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(Stratfor Global Intelligence)   The most balanced, insightful article on the declining middle class and U.S. power. So, what's it doing on Fark?   (stratfor.com) divider line 52
    More: Interesting, United States, Americans, upward mobility, real income, real estate taxes, median household income, middle class, global energy  
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3083 clicks; posted to Politics » on 09 Jan 2013 at 2:30 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-01-09 09:32:50 AM
Stratfor is still hurting from getting hacked and is running a pledge drive?

/Although I do agree with their core point that the Middle class is a key part of America's prosperity and that the modern corporation is slowing eroding the middle class.
 
ZAZ [TotalFark]
2013-01-09 11:04:35 AM
In the 1950s and 1960s, the median income allowed you to live with a single earner... one late model car and an older one... Someone earning the median income today might just pull this off, but it wouldn't be easy. Assuming that he did not have college loans to pay off but did have two car loans to pay totaling $700 a month

Here we see car inflation. The 1950s housewife might not have a car of her own, not even an older one. My grandmother never even had a license. Sometimes my mother would drive her father to work if she wanted to use the car during the day. They were not poor. They didn't have the modern "one car per person, plus a spare" culture.

If you're making two car payments, justify it with two wage earners.

The restructuring of inefficient companies did create substantial value, but that value did not flow to the now laid-off workers.

This section reminded me over the endless fights between rich athletes and rich team owners over how to split the revenue.  I tend to decide they're both wrong, and pay little attention to sports these days.
 
2013-01-09 11:27:39 AM
The restructuring of inefficient companies did create substantial value, but that value did not flow to the now laid-off workers. Some might flow to the remaining workers, but much of it went to the engineers who restructured the companies and the investors they represented.

I don't understand how anyone feels this is wrong.  If a person is gainfully employed by a company, there is a fair exchange of money for services.  If the company no longer requires those services, it would be unnatural for the company to continue employing the provider.  Similarly, if someone writes a program or re-designs a machine that can replace the need for 100 workers, s/he has a reasonable expectation to share in the company's financial gain.
 
2013-01-09 11:40:32 AM

Lucky LaRue: I don't understand how anyone feels this is wrong.


I don't know if wrong is the word I would use. That's just what happened. What's wrong is this:

Statistics reveal that, since 1947 (when the data was first compiled), corporate profits as a percentage of gross domestic product are now at their highest level, while wages as a percentage of GDP are now at their lowest level

Or, in graph form:

newshour.s3.amazonaws.com
Link

This is an unsustainable trend in an economy that is 60-70% reliant on consumer spending. Until Washington starts to value people over corporations and wages over assets it will be extremely difficult to change this.
 
2013-01-09 11:46:34 AM

Dusk-You-n-Me: This is an unsustainable trend in an economy that is 60-70% reliant on consumer spending. Until Washington starts to value people over corporations and wages over assets it will be extremely difficult to change this.


Or until there aren't enough consumers spending enough.
 
2013-01-09 11:59:37 AM

Lucky LaRue: I don't understand how anyone feels this is wrong.


In so far as it increasingly leaves ex-employees with no better use for the time on their hands than preparing violent overthrow of the existing social order, it tends to be detrimental. But until such externalized social cost is re-internalized by actualization, it's only a potential problem for the company, and current US accounting rules don't appear to require including this in corporate forecasts.
 
2013-01-09 12:08:50 PM
I'm enjoying this thread is in the clank-clank stages of the roller coaster, right before it turns into a downhill slide with us all screaming at the top of our lungs.  The article may be "balanced," but impartiality doesn't last long in discussion.

The points, as far as I can tell, are solid (and yes, someone more economically educated than I with a particular bias will slap me with some insulting label).  It doesn't instill confidence that the key successes listed within the article are all examples of how our government has Mister-Magooed its way into prosperity through no fault of its own.

I'd hate to be around when our luck runs out, but maybe it already has.
 
ZAZ [TotalFark]
2013-01-09 12:20:40 PM
Lucky LaRue

If the owner of a company thinks robots sweep floors better than humans, then fire the janitor. The more likely scenario is the new owner of the company also owns a robot maker. He fires the janitors, locks the company into a long term robot purchase and maintenance agreement, then dumps the restructured company at a huge short term profit thanks to leverage and the lure of lower payroll costs. In the long term the company takes a loss. That's not the investor's problem.

