The problem with "Trickle Down Economics"

[Fruityfact]

You seem to be a victim of the obama approach. Reagan said, in explaining the difference between an optimist and a pessimist, that two children are placed in a room filled completely with horse manure. One is inconsolably depressed and the other is gleefully digging through the manure saying that with all that manure, there must be a pony in there somewhere.

Obama's approach creates and maintains your outlook.

Reagan's approach creates and maintains mine.

A conservative would gladly maintain the status quo and remain in that manure looking for that little pony he/she will never find
A liberal would try to bring change and dig out of that ****

 

[PeteEU]

So how is it the middle class are earning more in the US/UK and living better lifestyles then they ever where in the previous decades?

They are not. Look at inflation adjusted numbers and it will shock you.

 

[code1211]

The thing that is "scaring" them is that they won't get a return on their investment. The reason that they are very correct about that is because too much wealth has pooled at the top. The Middle Class cannot consume what the wealthy would invest in to produce.

That is the reason the pie is shrinking, and no other.

So to be sure what you are saying, after about 200 years of the rich continuously striving to get richer, you are saying that they have, as a unified group, determined that they are all, every one of them, rich enough and that there is absolutely no need for them to invest and gain more wealth.

Do you actually believe this nonsense?

 

[johnny_rebson]

The real estate bubble bursting was a chain reaction.

First the unions were strangling American businesses. Those corporations had no choice but to move those jobs overseas to China and other countries.

As a result, those who became unemployed or underemployed could no longer afford to pay their mortgage. As a result of that, we now have a surplus of single family housing. As a result of this surplus, the price of housing has fallen.

Unfortunately some Americans refuse to put the blame where it belongs, on the union workers.

 

[code1211]

Over the past 30 years, our pie has grown, yet the top two or three percent aquired all of the growth. If this continues, it only matters to the financially elite if the pie grows, to the rest of us, it feels as if the pie has been shrinking for decades. What good is it to the median income earner if he doesn't benefit from increased productivity?

I am nowhere near the top 2 or 3 %. Still, I have acquired a home, currently have no debt whatsoever and have retirement, savings and a fairly comfortable life. I have not done the things that many have like take extravagant vacations or bought the new, big shiny things. The used car lot is where I shop for cars. I have the things that I think are desirable. For me that's enough.

I have much more than my parents, raised during the depression ever dreamed of having. Much less than most in my neighborhood.

I have seen the pie increase in size and when i was about 30 decided what my piece should look like and am still working to make it so. Thankfully, I've been pretty lucky and have worked very steadily, had no disastrous accidents and only one serious illness.

One thing that helps me to avoid envy is thatI don't care what the top 2 or 3% have. It doesn't interest me. I care what i have.

 

[code1211]

So if we increased the capital gains tax, which is mostly paid by the rich, exactly what mechanism would be used to pass on costs to consumers?

Why do you feel you have a right to the capital gains of those you are trying to take it from?

 

[imagep]

So how is it the middle class are earning more in the US/UK and living better lifestyles then they ever where in the previous decades?

Adjusted for inflation, over the past 30 years ago the middle class is not earning more, the middle class has lost 2 or 3 percent in real purchasing power. So why is the middle class living better lifestyles? Debt and technology. The typical middle class citizen owes far more debt than they did 30 years ago. The typical Tea Party response to that debt is that the middle class should learn to live within it's means, but doing so means reducing their standard of living, reducing consumption, reducing the number of jobs, and reducing business profitability. Do we really want that?

When the rich are getting richer, to the point that they have more money than they can find good business investements, and the middle class is becoming poorer, the natural free market solution is debt and lending. The lenders have spare money that they want to gain rents on, and the middle class has a lack of money, so the two meet and form a mutually desirable agreement to engage in a debt transaction. This effectively redistibutes money to take it from those who have too much and put it in the hands of those who don't have enough. Debt and lending are probably the most accurate measurement of the misallocation of income and wealth. For those who believe that too much consumer debt was a contributor to our current poor economic times, then they should realize that a misallocation of income and wealth is the largest contributor to such debt and lending.

Technology is the largest saving factor for the middle class. Better health care treatments, cell phones, air conditioning, television, computers, and of course the internet, are the areas where the middle class have benefited the most from. Without the growth in technology over the past 50 years or so, the middle class would be totally screwed today.

 

[code1211]

A conservative would gladly maintain the status quo and remain in that manure looking for that little pony he/she will never find
A liberal would try to bring change and dig out of that ****

A true liberal would sit there inconsolable and wait for Obama to dig him out.

