Rich People Don't Create Jobs...

Where does the investment come from in order to develop, design, produce and deliver the goods to market? Capital is needed to meet the market demand.

 

Poor people have given you most likely every job you've ever had. Poor, and middle class, people buy the washing machines, kitchen sinks, houses, everything that rich people make or do in far, far greater quantities than rich people can ever dream of. If all of us, rich and poor alike, don't realize this we are headed for the same disaster that overtook the Romans, the British and every other society that thought the rich were anything more than stewards of the wealth they oversaw for themselves and all of us.

 

The EITC is a government welfare program for working households that's funded from income tax revenues and not a rebate or refund from the Social Security taxes.

Social security is not an investment program and doesn't have a return on investment. Social Security/Medicare are tax and spend welfare programs. I've previously made a privatization proposal but it's unlike Republican proprosals for privatization. All Republican proposals have been based upon median income and above leaving low income earners worse of than they are currently. My proposal was based upon the federal minimum wage and resulted in four-times or more retirement income and it could do this because it was based upon individual investment portfolios that are very long term (45 years of working) and are highly diversified and age adjusted.

I've made tax proposals for both federal and state taxation. My proposal for federal taxation used the income tax with an "exemption" from taxation up to median household income. My proposal for state taxation is a consumption tax (sales tax) with a prebate based upon median household income. Basically the same except one taxes income while the other taxes spending. They have features in common.

They are both based upon the fact that households with above median income can afford to pay taxes while that is questionable or pragmatically impossible for household with below median income.

Both are progressive for those paying the taxes based upon the exemption on income and the prebate on consumption while imposing a single tax rate respectively.

By increasing the disposable income for those below median income it increases consumption, creating jobs, because virtually all of the money for low income households is used exclusively for consumption. Much or all of the increased disposable income provided for by tax cuts for those above median income is used for investments as opposed to consumption and investments don't create jobs.

 

In point of fact the market itself is a monopoly that drives down compensation and, left unopposed by a force that drives compensation up, it results in under-compensation for labor at the bottom of the economic pyramid. Organized labor (unions) provided the opposing force to the market during the 1950's and 1960's when middle class America expanded. Organized labor began to lose that power during the 1970's due to union-busting Republican legislation and today the power of organized labor is at it's lowest point in 79 years based upon membership statistics.

Each nation has a unique economy and comparisons are, by analogy, a comparison of apples and oranges. We cannot compare our "cost of living" with one in an undeveloped third world country because the economies are completely different. We can calculate what the "cost of living" is for the United States which is the only economy that Americans live in. The basic cost of living is not subjective but instead is quantifiable and the brilliant minds at MIT have quantified it for every county in the United States.

You can look up the "MIT Living Wage Calculator" which is non-political as it merely provides a quantitative analysis of the minimum cost of living throughout the United States (by county) without any political proposals. IMHO I think some of the calculated costs are low and some basic costs are not included at all but I'm not nearly knowledgeable enough to dispute a quantitative analysis conducted by MIT. If you think you're smarter than the brilliant brains at MIT then perhaps you can argue with them but I'm not quite that smart and I'm willing to accept the scientific analysis they provide.

http://livingwage.mit.edu/

 

Bingo.

well, there are many ways a person can "live", if you define living as simply being alive. For example, for housing, a person could live in a brick and motor house in a normal environment, in the ghetto, in a trailer, in a shantytown, or be homeless. There are all housing "options" and the living wage calculator probably picks something in between the first and last options. However, this is clearly not the "lowest housing option that people are willing to accept" since being homeless is certainly an option, and it's an option that millions of Americans are living with every day. Now you're right in the sense that there is a lower bound of wages at which people will choose not to work, but rather live on government assistance. And in that sense, wages do have a sort of lower bound (ie wages are propped up, to some extent by the shortage of labor created by people choosing not to work and to live on govt assistance). Of course, we do have illegal immigrants who do not receive the same assistance, and are thus, willing to work for far lower wages.

But by enlarge, wages are not affected by this lower bound (since we already have minimum wage laws), but rather by the forces of supply and demand (largely controlled by the demand for labor, due to the monopoly forces we discussed above).

 

We would assume tha those half million more unemployed would receive government welfare assistance which increases consumer spending creating jobs but I don't disagree in principle.

The problem still remains the highly disportionate income inequality because the very wealthy don't use most of their disposable income for consumption. By investing in stocks, hedge funds, and even existing real estate they don't create any jobs with their income. Tax breaks for the wealthy don't create jobs while welfare for the poor and increasing the minimum wage does create jobs because all of that money is spent on consumption. It's something that Republicans simply can't seem to grasp.