See also Friendly's, which went bankrupt when investors took the money out of the company and left its liabilities.

The problem as I see it is more and more of the biggest companies in America don't do anything. They move money around. Enron is the classic example. The stock market is buried under layers of parasites and its incentives bear little relation to actual production.
 
2013-01-09 12:24:57 PM

Dusk-You-n-Me: Lucky LaRue: I don't understand how anyone feels this is wrong.

I don't know if wrong is the word I would use. That's just what happened. What's wrong is this:

Statistics reveal that, since 1947 (when the data was first compiled), corporate profits as a percentage of gross domestic product are now at their highest level, while wages as a percentage of GDP are now at their lowest level

Or, in graph form:

[newshour.s3.amazonaws.com image 480x326]
Link

This is an unsustainable trend in an economy that is 60-70% reliant on consumer spending. Until Washington starts to value people over corporations and wages over assets it will be extremely difficult to change this.


I don't doubt your statistics, or your conclusion of unsustainability for that matter.  I don't see the need for government involvement, though.  The market, left to its own devices, is perfectly capable of balancing itself.  Simplistically, if companies are making so much profit that consumers no longer have the income necessary to continue spending, then the company will either choose to fail or it will choose to survive with less profits.  There is an equilibrium out there, though that does not involve economic collapse.  The graph is always going to skew to the producer, though, and I think that is the real sticking point for most Americans:  They just don't feel like that is fair.
 
2013-01-09 12:27:09 PM

abb3w: In so far as it increasingly leaves ex-employees with no better use for the time on their hands than preparing violent overthrow of the existing social order,


We are a long way from that scenario.  If we are going to start planning for social revolution in the United States, we may as well build plans for an alien invasion.  Both seem equally likely.
 
2013-01-09 12:33:12 PM

Lucky LaRue: I don't see the need for government involvement, though.


When you spend 30+ years destroying the private sector's mechanism (unions!) for balancing that share of output there is then no one left but the government to attempt to do so through tax policy. Surprise!

Lucky LaRue: The market, left to its own devices, is perfectly capable of balancing itself.


Keep waiting, middle class. The trickle down will start any day now.
 
2013-01-09 12:44:09 PM

Dusk-You-n-Me: When you spend 30+ years destroying the private sector's mechanism (unions!) for balancing that share of output there is then no one left but the government to attempt to do so through tax policy. Surprise!


Unions were a force of great good when the men who formed them fought to keep them.  They became corrupted and self-destructive once the government got involved to "protect" them.

Dusk-You-n-Me: Keep waiting, middle class. The trickle down will start any day now.


Since when is cyclical economic cause-and-effects "trickle down"?  Or is that just dog whistling?
 
2013-01-09 12:54:40 PM

Lucky LaRue: Since when is cyclical economic cause-and-effects "trickle down"?  Or is that just dog whistling?


30 years of wage stagnation. How many economic cycles have we been through in that time? The problem is much larger than the cyclical nature of the economy.
 
2013-01-09 01:15:32 PM

Dusk-You-n-Me: Lucky LaRue: Since when is cyclical economic cause-and-effects "trickle down"?  Or is that just dog whistling?

30 years of wage stagnation. How many economic cycles have we been through in that time? The problem is much larger than the cyclical nature of the economy.


30 years of wage stagnation, but continued economic growth.  That could argue that 30 years ago, wages were too high and the system is correcting itself.  Neither you or I know for sure, and I don't think even a room-full of Nobel-prize winning economist could give you a definitive answer.  The response, therefore, shouldn't be to have the government poking at the problem with a stick.
 
2013-01-09 01:19:41 PM

Lucky LaRue: Neither you or I know for sure, and I don't think even a room-full of Nobel-prize winning economist could give you a definitive answer.  The response, therefore, shouldn't be to have the government poking at the problem with a stick.


You don't know, I don't know, no one can possibly know, so government shouldn't do anything. I disagree. It's the government's responsibility to do something. It has and it will continue to do so, albeit much slower than I would like.
 
2013-01-09 01:56:58 PM

Lucky LaRue: Dusk-You-n-Me: Lucky LaRue: Since when is cyclical economic cause-and-effects "trickle down"?  Or is that just dog whistling?