 

[code1211]

The real estate bubble bursting was a chain reaction.

First the unions were strangling American businesses. Those corporations had no choice but to move those jobs overseas to China and other countries.

As a result, those who became unemployed or underemployed could no longer afford to pay their mortgage. As a result of that, we now have a surplus of single family housing. As a result of this surplus, the price of housing has fallen.

Unfortunately some Americans refuse to put the blame where it belongs, on the union workers.

Anyone who bought a house, took out a second mortgage, sold a house, invested in any 401K, invested in any stock related to anything that helped to build a house, enjoyed the fired up economy or just lived in the USA was a part of the Real Estate Bubble Bursting.

There is absolutely no way to place a blame on any individual or any group without blaming every single person in the country.

Our lawmakers created the conditions for this to happen because they are idiots, but we keep electing them and they keep stealing from us.

 

[johnny_rebson]

Adjusted for inflation, over the past 30 years ago the middle class is not earning more, the middle class has lost 2 or 3 percent in real purchasing power. So why is the middle class living better lifestyles? Debt and technology.

Well then you should be happy that the banks are still lending you money.

Yet you liberals still complain.

 

[imagep]

Why do you feel you have a right to the capital gains of those you are trying to take it from?

I have as much right to the fruits of my physical and intelectual labor as the elite do, and I have as much right to keep the money that I earn as the rich do. Yet, I pay a higher marginal tax rate on the money that I personally earn than the money that the rich earn from passive title income (Capital Gains).

I believe that we shouldn't punish those of us who work and are personally productive more just to benefit to give a tax break to those who happen to have great wealth. Now that said, the profit from passive investments shouldn't be taxed at a rate higher than work, as there is certainly a economic benefit in the act of passive investment, I am only asking that the profits from passive investment be taxed at the same rate as the income recieved by people who personally produce (work).

Now do you feel that a rich person, who generates income soley from passive income has more rights to my meager wage than I do?

 

[PeteEU]

I suppose half a truth is better than none. Let me shine a little on your misunderstandings.

The economic melt down was due in large measure to the real estate bubble bursting. This was the result of lending practices mandated by the federal government to lend money to people who were unable to pay the loans back. This was referred to as "Sub Prime" lending. The borrowers, not the loans, were sub-prime.

Wrong, and an utter lie. Sub-Prime was NOT government mandated. Fannie and Freddie are, but they are not sub-prime per say since Fannie and Freddie do not lend money. They accept loans from banks under very strict conditions, condition's that sub-prime do not for-fill. In fact a huge proportion of the sub-prime lending was done by unregulated private banks and financial institutions. This is a GOP lie spread from day one to discredit Fannie and Freddie, a target of the GOP for decades.

Now you might claim that it is all Fannie and Freddie's fault and show default rates now and the amount of money needed to bail them out. And that would be correct, but a highly slanted view. When the crisis hit, default rates in Fannie and Freddie were pretty much normal, and it was the private sector that was defaulting like mad... Washington Mutal comes to mind. Now because Fannie and Freddie tailor to the lower middle class and middle class, then when the crisis hit, these were the first to loose their jobs... and that meant that they were the first to get into trouble with repayments. It is simple logic and does not change the fact that the sub-prime mortgage crisis stared with the private sector unregulated lending and had nothing what so ever to do with Fannie and Freddie.

OH and Fannie and Freddie has also been used to save banks, by allowing bad loans to be sold cheaply to Fannie and Freddie so to take them off the balance sheet of the banks.. Bank of American has done this several times.

Because the loans were doomed to to be defaulted, the banks "bundled" them and sold them in bundles. It was like a really big game of Hot Potato. These were the rotten eggs and apples that you refer to. When the various loans that comprised the various bundles started to default, the bundles became suspect and the actuaries determined that the value of the assets purchased was overstated and the value of the firms holding bundles evaporated.

Assets values were overstated because of ratings agencies giving crap assets triple A ratings on behest often of their masters.. the financial industry. The "bundles" were only allowed because of deregulation thanks to Reganeconomics. And this was not even the biggest problem in many ways.. the insurance taken out on these bundles were also traded and meant there was no risk to the "bundles" in the end...until of course the whole pyramid scheme fell apart.

It was all dependent on one thing.. that housing prices would always go up.

It was not Reaganomics or trickle down or any other politically motivated misdirect.

Deregulation is a core aspect of Reaganonmics. Deregulation like getting rid of the barriers between banks and investment banks. Or allowing CDS's or allowing a multitude of risky and often very very complicated financial instruments that no one understood.

