Top 1% US Pre-Tax income share 1913-2012

[Atreus21]

Actually that did happen even though they didn't come to your door. Its called the financial crisis of 2007-2008.

And did middle class and poorer people get the recovery of the top 1%? The 1% are the only ones who have recovered and have gotten even richer.

So how did they take money from me? Me, specifically. Are you saying there's money I would've gotten but for their malfeasance?

 

[bshole]

So how did they take money from me? Me, specifically. Are you saying there's money I would've gotten but for their malfeasance?

Good christ, where the FUCK do you think they got their bailout money from? Are you even a taxpayer? Do you think government money falls from a money tree or something? Pathetic.

 

[Jhhnn]

In either case, the allegation is that something was dishonestly taken from poorer Americans. I'm one of those Americans, and I don't recall rich people coming to my door trying to swindle me out of my money.

The only way they get my money is by offering me something I want.



I don't think a marginal tax rate that high is going to make any difference. Marginal rates have gone up and down with no real correlation in revenue.

I do agree that all income should be taxed the same though. I understand the argument that short term capital gains should be taxed higher than long term, but I think income is income.



Unionization in the private sector? No problem. If they want to band together to raise the price of their labor, go right ahead. But if their employer goes under from being uncompetitive as a result... they'd better be prepared for that.

Public sector? No way. We have enough people taking from the public trough as it is.

More government jobs is precisely what is not needed. People need to be working more in the private sector. