Not exactly news to me

[sprinter]

Middle Class in America Is Radically Shrinking

 

 

 

The 22 statistics detailed here prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.

 

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

 

So why are we witnessing such fundamental changes? Well, the globalism and "free trade" that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects. It turns out that they didn't tell us that the "global economy" would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations. The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.

 

 

 

 

Giant Sucking Sound

 

The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world. After all, what corporation in their right mind is going to pay an American worker 10 times more (plus benefits) to do the same job? The world is fundamentally changing. Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money. Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new "global" labor pool.

 

What do most Americans have to offer in the marketplace other than their labor? Not much. The truth is that most Americans are absolutely dependent on someone else giving them a job. But today, U.S. workers are "less attractive" than ever. Compared to the rest of the world, American workers are extremely expensive, and the government keeps passing more rules and regulations seemingly on a monthly basis that makes it even more difficult to conduct business in the United States.

 

So corporations are moving operations out of the U.S. at breathtaking speed. Since the U.S. government does not penalize them for doing so, there really is no incentive for them to stay.

 

What has developed is a situation where the people at the top are doing quite well, while most Americans are finding it increasingly difficult to make it. There are now about six unemployed Americans for every new job opening in the United States, and the number of "chronically unemployed" is absolutely soaring. There simply are not nearly enough jobs for everyone.

[retro-man]

Would have been a different world if Perot hadn't torpedoed his own chances at becoming President. He had it right though. Read my later posts (pp 4 or so) in the "Obamanomics is Failing" thread. The quotes you posted would seem to be common sense. But very few seem to be getting it.

[Edstock]

Remember, it's all Obama's fault.

[97 F350]

I read that article over the weekend. It is just a moldering bucket of tripe. The only thing it proves is that the author had absolutely nothing to say and he was staring at a deadline to write an article. So he grabbed 22 random statistics and listed them and said it proved the end of the middle class.

 

The only reason he had 22 reasons is a couple of them were wordy (at least three lines long) and that enabled him to reach the mininum number of words he needed to write. Otherwise this would have been 23 or 24 reasons the middle class is dying as he would have googled 1 or 2 more totally unrelated statistics to "prove" his point.

 

It also fits in nicely with the general crap printed in these supposed "finance" sites - the US is doomed! China will take over the world! Blah, blah, blah.

 

I could easily disprove each and every point of this moronically bad cut-and-paste job of an article, but why waste the time and energy actually doing something right? The people that think we will all be speaking Chinese next year would lap it up no matter what, everybody else without an agenda can see the total lack of anything besides random words in this article.

 

Here is a quote from about the fifth comment down -

 

The first chart "83 percent of all U.S. stocks are in the hands of 1% of the people." proves the opposite of what is being claimed. In 1962, 1983, 1989, 1998, and 2001 the top 1% held 94.4%, 92.9%, 87.52%, 86.0%, and 83.6% respectively. Meanwhile all of the other categories at improved their share by a minimum of 380% (Top 9.0% category). The Middle 20% category grew by 1000%. The greedy Top 1% saw only 136% increase in that time.

 

Right off the bat - his first argument is destroyed by his own statistics. All he did was look at one point in time - Dude must have missed Elementary Analysis 101.

[97 F350]

Dang it - double post .

Edited July 26, 2010 by 97 F350

[xr7g428]

Sprinter, you might want to take a more careful look at the so called facts in that article. Some of the the references say exactly the opposite, or at least draw the opposite inference to what he has printed in his article. There is no penalty for lying on the internet. For example, stock ownership is more broadly based now than ever in history. The definition of bank owned real estate depends on qualifying ownership as a comparison of debtor equity to mortgage indebtedness. With the drop in real estate value this is inevitable.

 

The author is either very bad at math or is depending on the reader to be. Zero is immutable. Any growth in income, is going to create greater disparity between the top and the bottom, The only way that income distribution can become flatter is when the earners stop earning. Do you really believe that having a larger percentage of the population earning less is a good thing?

 

If the higher marginal tax rate goes too high what happens is that less income makes it on to a tax return. This is why every time that marginal rates for capital gains are reduced, it increases the total amount of tax collected, regardless of the party in power.

