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Old 02-18-2013, 05:56 PM  
Direckshun Direckshun is offline
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The problem with conservativism in 2013.

The key problem that I believe conservativism has to face in 2013 and the near future is that it doesn't have an answer to what has become the most critical problem for the 21st century economy: inequality.

There has been a historical tendency over the past 15 years and three Presidents to concentrate more and more wealth with the wealthy, and less and less wealth with everybody else. Inequality is at all time highs on that front, and it gives the middle and lower classes less spending money, slogs down the economy, and ultimately splits the economic pie even greater into the hands of the few.

Liberalism has a whole host of solutions, bordering from the more free market tendencies of the Democratic Party and the mainstream liberal movement, to the more socialist suggestions frequently made by the party's left wing. Some of them can be argued as legitimately good ideas (raising the minimum wage, capping the multi-billion dollar tax breaks for huge corporations, any number of investments in college education), some of them are obviously more on the fringe.

Conservativism's answer seems to be singular and ineffective: get "government out of the way," undo the massive structure of government regulation, and the economy will grow. And like a rising tide that lifts all boats (think "trickle down" economics), as the economy grows, so too will the fortunes of the lower and middle classes. Honestly, if conservativism has more of a message than this right now with regards to inequality, I've missed it.

The problem with this message, and conservativism in general right now, is that it seems outdated for 2013. As the economy has grown at times throughout the past fifteen years, the middle class and working poor have seen less and a less of a return on that progress, and the upper class has soared. In other words, the absolute core conservative response to the biggest issue affecting working Americans in 2013 is no longer applicable. It had some bearing, perhaps, in previous decades, but we now reside in an era where this dynamic no longer holds water.

Economists are reportedly attempting to figure out why that is the case. A decrease in education quality seems, to me, to be the most convincing cause, although obviously this is something that deserves a holistic analysis.

But either way, I don't really see convincing analysis that growth is enough anymore. It seems that a reduction in inequality seems now to be just as important.

http://www.washingtonpost.com/busine...06b_print.html

Growth isn’t enough to help the middle class
By Jim Tankersley
Published: February 13

Two kinds of middle-class Americans are struggling today — people who can’t find any work or enough work, and full-timers who can’t seem to get ahead.

Democrats and Republicans prescribe economic growth to help both groups. There was a time that would have been enough. But not today.

In the past three recoveries from recession, U.S. growth has not produced anywhere close to the job and income gains that previous generations of workers enjoyed. The wealthy have continued to do well. But a percentage point of increased growth today simply delivers fewer jobs across the economy and less money in the pockets of middle-class families than an identical point of growth produced in the 40 years after World War II.

That has been painfully apparent in the current recovery. Even as the Obama administration touts the return of economic growth, millions of Americans are not seeing an accompanying revival of better, higher-paying jobs.

The consequences of this breakdown are only now dawning on many economists and have not gained widespread attention among policymakers in Washington. Many lawmakers have yet to even acknowledge the problem. But repairing this link is arguably the most critical policy challenge for anyone who wants to lift the middle class.

Economists are not clear how the economy got to the point where growth drives far less job creation and broadly shared prosperity than it used to. Some theorize that a major factor was globalization, which enabled companies to lay off highly paid workers in the United States during recessions and replace them with lower-paid ones overseas during recoveries.

There is even less agreement on policy prescriptions. Some liberal economists argue that the government should take more-aggressive steps to redistribute wealth. Many economists believe more education will improve the skills of American workers, helping them obtain higher-paying jobs. And still others say the government should seek to reduce the cost of businesses to create new jobs.

The problem is relatively new. From 1948 through 1982, recessions and recoveries followed a tight pattern. Growth plunged in the downturn, then spiked quickly, often thanks to aggressive interest rate cuts by the Federal Reserve. When growth returned, so did job creation, and workers generally shared in the spoils of new economic output.

You can see those patterns in comparisons of job creation and growth rates across post-World War II recoveries. Starting in 1949 and continuing for more than 30 years, once the economy started to grow after a recession, major job creation usually followed within about a year.