 

While we can make assumptions about how MIT determined the minimum cost of living I'd assume they were very smart in doing that. For example they might have taken the bottom 20% of rental costs as the foundation for determining what the cost of housing would be for the bottom 20% of income households in a specific area. They sure as hell didn't use the median home price for the county because the poor can't afford to purchase a home.

The median hourly wage in the United States is only $10.55/hr (last time I checked) and while a single person without dependents might be able to live on this it won't support the median household of four people if one must stay at home to take care of pre-school children. This is above the minimum wage in almost all places in the US (Seattle being a rare exception today where I believe it's $11/hr today but will increase to $15/hr in about six years) but it's still not enough for millions of families to live on.

Based upon numerous statistics we know that at least 40 million working households don't have enough income to live on today because the market does not base compensation on "a fair day's wage for a fair day's work" (a quotation from John Wayne in the movie McLintock).

 

By the 1980's productivity had been increasing productivity per capita since 1970 while wages/compensation were not keeping pace. So there were jobs but basically they paid less relative to productivity. We also need to remember that the AI&T (Artificial Intelligence & Technology) was focused on middle-income jobs because the cost of the AI&T was greater at that time. The costs related to advancements in AI&T is reflected by the huge drop in cost of commodities we use that employ AI&T. Home computers are only a small fraction of the cost today when compared to the 1970's based upon capabilities of the computer. Even the simple pocket calculator has dropped in price from $30 or more to a dollar at your local Dollar Tree. Basically in the 1980's AI&T replaced middle income jobs with lower paying jobs. Today, because of a dramatically lower cost, AI&T is targeting low paying jobs and there aren't any lower paying jobs to keep people employed.

While I often refer to robots I generally refer to AI&T which includes nanotechnology (which often refers to nano-robots anyway). We can also look at 3-D printing which is an awesome technology. Someday we can even assume that we'll have a 3-D printer that can literally "print" a cooked chicken dinner for us like we see in some science fiction movies. All it takes is 3-D printing at the atomic level and being able to "map" the atomic structure of a chicken, mashed potatoes, and gravy. Both of those are theoretically feasible today and all we need to do is to develop the technology to make it happen. Of course a robot/computer will be able to design and build the 3-D printer and a robot/computer will map the atomic structure of the chicken, mashed potatoes, and gravy. Robots and computers will also process the pure elements required for the 3-D printer. No human labor required at all.

 

the same amount of money is in the economy if the middle class gets it first, just takes a little more effort for the rich to get it that way

 

The 2.2% and 3.5% figures are "real" growth rates, already adjusted for inflation.

 

Well it is a retirement system so if you pay more into it shouldn't you get more out of it not less? Raise the cap on contributions they raise the cap on benefits. Fair enough don't you think?

If a person makes say $10,000,000 and is self employed in a business they own that would mean you would tax them to the tune of $1,240,000 just for Social Security. THAT is fair to you just because you don't want to pay more?

To be fair and they get the same lousy return on their contribution they should receive $196,825 in benefits and not the about $2,300 cap.

 

You mean poor people invented a product, put together the capital, built the buildings, purchased the equipment, hired the people including me, marketed the product, then sold the product and then cut me a check?

 

Yes it is it is it's intended purpose.

It is a retirement program with surplus funds being invested in US Treasury Bills and what you receive can be measured as a return on the money you "contributed". If you are in the lower income bracket where your contributions are refunded through the EITC you get a great return, if you are at the top of the income brackets you get a lousy return. I am in the top 25% and had I had the money myself and invested would be getting much better benefit.

And we agree there needs to be at the least some partial privatization in order to maintain returns and to give people more control over their contributions if not wipe out the program of retirement funding and establish IRA or 401k type programs with government subsidies that phase out as the income goes up replacing the EITC. The money being invested in stock and bond broad based index funds.

 

So what is a sustainable GDP growth rate then? Even if GDP growth was only 2% above population growth, average net worth would double every 45 years.

 

Given historical trends, why couldn't it achieve 3%? Then real incomes double in 25 years.

 

Unless one is an actor or an athlete, or employs some other esoteric skill set, it is almost impossible to become wealthy without increasing the wealth of others. Even actors and athletes need cameramen and the like.

By the way, for the betterment of our general conversation, allow me to make the distinction between "rich" and "wealthy".

One's wealth is calculated by the value others place upon what that one has.
One's richness is calculated by the value that one places upon what that one has.

Given the above, all the more, the "rich" most certainly do create jobs.

