The problem with conservativism in 2013.

[Direckshun]

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The problem with this message, and conservativism in general right now, is that it seems outdated for 2013.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 In other words, the absolute core conservative response to the biggest issue affecting working Americans in 2013 is no longer applicable.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.

[patteeu]

Originally Posted by Loneiguana

Here is something else for you to ignore.

http://articles.latimes. com/1992-08-12/news/mn-5406_1_child-poverty

"Child Poverty Grew in 1980s, Study Finds : Families: Over one-fourth of children living in major cities were classified as poor in 1989, group reports. Santa Ana leads Orange County with a 22% rate." Aug 12, 1992

WASHINGTON — The pervasiveness of poverty among American children grew during the past decade (1980's), resulting in inadequate medical attention and schooling for the nation's underprivileged youth, a child advocacy group said Tuesday.

...

The study, which is based on Census Bureau figures, examines the percentage of children living in households with income below the government's official poverty line. At the time of the study, the threshold was $13,000 for a family of four. Recent Census figures show that 31 million Americans, or 12% of the overall population, live below the poverty line.

The Washington-based advocacy group found that 26% of the children it studied were living in poverty in 1989. The study also shows that childhood poverty is not concentrated within the nation's biggest urban areas, but extends into many smaller cities and suburbs as well.

...

Jim Weill, who helped prepare the CDF report, said that while the nation as a whole grew wealthier during the 1980s, the disparity between rich and poor grew.

So now you want to include the end of the Carter era and the beginning of the GHWBush when the S&L crisis hit. Give it up already. You can't fight the data.

[BucEyedPea]

Originally Posted by Loneiguana

That analogy doesn't even make sense. The rich don't get the same hamburger or the same service, nor does the hamburger help the rich make more money (which infrastructure does).

So

[Prison Bitch]

The Left has to clearly line out what they want economically. Just tell us - specifically - what you want to do about income inequality. Show us your plan, because I see a lot of complaints but never anything specific outside "repeal the Bush tax cuts!" What should the rates be, how should corporations be taxed, what (if any) should be the ceiling for FICA, what is the level for the death tax?


Ben & Jerry's does (or did) a specific plan where they limited the ratio of pay from top to bottom at no more than 7x pay. Something like that. I'd like to see a specific plan.

[listopencil]

Originally Posted by KC native

Um, not even close. Examining who benefits more is not equivalent to a plank of the communist party. As has been mentioned several times around here, Adam Smith the father of modern capitalist theory advocated a progressive tax schedule. Expecting those who can afford to pay more to pay more is no where close to socialism/communism.

Aside from that, where do you get that I'm valuing the benefits solely on the basis of material wealth being protected? What about material wealth being generated (of which, most of it accrues to the wealthy)? What about the factors that society provides so the wealthy can continue to generate and protect material wealth?

No, I was specifically referring to this comment of yours:

Originally Posted by KC native

....of course they pay more, that have tremendously more.

Aside from that, why do you have a problem with the people who generate the wealth keeping more of it than the people who don't? And I've addressed how the wealthy do pay more into the system even when you don't consider income tax.

[KC native]

Originally Posted by listopencil

No, I was specifically referring to this comment of yours:



Aside from that, why do you have a problem with the people who generate the wealth keeping more of it than the people who don't? And I've addressed how the wealthy do pay more into the system even when you don't consider income tax.

Our tax system has historically been based on two things, fairness and ability to pay.

If we are going to raise sufficient revenue to fund the things that we as a society have deemed worth funding, we aren't going to get it by raising taxes on the lower rungs of wage earners. You can't squeeze blood from a turnip.

The wealthy get a tremendous deal in the USA these days. They have never seen lower tax rates (modern financial era, so after the creation of the Fed, no idea of before then). They have access to the best financial markets in the world. They have protections for their wealth.

The wealthy have an ability to pay more. Considering the tremendous benefits our society provides them and considering the magnitude of those benefits, it's also fair to expect them to pay more.

If we didn't have a debt load and deficits or the already promised benefits, then the rates as they are would be fine. Unfortunately, a little thing called reality gets in the way.

[mlyonsd]

Originally Posted by KC native

Our tax system has historically been based on two things, fairness and ability to pay.

If we are going to raise sufficient revenue to fund the things that we as a society have deemed worth funding, we aren't going to get it by raising taxes on the lower rungs of wage earners. You can't squeeze blood from a turnip.

The wealthy get a tremendous deal in the USA these days. They have never seen lower tax rates (modern financial era, so after the creation of the Fed, no idea of before then). They have access to the best financial markets in the world. They have protections for their wealth.

The wealthy have an ability to pay more. Considering the tremendous benefits our society provides them and considering the magnitude of those benefits, it's also fair to expect them to pay more.

If we didn't have a debt load and deficits or the already promised benefits, then the rates as they are would be fine. Unfortunately, a little thing called reality gets in the way.

The rich do pay more. Way more. But you could take all their money and it wouldn't fix our financial problems.

Unfortunately a little thing called reality gets in the way and we are not only going to have to cut spending and address entitlement reform, the rest of us are going to have to start paying more of our fair share.

