Economists say income gap hurts U.S. economy (2)

[JoyJuice]

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[Ken-1122]

Viren

Yes it does help! You seem to be saying that putting less money into the economy will help it. That is simply illogical.

To fix things more money needs to be circulating through the economy, but you are against this very thing.


Ken

It's sorta like a pyramid scheme because we have to keep paying it back! Currently approx 9% of the Federal Budget is spent on interest of the debt. That's just interest! And you want to add to that? Imagine how much the economy would grow if we didn't have to flush 9% of the federal budget down the toilet every year? The Federal debt is not our friend!

K

 

[Viren]

Viren

Yes it does help! You seem to be saying that putting less money into the economy will help it. That is simply illogical.

To fix things more money needs to be circulating through the economy, but you are against this very thing.


Ken

It's sorta like a pyramid scheme because we have to keep paying it back! Currently approx 9% of the Federal Budget is spent on interest of the debt. That's just interest! And you want to add to that? Imagine how much the economy would grow if we didn't have to flush 9% of the federal budget down the toilet every year? The Federal debt is not our friend!

K

It still comes down to simple math. Basically what you're saying is a payment on a loan is greater than the loan itself. Yeah, 9% of the federal budget has to be paid back, but that is a fraction of what was borrowed and put to use into the economy since 2008. The debt doubled. That means a lot more than 9% was pumped into the economy.

 

[A2SG]

Yes it probably would be better for the economy; but at the expence of the company getting into financial trouble, which means they are not going to do that.

You keep forgetting: corporate profits are high. Astronomically high. Higher than they've ever been!

The largest companies can afford it. After all, it's not like they're paying corporate taxes....

Hurt: Regulations cost jobs - Martinsville Bulletin

Not a lot of specific regulations there, I'm afraid. It mentions a few areas that are regulated: "Hurt said he will concentrate on regulations in three main areas: boiler emissions, cement plant emissions and utilities." without mentioning why the regulations are problemmatic. It brings up the very pertinent question of why these emissions are regulated. Pollution? Toxic waste? Danger to ground water or where people live? These all seem like very legitimate things to regulate, I have to say.

He also mentions "dust regulations" but, again, no mention is made of why regulating dust isn't a good thing. Given that dust inhalation can cause health problems for workers, this also seems like a very legitimate concern.

The author says that regulations must "withstand a legitimate cost-benefit analysis and are in keeping with our priorities as nation", but he doesn't seem to put any regulations to this test, nor is he in any way specific about how environmental or workplace safety figures into this cost-benefit analysis.

Basically, that article reads like a politician using the issue of regulations to gain votes from business owners who dislike them because things like caring about the world around them and the safety of their employees is expensive.

If you want to make the case against regulations, you'll have to be a heck of a lot more specific than this, friend.

But they can! No comapny is gonna price themselves out of business!

And yet, that's exactly what happened to about 20,000 companies in 1932 and up to 200,000 companies in 2009.

My point is, when company increases the value of his product, and gets people to pay more for their product, that is another example of creating wealth.

Assuming people can afford the higher price. But, another way to increase wealth is for companies to pay their workers more, so they can use that additional money to buy more stuff, as well as paying more for stuff they like better when it's improved!

Are you kidding me? People spend more money today then in the 1950's and 60's!

Because many things cost more now. A new car cost around $2600 (and gas was 25 cents a gallon!); a house could set you back around $16,000.

Have you been to a toy store lately? How many kids do you see playing games like "kick the can", How many kids use a string and 2 cans to pretend they have a telephone? Even the poor kids have cell phones, computers, and $100.00 shoes! Everybody has 2-3 cars, cable TV and X-Box. People spend more today than ever before; yeah I know both parents work so they can afford more, but still; that's better for the economy, right?

It certainly should be.

So why isn't the economy booming?

Could it be that consumer spending comes with a massive amount of debt, which doesn't help the economy? Could it be that, despite all the spending you see, many families cannot spend like that, and go broke trying to? Or, possibly, that the profits from consumer spending don't circulate back into the economy like it's supposed to?

