What made the big disparity in wealth?

And under capitalism everyone is poor except the uber rich.

Hence you need a balance of the two.

- - - Updated - - -

How appropriate for audience level of Fox News.

 

It is probably the new cultural landscape of America where dependency instead of a good work ethic is valued and respected. In the past everyone had a good work ethic, and everyone prospered at some level but today most people are lookiing for a handout or free ride, while the minority who still possess a good work ethic have become rich.

 

You hate the 1% who is working hard for their money.

You love the 1% who is benefiting from government and sugar daddy Bernanke's bailouts.

Okay. Carry on.

 

Ok, let's look at the 80s...
Reagan (1981-1989) based his economic program on the theory of "supply-side economics", which advocated reducing tax rates so people could keep more of what they earned. The theory was that lower tax rates would induce people to work harder and longer, and that this in turn would lead to more saving and investment, resulting in more production and stimulating overall economic growth.

Unfortunately, the tax cuts implemented served mainly to benefit wealthier Americans, the economic theory behind the cuts argued that benefits would "trickle down" to lower-income people as well because higher investment would lead new job opportunities and higher wages. Given the massive growth in income disparity recorded by the Congressional Budget Office (http://www.cbo.gov/publication/42729), it's clear that the wealthy were (unsurprisingly) not suddenly motivated to hire more people that weren't required without an increase in consumer demand.

The central theme of Reagan's national agenda,was his belief that the federal government had become too big and intrusive. In the early 1980s, while he was cutting taxes, Reagan was also slashing social programs. Reagan also undertook a campaign throughout his tenure to reduce or eliminate government regulations affecting the consumer, the workplace, and the environment. At the same time, however, he feared that the United States had neglected its military in the wake of the Vietnam War, so he successfully pushed for big increases in defense spending.

The combination of tax cuts and higher military spending overwhelmed more modest reductions in spending on domestic programs. As a result, the federal budget deficit swelled even beyond the levels it had reached during the recession of the early 1980s. From $74,000 million in 1980, the federal budget deficit rose to $221,000 million in 1986. It fell back to $150,000 million in 1987, but then started growing again. Some economists worried that heavy spending and borrowing by the federal government would re-ignite inflation, but the Federal Reserve remained vigilant about controlling price increases, moving quickly to raise interest rates any time it seemed a threat. Under chairman Paul Volcker and his successor, Alan Greenspan, the Federal Reserve retained the central role of economic traffic cop, eclipsing Congress and the president in guiding the nation's economy.

In short, in light of the economic disparity that resulted, it is clear that "trickle down" theory did not work. The wealth simply accumulates at the top and is hoarded by the few at the expense of the majority.

Feel free to take a look at the link I provided (http://www.cbo.gov/publication/42729) and tell me again how things got better during the 80s and 90s.

 

Laffer was put into a televised debate with the investor Peter Schiff on August 28, 2006, not long before the housing bubble started to implode, and our economy went into its near-death spiral. This was a crucial time in our recent economic history.

Here are some of the key moments of this debate:

00:45 seconds in: Schiff predicts that a recession is coming and it will be “pretty bad … and will last not just for quarter but for years.” Why? “The basic problem with the U.S. economy is that we have too much consumption and borrowing and not enough production and savings.” Then the American consumer will stop consuming, and save more, “especially when he sees his home equity evaporate.”

01:39: Laffer responds: “No, I don’t believe any of it.” He makes the point that savings are down, but “wealth” has risen dramatically. Then he adds this sentence, which should be inscribed on his tombstone: “The United States economy has never been in better shape." He concludes Schiff is totally wrong, and he, Laffer, just doesn’t “know where he is getting his stuff.”

2:15: Schiff counters “wealth” hasn’t increased, only the paper value of stocks and real estate. He adds that when the stock market bursts all that wealth will evaporate, leaving only debt. Bingo.

2:23: Laffer says he will be Schiff a penny that he’s wrong. Schiff counters that he’ll bet more than a penny. (I wish the U.S. had bet Laffer $1 trillion...) Laffer says one condition of the bet is that Schiff signs a letter to Laffer when he is proven wrong, admitting his error. I wonder if Laffer has now written such a letter instead?