 

The part that is just staggering in stupidity is that most people are dependent on being "given" a job. Less than 10% of the population works in manufacturing. Most wages now are a function of value added to the firm which translates to value added to the customer. Big corporations employ a smaller percentage of the work force than ever before. Over 90% of all new jobs are being created by small businesses. Very few people want a job that involves standing at an assembly line doing a repetitive task several hundred times a day. Yes they will take those jobs if nothing else is available, but it is the least valuable use of many lives. Why would we want to perpetuate this?

 

Since leaving the automotive business, the thing I am most often struck by is just much talent is being wasted by really smart people that take an assembly line job, just for the money. Sure assembly work is great for some people, but it is not the best use for so many.

[sprinter]

The author is either very bad at math or is depending on the reader to be. Zero is immutable. Any growth in income, is going to create greater disparity between the top and the bottom, The only way that income distribution can become flatter is when the earners stop earning. Do you really believe that having a larger percentage of the population earning less is a good thing?

 

If my income grows, and the ceo's remain the same, the percentage difference shrinks. I have no idea what point you are trying to make with your statement.

 

 

The part that is just staggering in stupidity is that most people are dependent on being "given" a job. Less than 10% of the population works in manufacturing. Most wages now are a function of value added to the firm which translates to value added to the customer. Big corporations employ a smaller percentage of the work force than ever before. Over 90% of all new jobs are being created by small businesses. Very few people want a job that involves standing at an assembly line doing a repetitive task several hundred times a day. Yes they will take those jobs if nothing else is available, but it is the least valuable use of many lives. Why would we want to perpetuate this?

 

Since leaving the automotive business, the thing I am most often struck by is just much talent is being wasted by really smart people that take an assembly line job, just for the money. Sure assembly work is great for some people, but it is not the best use for so many.

 

Do you work for somebody or are you the business owner? People that work for someone else are dependent upon being given a job. It doesn't matter if you work in automotive assembly, a bank president or the greeter at walmart. True with increase in small businesses there are more owners. But what percentage of Americans can say they own a profitable business?

[sprinter]

I read that article over the weekend. It is just a moldering bucket of tripe. The only thing it proves is that the author had absolutely nothing to say and he was staring at a deadline to write an article. So he grabbed 22 random statistics and listed them and said it proved the end of the middle class.

 

The only reason he had 22 reasons is a couple of them were wordy (at least three lines long) and that enabled him to reach the mininum number of words he needed to write. Otherwise this would have been 23 or 24 reasons the middle class is dying as he would have googled 1 or 2 more totally unrelated statistics to "prove" his point.

 

It also fits in nicely with the general crap printed in these supposed "finance" sites - the US is doomed! China will take over the world! Blah, blah, blah.

 

I could easily disprove each and every point of this moronically bad cut-and-paste job of an article, but why waste the time and energy actually doing something right? The people that think we will all be speaking Chinese next year would lap it up no matter what, everybody else without an agenda can see the total lack of anything besides random words in this article.

 

Here is a quote from about the fifth comment down -

 

 

 

Right off the bat - his first argument is destroyed by his own statistics. All he did was look at one point in time - Dude must have missed Elementary Analysis 101.

 

 

 

 

Sounds impressive those numbers you gave us, but really don't change reality one bit. Looking at the table the top 1% hold $3,568,400 (family household) compared to the rest of the chart added together making $699,300 total. If I done my math correctly, that gives the top 1% group 80% of the assets in the stock market. Those "big increases" you quoted were changes from $1,200 to $12,000. While the top 1% changed $951,000. Given the choice, I think I would rather have $951,000 than $10,800 any day of the week. Remember, figures never lie, but liars figure!

[97 F350]

Sounds impressive those numbers you gave us, but really don't change reality one bit. Looking at the table the top 1% hold $3,568,400 (family household) compared to the rest of the chart added together making $699,300 total. If I done my math correctly, that gives the top 1% group 80% of the assets in the stock market. Those "big increases" you quoted were changes from $1,200 to $12,000. While the top 1% changed $951,000. Given the choice, I think I would rather have $951,000 than $10,800 any day of the week. Remember, figures never lie, but liars figure!

