Economists say income gap hurts U.S. economy

[Viren]

The IMF is an international organization; their focus is on all countries, not just the USA. Yes they did say income disparities can hurt economies, but they did not say how this applies to the USA; they hardly mentioned the USA.
As I said before, I don't think the problem is income inequality, the problem is too many poor people. If nobody were poor but income inequality were greater, do you think the IMF would have a problem with that? I don't think so.

Ken

I agree that there are too many poor people, but that shouldn't be because productivity has never been greater. Eventually the lower classes need to get more of that wealth. Not out of fairness, but simple math. If everyone was richer and inequality was greater we would still face the same problem, because what matters is the relationship of supply and demand.

High income inequality leads to lagging demand and a glut of products on the market. Why don't we have a glut of products on the market now? Like I said before stimulus debt spending. The problem has just been postponed a few years until we run out of people willing to lend to us.

 

[Ken-1122]

Um, consumers don't simply choose to pay more for something, that isn't how it works. Put simply, if a good or service is deemed more valuable, the seller will try to charge more;

Exactly! Now what does the seller do to his product in order to get people to pay more for it?

You posited a developed property with a home built on it. Real estate agents assess value for a property when they advise the seller on what price to list the property at and sell it.

So why do you have to pay $400-$500 to get an appraisal on your property before you sell it? Why can't cha just ask a real estate agent?

Nope.

Both have value, but in different ways. A $100 bill is legal tender. A stock certificate is not.

Which means that the $100 bill has the set value of one hundred dollars, exactly. At all times. The stock can be sold at a certain price at a certain time: $100 today but tomorrow....maybe not. It's value fluctuates, sometimes by a huge degree.

So if a stock is selling for $100 per share, how much is it worth?

Depends on how you define "value." If you're selling it, the house is worth exactly what someone is willing to pay for it, not one nickle more or less. A different measurement of value determines how much is to be paid in property taxes, or how much can be used as collateral for a loan.

Have you ever bought or sold a house before?


Ken

 

[A2SG]

Exactly! Now what does the seller do to his product in order to get people to pay more for it?

He can do a few things to make his product or service more valuable, but there are other factors that determine market value which are out of the individual seller's control. For example, if more people can afford his product or service, (ie increased demand), he could charge more for it.

So why do you have to pay $400-$500 to get an appraisal on your property before you sell it? Why can't cha just ask a real estate agent?

You don't have to. But a real estate agent's assessment won't get you a bank loan, and the paid appraisal would tell you if the real estate agent's assessment is good or not, if you have doubts about it. Of course, a better indication of the real estate agent's assessment would be the offers you get when you put your property on the market.

So if a stock is selling for $100 per share, how much is it worth?

At that moment, $100. A moment later, maybe more, maybe less.

That $100 bill in your pocket, however, is worth one hundred dollars all day, every day, and you can buy stuff with it. You can't buy stuff with a stock certificate.

Have you ever bought or sold a house before?

Yup. We've bought and sold a condo, and then bought a house.

We also had a great Realtor! She not only got us a great price for the condo, more than we paid (maybe not enough to make us rich, but enough to buy the house!) but her husband makes great omelets!

-- A2SG, okay, maybe that last part isn't entirely relevant...but then again, you've never had his omelets....

 

[HonestTruth]

While the unfair economy that benefits the wealthy hurts the poor, we are at least now seeing some measure of recovery from the failed Bush caused recession:



WASHINGTON: A recovering US is outpacing other major economies | Business | CentreDaily.com



As always, not a word of praise from the delusional Obama haters but the truth is that his policies have caused record corporate profits. Monies which have not trickled down to the poor contrary to the mythical teaching of Reaganomics. It is time for reform.

 

[catholichomeschooler]

While the unfair economy that benefits the wealthy hurts the poor, we are at least now seeing some measure of recovery from the failed Bush caused recession:



WASHINGTON: A recovering US is outpacing other major economies | Business | CentreDaily.com



As always, not a word of praise from the delusional Obama haters but the truth is that his policies have caused record corporate profits. Monies which have not trickled down to the poor contrary to the mythical teaching of Reaganomics. It is time for reform.

We are in the slowest recovery in US history thanks to Obama's meddling.

He(and apparently you) doesn't understand basic economics.

More people are not working in America today than at any time in our history.

He treats businesses as the enemy.

 

[HonestTruth]

We are in the slowest recovery in US history thanks to Obama's meddling.

He(and apparently you) doesn't understand basic economics.

More people are not working in America today than at any time in our history.

He treats businesses as the enemy.

We are in the slowest recovery thanks to Republican obstructionism.