3:05: Anchor Michelle Cabrusa-Carrera notes a huge portion of the economy is related to construction and housing. What happens should those jobs goes away? Laffer says there will be lots of things that will fill those lost jobs again. “The neat thing about this economy is that we have a lot of flexibility in what we produce, and what we have.” It just wasn’t so. He adds this isn’t a housing economy, but rather one driven by good economic policies, and “it’s working beautifully.” And it is, if you’re a billionaire, or in the business of selling books filled with off-base economic theories.

3:36: Schiff says it’s a good economy if you’re an investor in gold, or oil. He said this, by the way, in 2006.

That's not to say Schiff was right about everything, because he wasn't. He predicted the artificially low interest rates would become a thing of the past in the near future, which never happened. Why? Because so many of the other things he predicted did happen.

Here's the video, in case you need it.
[video=youtube_share;LfascZSTU4o]http://youtu.be/LfascZSTU4o[/video]

 

Since inflation inflates the prices of consumables, and since consumables constitute a higher percentage of low income earner's paychecks than any other demographic, I thus think you should probably recuse yourself from this discussion.

 

Things did get better during the 80's and 90's:



As we can clearly see in the above graphic, each group experienced an increase in after-tax income during the 80's and 90's. It's true that the rich did better than everyone else, but the fact remains each income group was better off than they were during the Carter years. It appears that you are proving what Margaret Thatcher said : liberals would rather the poor were poorer provided the rich were less rich.

Realize that you can't have a consistent argument in this discussion without condemning the economic results of the Bill Clinton era. Wealth inequality went up faster during his Presidency than it did during Reagan's, with tax rates a full 11% lower than where they were for most of Reagan's Presidency, yet progressives call his economic policy a raging success.

 

And likewise, wealth inequality is skyrocketing under Obama. Reagan at least had the advantage of at least increasing the wealth of all income groups.

These liberals are serially wrong.

 

What does that prove?

 

He made brash claims about the current and future of the economy and was proven to have been 100% wrong... Kinda proves he doesn't know his ass from a hole in the ground.

 

Actually, in the graphic you provided, it looks like the bottom 40% was at about 0 until '94... halfway through the last decade you're talking about.
and let's not forget that +16% on a pittance is still a pittance, whereas +281% on a significant portion of the nation's wealth is a massive increase in power (enough to buy conservative politicians, for example).

Really? The why is it liberals that are trying to lessen income inequality and ensure workers are paid a living wage - while conservatives promote economic theories that increase income inequality and rabidly fight any attempt to improve the standard of living for the poor?

Fail.
http://www.factcheck.org/2008/02/the-budget-and-deficit-under-clinton/


Also, this graphic might provide some additional perspective on the current status:

 

Recessions tend to hit the poorest the hardest. You may have heard of a nasty one in the early 80's.

More importantly, so what? The time period we are talking of is the "80's and 90's", which includes everything throughout the 90's.

The way to help the poor is to create a vibrant economy that is full of opportunity and upward mobility. Paying burger flippers $15 an hour when their labor is not worth that much increases unemployment which disproportionately harms those at the very bottom of the low-skilled ladder and harms those whose labor is actually worth $15 an hour on the open market.

How is that a "fail"? Try not speaking in internet meme language.

Taxes were significantly lower under Clinton's Presidency than they were for the majority of Reagan's Presidency. That's a really big problem for inconsistent progressive arguments that slam the economic policies of the 80's while calling the economic policies of the 90's a raging success. Can you just admit this is a partisan argument you are making? "Go Team Democrat!" I've just about dragged that out of you at this point, but it will help save time for future arguments.

What does the Bush tax cuts and the Wars in Iraq and Afghanistan have to do with the discussion we are having of the 80's and 90's? Are you trying to change the topic?

 

I find it intriguing that you want to credit Reagan's policies for benefits across the board, even though only the rich were significantly benefited before Clinton's term - yet you want to simultaneously blame Clinton for the income disparity represented by the same graphic that was obviously a result of the same policies...

Hypocrite much?

And that is done by creating more consumers to drive more sales, so that businesses actually have a motive to hire more people. NOT by handing money to a very small percentage of the population and expecting them to hire people that they don't have a business need for.