[patteeu]

Originally Posted by KC native

Our tax system has historically been based on two things, fairness and ability to pay.

If we are going to raise sufficient revenue to fund the things that we as a society have deemed worth funding, we aren't going to get it by raising taxes on the lower rungs of wage earners. You can't squeeze blood from a turnip.

How do you define lower rungs? The bottom 99% has a lot more blood to give than the top 1%. Raising tax rates on the first dollar of income would generate a lot more revenue than raising the rate on the 100,000th dollar or the 1,000,000th dollar.

Originally Posted by KC native

The wealthy get a tremendous deal in the USA these days. They have never seen lower tax rates (modern financial era, so after the creation of the Fed, no idea of before then). They have access to the best financial markets in the world. They have protections for their wealth.

The wealthy have an ability to pay more. Considering the tremendous benefits our society provides them and considering the magnitude of those benefits, it's also fair to expect them to pay more.

If we didn't have a debt load and deficits or the already promised benefits, then the rates as they are would be fine. Unfortunately, a little thing called reality gets in the way.

The working class gets a tremendous deal in the USA these days. I wonder how many of them would want to emigrate to Mexico or any other third world country.

[KC native]

Originally Posted by mlyonsd

The rich do pay more. Way more. But you could take all their money and it wouldn't fix our financial problems.

Unfortunately a little thing called reality gets in the way and we are not only going to have to cut spending and address entitlement reform, the rest of us are going to have to start paying more of our fair share.

I realize that you are borderline retarded but when you are comparing things of different sizes, like income, you have to rely on percentages for apple to apple comparisons. The wealthy's effective tax rate (what they actually pay as a % of their income) is historically low.

Aside from that, lifting the cap on wages subject to FICA taxes fixes social security. I agree that some spending must be cut and that defense spending should be the first to be reviewed for cuts.

[KC native]

Originally Posted by patteeu

How do you define lower rungs? The bottom 99% has a lot more blood to give than the top 1%. Raising tax rates on the first dollar of income would generate a lot more revenue than raising the rate on the 100,000th dollar or the 1,000,000th dollar.



The working class gets a tremendous deal in the USA these days. I wonder how many of them would want to emigrate to Mexico or any other third world country.

That is completely false. The top 1% receives somewhere in the neighborhood of 20% of all income. If we look at the top 10%, then that numbers grows to 45%. Increasing the rates on those people would generate more revenue that squeezing lower income tax payers.

This is basic math patty. Color me not surprised that your gop talking points interfere with that.

[patteeu]

Originally Posted by KC native

That is completely false. The top 1% receives somewhere in the neighborhood of 20% of all income. If we look at the top 10%, then that numbers grows to 45%. Increasing the rates on those people would generate more revenue that squeezing lower income tax payers.

This is basic math patty. Color me not surprised that your gop talking points interfere with that.

Basic math:

1. 80% > 20% (and 55% > 45%)

2. Raising the rate on the first dollar hits 100% of wage earning families. Raising the rate on the 100,000th dollar hits less than 20% of wage earning families. 100% > 20%.

Yes, you're right about one thing. It's basic math. Learn it.

[mlyonsd]

Originally Posted by KC native

I realize that you are borderline retarded but when you are comparing things of different sizes, like income, you have to rely on percentages for apple to apple comparisons. The wealthy's effective tax rate (what they actually pay as a % of their income) is historically low.

Way to totally avoid my point. Your answer should have been, yes, the wealthy pay more, much more in taxes, even if it is less than what they historically have.

Aside from that, lifting the cap on wages subject to FICA taxes fixes social security. I agree that some spending must be cut and that defense spending should be the first to be reviewed for cuts.

I agree with the idea of lifting the FICA cap and spending cuts. I don't agree lifting the FICA cap fixes SS or Medicare.

[KC native]

Originally Posted by patteeu

Basic math:

1. 80% > 20% (and 55% > 45%)

2. Raising the rate on the first dollar hits 100% of wage earning families. Raising the rate on the 100,000th dollar hits less than 20% of wage earning families. 100% > 20%.

Yes, you're right about one thing. It's basic math. Learn it.

Only if you ignore the magnitude of the incomes. What is a bigger number patty, 1% of 30k, or 1% of 150k?

[KC native]

Originally Posted by mlyonsd

Way to totally avoid my point. Your answer should have been, yes, the wealthy pay more, much more in taxes, even if it is less than what they historically have.


I agree with the idea of lifting the FICA cap and spending cuts. I don't agree lifting the FICA cap fixes SS or Medicare.

Of course the wealthy pay more, they earn a tremendous amount more. Why the **** are ratios and %'s so hard for you guys to understand. If we are comparing things of a different size then we need a way to account for the difference. %'s are the easiest way to do this.

Medicare is a different animal. We need a dramatic healthcare change, single payor style similar to France would be best.

Lifting the cap absolutely makes Social Security solvent. There are several reports/studies that show this.

[patteeu]

Originally Posted by KC native

Only if you ignore the magnitude of the incomes. What is a bigger number patty, 1% of 30k, or 1% of 150k?

No, not "only if" anything. What you called completely false turned out to be completely true.