At the height of those recoveries, every percentage point of economic growth typically spurred about six-tenths of a percentage point of job growth, when compared with the start of the recovery. You could call that number the “job intensity” of growth.

The pattern began to break down in the 1992 recovery, which began under President George H.W. Bush. It took about three years — instead of one — for job creation to ramp up, even when the economy was growing. Even then, the “job intensity” of that recovery barely topped 0.4 percent, or about two-thirds the normal rate.

The next two recoveries were even worse. Three and a half years into the recovery that began in 2001 under President George W. Bush, job intensity was stuck at less than 0.2 percent. The recovery under President Obama is now up to an intensity of 0.3 percent, or about half the historical average.

Middle-class income growth looks even worse for those recoveries. From 1992 to 1994, and again from 2002 to 2004, real median household incomes fell — even though the economy grew more than 6 percent, after adjustments for inflation, in both cases. From 2009 to 2011 the economy grew more than 4 percent, but real median incomes grew by 0.5 percent.

In contrast, from 1982 to 1984, the economy grew by nearly 11 percent and real median incomes grew by 5 percent.

Today, nearly four years after the Great Recession, 12 million Americans are actively looking for work but can’t find a job; 11 million others are stuck working part time when they would like to be full time, or they would like to work but are too discouraged to job-hunt. Meanwhile, workers’ median wages were lower at the end of 2012, after adjustments for inflation, than they were at the end of 2003. Real household income was lower in 2011 than it was in 1989.

Obama alluded to the breakdown between growth and middle-class wages and jobs in his State of the Union address. “Every day,” he said, “we should ask ourselves three questions as a nation: How do we attract more jobs to our shores? How do we equip our people with the skills needed to do those jobs? And how do we make sure that hard work leads to a decent living?”

But outside of some targeted help for manufacturing jobs and some new investments in skills training, the proposals Obama offered focused comparatively little on repairing the relationship between growth and jobs, or growth and income. Obama’s boldest plans included increasing the minimum wage and guaranteeing every child a preschool education. Both aim largely at boosting poorer Americans and helping their children gain a better shot at landing the higher-paying jobs.

The Republican response to Obama’s speech did not appear to nod to the new reality at all. Sen. Marco Rubio (Fla.) said that “economic growth is the best way to help the middle class” and offered few job-creation proposals that appeared materially different from what Republican politicians have pushed since the 1980s.

Economists are still trying to sort out what broke the historical links between growth and jobs/incomes.

Economists are still trying to sort out what broke the historical links between growth and jobs/incomes.

Federal Reserve Bank of New York economists Erica Groshen and Simon Potter concluded in a 2003 paper that the recoveries from the 1990 and 2001 recessions were largely “jobless” because employers had fundamentally changed how they responded to recessions. In the past, firms laid off workers during downturns but called them back when the economy picked up again. Now, they are using recessions as a trigger to lay off less-productive workers, never to hire them back.

Economists at the liberal Economic Policy Institute trace the problem to a series of policy choices that, they say, have eroded workers’ ability to secure rising incomes. Those choices include industry deregulation and the opening of global markets on unfavorable terms for U.S. workers.

In the latest edition of their book “The State of Working America,” EPI economists argue that an “increasingly well-paid financial sector and policies regarding executive compensation fueled wage growth at the top and the rise of the top 1 percent’s incomes” at the expense of average workers.

Robert Shapiro, an economist who advised Bill Clinton on the campaign trail and in the White House, traces the change to increased global competition.

“It makes it hard for firms to pass along their cost increases — for health care, energy and so on — in higher prices,” he said. “So instead they cut other costs, starting with jobs and wages.”

Shapiro said the best way to restart job creation is to help businesses cut the costs of hiring, including by reducing the employer side of the payroll tax and pushing more aggressive efforts to hold down health-care cost increases.