It was the ill advised efforts of both political parties to create a secure voter base by buying votes.

On this we agree... right wing votes. After all small government and deregulation and lower taxes are a cornerstone of Reaganomics. Even today, the GOP is pushing for deregulation, blocking needed regulation and wanting lower taxes... especially on the rich.

Until about a month before the melt down, both Dodd in the Senate and Frank in the Congress were saying that everything was great. Bush asked for this practice to be stopped about 40 times through both of his terms, but did not do so with any passion or drive. The practice started under Clinton.

Again only a half truth. The "practices" that ultimately lead to this crisis, started actually under Carter and was amplified under Reagan, Bush 1 and then the last nail in the coffin was done under Clinton, thanks to a GOP proposal to get rid of Glass-Segal. And it is funny that you mention Dodd and Frank, two of the most hated by the GOP, and totally forget to mention that Bush and the GOP had 6 freaking years of absolute power to prevent the melt down, but DID NOTHING!

If you think that things were worse when Obama took office than when reagan took office, you probably were not an adult at that time. Reagan took office, comparatively, next year after the economy was down and out and the people had given up hope.

Again more bull****. Sorry but what Reagan took over was nothing compared to Obama. The downturn, the amount of jobs being lost every month and the credit crisis and debt load was much much bigger when Obama took over than when Reagan took over from Carter. What Reagan also took over was "given up hope".. not on the economical front, but in the cold war front. After the defeat in Vietnam, Watergate and the Iran hostages, the moral in the US was at an all time low, and Reagan "fixed" that. But on the economic front.. there is simply no comparison. Obama took over a 10+ trillion dollar debt load, Reagan had under 1 trillion.

We need another Reagan. I know obama is not one. I don't think Mitt is one. Mitt is like reagan without a sense of humor.

You might need a Reagan to get moral up, but you certainly do not need a Reagan on the economic front.. he was an utter disaster tripling the US debt in his term for example.

 

[johnny_rebson]

Anyone who bought a house, took out a second mortgage, sold a house, invested in any 401K, invested in any stock related to anything that helped to build a house, enjoyed the fired up economy or just lived in the USA was a part of the Real Estate Bubble Bursting.

There is absolutely no way to place a blame on any individual or any group without blaming every single person in the country.

Our lawmakers created the conditions for this to happen because they are idiots, but we keep electing them and they keep stealing from us.

Don't blame me, I never joined a union and forced a company to send my job overseas.

 

[imagep]

Well then you should be happy that the banks are still lending you money.

Yet you liberals still complain.

It's funny that you call me a liberal. I have been accused of being on the far right many times as I wish to abolish nearly all forms of welfare and government freebie programs.

I only noted that lending and debt are a measure of mis-distribution of wealth, and a mechanism for redistibuting it properly. I don't know how making the observation that we have misdistribution of resources makes me a liberal. Maybe not having the intelectual capability to recognize such makes others comparitive morons.

And yes, I do support having a banking system (although I find many banking regulations very disagreeable). Without it we would not have been able to utilize our collective wealth in as productive manner as we have.

 

[PeteEU]

The real estate bubble bursting was a chain reaction.

First the unions were strangling American businesses. Those corporations had no choice but to move those jobs overseas to China and other countries.

As a result, those who became unemployed or underemployed could no longer afford to pay their mortgage. As a result of that, we now have a surplus of single family housing. As a result of this surplus, the price of housing has fallen.

Unfortunately some Americans refuse to put the blame where it belongs, on the union workers.

Because they know it is not the union workers... it is the corporations and the wealthy elite who bay very little in taxes and exploit people when ever they can.

Do some Unions need to be broken, because they have become no better than the companies they were formed to fight? Sure, but it is nothing but an excuse to remove rights from people for form unions and get fair wages and working conditions. It is no excuse to move to the bottom to compete with slave laobur countries. In the mean time, the rich and corporations are using US dollars as toilet paper because they cant find room for them any more.

When a company like Apple has a global tax rate of 3.2% or GE getting money back despite having massive profits.. then you know there is a massive problem on the social front ... a Marie Antoinette moment in the making. It is time the right wake up and smell the rotting cake and do something for the people as a whole, and not just the 1%.

 

[imagep]

Don't blame me, I never joined a union and forced a company to send my job overseas.

Do you make less than people in China or India do? If you expect to be paid more than $70 a week, or if you like purchasing inexpensive products made overseas, regardless of if you joined a union or not, you have contributed to jobs being exported. I believe that we all hold some of that blaim.