30 years of wage stagnation. How many economic cycles have we been through in that time? The problem is much larger than the cyclical nature of the economy.

30 years of wage stagnation, but continued economic growth.  That could argue that 30 years ago, wages were too high and the system is correcting itself.  Neither you or I know for sure, and I don't think even a room-full of Nobel-prize winning economist could give you a definitive answer.  The response, therefore, shouldn't be to have the government poking at the problem with a stick.


You cannot separate a nations economy from its governance.
 
2013-01-09 02:43:41 PM
Hm, Stratfor. Haven't read their reports since college a decade ago.

Recall reading their predictions for the 2000s in 1999 or so. The Middle East would decline in importance, they said.
 
2013-01-09 02:45:17 PM

Lucky LaRue: The restructuring of inefficient companies did create substantial value, but that value did not flow to the now laid-off workers. Some might flow to the remaining workers, but much of it went to the engineers who restructured the companies and the investors they represented.

I don't understand how anyone feels this is wrong.  If a person is gainfully employed by a company, there is a fair exchange of money for services.  If the company no longer requires those services, it would be unnatural for the company to continue employing the provider.  Similarly, if someone writes a program or re-designs a machine that can replace the need for 100 workers, s/he has a reasonable expectation to share in the company's financial gain.


I didn't take it as a value judgment so much as a statement of fact to support their thesis that the middle class is getting squeezed as a consequence of the prosperity of the country they support with their very existence.

Restructuring "inefficient" companies led to a larger share of profits going to investors and upper middle class workers while stripping jobs away from the middle class. In addition, car prices, house prices, education prices, and food prices have all risen at faster rates than wages. People want to talk about an impending economic doomsday in this country related to government spending vs revenue, but I think we're much more likely to kill ourselves by forcing the middle class out in favor of a permanent underclass in service to the state and the corporations. We need people to stand behind our guns and fill our prisons, after all. And the middle class roundly rejected that arrangement in the 70s. The only way around that is to eliminate the middle class, and dismantle all social safety nets aside from Military Service and Crime. As an added bonus, criminals get to be used for cheap labor by the corporations which get protections from the military while the government reaps a higher GDP to play with in their military expenditures.

Things are about to get a whole lot "simpler" in the US. And it's going to hurt.
 
2013-01-09 02:47:07 PM

ZAZ: This section reminded me over the endless fights between rich athletes and rich team owners over how to split the revenue.  I tend to decide they're both wrong, and pay little attention to sports these days.


Well, you should. Because most business owners that use unions use the sports owners' models to negotiate with their unions. And they're winning with them. And when they're not, all they do is declare bankruptcy and screw the workers anyway. And those that don't have unions don't even have that problem, because they can make their payscale anything they want and tell their workers to go somewhere else if they don't like it.
 
2013-01-09 02:52:07 PM

Lucky LaRue: Dusk-You-n-Me: Lucky LaRue: Since when is cyclical economic cause-and-effects "trickle down"?  Or is that just dog whistling?

30 years of wage stagnation. How many economic cycles have we been through in that time? The problem is much larger than the cyclical nature of the economy.

30 years of wage stagnation, but continued economic growth.  That could argue that 30 years ago, wages were too high and the system is correcting itself.  Neither you or I know for sure, and I don't think even a room-full of Nobel-prize winning economist could give you a definitive answer.  The response, therefore, shouldn't be to have the government poking at the problem with a stick.


What exactly do you think "government" has been doing for the last 30 years with its union busting, subsidization of specific industries, half-assed attempts to break up trusts, legalization of foreign/corporate money financing elections... etc?

You're talking a big game, but the game already started. You're thinking what the first move should have been. Too late, that ship done sailed. We're thinking about what the next move should be.
 
2013-01-09 02:52:31 PM

Lucky LaRue: The graph is always going to skew to the producer, though, and I think that is the real sticking point for most Americans:  They just don't feel like that is fair.


Who do you mean by "Producers"?
 
2013-01-09 02:53:19 PM
The most balanced, insightful article on the declining middle class and U.S. power. So, what's it doing on Fark Stratfor?

FTFS

/What's a Stratfor?
 
2013-01-09 02:53:41 PM
The author hints at, but misses a key point of the problem.