 

I think it's ok to put caps on the amount you can take out.... it's a safety net, I am more concerned about the average person surviving old age then the top 10%

if we can pay the social security tax for EVERY dollar we make, so can they

if they make 10 million a year and they need social security to survive, they will just have to live like everyone else getting the max return on social security

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People need to stop believing the political propaganda and pay attention to the facts.

The EITC is fully funded through the general tax revenues without a single dime coming from FICA/Payroll/Self-employment taxes. It is not a refund of FICA/Payroll/Self-employment taxes.

Social Security/Medicare don't have any surplus revenues to invest. While over-taxation for the program was initiated under former President Reagan so that excess revenues from working Americans could be borrowed to fund general expenditures and keep income taxes lower for wealthy Americans it was never an investment program. It's a welfare program in all respects like every other welfare program with only one exception in that it has a dedicated tax base. Congress could terminate Social Security and Medicare tomorrow with a simple vote just like they can do with every welfare program in existance.

Any privatization plan for Social Security/Medicare must benefits the lowest income workers because they're the ones that need the assistance the most when they become too old to work. That's been the problem with all Republican privatization proposals. None of the people that Social Security was really supposed to benefit (i.e. the low income workers that couldn't afford to invest for retirement) received any benefit under Republican proposals. Republican proposals really only benefited those with median or above median income that could afford to invest for retirement and don't need Social Security at all.

We also need to change the "benefit schedule" for Social Security because it makes no sense at all. Today those that live their entire working lives in poverty have even worse proverty to look forward to when they can no longer work under Social Security. Roughly 40% of all Social Security beneficiaries receive less than official poverty level benefits. They were better off living in poverty working at a federal minimum wage job than they are when they can no longer work at all. On the opposite end we have the high income workers that receive up to about $30,000 each, or $60,000 for a couple, from Social Security at retirement but they were also able to invest during their careers and might have an additional $100,000/yr in private retirement income. They don't need Social Security at all and the Social Security payments to them merely fund vacations, new luxury cars, and extravagant lifestyles.

If we're going to have a welfare safety net that provides necessary income during retirement then it needs to be a true safety net that provides far more to those that were unable to invest during their working careers and nothing to those that had surplus income to invest. I've proposed a $30,000/yr minimum income that would be funded first from private investments plus any necessary additional funding through a government subsidy program to meet that $30,000/yr income level. That basically quadruples the minimum benefit being paid by Social Security today and it ensure that someone that lived in poverty their entire working lifetime won't have to live in even worse poverty when they're too old to work.

Bottom line the minimum retirement income for the poor needs to be dramatically increased from poverty level today to probably $30,000/yr and that can only happen if the FICA/Payroll/Self-Employment taxes are imposed on all income and if Social Security is privatized based upon minimum wage income investments as the baseline.

That is the proposal I make but increasing Social Security benefits for the poor has never been on the table for Republicans that don't give a damn about the poor that need Social Security the most.

 

It's not fair because the poor can't afford to pay more but instead it's fair because the person with $10 million/yr in income can easily afford to pay $1,240,000/yr in taxes and still easily afford to invest over $5 million/yr for retirement providing them with millions of dollars in annual retirement income when they're too old to work.

What part of "The Wealthy Don't Need Government Wellfare Assistance" does the right-wing not understand?

 

The problem is that this is dealing with "gross" numbers and not "net" numbers. The surplus wealth created is a net number after expenses but many ignore the "cost of living" of those creating the wealth as an expenditure. The "wages" are accounted for but not the "cost of living" and roughly 40% of households have income less than what is necesary to fund their cost of living. Those with incomes less than the cost of living realize no wealth because they're operating in the "negative" while at the same time those with more income receive even more of the wealth because net wealth creation doesn't change, The "negative" wealth of 40% of American households in theory turns into a "positive" for the rest of American households but in reality only the top 1% realize additional wealth because of the "negative" income of 40% of American households.

 

Gee, of course not. After paying that tax, that would leave the poor feller just $8,760,000. How unfair is that!

It's much more fair to crank the tax up against the working mom struggling to raise a couple kids on her $18,000 wage.

Because more is never enough.

 

I've always said if we had 1000 more of those evil Bill Gates how great things would be for everyone. Instead it's all about jealousy of Bill's wealth and zero comprehension about how many people and businesses he has very positively impacted...

 

Trying to use ant single individual as the basis of support for economic ideas is not really going to work for individuals with more than the bare minimum of economic education.

 

But how long can it be sustained? Hasn't every period of read GDP growth above 3% been followed by a significant recession?