 

 

Exactly. And his whole article is based completely on this. Yes in 2001 the top 1% own 83% of the stock market (not 80%). But his whole argument based on that number is the middle class is shrinking away. But the chart proves the exact opposite. Back in 1962, the top 1% owned 94.4% of the stock market and in 1982 the top 1% owned 92.9%. Somewhere in there is this author's definition of the peak of the middle class, yet thy owned 10% less of the stock market than they do now. So the middle class now actually owns more compared to the rich than they did in their "heydey".

 

So yes, those numbers are "impressive" . And his whole article is a steaming pile of $h!+ because either he didn't know how to interpret his own data or "he figured".

[RangerM]

I think the key question is whether or not this is a natural progression.

 

People who are (or were) middle class typically know (and do) what it takes to move up. They save, start small side businesses, educate themselves and their children, and generally avoid things that poor people do.

 

The poor also often move up from their station in life, and not just via the lottery. Some perpetually poor are there for two reasons; they either do the things that keep them (and their children) poor, or they are disabled.

 

I've yet to see how the poor have any higher instance of disability than any other demographic. Except when we redefine what a "disability" is. Many disabilities anymore seem to be self-inflicted.

 

This article smacks of "blame the system" for peoples' destiny, while absolving the people themselves from any blame. Such arguments are often made to justify government redistribution of wealth. Trouble is, it doesn't redistribute "wealth", it only redistibutes "income" which is not what it takes to encourage people to achieve; and it certainly doesn't encourage weathy people to take chances with their wealth.

[sprinter]

Exactly. And his whole article is based completely on this. Yes in 2001 the top 1% own 83% of the stock market (not 80%). But his whole argument based on that number is the middle class is shrinking away. But the chart proves the exact opposite. Back in 1962, the top 1% owned 94.4% of the stock market and in 1982 the top 1% owned 92.9%. Somewhere in there is this author's definition of the peak of the middle class, yet thy owned 10% less of the stock market than they do now. So the middle class now actually owns more compared to the rich than they did in their "heydey".

 

So yes, those numbers are "impressive" . And his whole article is a steaming pile of $h!+ because either he didn't know how to interpret his own data or "he figured".

 

I wouldn't use the increase of stocks owned be the middle class as a total indication the middle class is improving! The increase in the stock market for middle Americans was due to the government introducing the 401k in 1980. Businesses offered more stock for sale as "there's a sucker born every minute". And after most of us has lost 50% of our little 'nest egg', just where did that money go to? Could it really just disappear into thin air? No, I'm thinking that boom allowed many corporations to build that new factory in China, India or some other foreign land where the labor is cheap and profits are high. Another transfer of wealth to those one percenters. And if they blow the economy completely out, those stock certificates will be nothing more than wiping paper. But the super rich will still own the company but will never have to pay you $hit in return for your investment.

[97 F350]

Never said it was the total indication. BUT it was the author's first point in arguing that the middle class is disappearing. So it should have been his most salient point in his article. Except for the fact that he completely interpreted the data bass ackwards.

 

My entire point is that the article was garbage. Just another nonsensical piece trying to raise the fear level in hysterical people who believe everything on Yahoo Finance.

 

Yes - a lot of it was driven by 401-k's. No, most of the people in the US did not lose 50% of their retirement. You did hear about the ones who did - it made great headlines. My 401-k lost about 25% at it's worst. It has since rebounded. And dropped again. And rebounded again. That's how it works.

 

 

And if they blow the economy completely out, those stock certificates will be nothing more than wiping paper. But the super rich will still own the company but will never have to pay you $hit in return for your investment.

 

And please make up your mind. If the stock certificates are worthless, how will the "super rich" still own the company? They own it via stock certificates also.

 

It's all a conspiracy. The Illuminati and the Reptilians have joined forces - better learn Mandarin quick!

[Edstock]

Whatever happened to "Trickle Down"?

[RangerM]

Whatever happened to "Trickle Down"?

Some people came out of the house, and the rain fell on them.

 

Others didn't, and missed out.

[Roadtrip]

Whatever happened to "Trickle Down"?

 

What happened to "trickle down" is that it never existed -- the phrase does not exist in any school of economic theory.