But hey, it's your example...you tell me why consumers are spending, but the economy isn't booming.

Do you believe wealth is constantly being created, or do you think there is only finite amount of wealth in this country and it doesn't increase?

The economy IS finite, and the rate of growth, while it does exist, has been growing steadily downward:

-- A2SG, some might say it's still growth though, but it doesn't exactly make for a robust economy, does it?

 

[Ken-1122]

It still comes down to simple math. Basically what you're saying is a payment on a loan is greater than the loan itself. Yeah, 9% of the federal budget has to be paid back, but that is a fraction of what was borrowed and put to use into the economy since 2008. The debt doubled. That means a lot more than 9% was pumped into the economy.

You misunderstood what I said. I said 9% of the budget is used to pay INTEREST! this happens every year. that does not include the principle that has to be paid back, that's just paying interest! That means we are paying much more than what is borrowed.

Ken

 

[Viren]

You misunderstood what I said. I said 9% of the budget is used to pay INTEREST! this happens every year. that does not include the principle that has to be paid back, that's just paying interest!That means we are paying much more than what is borrowed.

Ken

The amount of money we're paying in interest now is a fraction of what was borrowed and spent since 2008. We were talking about the current economy and you moved the goal post to how much needs to be paid back years in the future.

 

[Ken-1122]

You keep forgetting: corporate profits are high. Astronomically high. Higher than they've ever been!

The largest companies can afford it. After all, it's not like they're paying corporate taxes....

How do you know what they can afford? And which companies are you talking about that are not paying taxes?

And yet, that's exactly what happened to about 20,000 companies in 1932 and up to 200,000 companies in 2009.

How do you know all those companies went under because their prices were too high?

Assuming people can afford the higher price. But, another way to increase wealth is for companies to pay their workers more, so they can use that additional money to buy more stuff, as well as paying more for stuff they like better when it's improved!

How does paying workers more create wealth for the company?

Because many things cost more now. A new car cost around $2600 (and gas was 25 cents a gallon!); a house could set you back around $16,000.

Or maybe it is because technology has given us more things to buy.

It certainly should be.

So why isn't the economy booming?

Could it be that consumer spending comes with a massive amount of debt, which doesn't help the economy? Could it be that, despite all the spending you see, many families cannot spend like that, and go broke trying to? Or, possibly, that the profits from consumer spending don't circulate back into the economy like it's supposed to?

But hey, it's your example...you tell me why consumers are spending, but the economy isn't booming.

It could be some of that stuff, or it may be that the standard of a booming economy is different than it used to be. The poor of today is not as poor as the poor of the 1950's and 1960's and the rich of today is richer than the rich during that time.

The economy IS finite, and the rate of growth, while it does exist, has been growing steadily downward:

So why has the Gross National Product been on a steady increase over the years? How did that happen if the economy is finite?
Graph: Gross National Product: Implicit Price Deflator - FRED - St. Louis Fed

Ken

 

[Ken-1122]

The amount of money we're paying in interest now is a fraction of what was borrowed and spent since 2008. We were talking about the current economy and you moved the goal post to how much needs to be paid back years in the future.

If the world were going to end tomorrow, we would have gotten away with borrowing more than we pay back. But the world is not going to end tomorrow and we cannot afford to conduct business as if it will! Therefore the decisions we make today must take into account the effect it has on what we have to deal with tomorrow. Borrowing more money today will only hurt us more tomorrow.

Ken

 

[A2SG]

How do you know what they can afford?

I know that corporate profits are higher than they've EVER been.

And which companies are you talking about that are not paying taxes?

Naming Names Of Corporations Who Pay No Taxes | The Economic Populist

How do you know all those companies went under because their prices were too high?

Um, here's a trivia question for you: what do 1932 and 2009 have in common? Both were when massive recessions happened. In other words, a lot of people who could no longer afford to buy stuff.

How does paying workers more create wealth for the company?

It would improve the economy and stimulate economic growth. Which creates wealth.

Or maybe it is because technology has given us more things to buy.

Also true. At least for those who can afford them.