By offshoring manufacturing we have lost a key source of wealth creation. Yes, wealth is also created in our farms and mines, but the manufacturing base of this nation was the pillar of 19th/20th century wealth creation. The wealth of the Japanese is almost exclusively manufacturing-based due to their poor mineral wealth and minimal agricultural resources. Losing that wealth creation - wealth creation that is inherently grown from the lower and middle classes has hindered that growth. Sure, the wealthy continue to skim ever-fatter margins from overseas factories, but now the wealth goes straight to the top and slowly trickles when it previous flooded the entire market as janitors, line-workers, engineers, and shift managers deposited their checks.

So every time you buy more junk from Asia, remember that you are driving nails into your own economic coffin.
 
2013-01-09 02:55:57 PM

Arkanaut: The most balanced, insightful article on the declining middle class and U.S. power. So, what's it doing on Fark Stratfor?

FTFS

/What's a Stratfor?


What's a Stratfor? Playing awesome guitar riffs.
 
2013-01-09 02:56:07 PM
Is Stratfor still hiring washed out cops that want to be spies?
 
2013-01-09 03:09:03 PM
In summary...

1. shiat's f*cked up.

b) The last time shiat was this f*cked up was the Great Depression.

iii. Government programs dug us out of The Great Depression.

Therefore..

Potato) Government programs never work. Suck it, libs.
 
2013-01-09 03:20:48 PM
That article depressed the living hell out of me.
 
2013-01-09 03:24:07 PM
Yep.
 
2013-01-09 03:34:19 PM

Lucky LaRue: Neither you or I know for sure, and I don't think even a room-full of Nobel-prize winning economist could give you a definitive answer. The response, therefore, shouldn't be to have the government poking at the problem with a stick.


I knew I read a comment on Fark a while back about seeing Krugman on a train and him being big, but I didn't think he was that big.
 
2013-01-09 03:37:24 PM

madgonad: The author hints at, but misses a key point of the problem.

By offshoring manufacturing we have lost a key source of wealth creation. Yes, wealth is also created in our farms and mines, but the manufacturing base of this nation was the pillar of 19th/20th century wealth creation. The wealth of the Japanese is almost exclusively manufacturing-based due to their poor mineral wealth and minimal agricultural resources. Losing that wealth creation - wealth creation that is inherently grown from the lower and middle classes has hindered that growth. Sure, the wealthy continue to skim ever-fatter margins from overseas factories, but now the wealth goes straight to the top and slowly trickles when it previous flooded the entire market as janitors, line-workers, engineers, and shift managers deposited their checks.

So every time you buy more junk from Asia, remember that you are driving nails into your own economic coffin.


The head of HP has said that the cost of rising wages in Asia and the dramatic rise in shipping costs has narrowed the gap between the US and Asia. If the US would accept a 10% corporate tax rate that HP would move manufacturing back to the US.

Current tax rate 30%. The US is getting 30% of 0 or nothing
10% tax rate = 10% of $300,000,000 or $30,000,000 + taxes from all the newly employed and taxes from the items those newly employed purchase.

Pelosi and the President did not respond. A silent NO

Keep in mind that this is just 1 manufacturer. We could get back 100's of manufacturers if we played smart.
 
2013-01-09 03:46:02 PM
That's an excellent explanation of the problem that cops out from proposing any solutions. But I've also got nothin'.
 
2013-01-09 03:55:54 PM

ZAZ: See also Friendly's, which went bankrupt when investors took the money out of the company and left its liabilities.


Friendly's isn't bankrupt, we're just still waiting for the waitress.
 
2013-01-09 04:06:52 PM
"The left would argue that the solution is for laws to transfer wealth from the rich to the middle class. That would increase consumption but, depending on the scope, would threaten the amount of capital available to investment by the transfer itself and by eliminating incentives to invest. You can't invest what you don't have, and you won't accept the risk of investment if the payoff is transferred away from you."

That paragraph is why the article is not balanced or insightful. It inserts what is nowhere near a balanced point into the equation to appear balanced. The truth is there is no elimination of incentive to invest until the point of a degenerate tax (where people who make more take home less than those who make less). Until that point, you always have incentive to invest for the same reasons corporations will continue to hire until they cannot profitably grow from the hire, independent of taxes: you still have a marginal gain.