The fact remains that US corporate profits are at their HIGHEST since the year 1900 thanks to President Obama. That has been fully documented on this forum previously. He treats businesses especially well while the Republican death panels in Congress delight in seeing the poor suffer.

Get your facts straight, buddy.

 

[catholichomeschooler]

We are in the slowest recovery thanks to Republican obstructionism.

The fact remains that US corporate profits are at their HIGHEST since the year 1900 thanks to President Obama. That has been fully documented on this forum previously. He treats businesses especially well while the Republican death panels in Congress delight in seeing the poor suffer.

Get your facts straight, buddy.

My facts were accurate.

What policy move by President Obama do you claim helped corporate profits?

 

[MikeCarra]

We are in the slowest recovery in US history thanks to Obama's meddling.

Not really. Remember during the Great Depression in the 30's Hoover opted to take a more laissez faire business-friendly "let the market fix itself" approach and it failed miserably.

It wasn't until FDR stepped in with a more activist approach. And even then FDR and his administration had to throw a bunch of ideas at the problem. Some failed from the outset and some helped a great deal.

The current mess we see is made worse because the "Trickle Down" ideal espoused by Reaganite Republicans has NEVER been shown to work, but indeed leads to more and more advantage to the top.

Increases in minimum wage would result in direct money back into the economy but you'd think it was the end of humanity if you listen to the Right.

The GOP has been the loudest advocates for wealthy and corporate interests. There is no denying this. The poor must face austerity measures so that the C-Suite doesn't see any discomfort.

Now, of course Obama has been ineffective in changing any of this and I"m not entirely sure he's the one to do it. It's hard to square Obama's presidency as it has unfolded with the hope and change we all wanted.

But do not for a moment think that the GOP has been trying to help the economy in a meaningful way.

He(and apparently you) doesn't understand basic economics.

People who hang onto the belief that "trickle down" works clearly don't understand that 30+ years of this failed experiment has yet to show one positive result.

More people are not working in America today than at any time in our history.

You need to learn some history:

He treats businesses as the enemy.

If he treats business as the enemy I can't imagine what it would be like if they were treated as valued friends. Considering that the DJIA has hit RECORD HIGHS over the past couple of years.

Can I ask how people can think of Obama as a friend to communists and Marxists while also enjoying the most concentration of wealth at the top in the past few decades and amazing performance by the stock market?

Do you guys actually know what communism and marxism entails?

 

[catholichomeschooler]

Not really. Remember during the Great Depression in the 30's Hoover opted to take a more laissez faire business-friendly "let the market fix itself" approach and it failed miserably.

It wasn't until FDR stepped in with a more activist approach. And even then FDR and his administration had to throw a bunch of ideas at the problem. Some failed from the outset and some helped a great deal.

The current mess we see is made worse because the "Trickle Down" ideal espoused by Reaganite Republicans has NEVER been shown to work, but indeed leads to more and more advantage to the top.

Increases in minimum wage would result in direct money back into the economy but you'd think it was the end of humanity if you listen to the Right.

The GOP has been the loudest advocates for wealthy and corporate interests. There is no denying this. The poor must face austerity measures so that the C-Suite doesn't see any discomfort.

Now, of course Obama has been ineffective in changing any of this and I"m not entirely sure he's the one to do it. It's hard to square Obama's presidency as it has unfolded with the hope and change we all wanted.

But do not for a moment think that the GOP has been trying to help the economy in a meaningful way.



People who hang onto the belief that "trickle down" works clearly don't understand that 30+ years of this failed experiment has yet to show one positive result.



You need to learn some history:

If he treats business as the enemy I can't imagine what it would be like if they were treated as valued friends. Considering that the DJIA has hit RECORD HIGHS over the past couple of years.

Can I ask how people can think of Obama as a friend to communists and Marxists while also enjoying the most concentration of wealth at the top in the past few decades and amazing performance by the stock market?

Do you guys actually know what communism and marxism entails?

A depression is not a recovery.

The recovery out of the depression was quite rapid.

Our current recovery is the slowest in US history.

 

[Belk]

A depression is not a recovery.

The recovery out of the depression was quite rapid.

Our current recovery is the slowest in US history.

Feel free to cite support for these claims.

 

[catholichomeschooler]

Feel free to cite support for these claims.

The Worst Economic Recovery in History



The Great Depression started with major economic contractions in 1930, '31, '32 and '33. In the three following years, the economy rebounded strongly with growth rates of 11%, 9% and 13%, respectively.

The current recovery began in the second half of 2009, but economic growth has been weak. Growth in 2010 was 3% and in 2011 it was 1.7%. Who knows what 2012 will bring, but the current growth rate looks to be about 2%, according to the consensus of economists recently polled by Blue Chip Economic Indicators. Sadly, we have never really recovered from the recession. The economy has not even returned to its long-term growth rate and is certainly not making up for lost ground. No doubt, there are favorable economic numbers to be found, but overall we continue to struggle.