It could be some of that stuff, or it may be that the standard of a booming economy is different than it used to be. The poor of today is not as poor as the poor of the 1950's and 1960's and the rich of today is richer than the rich during that time.

So why isn't the economy booming?

So why has the Gross National Product been on a steady increase over the years? How did that happen if the economy is finite?
Graph: Gross National Product: Implicit Price Deflator - FRED - St. Louis Fed

As to why the GNP has increased, the short answer is outsourcing.

The difference between GNP and GDP is that GNP includes all US companies, here and in other countries, as opposed to GDP which includes business conducted in the US.

The difference between the two is part of the problem; the US economy can't grow as much if so much of its wealth creates jobs in other nations instead of for Americans.

But to your second point, when I say the economy is finite, that simply means your wealth comes from people buying your product or service. It doesn't come from thin air. That isn't to say the economy can't grow: it does. Sometimes more than at other times.

And currently, it's growth is slow, to the point of stagnation in some areas. Which does not make for a robust economy, but instead causes a lot of problems for a lot of people.

-- A2SG, but hey, why should you care what I think....why don't YOU explain why the economy isn't booming.....

 

[Viren]

If the world were going to end tomorrow, we would have gotten away with borrowing more than we pay back. But the world is not going to end tomorrow and we cannot afford to conduct business as if it will! Therefore the decisions we make today must take into account the effect it has on what we have to deal with tomorrow. Borrowing more money today will only hurt us more tomorrow.

Ken

The core problem isn't borrowing. If we want to deal with the future we need to get money circulating in the economy again. Cutting spending without dealing with this will only lead to economic contraction. Greece is a great example of this. They cut spending and put in austerity measures and now have -6% growth and 25% unemployment.

 

[Ken-1122]

Naming Names Of Corporations Who Pay No Taxes | The Economic Populist

Is that it? Just those few companies? You made it seem as if none of the Corporations were paying taxes! You should have been more clear about your accusations.

Um, here's a trivia question for you: what do 1932 and 2009 have in common? Both were when massive recessions happened. In other words, a lot of people who could no longer afford to buy stuff.

What about all the other years when people could afford to buy more stuff? What's your point?

It would improve the economy and stimulate economic growth. Which creates wealth.

When have companies ever paid employees more than they could get away with???? (hint) NEVER! What makes you think it is gonna happen now? Companies look out for their own best interest, not the Economy's best interest.

So why isn't the economy booming?

Booming compared to what?? 10 years ago? 50 years ago? 100 years ago?

As to why the GNP has increased, the short answer is outsourcing.

The difference between GNP and GDP is that GNP includes all US companies, here and in other countries, as opposed to GDP which includes business conducted in the US.

Maybe the excessive growth of the GNP and the lack of growth of the GDP is the reason corporations are making record profits and domestic wages are not reaping the benifits of those record profits. What do you think?

But to your second point, when I say the economy is finite, that simply means your wealth comes from people buying your product or service. It doesn't come from thin air. That isn't to say the economy can't grow: it does. Sometimes more than at other times.

Sounds like you are contridicting yourself; what are you saying? Do you believe the economy can only grow so much then it cannot grow any more? (finite) Or do you beleive it will always have the potential to grow and there is no limit to how much it can grow (infinite) Which are you saying?

Ken

 

[Ken-1122]

The core problem isn't borrowing. If we want to deal with the future we need to get money circulating in the economy again. Cutting spending without dealing with this will only lead to economic contraction.

Currently 9% of our budget is spent just paying the interest of too much borrowing and refusing to cut spending. Will you be happy when we are spending 15% 10 years from now? or 20% later? How much is too much before you realize borrowing money IS a core problem? 50%? 75%???

Ken

 

[A2SG]

Is that it? Just those few companies? You made it seem as if none of the Corporations were paying taxes! You should have been more clear about your accusations.

Um, the site said those were the "top worst offenders," not a complete list.

What about all the other years when people could afford to buy more stuff? What's your point?

My point, as I've been saying all along, is that the economy improves when MORE people are able to afford to buy stuff, not LESS. Which is why it's bad for the economy when a huge percentage of the nation's wealth (currently more than 80%) is concentrated at the very top.