 

Why don't you take your hard-earned capital and invest in a business and then pay for the overhead and pay for the compensation costs of your employees (whose costs are uncertain -- due to ObamaCare, as well as the uncertainty of future costly regulations). And then tell us about how "trickle-down" economics works, after you've met payroll and all the other untold expenses associated with a business enterprise. We're all ears.

[Roadtrip]

I wonder how many of us want our kids to grow up to be factory workers.

[Roadtrip]

I wonder how many among us has been edged out of of the middle class.

[akirby]

What happened to "trickle down" is that it never existed -- the phrase does not exist in any school of economic theory.

 

Why don't you take your hard-earned capital and invest in a business and then pay for the overhead and pay for the compensation costs of your employees (whose costs are uncertain -- due to ObamaCare, as well as the uncertainty of future costly regulations). And then tell us about how "trickle-down" economics works, after you've met payroll and all the other untold expenses associated with a business enterprise. We're all ears.

 

Trickle down only works where job creation is concerned. If you allow businesses to grow then they can hire more people and that also helps the tax base. If you stifle business growth with things like higher taxes or higher health care costs then they stop hiring.

 

Businesses are just middle men - they take raw materials and/or labor and turn them into goods and services that people purchase. If you increase the cost of doing business then the businesses just increase the cost of their goods and services accordingly because every business seeks to make profit. That's why taxing the oil companies was a stupid idea because all they'd do is transfer the cost to the consumer.

 

Where trickle down doesn't work is when you cut costs for a business that isn't growing - that just makes the owners more profit. So forget about across the board tax breaks and focus on incentives to create new jobs.

[RangerM]

Businesses are just middle men - they take raw materials and/or labor and turn them into goods and services that people purchase. If you increase the cost of doing business then the businesses just increase the cost of their goods and services accordingly because every business seeks to make profit. That's why taxing the oil companies was a stupid idea because all they'd do is transfer the cost to the consumer.

 

Where trickle down doesn't work is when you cut costs for a business that isn't growing - that just makes the owners more profit. So forget about across the board tax breaks and focus on incentives to create new jobs.

Except when you cut taxes to attract businesses to move their operations. States do it all the time.

 

Across the board tax breaks in the U.S.A. makes the U.S.A. a more attractive place to conduct business, even in mature industries.

 

And like you said, businesses are just middle men. The costs of doing business are merely passed along to the consumer, the shareholder, or the employee. All corporate taxes are ultimately paid by individuals. It's just a matter of their visibility.

[akirby]

Except when you cut taxes to attract businesses to move their operations. States do it all the time.

 

Across the board tax breaks in the U.S.A. makes the U.S.A. a more attractive place to conduct business, even in mature industries.

 

And that would fall under the category of job creation.

[RangerM]

Yes and no.

 

In a truly mature industry (no growth), jobs couldn't be created, only moved.

 

But a job moved here is just as good as far as I'm concerned.

[sprinter]

 

And please make up your mind. If the stock certificates are worthless, how will the "super rich" still own the company? They own it via stock certificates also.

 

It's all a conspiracy. The Illuminati and the Reptilians have joined forces - better learn Mandarin quick!

 

 

Yes and no. Take for instance a company that manufactures a food product with a secret recipe. If the company goes to hell due to a poor economy, do you think you're entitled to the secret because you owned a minuscule portion of stock in that company? I don't think that will happen. Are you going to take your certificates to the company and demand some other asset for your percentage of 'ownership' when the doors are closed? Perhaps an office desk and chair? I would like to see that! Certain stock ownership allows for you to vote. But as you may guess, the people who own the company will almost always have the controlling voting block and will make all decisions, good or bad.

 

If the company is doing well and you buy stock, you have a very good chance of making money, if someone else wants to buy your stock. The worth of the stock is related to the demand by the buyers. The value of everything depends upon what someone else is willing to pay for it. If no one wants those shares you own, then they are worthless. But that broke company will still be sitting there with the gates locked. Maybe after liquidation and the creditors are paid, you just might make a penny or two. Meanwhile the previous owners are still doing well because they probably drained most of the profits for themselves leading to the disproportionate increases between the worker and owner/ceo salaries.