 

[ttwtt78640]

Because they know it is not the union workers... it is the corporations and the wealthy elite who bay very little in taxes and exploit people when ever they can.

Do some Unions need to be broken, because they have become no better than the companies they were formed to fight? Sure, but it is nothing but an excuse to remove rights from people for form unions and get fair wages and working conditions. It is no excuse to move to the bottom to compete with slave laobur countries. In the mean time, the rich and corporations are using US dollars as toilet paper because they cant find room for them any more.

When a company like Apple has a global tax rate of 3.2% or GE getting money back despite having massive profits.. then you know there is a massive problem on the social front ... a Marie Antoinette moment in the making. It is time the right wake up and smell the rotting cake and do something for the people as a whole, and not just the 1%.

That is all well and good, on paper, yet you ignore the 15% that rely totally on gov't assistance to merely exist, much like driving with the parking brake on and compaining about that lousy gas mileage. Rasing the taxation on corporations or businesses does NOT mean lower profits for those entities, it means higher prices for the SAME goods and services that they produce, as they pass on these added overhead costs (of taxation), causing INFLATION. Inflation is the "hidden tax" that is the most destructive and regressive form of taxation possible. True that the top 1% make much more money, but also true that they pay the bulk of ALL taxes; while the bottom 15% pay no taxes AND use tax money simply to exist, producing nothing yet consuming plenty.

 

[imagep]

Generally, wages inflate at about the same rate that products do. So to the typical joe shmoe, like me, who doesn't have a lot of cash or cash-like investments, inflation is mearly an inconvienience, not a destructor of value.

Now to people who hord lots of cash, instead of actively investing it in business expansion, it is indeed a tax. So the moral of your story is that one with savings should invest in non-cash type investments (businesses, real estate, stocks), instead of stuffing it in their mattress.

 

[code1211]

I have as much right to the fruits of my physical and intelectual labor as the elite do, and I have as much right to keep the money that I earn as the rich do. Yet, I pay a higher marginal tax rate on the money that I personally earn than the money that the rich earn from passive title income (Capital Gains).

I believe that we shouldn't punish those of us who work and are personally productive more just to benefit to give a tax break to those who happen to have great wealth. Now that said, the profit from passive investments shouldn't be taxed at a rate higher than work, as there is certainly a economic benefit in the act of passive investment, I am only asking that the profits from passive investment be taxed at the same rate as the income recieved by people who personally produce (work).

Now do you feel that a rich person, who generates income soley from passive income has more rights to my meager wage than I do?

I don't think anyone has the right to any income that he did not earn. That includes the Gubmint.

 

[code1211]

Wrong, and an utter lie. Sub-Prime was NOT government mandated. Fannie and Freddie are, but they are not sub-prime per say since Fannie and Freddie do not lend money. They accept loans from banks under very strict conditions, condition's that sub-prime do not for-fill. In fact a huge proportion of the sub-prime lending was done by unregulated private banks and financial institutions. This is a GOP lie spread from day one to discredit Fannie and Freddie, a target of the GOP for decades.

Now you might claim that it is all Fannie and Freddie's fault and show default rates now and the amount of money needed to bail them out. And that would be correct, but a highly slanted view. When the crisis hit, default rates in Fannie and Freddie were pretty much normal, and it was the private sector that was defaulting like mad... Washington Mutal comes to mind. Now because Fannie and Freddie tailor to the lower middle class and middle class, then when the crisis hit, these were the first to loose their jobs... and that meant that they were the first to get into trouble with repayments. It is simple logic and does not change the fact that the sub-prime mortgage crisis stared with the private sector unregulated lending and had nothing what so ever to do with Fannie and Freddie.

OH and Fannie and Freddie has also been used to save banks, by allowing bad loans to be sold cheaply to Fannie and Freddie so to take them off the balance sheet of the banks.. Bank of American has done this several times.



Assets values were overstated because of ratings agencies giving crap assets triple A ratings on behest often of their masters.. the financial industry. The "bundles" were only allowed because of deregulation thanks to Reganeconomics. And this was not even the biggest problem in many ways.. the insurance taken out on these bundles were also traded and meant there was no risk to the "bundles" in the end...until of course the whole pyramid scheme fell apart.

It was all dependent on one thing.. that housing prices would always go up.



Deregulation is a core aspect of Reaganonmics. Deregulation like getting rid of the barriers between banks and investment banks. Or allowing CDS's or allowing a multitude of risky and often very very complicated financial instruments that no one understood.