During the postwar period up to the current recession (1947-2007), the average annual growth rate for the U.S. was 3.4%. The last three decades have experienced somewhat slower growth than the earlier periods, but even in the period 1977-2007, the average growth rate was 3%. According to the National Bureau of Economic Research, the recovery began in the second half of 2009. Since that time, the economy has grown at 2.4%, below our long-term trend by either measure. At this point, the economy is 12% smaller than it would have been had we stayed on trend growth since 2007.


Worse, the gap is growing over time. Today, the economy is four percentage points further from the trend line than it was the first quarter of 2009 when this administration's nearly $900 billion fiscal stimulus efforts began. If forecasts of around 2% growth turn out to be accurate, we will add to that gap this year.

Contrast this weak growth with the recovery that followed the other large recession of recent decades. In the early 1980s, the economy experienced a double-dip recession, with contractions in both 1980 and '82. But growth rates in the subsequent two years averaged almost 6%. The high growth that persisted throughout the 1980s brought the economy quickly back to the trend line. Unlike the current period, from 1983 on, the economy was in rapid catch-up mode and eventually regained all that had been lost during the early '80s.


Edward Lazear: The Worst Economic Recovery in History - WSJ.com

 

[David Waffen]

While the unfair economy that benefits the wealthy hurts the poor, we are at least now seeing some measure of recovery from the failed Bush caused recession:

How did Bush cause the recession exactly? The economy collapsed two years after the democrats came to office, having both the Senate and House, meaning they were in charge. The economy busted because liberals wanted to force the banks to give everyone a mortgage so everyone could get a house. This policy inflated the market and left banks holding the bad check the government wrote, which they quickly sold off (subprime mortgages).

Then Obama decided we need to take money out of the economy (from the people that know how to spend it), and spent years spending the money on all the groups that helped him get elected.

WASHINGTON: A recovering US is outpacing other major economies | Business | CentreDaily.com

As always, not a word of praise from the delusional Obama haters but the truth is that his policies have caused record corporate profits. Monies which have not trickled down to the poor contrary to the mythical teaching of Reaganomics. It is time for reform.

The US is doing slightly better than Japan (which has a hopeless economy) and Europe (also in trouble). Japan and Europe have horribly anti-business, pro-labor policies that make business growth impossible. Japan also suffers from low childbirth and little immigration. Europe spent too much and the people do not want to do what it takes to fix it - too many countries are holding down others in their interconnected economies.

I know of no single thing that anyone can say Obama or the Dems pushed that would actually help the economy.

 

[David Waffen]

We are in the slowest recovery thanks to Republican obstructionism.

The fact remains that US corporate profits are at their HIGHEST since the year 1900 thanks to President Obama. That has been fully documented on this forum previously. He treats businesses especially well while the Republican death panels in Congress delight in seeing the poor suffer.

Get your facts straight, buddy.

Businesses well how?

 

[David Waffen]

Not really. Remember during the Great Depression in the 30's Hoover opted to take a more laissez faire business-friendly "let the market fix itself" approach and it failed miserably.

He was only in office for a few years after it hit. FDR's policies were horrible and it took until WWII for the economy to recover.

It wasn't until FDR stepped in with a more activist approach. And even then FDR and his administration had to throw a bunch of ideas at the problem. Some failed from the outset and some helped a great deal.

The only thing his policies accomplished was making for a better long term (decades long) financial security. All the policies that affected his terms in office were failures.

The current mess we see is made worse because the "Trickle Down" ideal espoused by Reaganite Republicans has NEVER been shown to work, but indeed leads to more and more advantage to the top.

Kennedy agreed with it and it worked. The 80s saw a quick recovery, which is why he was reelected.

Increases in minimum wage would result in direct money back into the economy but you'd think it was the end of humanity if you listen to the Right.

Direct money back into the economy? That makes no sense whatsoever. Money goes back into the economy unless the government taxes it, which takes it a while to spend it.

Minimum wage is going to kill jobs.

But do not for a moment think that the GOP has been trying to help the economy in a meaningful way.



People who hang onto the belief that "trickle down" works clearly don't understand that 30+ years of this failed experiment has yet to show one positive result.

There are plenty of examples and europe is showing the opposite.

You need to learn some history:

If he treats business as the enemy I can't imagine what it would be like if they were treated as valued friends. Considering that the DJIA has hit RECORD HIGHS over the past couple of years.

Can I ask how people can think of Obama as a friend to communists and Marxists while also enjoying the most concentration of wealth at the top in the past few decades and amazing performance by the stock market?

