leads to money.

Sure, but in very different ways.

You can go from New York to San Francisco by travelling west or by travelling east; both are different ways of getting there, but there's literally a world of difference between them.

companies have always gone out of business. The point is, there is always a group of people who can afford your products.

Not if you owned one of those 20,000 companies in 1932. Or one of the 170,000 that closed in 2009. (Over 200,000 according to Fox News.)

Point being, if people can't afford your product, you won't be able to sell it; you won't be able to make a profit because money won't be moving around.

Put simply, if people don't make more money, they can't spend more money. The economy needs more people to make more money so they can spend more money.

Because that's how capitalism works.

-- A2SG, and it doesn't work if the rich keep it all among themselves....
 
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Ken-1122

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Exactly. It stays at the top, it doesn't go toward creating new jobs or paying employees better, either of which would help our struggling economy.
Didn't you just say stock certificates aren't as good as cash? The profit stays with the company; (reinvested) until the shareholder decides to sell! When money is reinvested into the company, that allows the company to grow and create more jobs.


Point being, if people can't afford your product, you won't be able to sell it;
You won't be able to sell it to those people! There are always people who can afford your products. Now weather or not they feel your products is good enough for the price you are asking is a different story.

Ken
 
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A2SG

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Didn't you just say stock certificates aren't as good as cash?

I actually said they were different. Chiefly, cash is legal tender and can be freely traded anywhere. Stock certificates are a commodity and can be sold, but they aren't legal tender.

The profit stays with the company; (reinvested) until the shareholder decides to sell! When money is reinvested into the company, that allows the company to grow and create more jobs.

Theoretically, sure. At least,that's how it's supposed to work.

So, given that corporate profits are at an all time high, why aren't there more jobs?

You won't be able to sell it to those people! There are always people who can afford your products.

Not for 20,000 businesses in 1932, nor for 170,000-200,000 businesses in 2009.

Now weather or not they feel your products is good enough for the price you are asking is a different story.

Whether or not something is worth the price isn't an issue for those who can't afford it in the first place.

Point being, you can only sell your product and make a profit if enough people can afford to buy it. If they can't, say because they don't make enough money, then your business is gonna go under.

So it's in the best interest of a capitalist economy for more people, not less, to have access to more money, not less, to buy stuff. That's what keeps the economy growing.

And that, in a nutshell, is why a wide gap in income inequality is bad for the economy.

-- A2SG, as I've been saying all along.....
 
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Ken-1122

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I actually said they were different. Chiefly, cash is legal tender and can be freely traded anywhere. Stock certificates are a commodity and can be sold, but they aren't legal tender.
Right! But until they are sold, they are an investment in the company; do you agree?

Theoretically, sure. At least,that's how it's supposed to work.

So, given that corporate profits are at an all time high, why aren't there more jobs?
There are more jobs! They are just in other countries where much of the record profits are made.

Not for 20,000 businesses in 1932, nor for 170,000-200,000 businesses in 2009.
Whether or not something is worth the price isn't an issue for those who can't afford it in the first place.

Point being, you can only sell your product and make a profit if enough people can afford to buy it. If they can't, say because they don't make enough money, then your business is gonna go under.
There are people who will spend nearly a million dollars on a car! You don't see Rolls Royce going outta business! People spend multiple millions on a luxury Yaht! yet you don't see these boat makers going outta busines! If people can affort to spend millions on cars and boats, they can afford to buy whatever those companies were selling; they just didnt want to.

So it's in the best interest of a capitalist economy for more people, not less, to have access to more money, not less, to buy stuff. That's what keeps the economy growing.

And that, in a nutshell, is why a wide gap in income inequality is bad for the economy.

-- A2SG, as I've been saying all along.....
Yeah you keep repeating the same error over and over again; does'nt make it right though

Ken
 
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Ken-1122

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I guess you don't think anything is wrong with the economy then.
I think the recovery would be doing a lot better if we didn't have a president flushing nearly a trillion dollars down the toilet under the pretense of a stimulus package as soon as he got into office, and is currently spending nearly 2 trillion on Obamacare.

When you consider the handicap your president is crippling the economy with, I am surprised there is any recovery at all!