On this we agree... right wing votes. After all small government and deregulation and lower taxes are a cornerstone of Reaganomics. Even today, the GOP is pushing for deregulation, blocking needed regulation and wanting lower taxes... especially on the rich.



Again only a half truth. The "practices" that ultimately lead to this crisis, started actually under Carter and was amplified under Reagan, Bush 1 and then the last nail in the coffin was done under Clinton, thanks to a GOP proposal to get rid of Glass-Segal. And it is funny that you mention Dodd and Frank, two of the most hated by the GOP, and totally forget to mention that Bush and the GOP had 6 freaking years of absolute power to prevent the melt down, but DID NOTHING!



Again more bull****. Sorry but what Reagan took over was nothing compared to Obama. The downturn, the amount of jobs being lost every month and the credit crisis and debt load was much much bigger when Obama took over than when Reagan took over from Carter. What Reagan also took over was "given up hope".. not on the economical front, but in the cold war front. After the defeat in Vietnam, Watergate and the Iran hostages, the moral in the US was at an all time low, and Reagan "fixed" that. But on the economic front.. there is simply no comparison. Obama took over a 10+ trillion dollar debt load, Reagan had under 1 trillion.



You might need a Reagan to get moral up, but you certainly do not need a Reagan on the economic front.. he was an utter disaster tripling the US debt in his term for example.

The USA was in the dumper when Reagan took office. The national mood was that the best of America was past and that Japan was to become the economic power. Obama has successfully moved us to that point again.

Under Reagan, an economic upsurge started and continued through the Clinton years and, for the most part, the Bush years. If obama had returned the economy to the level of the Bush years, there would be no need to have an election.

The downturn following the Real Estate Bubble should have been similar to the one that followed 9/11 except that the remedies were so badly bungled by the Dems. You didn't mention if you were an adult during the Carter Administration or not.

Right now, the population divides into two major groups: Those who remember how the Carter years felt and those who are finding out.

 

[code1211]

Don't blame me, I never joined a union and forced a company to send my job overseas.

Did you buy a house, sell a house, take out a loan or live in the USA?

 

[imagep]

I don't think anyone has the right to any income that he did not earn. That includes the Gubmint.

So people don't have a right to inheritance? Inheritance isn't earned income. Neither is income from passive investment, or the lottery.

Liberals like you don't know nothin bout economics.

 

[code1211]

Because they know it is not the union workers... it is the corporations and the wealthy elite who bay very little in taxes and exploit people when ever they can.

Do some Unions need to be broken, because they have become no better than the companies they were formed to fight? Sure, but it is nothing but an excuse to remove rights from people for form unions and get fair wages and working conditions. It is no excuse to move to the bottom to compete with slave laobur countries. In the mean time, the rich and corporations are using US dollars as toilet paper because they cant find room for them any more.

When a company like Apple has a global tax rate of 3.2% or GE getting money back despite having massive profits.. then you know there is a massive problem on the social front ... a Marie Antoinette moment in the making. It is time the right wake up and smell the rotting cake and do something for the people as a whole, and not just the 1%.

Answer that phone. It's reality calling.

The Dems took control of Congress in 2006 and the White House in 2008. They held all legislative power for four years and for two of those, the White House also.

Are you seriously blaming the Republicans for anything that the Democrats could have changed but ignored? Take off the blinders and see that the rotting fish may look like a Democrat or a Republican, but the label is just a distraction. They are all lying, cheating thieves who would sell their own mother into prostitution for cold, hard cash.

 

[code1211]

So people don't have a right to inheritance? Inheritance isn't earned income. Neither is income from passive investment, or the lottery.

Liberals like you don't know nothin bout economics.

Liberal? You've missed my point entirely.

Inheritance is not a confiscation of anything but a deliberate passing of that thing to the elected recipient. The person who receives does so as a he would receive any gift and the act of giving the gift creates the right for the receiver.

Are you being serious with that comment or just obtuse?

 

[phattonez]

Do you make less than people in China or India do? If you expect to be paid more than $70 a week, or if you like purchasing inexpensive products made overseas, regardless of if you joined a union or not, you have contributed to jobs being exported. I believe that we all hold some of that blaim.

Let more jobs be exported. I'm glad that we have low-cost labor for low-productivity production. That gives us more disposable income to increase our quality of life. Of course, minimum wage is destroying the opportunity for young people to earn wages and get a huge return if they invest that, and we wouldn't have to pay for transportation. But still, the point is, outsourcing is not the evil it is made out to be. Free trade and further division of labor is a boon to production.