When have companies ever paid employees more than they could get away with???? (hint) NEVER! What makes you think it is gonna happen now? Companies look out for their own best interest, not the Economy's best interest.

I know. I simply stated what would improve the economy, I never said it was something that corporations would do willingly. Greed usually wins out over responsible behavior.

Which is why we usually need government solutions to make corporations act responsibly when they choose not to. The idea the GOP seems hell bent on, that if you give rich people enough money, they'll fix the economy out of the goodness of their hearts, just doesn't work.

Booming compared to what?? 10 years ago? 50 years ago? 100 years ago?

Compared to just about any period short of the worst years of the Great Depression, really.

Why isn't the economy booming?

Maybe the excessive growth of the GNP and the lack of growth of the GDP is the reason corporations are making record profits and domestic wages are not reaping the benifits of those record profits. What do you think?

Could be a factor, sure.

Are you citing this as a reason why the economy isn't booming? If so, then it seems the only possible solution is government enforcement of better wages, since, by your own admission, corporations aren't going to willingly do what's needed for a better economy overall.

Sounds like you are contridicting yourself; what are you saying? Do you believe the economy can only grow so much then it cannot grow any more? (finite) Or do you beleive it will always have the potential to grow and there is no limit to how much it can grow (infinite) Which are you saying?

First of all, no economy can grow at an infinite rate. That's not how an economy, or reality, works.

Second, a finite economy can still be a growing one. All I mean when I say the economy is finite is that the only way to make money is for other people to give it to you. Wealth doesn't just appear out of thin air, it comes from somewhere.

Yes, the economy can grow. When it's robust and strong, it grows more than when it isn't. And one of the things that curbs growth is a wide gap in income inequality, because it means LESS people control MORE money.

For an economy to grow, MORE people need to spend money. Not LESS.

-- A2SG, if you still think that's unclear, then I must apologize, as I can't think of any way to make it clearer....

 

[Jeffwhosoever]

Quit taxing me blind and I will spend more!

 

[A2SG]

Quit taxing me blind and I will spend more!

You got the Bush tax cuts in 2001, then again in 2003, renewed in 2010 and again in 2012.

What's stopping you from spending?

-- A2SG, what's the GOP excuse du jour....

 

[Ken-1122]

Um, the site said those were the "top worst offenders," not a complete list.

Well you made it seem as if none of the Corporations were paying taxes. I do understand why many do not pay or pay considerable less; many cities will court big business with tax breaks to get them to move to their city in an effort to create jobs in their area. Even though the company isn't paying taxes, the people working for the company do; and that's good for their local economy. That's why Boeing left Seattle and went to Chicago; then some of the Seattle politicians gave Boeing huge tax breaks just to keep some of the factories in Seattle.

I know. I simply stated what would improve the economy, I never said it was something that corporations would do willingly. Greed usually wins out over responsible behavior.

You keep talking about record profits when you should be talking about percentages. If a company has 2 factories/plants in 1970 and each plant spends 70% of it's gross on labor, makes 5% profit; and the rest on everything else; then you look at the same company today but it now has 20 factories (10 X larger) and each factory still pays 70% on labor, 5% profit, and 25% on everything else; because the company is 10 times larger, it will make 10 times the profit! What I see you doing is you are looking at the fact that they are making 10 times the profit, and looking at each individual employee pay (neglecting to mention they are employing 10 times the people) and complaining that they are making 10 times the profit but the employees are getting the same pay, and calling them selfish for not sharing the wealth with the employees. You need to quit looking at the amount of profit the company makes and look at the amount of profit each factory makes because the larger the company, the more profit it will make even though the percentage of profit will remain the same.

Which is why we usually need government solutions to make corporations act responsibly when they choose not to. The idea the GOP seems hell bent on, that if you give rich people enough money, they'll fix the economy out of the goodness of their hearts, just doesn't work.

More Government regulations? Don't we have enough corporations moving overseas already? What you wanna make more jobs leave?

Compared to just about any period short of the worst years of the Great Depression, really.

