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Income Inequality Is Hurting The Economy, 3 Dozen Economists Say - Huffpost


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Income Inequality Is Hurting The Economy, 3 Dozen Economists Say

 

 

WASHINGTON (AP) — The growing gap between the richest Americans and everyone else isn't bad just for individuals. It's hurting the U.S. economy.

 

So says a majority of more than three dozen economists surveyed last week by The Associated Press. Their concerns tap into a debate that's intensified as middle-class pay has stagnated while wealthier households have thrived.

 

A key source of the economists' concern: Higher pay and outsize stock market gains are flowing mainly to affluent Americans. Yet these households spend less of their money than do low- and middle-income consumers who make up most of the population but whose pay is barely rising.

 

"What you want is a broader spending base," said Scott Brown, chief economist at Raymond James, a financial advisory firm. "You want more people spending money."

 

Spending by wealthier Americans, given the weight of their dollars, does help drive the economy. But analysts say the economy would be better able to sustain its growth if the riches were more evenly dispersed. For one thing, a plunge in stock prices typically leads wealthier Americans to cut sharply back on their spending.

 

"The broader the improvement, the more likely it will be sustained," said Michael Niemira, chief economist at the International Council of Shopping Centers.

 

I have said before that an economy is like a closed hydraulic system. Picture a fountain. If you want it to keep working, the water has to flown a circular path, Money has to flow down if it is going to continue flowing up. If it all collects on one side of the system, the system stops working, the pump breaks down and you have a stagnant, unhealthy pond.

 

The typical conservative position that wealth redistribution is some kind of evil commie plot to destroy America is simply moronic. Wealth must be redistributed if an economy is to work. The preferred method is ALWAYS for the money flowing downstream to be from fair pay for fair work, then back upstream in payment for goods and services. But when the wealth is collected by over paid executives, wealthy stockholders, and wall street money traders at the expense of workers as is the case at the worst offending businesses like Walmart and McDonnalds, less money is available for those workers to spend as consumers. 

 

The republican argument that these wealthy businesses need MORE money in to hire more people is insane. The data shows that they HAVE been collecting more and more money without the promised benefit of more jobs. The position that a hike in minimum wage would cost jobs is flawed for the same reason. These companies have the money to pay because they have been collecting the money by underpaying employees for decades.

 

If there is an argument to be made for cutting entitlement programs like the ones even people who work 40 hours a week need to survive, it is not only inhuman and unconscionable, it is economic suicide to also deny workers a cost of living increase.

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If there is an argument to be made for cutting entitlement programs like the ones even people who work 40 hours a week need to survive, it is not only inhuman and unconscionable, it is economic suicide to also deny workers a cost of living increase.

 

Hello Obamacare, a portal to hiring people without benefits.

 

Hooorah!

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Monetary policy will continue to widen this gap.   All that money that has been given out to "stimulate" has made the rich richer, especially while the bubbles build.  While the poorer suffer the consequences of bid up prices and less valuable money.  Plus the fallout when it pops, because most of the wealthy will not feel nearly as much pain in standard of living. 

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Typical response. Cant form an intelligent counter argument? Make a joke. 

 

Pathetic.

The intelligent counter argument is that the tax code needs to be reformed so that the middle class isn't paying more taxes than their wealthy counterparts.

 

Wealth distribution is a moronic argument because there is no evidence to suggest it will work. The rich continue to work harder and invest in the economy so they can get rich. Why bother if the government is simply going to take it away? Where has that worked?

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Let's not be too hasty there ....I suggest draining the stagnant,unhealthy pond that is the NE corridor.

 

income%20edit.jpg

http://www.theatlanticcities.com/jobs-and-economy/2013/12/staggering-concentrated-wealth-americas-northeast-corridor/7872/

 

Now post the same map with average cost of living. Oh wait, it's the same map. People outside of the DMV act like I'm rich when I say I make mid 50s. Then I have to explain to them that that is almost 50k less than the median household income in the county and that I can't buy a home with a six figure down payment.

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10 replies to the thread. And we've seen attempts at exaggeration to the point of absurdity, and attempts to change the topic to Obamacare, then to try to claim that high median income is bad, and low median income is good, then to try to talk about the population growth of Texas.

At this rate, we'll see posts about abortion before we make it to the second page.

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The intelligent counter argument is that the tax code needs to be reformed so that the middle class isn't paying more taxes than their wealthy counterparts.

Wealth distribution is a moronic argument because there is no evidence to suggest it will work. The rich continue to work harder and invest in the economy so they can get rich. Why bother if the government is simply going to take it away? Where has that worked?

Tax codes must be fixed. Too bad the tea party won't even discuss closing loopholes. Why because the tea party is really a tool for the Koch brothers and their like.

The rest is just a proven lie. The rich HAVE been getting richer without helping the economy. There is nothing intelligent about repeating talking points. Next you will be telling me how Brondo has electrolytes.

And since when is paying a fair wage "taking"?

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We need to alter the tax code drastically.  One of the things we need to do is penalize short term "investment" and profit taking that fuel things high speed trading where people figure out the movements of things like large retirement funds (that are primarily made up by the middle class), and then sell into them hurting the returns of those funds (and therefore the retirement funds of the middle class) and not generally aiding the economy (i.e. they aren't long term investing in a company that allows it to grow and hire workers).

 

There are already taxes on the investment transaction in places like Britian.  If you are "buying and holding", these taxes are pretty much irrelevant, but if you are doing lot's of fast buying and selling, like in high speed trading, then they become a real issue.