 

Now I don't believe in the reptilians and have no plans to learn Mandarin in the future. However I do believe there are evil, greedy, powerful people out there who think they can rule the world. These were the railroad, banker and oil barons in our history. They stepped on and removed anyone who got in the way. The rest of the world's population is merely cattle or serfs to be controlled as they please. That is the way it's been for thousands of years. The existence of middle class America will only be a mere blimp in time if the people don't stand up and fight the tyranny that is occurring and increasing daily.

[akirby]

Yes and no.

 

In a truly mature industry (no growth), jobs couldn't be created, only moved.

 

But a job moved here is just as good as far as I'm concerned.

 

I missed the move part, but most companies don't move their operations unless they get such a huge tax break that it pays for the move. More typically it's either a new company or a new branch which would be net new jobs for that company.

[RangerM]

I think that's where the "offshoring" part comes in. I agree with you that simply picking up and moving isn't something a company does lightly. The cost of the move (itself) is significant.

 

Companies don't simply decide to offshore on the basis of labor only, but also on the overall cost of doing business. When government (taxes or regulation) have made it more attractive to move away, something is wrong.

 

I've never understood the argument that the government "pays companies to offshore", unless what they mean is that government makes it cost more just to stay.

[Roadtrip]

Trickle down only works where job creation is concerned. If you allow businesses to grow then they can hire more people and that also helps the tax base. If you stifle business growth with things like higher taxes or higher health care costs then they stop hiring.

 

For clarification, "Trickle down" was a phrase that came into vogue in the Mainstream Media during the 1980s as a pejorative description of President Reagan's supply-side economic policies. The "trickle-down" enterpretation was that tax-rate cuts (not to be confused with tax cuts) would eventually "trickle down" to job creation -- as if job creation was the final "trickle" in the economic stream.

 

Economic, financial, and accounting realities dictate the opposite to be true.

 

When a private business or a firm hires a new employee, that employee is an investment -- an asset who is supposed to add value, who is supposed to help the business to become profitable.

 

However, there are many conditions that determine whether the business is profitable. What is certain, however, is that the newly hired employee is paid (along with overhead costs) before any profit is realized. The last party to gain from hiring people is the original investor. The first party to gain is the person who was hired and receives a paycheck on a regular basis.

 

The failure rate of small business startups is upwards of 50 percent within the first year. The employees get paid during that time (or when their paychecks begin to bounce, they tend to walk away). The investors/owners? They had a much larger stake and therefore took a more significant risk.

 

 

Businesses are just middle men - they take raw materials and/or labor and turn them into goods and services that people purchase. If you increase the cost of doing business then the businesses just increase the cost of their goods and services accordingly because every business seeks to make profit. That's why taxing the oil companies was a stupid idea because all they'd do is transfer the cost to the consumer.

 

You are accurate in your assessment of cost of goods/services and how additional cost of inputs (not to mention taxes and regulations) translate to higher costs to consumers. But your rather bland description re: "Businesses are just middle men" seems to dismisss what businesses must do to remain competitive, as well as create innovative new products -- which most businesses MUST do to stay alive (and keep people employed). And it's that innovative/risk-taking spirit -- on the part of business --that helped make this a wealthy country. If businesses were merely "middle-men," I guarantee that we wouldn't be having this discussion on the Internet.

 

 

Where trickle down doesn't work is when you cut costs for a business that isn't growing - that just makes the owners more profit. So forget about across the board tax breaks and focus on incentives to create new jobs.

 

But "trickle down" just won't go away. I guess the phrase can be attributed to Will Rogers' description of -- or frustration with -- the New Deal programs of the 1930s: "[M]oney was all appropriated for the top in hopes that it would trickle down to the needy." I digressed, but you are the one who brought it up again.

 

"Where trickle down doesn't work is when you cut costs for a business that isn't growing - that just makes the owners more profit.

By this logic, a company could cut costs to zero and therefore realize infinite profits. Pretty stupid, true, but that's what your logic suggests.

 

So forget about across the board tax breaks and focus on incentives to create new jobs.

 

Please explain the difference between "across the board tax breaks" and "incentives" when it comes to creating new jobs. Does it have something to do with creating tax incentives for industries that you personally favor?