Well if you are gonna compare our economy to some of those years; it is booming! The reason it seems slow is because we are comparing our economy to 8-10 years ago, not the 1920's when people were starving in the streets, middle income americans had only 1-2 changes of clothes, and indoor plumbing, was considered a luxury for middle income americans.

Could be a factor, sure.

Are you citing this as a reason why the economy isn't booming?

No I'm citing this as the reason corporate profits are high and wages are low.

First of all, no economy can grow at an infinite rate. That's not how an economy, or reality, works.

I'm not talking about growing at an infinite rate, I am asking is there an infinite amount of growth the economy is capable of. In other words, do you believe there is a limit on the size the economic pie is capable of growing? Then once it reaches that size it is unable to grow anymore?

Ken

 

[A2SG]

Well you made it seem as if none of the Corporations were paying taxes. I do understand why many do not pay or pay considerable less; many cities will court big business with tax breaks to get them to move to their city in an effort to create jobs in their area. Even though the company isn't paying taxes, the people working for the company do; and that's good for their local economy. That's why Boeing left Seattle and went to Chicago; then some of the Seattle politicians gave Boeing huge tax breaks just to keep some of the factories in Seattle.

The point being, if you recall, that these large corporations, by not paying corporate taxes (and showing record profits), could afford to pay their workers better. Doing so would not get them into "financial trouble."

Y'know, if they wanted to. For the economy and all that.

You keep talking about record profits when you should be talking about percentages.

Why? Record profits means they're making money, a lot of it. Money that could be used to pay their workers better.

If a company has 2 factories/plants in 1970 and each plant spends 70% of it's gross on labor, makes 5% profit; and the rest on everything else; then you look at the same company today but it now has 20 factories (10 X larger) and each factory still pays 70% on labor, 5% profit, and 25% on everything else; because the company is 10 times larger, it will make 10 times the profit! What I see you doing is you are looking at the fact that they are making 10 times the profit, and looking at each individual employee pay (neglecting to mention they are employing 10 times the people) and complaining that they are making 10 times the profit but the employees are getting the same pay,

But they're not. Remember, wages are down. Not the same, DOWN. For whatever reason.

and calling them selfish for not sharing the wealth with the employees.

Wealth, I hasten to point out, they wouldn't have been able to make without those employees.

You need to quit looking at the amount of profit the company makes and look at the amount of profit each factory makes because the larger the company, the more profit it will make even though the percentage of profit will remain the same.

It doesn't disprove my point. Paying workers better would help the economy, not doing so helps the stockholders and upper management only. In other words, those individuals alone instead of the nation as a whole.

How is that not the very definition of "selfish"?

Which is why we usually need government solutions to make corporations act responsibly when they choose not to. The idea the GOP seems hell bent on, that if you give rich people enough money, they'll fix the economy out of the goodness of their hearts, just doesn't work.

More Government regulations? Don't we have enough corporations moving overseas already? What you wanna make more jobs leave?

I requoted myself. Where did I mention regulations?

What I did mention was responsibility. If corporations are not going to act responsibly toward the nation they live in (the one that has allowed them to have the success they do), then it's up to the government to make them act responsibly. Because the government represents the people, not the corporations (for the moment, anyway) and irresponsible, selfish corporate greed is not in the people's best interest.

Well if you are gonna compare our economy to some of those years; it is booming!

I'm assuming you have facts and figures to support this, and you just forgot to include them. Feel free at any time.

The reason it seems slow is because we are comparing our economy to 8-10 years ago, not the 1920's when people were starving in the streets, middle income americans had only 1-2 changes of clothes, and indoor plumbing, was considered a luxury for middle income americans.

If you feel the economy is booming, define "booming", and use specific data to show me how it's "booming" now and how it wasn't "booming" before.

Don't just make random, unproven claims, back them up!

No I'm citing this as the reason corporate profits are high and wages are low.

To what end? What's the point?

The point of the OP was that income inequality hurts the US economy. If you're asserting that it doesn't, then explain how the reasons why corporate profits are at an all time high while wages are at an all time low prove that assertion.