If those burger flippers happen to work for a business that recorded $5,503,100,000 in profit during 2012, while squeezing $1,200,000,000 in corporate welfare out of taxpayers (whether we choose to eat there or not), it's clear that the work of those "burger flippers" is worth significantly more to the business than what they're currently paying. This is especially obvious when they pay the CEO of that burger joint approximately $8,750,000 to run this welfare queen (not including his $18,900,000 retirement package).
http://money.cnn.com/magazines/fortune/fortune500/2012/snapshots/2262.html
http://www.nelp.org/page/-/rtmw/uploads/NELP-Super-Sizing-Public-Costs-Fast-Food-Report.pdf?nocdn=1
http://www.bloomberg.com/news/2012-12-12/mcdonald-s-8-25-man-and-8-75-million-ceo-shows-pay-gap.html
http://www.usatoday.com/story/money...donalds-former-new-ceo-big-pay-bumps/2078001/

I don't think anyone is saying they should drive production costs up by spending more on salaries/wages on an enterprise level, but there's an awful lot of fat in the top few echelons that (if properly distributed) could get the business's employees off the taxpayer's shoulders.

Once again, you should learn how to actually click on a link and read evidence for yourself... I wonder why you're so opposed to that notion...?
"The Clinton years showed the effects of a large tax increase that Clinton pushed through in his first year, and that Republicans incorrectly claim is the "largest tax increase in history." It fell almost exclusively on upper-income taxpayers."
http://www.factcheck.org/2008/02/the-budget-and-deficit-under-clinton/
It's not just a matter of the average tax rate, it matters where that tax is applied. Tax a broke person a percentage and you get nothing. Tax a wealthy person the same percentage and you get revenue. Not sure what's so difficult about this concept.

Because history doesn't stop and start solely within the points you select to drive your agenda. The Bush tax cuts (also affecting predominantly the top percentage of earners) were also an example of policy driven by the "trickle down" myth... How's that worked out for us?

 

That's not true. All but the bottom 20% were helped during the Reagan and Bush 41 Presidencies. And I'm not "blaming Clinton" as much as I am pointing out that progressives who complain about wealth inequality have the Clinton years to thank more than the Reagan years. They don't do that, though. I wonder why?

Nope. Though I do find it intriguing that the same people who complain about deficits and debt under Reagan give Obama a pass on deficits and debt. I wonder why they do that?

If your tax rate was raised, would you be more likely or less likely to spend?

It doesn't matter what the companies earns in profit. That's not how salaries are based. Flipping burgers is not a marketable skill, and its something that almost anyone can do, so thanks to the economic law of supply and demand (something progressives apparently don't believe in), their labor is not worth very much. Someone who can run a multi-billion dollar company requires many marketable skills, and it is something that very few people can do, so their labor is worth a lot, again, thanks to the law of supply and demand (something progressives apparently don't believe in).

Why should someone who flips burgers be paid the same as someone who assists surgeons?

What's difficult is your failure to understand that even after Clinton's tax increase, taxes were still a full 11% lower than where they were during most of Reagan's Presidency. So now you have to argue why lowering tax rates from 70% to 50% end up killing the economy, but 39% tax rates helped Saint Clinton save the country.

But we were discussing the 80's and 90's, why would you try and change the topic? Is it because ThinkProgress and MSNBC.com have more anti-Bush material at your disposal and you feel more comfortable?

 

It's an issue that grows at an exponential rate, which is why the gap has grown every year... The gap increased more under Dubya than under Clinton, but I don't blame him solely for it (although his moronic tax cuts for the wealthy certainly didn't help). I believe the administration that started the avalanche gets the credit for the damage to the valley below.

Despite my certainty that you won't read the link, please be aware that deficits have shrunk under Obama (whereas they grew under Reagan).
http://www.factcheck.org/2013/08/deficits-falling-from-way-up/

Debt may have increased (by approx 89%) under Obama - which is approximately equal to the 90% it increased under Dubya - but this is negligible compared to Reagan tripling the debt during his presidency (from $935.1 billion to $2.8 trillion).
http://usgovinfo.about.com/od/moneymatters/tp/5-Presidents-Who-Raised-The-Debt-Limit.htm

If I was making minimum wage and already spend 100% of my meager income, a tax rate increase would simply make me more reliant on welfare.
If I was making $100,000 a year, and generally spent 90% of my income - an increase of less than 10% would hurt my savings but not necessarily dramatically impact my standard of living.
If I was making $8,000,000+ and only spending 50% of my income, I don't know if I'd really feel it at all.

But you said their work was not worth $15 per hour to the business... Clearly worth to the business is directly related to the profit margin that can be generated which - on an enterprise level - is represented by net profits...

If being a burger flipper, or a cashier, or any other front-line worker is not a marketable skill that could be paid a living wage by an successful employer in our economy, please explain Costco.