Ken
 
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Viren

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I think the recovery would be doing a lot better if we didn't have a president flushing nearly a trillion dollars down the toilet under the pretense of a stimulus package as soon as he got into office, and is currently spending nearly 2 trillion on Obamacare.

When you consider the handicap your president is crippling the economy with, I am surprised there is any recovery at all!

Ken

LOL. It's the opposite. Without the stimulus package we would be experiencing somthing closer to the great depression.
 
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A2SG

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Right! But until they are sold, they are an investment in the company; do you agree?

Yes.

There are more jobs! They are just in other countries where much of the record profits are made.

Which proves, once again, why outsourcing is such a problem for the US economy. Couple that with massive income inequality and, well, the economy is seriously hurting.

There are people who will spend nearly a million dollars on a car! You don't see Rolls Royce going outta business! People spend multiple millions on a luxury Yaht! yet you don't see these boat makers going outta busines! If people can affort to spend millions on cars and boats, they can afford to buy whatever those companies were selling; they just didnt want to.

Because the rich can't buy everything; and the rich alone cannot support the entire nation's economy.

Which is why it's in such bad shape right now.

Yeah you keep repeating the same error over and over again; does'nt make it right though

How you can call it an error is a mystery to me, since it has been proven true time and time again over the past 900+ posts in this thread alone!

-- A2SG, Da Nile ain't just a river in Egypt, my friend....
 
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Ken-1122

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So you agree that the super rich do not just sit on top of their money, but that it is invested in the economy?

Which proves, once again, why outsourcing is such a problem for the US economy. Couple that with massive income inequality and, well, the economy is seriously hurting.
Outsourcing just explains why companies are making record profits and the American worker is not benefiting from it, but the shareholders are.

Because the rich can't buy everything; and the rich alone cannot support the entire nation's economy.
We are not talking about the entire econmy, we are talking about improving a product to make it worth more so people will be willing to pay more for it.

How you can call it an error is a mystery to me, since it has been proven true time and time again over the past 900+ posts in this thread alone!
Because income inequality is not the problem, poor people are the problem! you even admitted yourself that if everybody had enough money, that nobody was poor; but the super rich had even more thus income inequity was even greater than it is now, the economy would be great! That is why your argument keeps failing every time you make it.

Ken
 
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A2SG

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So you agree that the super rich do not just sit on top of their money, but that it is invested in the economy?

Not nearly as much as you seem to think.

"How The 'Job Creators' REALLY Spend Their Money"
Marketwatch estimates that over 90% of the assets owned by millionaires are held in a combination of low-risk investments (bonds and cash), the stock market, and real estate. According to economist Richard Wolff, about half of the assets of the richest 1% are held in unincorporated business equity (personal business accounts). The Wall Street Journal notes that over three-quarters of individuals worth over $20 million are invested in hedge funds.

Angel investing (capital provided by affluent individuals for business start-ups) accounted for less than 1% of the investable assets of high net worth individuals in North America in 2011.

The Mendelsohn Affluent Survey confirmed that the very rich spend less than two percent of their money on new business startups. The last thing most of them want, apparently, is the risky business of hiring people for new innovation

But, I can hear you saying, that means they DO invest in the economy by investing in corporations! Well, that brings up a very pertinent question:
How do corporations spend their money? To a good extent, they don't. According to Moody's, cash holdings for U.S. non-financial firms rose 3 percent to $1.24 trillion in 2011. The corporate cash-to-assets ratio nearly tripled between 1980 and 2010. It has been estimated that the corporate stash of cash reserves held in America could employ 3.5 million more people for five years at an annual salary of $40,000.
So while the rich do invest roughly 42% of their wealth in corporations, those corporations actually do sit on their cash rather than spend it on jobs.

Also:
The biggest investment by corporations is overseas, where they keep 57 percent of their cash and fill their factories with low-wage workers. Commerce Department figures show that U.S. companies cut their work forces by 2.9 million from 2000 to 2009 while increasing overseas employment by 2.4 million. They also tap into a "brain drain" of foreign entrepreneurs, scientists, and medical professionals rather than supporting education in America.
Still believe outsourcing does no damage to the US economy?