I'm not talking about growing at an infinite rate, I am asking is there an infinite amount of growth the economy is capable of.

No. The economy grows at a specific rate, not an infinite one. That's simply not possible.

In other words, do you believe there is a limit on the size the economic pie is capable of growing? Then once it reaches that size it is unable to grow anymore?

I'd say economic growth is limited to the amount of resources available. You can't make a company more profitable if people aren't there to buy the product, and you can't make more products for people to buy if there aren't enough raw materials to make them from.

So "infinite" is a word that doesn't apply here.

-- A2SG, it rarely does in the real world.....

 

[jgarden]

Economists say income gap hurts U.S. economy (2)

Unlike past recessions, the manufacturing and industrial jobs that have traditionally stimulated an economic recovery have been relocated offshore.

America's middle class which served as the "golden goose" for retail spending has been dealt a severe blow - from which it and the economy may never recover!

 

[Ken-1122]

The point being, if you recall, that these large corporations, by not paying corporate taxes (and showing record profits), could afford to pay their workers better. Doing so would not get them into "financial trouble."

Y'know, if they wanted to. For the economy and all that.

Many of those places that are courted by politicians are paying their employees better. These politicians are not courting Walmart and McDonalds; ya know! Boeing (my example) pays it's average worker $85,000.00 per year

Why? Record profits means they're making money, a lot of it. Money that could be used to pay their workers better.

If they are doing 3X's the business but only making 2X's the profit, profit percentages are down even though the dollar amount is up.

But they're not. Remember, wages are down. Not the same, DOWN. For whatever reason.

How do you know profits on a percentage basis are not down?

It doesn't disprove my point. Paying workers better would help the economy, not doing so helps the stockholders and upper management only. In other words, those individuals alone instead of the nation as a whole.

The company's obligation is to the shareholders, not the US economy.

I requoted myself. Where did I mention regulations?

What I did mention was responsibility. If corporations are not going to act responsibly toward the nation they live in (the one that has allowed them to have the success they do), then it's up to the government to make them act responsibly. Because the government represents the people, not the corporations (for the moment, anyway) and irresponsible, selfish corporate greed is not in the people's best interest.

So if the corporation packs up and goes overseas because the Government is forcing their hands over here; is that in the peopole's best interest?

To what end? What's the point?

The point is, you are making false comparasions. You say the Gross Domestic Product (GDP) is how much is produced in the USA and Gross National Product (GNP) is how much US corporations produce in the US and abroad. Then you say the GDP is down and I showed you the GNP was up! You then compain that the profit the Corporations make world wide is up (GNP) but the amount that is produced in the USA alone (GDP) is down along with US wages. If you are going to compare the US wages and the amount the US produces, you need to compare that to the profit that is produced in the US; not the profit that is made world wide by these corporations. If using GDP figures when speaking of wages and production, you need to also use GDP figures when comparing company profit; not GNP figures.

The point of the OP was that income inequality hurts the US economy. If you're asserting that it doesn't, then explain how the reasons why corporate profits are at an all time high while wages are at an all time low prove that assertion.

Are those company profits world wide? Or company profits of the factories that only exist in the USA. If you gonna exclude the company wages they pay world wide in this scenerio, you also need to exclude the company profit they make world wide also.

No. The economy grows at a specific rate, not an infinite one. That's simply not possible.

I'm not talking about the rate of growth, I'm talking about the amout it is capable of growing.

I'd say economic growth is limited to the amount of resources available.

Is there a limit to the amountof resources avaliable?

You can't make a company more profitable if people aren't there to buy the product, and you can't make more products for people to buy if there aren't enough raw materials to make them from.

So what type of raw materials did Steve Jobs, (Google) Warren Buffet, or Ted Turner (CNN) use to make their billions that expanded the economy?


Ken

 

[romanov]

This thread was split automatically after 1000 replies and this thread has been automatically created.
The old thread automatically closed is here: "Economists say income gap hurts U.S. economy"

Economist also said there was nothing to worry about back in 2008, then they just did not see it coming. They should be worried about the stifling effects of high taxes and debt to income ratios of the governments.