Did anyone say that, or did I say there was a lot of fat to be trimmed from the top echelons of the market?

For crying out loud, read any of the links I provided... I simply don't have time to tutor you on this.

Sorry, I didnt' realize this was an "80's and 90's" thread... I thought it was about wealth disparity and it's causes.
If anything, your attempt to pigeon-hole a cherry-picked timeframe was a deviation from the topic.

 

That's just your way of trying to avoid blaming Clinton.

Shrunk from an abnormally high baseline starting point, unless you want to pretend the deficit in 2009 was even close to what was historically a normal deficit level.

So what? We had a very small level of debt prior to Reagan's term. Fiat currency wasn't even a decade old when Reagan was elected President. The tripling of the debt from 1 trillion to 2.85 trillion under Reagan is going to be nothing compared to Obama's doubling of the deficit, from 10 trillion to 20 trillion by the time he's done.

What works for you doesn't necessarily work for anyone else. Since the 50% of the population who soaks up the majority of welfare and social program funding pays no federal income tax, and often gets more back than they put in, they may begin to see taxes as more than just voting themselves raises whenever they step into a voting booth. Someone making more than 100,000 may decide to hold off hiring another employee if his taxes are increased. Someone making millions may decide not to start another business since their marginal utility is reduced by an increase in their tax rates. These are all hypotheticals.

Quote me where I said their labor is not worth $15 per hour to the business.

$11.50 an hour is certainly better than the entry level positions at some retail places, but it's far below the $15 an hour that burger flippers at McDonalds are currently demanding.

Costco is a great company, but in order to buy from them, you have to pay a membership fee and buy many, if not most items, in bulk. Because of their starting salary they have many job applicants. In-n-Out burger operates the same way, paying their employees more (though its worth it, considering the high speed environment they operate in, similar to Costco).

You said that. If you support someone flipping burgers making $15 an hour, then you support the idea that their labor should be worth the same as someone who assists surgeons during surgery.

I'll take this as a dodge.

Your first response to me was in post #617 where you objected to the fact that wealth disparity increased more during Clinton's Presidency than it did during Reagan's. You didn't introduce anything post 90's until post #661. If we now both agree that wealth inequality increased more during Clinton's term than it did under Reagan's, and that the 80's and 90's were the two longest periods of economic expansion in US history, just like I initially claimed, I believe my dealings with you are over.

 

The fact that you avoid mentioning that it also let's Dubya off the hook for much of the damage during his administration has been duly noted.

Remind me again, how did we get that "abnormally high" deficit?

Remind me again, how did it get from 2.85 trillion (under Reagan) to 10 trillion (at the beginning of Obama's term)?

Someone in a position to hire employees doesn't do so unless it's required to meet customer demand. Similarly, one does not start a business unless there is a customer demand to be filled.
Customer demand only exists where consumers have money to spend on available goods/services. Handing piles of money to a very small percentage of folks who already have so much that they only spend a portion of it will do less to drive consumerism than distributing that same money across a broad range of people who spend everything they earn.

Ok.

And the counter-offer to those burger flippers has been... what? Eat less? Get a second (or third) job? Accept that you are undeserving of a wage that enables you to survive?

Costco's EBIT is only 2.8%.
http://www.coriolisresearch.com/pdfs/coriolis_understanding_Costco.pdf

Walmart currently has EBIT of 5.45%, almost double that of Costco.
http://cdn.walmartstores.com/sites/AnnualReport/2010/PDF/01_WMT 2010_Financials.pdf

Are you seriously telling me that companies like Walmart couldn't afford to pay their employees a wage commensurate with what Costco pays?

My position isn't limited to the fast food industry.
Cut the fat from the top, use it to lessen income inequality by dropping the disparity between echelons of the market.

Take it how you want. I've provided links and information. If you choose not to read them, I don't take accountability for that.

My objection related to your assertion as to why it had increased. Way to move the goalposts.

 

We weren't discussing "Dubya". The comment you first responded to was between Reagan and Clinton. You did not try and change the topic until much later.

The mortgage industry collapsing. Feel free to explain how that was all Bush's fault.

3 Presidents who added to the debt. What I want to know is how 1 President can come along and do more damage than all of them combined.

Allowing people to keep more of their own money isn't the same as "handing piles of money" to them. Pure Marxism.

The rich earn their money and they pay the overwhelming majority of the taxes. Half the country pays absolutely nothing in federal taxes, even though they are the ones who require the most federal help.