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We need to alter the tax code drastically.  One of the things we need to do is penalize short term "investment" and profit taking that fuel things high speed trading where people figure out the movements of things like large retirement funds (that are primarily made up by the middle class), and then sell into them hurting the returns of those funds (and therefore the retirement funds of the middle class) and not generally aiding the economy (i.e. they aren't long term investing in a company that allows it to grow and hire workers).

 

You want to raise short term capital gains taxes to higher than ordinary income tax?  Is that what you are suggesting?

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You want to raise short term capital gains taxes to higher than ordinary income tax? Is that what you are suggesting?

I would love for positions held less than a day to be heavily taxed. Algorithmic trading is a parasite on our financial system. Or a very small transaction fee so it's unprofitable to trade thousands of times a day.

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You want to raise short term capital gains taxes to higher than ordinary income tax?  Is that what you are suggesting?

 

What I'm really talking about doing is increasing the Financial transaction tax to something more like what the UK does.  I'd really like to get away from people most having to file IRS forms, and I think actually taxing the transaction moves you in that direction.

 

http://en.wikipedia.org/wiki/Financial_transaction_tax#Implemented_financial_transaction_taxes

 

I think raising the short term capital gains tax, especially where short term is one year, would be a less effecient way to do it.  Rather than that, I think generating a new category of very short term capital gains tax for cases where the stock was held for less than something like 60 days that is taxed at a much higher rate would be better.

 

But the most effeicent would be increasing the size of the financial transaction tax so that it is actually punative with respect to short term profit taking.

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Yeah, I could see something like a transaction tax.

(Not because I expect to raise significant revenue with it. But simply because I SUSPECT that a lot if what's going on isn't investment, isn't even speculation, it's outright manipulation.).

I've seen the CLAIM made that now days, the average length of time that a stock is held is now 19 SECONDS.

Seems to me that a transaction fee of even one penny per share per transaction would put the brakes on that.

Possible downside, though. Would the administrative costs of such a tax, cost vastly more than the tax?

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The American worker is a parasitic entitlement driven uneducated overpaid spoiled do-nothing.

I thought you guys knew that?

Indians and Chinese work harder for less, and so they do.

I don't see them starving.

(Because I live in Aspen)

**** you America. And **** every one of you in it.

I pledge allegiance to my profit, and the rest of the country can lick my nuts.

I am my own country, and all I need from you is to keep calling me daddy while I **** every last dollar out of you.

Sincerely,

The American Corporation

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Tax codes must be fixed. Too bad the tea party won't even discuss closing loopholes. Why because the tea party is really a tool for the Koch brothers and their like.

The rest is just a proven lie. The rich HAVE been getting richer without helping the economy. There is nothing intelligent about repeating talking points. Next you will be telling me how Brondo has electrolytes.

And since when is paying a fair wage "taking"?

Do not kid yourselves. Corporations have the Dems in their pockets as much as the Tea Party. Have you ever noticed how corporations are given so many tax breaks, but small businesses and individually afluent/middle class and up are not?

 

Reform the tax code

Cut the Federal government, starting with the military.

Initiate entitlement reforms, cutting off one of the legs that coorporations use to pay their employees so little (WalMart and McDonalds come to mind)

Reform government policies and spending so that education is a priority and the education system is filled with productive teachers.

 

This gives the every day worker more money, regardless of what the corporations do. They will have a better education, thus becoming more valuable to their employers.

 

There will always be an income gap. There has to be. If there wasn't, there would never be an incentive to work hard or gain skills/knowledge. Those who excel should be rewarded with higher paychecks/better benefits/happier work.

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There will always be an income gap. There has to be. If there wasn't, there would never be an incentive to work hard or gain skills/knowledge. Those who excel should be rewarded with higher paychecks/better benefits/happier work.

I agree that both parties are in the Corps pockets.  The will always be an income gap, but it is at historic highs percentage wise and growing.  One way or another I think that will reverse itself eventually.

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There is lots of evidence of the harm caused by great disparities in income equality. It's bad for society and hurts the wealthy too.  But it's not an either/or situation. The alternative to massive income equality is NOT removing the incentives for hard work. 

 

Here's a couple of links: perception versus reality on income inequality - http://www.youtube.com/watch?v=vttbhl_kDoo

 

And a longer TED talk - http://www.ted.com/talks/richard_wilkinson.html - recent USA policy has led to a situation with much lower economic mobility than other western economies. The takeaway ... "if you want to pursue the American dream, move to Denmark."

 

As a personal anecdote, I have cousins who are Danish and have done very well for themselves - it's not a communist hellscape. :lol: They recognize that their success is a combination of hard work and opportunity. They are more than happy to have some of their wealth used to provide opportunity to the less fortunate to grow their nation's economy.

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There will always be an income gap. There has to be. If there wasn't, there would never be an incentive to work hard or gain skills/knowledge. Those who excel should be rewarded with higher paychecks/better benefits/happier work.

 

The fact that there is an income gap with respect to work related paychecks isn't that much of an issue.  The problem is that many people generate large parts of their income from non-work related income where that income isn't necessarily being generated in a manner that benefits the economy or population as a whole.

 

That's what we have to fix.

 

(though, the issues you raise are also issues, they just aren't necessarily directly tied to the income gap issue.)

 

**EDIT**

Though, CEO income is also an issue in terms of income gap.  Just less of an issue IMO.

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