Obama seems to have embraced an approach pushed by Harvard University economists Claudia Goldin and Lawrence Katz: helping more Americans graduate from college and go on to high-skilled, higher-paying jobs. It’s a longer-term bet. But as senior administration officials like to say, the problem didn’t start overnight, and it’s not likely to be solved overnight, either.

Last edited by Direckshun; 02-18-2013 at 06:09 PM..
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Old 02-21-2013, 09:27 AM   #76
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I have two questions for you:
1) Why would high levels of wealthy inequality be good?
2) If the top percent have increased their share of the economic pie, why haven't we seen any sort of trickle down?
Sorry, I forgot to address your questions.

1. I don't care about income inequality. I haven't seen any reason to believe it's good or bad other than the fact that most of the people complaining about it are generally wrong on economic and tax issues.

2. Over what period of time?
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Old 02-21-2013, 09:37 AM   #77
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Originally Posted by Direckshun View Post
The problem with growing income inequality is that for each middle classer ascending into the upper class, many more are descending into the lower class.
I don't see any good evidence of that and I sure don't see any reason to believe there's a causal relationship between the two.



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Old 02-21-2013, 09:54 AM   #78
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Originally Posted by patteeu View Post
I don't see any good evidence of that and I sure don't see any reason to believe there's a causal relationship between the two.
The middle class is shrinking. Do you honestly believe it's because people are flooding into the upper class?

Hint: it's not.
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Old 02-21-2013, 10:26 AM   #79
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Originally Posted by Direckshun View Post
The middle class is shrinking. Do you honestly believe it's because people are flooding into the upper class?

Hint: it's not.
What that data shows is that the upper income levels are more immune to the economic disruptions caused by government disturbances in the economy. In a real recovery, those people would be bouncing back. In Obama's recovery, not so much.
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Old 02-21-2013, 11:02 AM   #80
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Why is inequality bad?
Because it retards economic growth. Extreme levels of income inequality are bad for an overall economy.

The middle class has been the fuel of the American growth machine. Choking those people out hurts everyone.
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Old 02-21-2013, 11:07 AM   #81
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Originally Posted by patteeu View Post
Sorry, I forgot to address your questions.

1. I don't care about income inequality. I haven't seen any reason to believe it's good or bad other than the fact that most of the people complaining about it are generally wrong on economic and tax issues.

2. Over what period of time?
Re: #2. Let's just use the criteria Obama fans use when they say "jobs saved = jobs created." It could be worse, therefore it trickled down successfully.
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Old 02-21-2013, 11:16 AM   #82
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Because it retards economic growth. Extreme levels of income inequality are bad for an overall economy.

The middle class has been the fuel of the American growth machine. Choking those people out hurts everyone.
Why is that? How does it choke people out? You guys keep saying "it's bad" but you don't have an explanation for why it's bad.
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Old 02-21-2013, 11:17 AM   #83
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Re: #2. Let's just use the criteria Obama fans use when they say "jobs saved = jobs created." It could be worse, therefore it trickled down successfully.
Income inequality has saved or created 180 million middle class lifestyles.
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Old 02-21-2013, 11:18 AM   #84
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Why is that? How does it choke people out? You guys keep saying "it's bad" but you don't have an explanation for why it's bad.
It's good for Democrats, because it's not a curable problem. No matter what the level of inequality it will never have to be deemed acceptable, therefore it's essentially an eternal talking point.
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Old 02-21-2013, 11:21 AM   #85
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Why is that? How does it choke people out? You guys keep saying "it's bad" but you don't have an explanation for why it's bad.
On my phone so do your own homework, but it is a widely accepted principle in economic circles and several papers have been written on the subject.

IIRC The IMF has the most well known work on this.
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Old 02-21-2013, 11:22 AM   #86
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It's good for Democrats, because it's not a curable problem. No matter what the level of inequality it will never have to be deemed acceptable, therefore it's essentially an eternal talking point.
Strawman much?
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Old 02-21-2013, 11:28 AM   #87
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Sorry, I forgot to address your questions.