Nice selective editing. Here's my whole quote, in context:

Only 3% of adults over the age of 25 work minimum wage. Most minimum wage workers are young part timers who are just getting into the labor market, and most will receive raises after a short period of time. Very few people have to live on a minimum wage salary. And yes, those who never did well in school, never gained a marketable skill, and only managed to work at the lowest of the low end jobs should work a 2nd or 3rd job. They should do what they have to do. The entitlement complex you are describing (omg I have to work 2 jobs!?!? why can't I just get paid a lot more for less work?!) is what's wrong with this country.

By your logic Costco could afford to pay their workers more than they currently are. Why should they be allowed any profit?

There is no "fat". A business earns what a business earns. If a private company wants to pay its CEO 8 million per year, what business is that of yours? What gives you the right to decide that's too much money, and that the money should be better spent building up a welfare state?

There is nothing in your links that addresses my question. That's why you couldn't be bothered to point anything out.

Your objection was that the economic policies of the 80's and 90's were failures, yet we saw the two longest peacetime expansions of our economy in history. You have yet to provide an adequate rebuttal to this fact.

 

More to this point:

Progressives love to focus on "Walmart" on why we need to put the minimum wage at $15 an hour, $20 an hour, or whatever ridiculous sum of money they believe is a "living wage", but they never address the issue that most companies in the US who do the hiring are small businesses who cannot absorb a doubling of their labor costs. Labor is just like anything available on the market... when you double the cost, it decreases demand. Small businesses owners will forgo hiring people because they can't afford it. How does that help poor people when it becomes much harder for them to get a job?

 

Actually, you're the one who brought up Bush 41, and it didn't make a whole lot of sense to have looked at the pattern established by 'trickle down' implemention across only 3 of the 4 presidents of the timeframe being discussed... Raising Dubya was hardly changing the subject.

No need. It'd be like explaining that fire is hot.

In terms of what?

So I take it you believe Reagan was a Marxist?
[video=youtube_share;cgbJ-Fs1ikA]http://youtu.be/cgbJ-Fs1ikA[/video]

Straw man much? Nobody ever said that no business should be allowed to make any profit.

That's so stupid it's funny.
In the example previously discussed, McDonald's recorded $5,503,100,000 in profit during 2012, while squeezing $1,200,000,000 in corporate welfare out of taxpayers (whether we choose to eat there or not). At the same time, they paid the CEO approximately $8,750,000 to run this welfare queen (not including his $18,900,000 retirement package).
http://money.cnn.com/magazines/fortune/fortune500/2012/snapshots/2262.html
http://www.nelp.org/page/-/rtmw/uploads/NELP-Super-Sizing-Public-Costs-Fast-Food-Report.pdf?nocdn=1
http://www.bloomberg.com/news/2012-12-12/mcdonald-s-8-25-man-and-8-75-million-ceo-shows-pay-gap.html
http://www.usatoday.com/story/money...donalds-former-new-ceo-big-pay-bumps/2078001/

I wonder, why is it ok for a corporation to take welfare subsidies and bank an extra billion or so dollars, but not ok for a working individual to accept welfare support in order to have enough income to survive?

Actually, as we've discussed in several posts, I responded to your assertion that wealth inequality grew faster under Clinton than under Reagan...
I have responded to this several times now highlighting that this is an issue that grows more severe each year, as the wealthy absorb a larger and larger percentage of the total wealth. This has nothing to do with Clinton, or the Bush Boys (though they may have made matters worth with additional ridiculous tax cuts for the wealthy). The results of the avalanche belong to the person who started the first rock rolling.

 

Typical 1% response. Dodge the question with ad homs and attacks because there is no justifiable defense for their position.

OK. Carry on.

 

Price inflation happens, but, I agree with you that being burdened with price inflation for fuel merely because the wealthiest want to earn record profits by creating riskier market conditions through public sector intervention; could be considered a form of tax burden.

 

Price inflation is usually temporary. I thought you meant general inflation.

 

you mean that historically, purchasing power returns to baseline ?

 

An "expert" has never been wrong before? Is that what you're trying to imply? Is Peter Schiff an "expert" but Laffer is not?

Neither does Ben Bernanke, but most people still consider him an "expert"...

[video=youtube;9QpD64GUoXw]https://www.youtube.com/watch?v=9QpD64GUoXw[/video]