If a person invests $100 bucks to gross $200, whether the government taxes $10 or $90, the person is still gaining from the investment and will do it. Even once you take away the certainty of an investment, add a risk/reward curve, insert a bunch of complicating transaction fees and beauracracy, the result is the same: if you make a gain, you have incentive unless taxed degeneratively.

This is in no way an argument for redistribution. Redistribution is moderately effective for basic stimulus, but there are many things the government does or can do that benefit from economies of scale internally. It is an argument for progressive taxation, though, which is not simply a one-sided political position: it is actual reality as seen in much economic research and follows many economic theory conclusions (neoclassical and modern schools). By including this paragraph, the article is tainted with derp because of some desire to want to sound reasonable and balanced.
 
2013-01-09 04:13:35 PM

Arkanaut: The most balanced, insightful article on the declining middle class and U.S. power. So, what's it doing on Fark Stratfor?

FTFS

/What's a Stratfor?


For WINNING, silly.
 
2013-01-09 04:19:17 PM

Lucky LaRue: The restructuring of inefficient companies did create substantial value, but that value did not flow to the now laid-off workers. Some might flow to the remaining workers, but much of it went to the engineers who restructured the companies and the investors they represented.

I don't understand how anyone feels this is wrong.


The engineers did not get a bigger cut. I work darn hard making skilled labor a thing of the past and deserve just compensation.
 
2013-01-09 04:19:50 PM
I sometimes stop reading an article when it contradicts itself.

In the 1950s and 1960s, the median income allowed you to live with a single earner -- normally the husband, with the wife typically working as homemaker -- and roughly three children. It permitted the purchase of modest tract housing, one late model car and an older one. It allowed a driving vacation somewhere and, with care, some savings as well. I know this because my family was lower-middle class, and this is how we lived, and I know many others in my generation who had the same background. It was not an easy life and many luxuries were denied us, but it wasn't a bad life at all.

Someone earning the median income today might just pull this off, but it wouldn't be easy. Assuming that he did not have college loans to pay off but did have two car loans to pay totaling $700 a month, and that he could buy food, clothing and cover his utilities for $1,200 a month, he would have $1,400 a month for mortgage, real estate taxes and insurance, plus some funds for fixing the air conditioner and dishwasher.


...and then I stopped. What are the chances a lower middle class family even owned a dishwasher and an air conditioner in the 1950's? Very low, so arguing that a modern family might not have funds to pay to fix them is beyond dumb.

I also don't buy the concept that a typical lower middle class family in the 1950's owned two cars. Plus, even if they did, they were inferior to modern cars in gas mileage, comfort, safety, features, acceleration, realibility, handling, and every other measurable statstic. A boring 2013 Toyota Camry 4 cylinder out accelerates the fastest 1950's or 1960's muscle car, not to mention has air bags and antilock brakes and a great sound system and navigation and will last 300,000 miles.

Now, I agree that, in recent years, much of the non-technoligical increases in the standard of living have gone to the rich. However, people who make these arguments gloss over the very significant increases in the standard of living that technological improvements have brought.

Also, there are non-technoligical improvements that have been felt across the board. For example, square feet of housing space per person. A 1950's lower middle class family with more than two kids probably had them sharing a room, which is much less common today, and the size of the kitchen, bathrooms (and the number of them), family room, and the house in general were much smaller, typically.
 
2013-01-09 04:27:55 PM

ex0du5: "The left would argue that the solution is for laws to transfer wealth from the rich to the middle class. That would increase consumption but, depending on the scope, would threaten the amount of capital available to investment by the transfer itself and by eliminating incentives to invest. You can't invest what you don't have, and you won't accept the risk of investment if the payoff is transferred away from you."

That paragraph is why the article is not balanced or insightful. It inserts what is nowhere near a balanced point into the equation to appear balanced. The truth is there is no elimination of incentive to invest until the point of a degenerate tax (where people who make more take home less than those who make less). Until that point, you always have incentive to invest for the same reasons corporations will continue to hire until they cannot profitably grow from the hire, independent of taxes: you still have a marginal gain.

If a person invests $100 bucks to gross $200, whether the government taxes $10 or $90, the person is still gaining from the investment and will do it . Even once you take away the certainty of an investment, add a risk/reward curve, insert a bunch of complicating transaction fees and beauracracy, the result is the same: if you make a gain, you have incentive unless taxed degeneratively.