1. I don't care about income inequality. I haven't seen any reason to believe it's good or bad other than the fact that most of the people complaining about it are generally wrong on economic and tax issues.

2. Over what period of time?
1. Your ignorance of the subject matter doesn't alter the fact that there is evidence that extreme levels of income inequality is bad for an economy.

2. For shits and giggles (also to show you tthat you're wrong) since 1980.
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Old 02-21-2013, 11:30 AM   #88
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How does it do any of that?

For example, the top target of people who seem to think income inequality is bad is our tax code. Specifically, those people claim that our tax code isn't progressive enough and that the rates on investment income (cap gains and dividends) are too low. You're telling me that the problem with inequality is a lack of upward mobility. Increasing progressivity and increasing rates on investment income both hinder upward mobility.

So again, what's the problem with income inequality?

And since upward mobility is important to you, do you agree that we should flatten the tax code further and reduce taxes on investment income instead of increase it?
I disagree with your economic theory. I will expand on this later.

First, I don't feel you answered my questions.

Let's assume we both agree that the U.S. suffers from third world level income inequality (remember I said assume). How, in your opinion, does that strengthen the American Economy. What positive benefit do you believe it gives our country?

On to your economic theory and the question you asked me in another post. What time frame? Let's go with from 2000 to present. you can start at 1990 or 80 if you want as well.

Show me where, during this time frame, lowering the tax code of top earnings resulted in a trickle down effect in --1)a growth in middle class, 2) growth in median wages, 3)growth in employment.


On to your economic theory. I believe in a progressive tax system because I believe it is the most fair form of payment for the services provided by society that increase wealth.
For example: A restaurant cannot make any money if there is not a basic road to connect it to customers,if it doesn't have basic utilities, a educated workforce, reasonable certainty of security, etc. All these things have in common is they are supported by our government and society, for the benefit of economic prosperity. We all benefit. I challenge you try to become a multi-millionaire in a country lacking basic infrastructure or a country without a strong police force.

Now, some benefit more. Since the American society played a role(one aspect of many) in someone becoming successful, I believe their taxes should be proportional to that. The rich just have more to lose if American Society goes down. Remember, that all income is taxed the same up to certain levels. My twenty thousand a year is taxed just the same as Trumps first twenty thousand. Hence progressive.

I also believe that a higher top tax rate promotes reinvestment into companies and businesses, as seen in the 1960's.

I also am aware that the Chicago School of Economics (which is generally your theories) have failed in the past. I would encourage you to look at Chile between 1973 and 1989.

Source: http:// www.huppi. com/kangaroo/L-chichile.htm
"Chile: The laboratory Test"

"Many people have often wondered what it would be like to create a nation based solely on their political and economic beliefs. Imagine: no opposition, no political rivals, no compromise of morals. Only a "benevolent dictator," if you will, setting up society according to your ideals.

The Chicago School of Economics got that chance for 16 years in Chile, under near-laboratory conditions. Between 1973 and 1989, a government team of economists trained at the University of Chicago dismantled or decentralized the Chilean state as far as was humanly possible. Their program included privatizing welfare and social programs, deregulating the market, liberalizing trade, rolling back trade unions, and rewriting its constitution and laws. And they did all this in the absence of the far-right's most hated institution: democracy.

The results were exactly what liberals predicted. Chile's economy became more unstable than any other in Latin America, alternately experiencing deep plunges and soaring growth. Once all this erratic behavior was averaged out, however, Chile's growth during this 16-year period was one of the slowest of any Latin American country. Worse, income inequality grew severe. The majority of workers actually earned less in 1989 than in 1973 (after adjusting for inflation), while the incomes of the rich skyrocketed. In the absence of market regulations, Chile also became one of the most polluted countries in Latin America. And Chile's lack of democracy was only possible by suppressing political opposition and labor unions under a reign of terror and widespread human rights abuses.