Do you guys actually know what communism and marxism entails?

The stock market will continue to hit hits because of inflation. The unemployment rate that you are showing it not accurate. The rate includes people who retire early, give up, go to live with family, etc.
Obama actually has not created any jobs. There are just as many jobs, fewer last time I checked. There are just more people that gave up.

 

[MikeCarra]

The only thing his policies accomplished was making for a better long term (decades long) financial security. All the policies that affected his terms in office were failures.

Well, tell that to the losers who get Social Security even today. Or those pesky minimum wagers.

Kennedy agreed with it and it worked. The 80s saw a quick recovery, which is why he was reelected.

Kennedy was not a supply side economist. That's a republican myth.

HERE

Kennedy was a Keynsian. Sorry to have to reiterate that yet again.

Direct money back into the economy? That makes no sense whatsoever.

Maybe not to you, but to many economists who have written recently. So...well....ya know.....

(CNN)

Money goes back into the economy unless the government taxes it, which takes it a while to spend it.

Or it gets held onto in savings accounts and other il-liquid holdings. Unlike most minimum wage workers who turn right around and spend it because they don't have the luxury of putting it in savings.

But hey, what do those economists know?

Minimum wage is going to kill jobs.

...says the guy who doesn't rely on a minimum wage I'm guessin'.

Some day you probably will. Just be hopeful then that someone might have worked a bit harder for you.

The stock market will continue to hit hits because of inflation.

Or you could look at THIS which is adjusted for inflation.

Don't worry, I'm sure you'll get SOMETHING right in this post sooner or later!

 

[Ken-1122]

He can do a few things to make his product or service more valuable,

The answer is, he can improve his product and that would increase the value of his product and he can sell it for more. That is an example what I meant by creating wealth.

At that moment, $100. A moment later, maybe more, maybe less.

Exactly! The price will always fluctuate, but at that moment the hard accet is still as valuable as the liquid accet (currency). When you improve on your product, the price will still fluctuate, but it will fluctuate at a higher price because you have created wealth.


Ken

 

[Ken-1122]

I agree that there are too many poor people, but that shouldn't be because productivity has never been greater. Eventually the lower classes need to get more of that wealth. Not out of fairness, but simple math. If everyone was richer and inequality was greater we would still face the same problem, because what matters is the relationship of supply and demand.

High income inequality leads to lagging demand and a glut of products on the market. Why don't we have a glut of products on the market now? Like I said before stimulus debt spending. The problem has just been postponed a few years until we run out of people willing to lend to us.

The military gets the bulk of this debt spending and of the poor who get it, they use the money to pay bills and buy food; not to buy luxuries.

Ken

 

[A2SG]

The answer is, he can improve his product and that would increase the value of his product and he can sell it for more. That is an example what I meant by creating wealth.

Yup, because more people buy his product. Again, he created wealth by getting other people to give him money. The Bureau of Engraving and Printing didn't print money and just hand it to him when he decided to raise his prices.

Exactly! The price will always fluctuate, but at that moment the hard accet is still as valuable as the liquid accet (currency).

But valuable in different ways. One is legal tender, the other is not.

When you improve on your product, the price will still fluctuate, but it will fluctuate at a higher price because you have created wealth.

Tell that to the makers of New Coke. Not all improvements equal more profits.

An improvement only increases your market value if more people agree that it's better and can afford to pay more for it. If, on the other hand, people can't afford the higher price (say if wages are down), that improvement won't mean squat.

-- A2SG, as I said, many factors affect market growth, and some of them are not controllable by sellers....

 

[Viren]

The military gets the bulk of this debt spending and of the poor who get it, they use the money to pay bills and buy food; not to buy luxuries.

Ken

A poor person may pay rent to a landlord who in turn buys stuff. It doesn't just end with a bill.

 

[Ken-1122]

Yup, because more people buy his product. Again, he created wealth by getting other people to give him money.

Exactly! He created wealth!

The Bureau of Engraving and Printing didn't print money and just hand it to him when he decided to raise his prices.

I never said they did!

But valuable in different ways. One is legal tender, the other is not.

I said it was worth the same, I never said it IS the same.

Tell that to the makers of New Coke. Not all improvements equal more profits.

Not just them, they say most start-ups goes out of business within the first 2 years.

An improvement only increases your market value if more people agree that it's better and can afford to pay more for it. If, on the other hand, people can't afford the higher price (say if wages are down), that improvement won't mean squat.

-- A2SG, as I said, many factors affect market growth, and some of them are not controllable by sellers....

True! My point is; the market GROWS! The rich become richer, not by taking from the poor, but by making the market grow then they get the lion's share of that growth.

Ken