This is in no way an argument for redistribution. Redistribution is moderately effective for basic stimulus, but there are many things the government does or can do that benefit from economies of scale internally. It is an argument for progressive taxation, though, which is not simply a one-sided political position: it is actual reality as seen in much economic research and follows many economic theory conclusions (neoclassical and modern schools). By including this paragraph, the article is tainted with derp because of some desire to want to sound reasonable and balanced.


Horse hockey. They will invest it elsewhere if there is a greater rate of return. Currently there is greater rates of return elsewhere with a lower incurred cost of doing business. That is where the money will go. This is why people invest overseas via a dummy company that they run but is owned by a fisherman in the Caymans who you paid $5 to sign some papers and then keep the money overseas in another account owned by another shell company to avoid US taxes.
 
2013-01-09 04:37:15 PM
Good read.

The assertion that the free market could correct itself, over time, is correct. It could. But with current law granting quite a substantial breadth of liberties to these corporations ($ and investment practices) in terms or what they can and cannot do, they have more cards to play with. From my point of view, and even in the graphs from this thread, the market seems to be destined towards 'pulling the rug out' of the middle class.

I dunno. I guess I just feel I cant understand how big the mountain is since I am on it.
 
2013-01-09 04:38:15 PM
Terrorists tend to be the unemployed.

Revolutionaries tend to be unemployed.

Fat and happy folks don't usually overthrow governments...

Does Syria look like fun? It's on its way.
 
2013-01-09 04:44:12 PM
It isn't difficult to figure out.

When the middle class hope to get rich is stronger than their fear of being poor they vote Republican.
When the middle class fear of being poor is stronger than their hope of being rich they vote Democratic.

Since there are no guarantees in life the Republicans appease the hopes of the middle class by going into debt and the Democrats assuage their fears by going into debt. This works so long as the people loaning us money (China) don't demand we pay it back. That, however, can't go on in perpetuity which is exactly why the military establishment has decided to reorientate its global strategy to the East. Indeed, it is quite true that China has a growing world significance...mostly because everyone owes them money.

So long as we can keep borrowing our way out of our problems we are going to do it. I fear another world war far more than I fear any internal revolution.
 
2013-01-09 04:44:22 PM
know many others in my generation who had the same background. It was not an easy life and many luxuries were denied us, but it wasn't a bad life at all.

Someone earning the median income today might just pull this off, but it wouldn't be easy.
snip
There would be little else left over for a week at the seashore with the kids.


A vacation is not a luxury?
 
RJB
2013-01-09 06:14:43 PM

Saiga410: know many others in my generation who had the same background. It was not an easy life and many luxuries were denied us, but it wasn't a bad life at all.

Someone earning the median income today might just pull this off, but it wouldn't be easy.
snip
There would be little else left over for a week at the seashore with the kids.

A vacation is not a luxury?


You know how I know you're not European?

Anyway, he said many luxuries, not all luxuries.
 
2013-01-09 06:27:45 PM

worlddan: It isn't difficult to figure out.

When the middle class hope to get rich is stronger than their fear of being poor they vote Republican.
When the middle class fear of being poor is stronger than their hope of being rich they vote Democratic.

Since there are no guarantees in life the Republicans appease the hopes of the middle class by going into debt and the Democrats assuage their fears by going into debt. This works so long as the people loaning us money (China) don't demand we pay it back. That, however, can't go on in perpetuity which is exactly why the military establishment has decided to reorientate its global strategy to the East. Indeed, it is quite true that China has a growing world significance...mostly because everyone owes them money.

So long as we can keep borrowing our way out of our problems we are going to do it. I fear another world war far more than I fear any internal revolution.


At this point, if the internal revolution is not the catalyst for another world war, than the US is doomed as a superpower. In fact, I would guess that even China would be doomed as a superpower unless that happened, because the actual kingmakers are beyond national borders now.
 
2013-01-09 07:00:37 PM

Negligible: ex0du5:
"The left would argue that the solution is for laws to transfer wealth from the rich to the middle class. That would increase consumption but, depending on the scope, would threaten the amount of capital available to investment by the transfer itself and by eliminating incentives to invest. You can't invest what you don't have, and you won't accept the risk of investment if the payoff is transferred away from you."
[...]
If a person invests $100 bucks to gross $200, whether the government taxes $10 or $90, the person is still gaining from the investment and will do it .
[...]