Conservatives have developed an apologist literature defending Chile as a huge success story. In 1982, Milton Friedman enthusiastically praised General Pinochet (the Chilean dictator) because he "has supported a fully free-market economy as a matter of principle. Chile is an economic miracle." (1) However, the statistics below show this to be untrue. Chile is a tragic failure of right-wing economics, and its people are still paying the price for it today. "

/the article continues, citing all statistics.
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Old 02-21-2013, 11:33 AM   #89
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Originally Posted by Loneiguana View Post
I disagree with your economic theory. I will expand on this later.

First, I don't feel you answered my questions.

Let's assume we both agree that the U.S. suffers from third world level income inequality (remember I said assume). How, in your opinion, does that strengthen the American Economy. What positive benefit do you believe it gives our country?

On to your economic theory and the question you asked me in another post. What time frame? Let's go with from 2000 to present. you can start at 1990 or 80 if you want as well.

Show me where, during this time frame, lowering the tax code of top earnings resulted in a trickle down effect in --1)a growth in middle class, 2) growth in median wages, 3)growth in employment.


On to your economic theory. I believe in a progressive tax system because I believe it is the most fair form of payment for the services provided by society that increase wealth.
For example: A restaurant cannot make any money if there is not a basic road to connect it to customers,if it doesn't have basic utilities, a educated workforce, reasonable certainty of security, etc. All these things have in common is they are supported by our government and society, for the benefit of economic prosperity. We all benefit. I challenge you try to become a multi-millionaire in a country lacking basic infrastructure or a country without a strong police force.

Now, some benefit more. Since the American society played a role(one aspect of many) in someone becoming successful, I believe their taxes should be proportional to that. The rich just have more to lose if American Society goes down. Remember, that all income is taxed the same up to certain levels. My twenty thousand a year is taxed just the same as Trumps first twenty thousand. Hence progressive.

I also believe that a higher top tax rate promotes reinvestment into companies and businesses, as seen in the 1960's.

I also am aware that the Chicago School of Economics (which is generally your theories) have failed in the past. I would encourage you to look at Chile between 1973 and 1989.

Source: http:// www.huppi. com/kangaroo/L-chichile.htm
"Chile: The laboratory Test"

"Many people have often wondered what it would be like to create a nation based solely on their political and economic beliefs. Imagine: no opposition, no political rivals, no compromise of morals. Only a "benevolent dictator," if you will, setting up society according to your ideals.

The Chicago School of Economics got that chance for 16 years in Chile, under near-laboratory conditions. Between 1973 and 1989, a government team of economists trained at the University of Chicago dismantled or decentralized the Chilean state as far as was humanly possible. Their program included privatizing welfare and social programs, deregulating the market, liberalizing trade, rolling back trade unions, and rewriting its constitution and laws. And they did all this in the absence of the far-right's most hated institution: democracy.

The results were exactly what liberals predicted. Chile's economy became more unstable than any other in Latin America, alternately experiencing deep plunges and soaring growth. Once all this erratic behavior was averaged out, however, Chile's growth during this 16-year period was one of the slowest of any Latin American country. Worse, income inequality grew severe. The majority of workers actually earned less in 1989 than in 1973 (after adjusting for inflation), while the incomes of the rich skyrocketed. In the absence of market regulations, Chile also became one of the most polluted countries in Latin America. And Chile's lack of democracy was only possible by suppressing political opposition and labor unions under a reign of terror and widespread human rights abuses.

Conservatives have developed an apologist literature defending Chile as a huge success story. In 1982, Milton Friedman enthusiastically praised General Pinochet (the Chilean dictator) because he "has supported a fully free-market economy as a matter of principle. Chile is an economic miracle." (1) However, the statistics below show this to be untrue. Chile is a tragic failure of right-wing economics, and its people are still paying the price for it today. "

/the article continues, citing all statistics.
Patty is the most willfulky ignorant poster here. He knows supply side conomics doesn't work. He's just married to gop talking points.
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Old 02-21-2013, 11:36 AM   #90
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“The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess …. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.

-Adam Smith in "The Wealth of Nations," 1776, Considered the father of economics and one of the first advocates of capitalism
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