One last thing:
One last way corporations see fit to spend their money: executive bonuses. Especially at the banks, where the extra stipends are often paid for with zero interest loans from the Federal Reserve.
So much for supply side economics, huh?

Outsourcing just explains why companies are making record profits and the American worker is not benefiting from it, but the shareholders are.

Which disproves your theory that outsourcing does zero damage to the US economy.

We are not talking about the entire econmy, we are talking about improving a product to make it worth more so people will be willing to pay more for it.

But if they CAN'T AFFORD IT, they CAN'T BUY IT, no matter how much you improve it.

Because income inequality is not the problem, poor people are the problem! you even admitted yourself that if everybody had enough money, that nobody was poor; but the super rich had even more thus income inequity was even greater than it is now, the economy would be great! That is why your argument keeps failing every time you make it.

What?

Could you restate that more clearly? I have no idea what argument you think I've made that you think has failed.

But, from what I can parse from that, I do have a couple of comments:

When did I say that nobody was poor??????

What I did say was that when MORE people have control of MORE money, they spend MORE, and that helps the economy.

Also, income inequality has been rising for decades, and currently is at the highest level since the late 20s.

We all know what happened then.

But, to be honest, I don't know if you actually understand the argument I've been presenting here. If you think my argument has "failed", then I'm afraid I have to say you haven't been paying attention to it.

Or to the current state of the economy, which proves everything I've been saying all along.

-- A2SG, but feel free to try and explain again what you think my argument is and why it's failed, because you didn't do that very well in your final paragraph there....
 
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Ken-1122

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economy by investing in corporations! Well, that brings up a very pertinent question:
How do corporations spend their money? To a good extent, they don't. According to Moody's, cash holdings for U.S. non-financial firms rose 3 percent to $1.24 trillion in 2011. The corporate cash-to-assets ratio nearly tripled between 1980 and 2010. It has been estimated that the corporate stash of cash reserves held in America could employ 3.5 million more people for five years at an annual salary of $40,000.
So while the rich do invest roughly 42% of their wealth in corporations, those corporations actually do sit on their cash rather than spend it on jobs.
I don't know how these corporations run but there is probably a legitimate reason they feel a need to keep higher cash reserves today than they needed 35 years ago. Good thing Ford Motor Company had higher cash reserves approx 5 years ago huh?

Also:
The biggest investment by corporations is overseas, where they keep 57 percent of their cash and fill their factories with low-wage workers. Commerce Department figures show that U.S. companies cut their work forces by 2.9 million from 2000 to 2009 while increasing overseas employment by 2.4 million. They also tap into a "brain drain" of foreign entrepreneurs, scientists, and medical professionals rather than supporting education in America.
Still believe outsourcing does no damage to the US economy?
Government regulations are a bigger problem today with corporations than they were 35 years ago. If the government cut back on regulations to the 1980's level, we would probably see a lot less outsourcing

But if they CAN'T AFFORD IT, they CAN'T BUY IT, no matter how much you improve it.
I'm not talking about improving your product to the point that your base is no longer to afford the product; I'm talking about an improvement that allows for a 2%-3% increase in price.
What?

Could you restate that more clearly? I have no idea what argument you think I've made that you think has failed.

But, from what I can parse from that, I do have a couple of comments:

When did I say that nobody was poor??????

What I did say was that when MORE people have control of MORE money, they spend MORE, and that helps the economy.

Also, income inequality has been rising for decades, and currently is at the highest level since the late 20s.

We all know what happened then.

But, to be honest, I don't know if you actually understand the argument I've been presenting here. If you think my argument has "failed", then I'm afraid I have to say you haven't been paying attention to it.

Or to the current state of the economy, which proves everything I've been saying all along.

-- A2SG, but feel free to try and explain again what you think my argument is and why it's failed, because you didn't do that very well in your final paragraph there....
You keep saying income inequality is the problem, when I ask why you keep saying and providing links that show how the economy suffers when a large percentage of people cannot afford to buy stuff. That is a poor person problem. If nobody was poor and everybody could afford to buy what they needed, the economy would be better off and it wouldnt matter how much the rich had. Now if you disagree, explain why it does matter how much the super rich has; assuming nobody is poor, and everybody can afford to buy what they want.

Ken
 
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