Horse hockey. They will invest it elsewhere if there is a greater rate of return. Currently there is greater rates of return elsewhere with a lower incurred cost of doing business. That is where the money will go. This is why people invest overseas via a dummy company that they run but is owned by a fisherman in the Caymans who you paid $5 to sign some papers and then keep the money overseas in another account owned by another shell company to avoid US taxes.


You are:

1) Arguing a different point than me, and one that has nothing to do with the quote or my response.
2) Confusing the reasons that people get offshore business with the reasons people invest internationally. These are orthogonal.
3) Appear to be arguing that we should have a 0% corporate tax rate. Because that's the rate in the Cayman Islands.

Because of 3), I'm currently of the opinion that either you are simply someone who comes into threads looking to find a healthy expression of their pent up frustration, or may have some form of mental handicap. Either way, I'm glad you've found Fark.
 
2013-01-09 07:22:50 PM
Meanwhile, we're getting ready to mint a coin which will create, via fiat, roughly 10% of GDP out of thin air.


Prices are rising, savings are falling. Shiat is more expensive. But there's no inflation!
 
2013-01-09 09:26:32 PM

o5iiawah: Meanwhile, we're getting ready to mint a coin which will create, via fiat, roughly 10% of GDP out of thin air.


Oh, you get those FW:FW:FW:FW:FW:FW: emails, too?
 
2013-01-09 10:33:58 PM
It's neither balanced, nor insightful.
 
2013-01-09 11:14:19 PM
That would increase consumption but, depending on the scope, would threaten the amount of capital available to investment by the transfer itself and by eliminating incentives to invest. You can't invest what you don't have, and you won't accept the risk of investment if the payoff is transferred away from you.

Why is this an either/or proposition? The money still gets back into the wealthy's hands because they own the products and services that are being consumed. They still get their hands on the money, a dirty poor person just gets to touch it first.
 
2013-01-09 11:32:37 PM

pxsteel: madgonad: The author hints at, but misses a key point of the problem.

By offshoring manufacturing we have lost a key source of wealth creation. Yes, wealth is also created in our farms and mines, but the manufacturing base of this nation was the pillar of 19th/20th century wealth creation. The wealth of the Japanese is almost exclusively manufacturing-based due to their poor mineral wealth and minimal agricultural resources. Losing that wealth creation - wealth creation that is inherently grown from the lower and middle classes has hindered that growth. Sure, the wealthy continue to skim ever-fatter margins from overseas factories, but now the wealth goes straight to the top and slowly trickles when it previous flooded the entire market as janitors, line-workers, engineers, and shift managers deposited their checks.

So every time you buy more junk from Asia, remember that you are driving nails into your own economic coffin.

The head of HP has said that the cost of rising wages in Asia and the dramatic rise in shipping costs has narrowed the gap between the US and Asia. If the US would accept a 10% corporate tax rate that HP would move manufacturing back to the US.

Current tax rate 30%. The US is getting 30% of 0 or nothing
10% tax rate = 10% of $300,000,000 or $30,000,000 + taxes from all the newly employed and taxes from the items those newly employed purchase.

Pelosi and the President did not respond. A silent NO

Keep in mind that this is just 1 manufacturer. We could get back 100's of manufacturers if we played smart.


I actually agree with that. The corporate tax rates are too high.

However, manufacturing goes offshore to avoid environmental regulations and workplace safety concerns too. I kind of like not having poison in my air/water and not keeping our people as safe as reasonably possible.
 
2013-01-09 11:34:33 PM

Lucky LaRue: We are a long way from that scenario.


If you can reliably forecast revolutions more than a month in advance, you can probably get Nate Silver to write you a letter of recommendation to a CIA analysts job.

media.npr.org


Additionally, there are externalized social costs that manifest before that absolute threshold. They just tend not to affect the company quite so directly.

ex0du5: If a person invests $100 bucks to gross $200, whether the government taxes $10 or $90, the person is still gaining from the investment and will do it.


Slightly oversimplifies, by neglecting the probabilistic nature of the return.
 
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