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7 comments

1 HappyWarrior  Sep 8, 2014 8:55:56am

What’s alarming to me is that many want policies that would make that gap even worse. Frankly, we need to rethink how we approach our government. To hell with “run government like a business” that we’ve seen too much of. We need a government willing to invest in its citizenry.

2 Eclectic Cyborg  Sep 8, 2014 9:21:41am

The problem is that many of the very wealthy feel like the very non wealthy are just being LAZY. Like there’s this mountain of riches out there waiting for them and they don’t want to be bothered to get off their butt and go after it.

I will be the first to agree that making a lot of money takes a lot of work, but the idea that poor people are suffering because they don’t work hard and are just lazy moochers is completely ridiculous.

3 Rightwingconspirator  Sep 8, 2014 9:36:30am

re: #1 HappyWarrior

re: #2 Eclectic Cyborg

Is that really the problem (s)? Not decades of exporting our mfg? Failing to use reciprocity in trade duty rates at all? Failing to back NASA and other high tech high potential technologies? Failing to lengthen school years and up SAT scores for the less than wealthy? The minimum wage? the minimum wage will not repair the middle class. Not even at 40 hours a week + medical. Taxing the wealthy at a higher rate won’t help the middle class either.

I fear we seek to add water to the radiator & repaint the car as we really have a couple flat tires stuck where we are.

4 HappyWarrior  Sep 8, 2014 9:46:23am

re: #3 Rightwingconspirator

Is that really the problem (s)? Not decades of exporting our mfg? Failing to use reciprocity in trade duty rates at all? Failing to back NASA and other high tech high potential technologies? Failing to lengthen school years and up SAT scores for the less than wealthy? The minimum wage? the minimum wage will not repair the middle class. Not even at 40 hours a week + medical. Taxing the wealthy at a higher rate won’t help the middle class either.

I fear we seek to add water to the radiator & repaint the car as we really have a couple flat tires stuck where we are.

I didn’t say anything about taxation though. What you’re talking about goes to what I am saying about investing in our people. But I will also add that I do have a problem with the tendency by many to want to cut education rather than being willing to raise taxes but that’s another story. I’m talking about investment in our people. You know why we did so well in the 50’s and 60’s? It’s because through programs like the GI Bill, we brought in tons of people into universities who otherwise may not have been able to go to college and prove themselves. By all means invest more in NASA and invest in more technology but an economy that doesn’t invest in its people is trouble and leads to what you’re talking about where you have a huge wealth gap between rich and middle class.

5 lostlakehiker  Sep 8, 2014 9:53:59am
After the Carter/Reagan era recession we had a middle class boom.

After the Carter era inflationary mess, we had to clean house and put a lid on inflation. That done, we had the Reagan boom.

And yes, it was a middle-class boom. Inflation hurts the middle class more than it hurts the rich. The rich can comfortably take risks with their assets, so they don’t keep much in cash. The middle class cannot very keep all or most of their savings in the stock market.

6 lostlakehiker  Sep 8, 2014 10:16:15am

re: #3 Rightwingconspirator

Is that really the problem (s)? Not decades of exporting our mfg? Failing to use reciprocity in trade duty rates at all? Failing to back NASA and other high tech high potential technologies? Failing to lengthen school years and up SAT scores for the less than wealthy? The minimum wage? the minimum wage will not repair the middle class. Not even at 40 hours a week + medical. Taxing the wealthy at a higher rate won’t help the middle class either.

I fear we seek to add water to the radiator & repaint the car as we really have a couple flat tires stuck where we are.

Actually, the US has increased its manufacturing output. What has fallen is manufacturing employment. Even in China, manufacturing employment is falling, as Chinese workers are set to be replaced by Chinese robots in Chinese factories.

The wealth gap is being driven by factors that operate quietly and almost invisibly. Manufacturing jobs disappear, while a cornucopia of well-made goods swells the shelves of the stores. And the jobs are not going overseas, not mostly. They’re going to robots. And other improvements in efficiency.

This tilts the table. Who can earn serious money by working? The people who design and produce the robots, who design and think up the stuff they will make, who code up the 3D printers, etc. Plus, those in the professions. This is high end work and it takes talent and long apprenticeships or formal education.

Then there’s low-end work. Hospitality, entertainment, stocking shelves, etc. It’s a bifurcation. Raising SAT scores might help a little, if it could be done. But these top-echelon jobs are always going to be scarce. We could win a few of them away from Singapore and China and India and Europe, but realistically those places have smart people too and their educational systems are not going to fall laps behind ours.

Meanwhile, competition here is intensifying as we bring aboard a large number of immigrants, some who came here legally and others who didn’t. Both groups are here to stay and are part of the supply-demand equation. Legal immigrants are often high-skill and highly educated, and they take a considerable share of the top-end work. This isn’t all bad for us, as we would be lost if we fell behind in the race for the technological upper hand, but it does make high-end work harder to land in the short run. And it widens the wealth gap, because bringing in people at either end of the distribution of income does that. Illegal immigrants sometimes make up generations worth of backlog in a few years and land in this top-talent job winner pool, but more often Rome isn’t built in a day and the first generation (and the second) is predominantly in competition for low-end work. This again widens the wealth gap, for the same reason given before.

Solution? A comprehensive solution is not easily discovered. Suggestions? Expand the earned income tax credit. Widen it, while we’re at it, to single earners without children. (For real, not the token level it’s at now.) Earned income tax credits don’t cut into the chances for less-skilled workers to land a job. They don’t cut into the incentive to work, provided they taper off gradually rather than with a bang. At the other end, treat all capital gains income like earned income, but index the purchase price to the consumer price index so that phantom gains, gains that are an artifact of inflation, are not taxed. This ought to provide enough extra revenue to fund the enlarged earned income tax credit.

7 Rightwingconspirator  Sep 8, 2014 10:52:10am

re: #4 HappyWarrior

Thing is a good middle class boom fundamentally fixes the problems we are trying to repair symptom by symptom. Expensive medical-ACA. Low wages-Raise the minimum wage. Income disparity-tax the wealthy at higher rates.

All of those symptoms are caused by the disease of the lack of a boom or even serious growth in the middle class.

Who can make a boom? It’s the better fix.


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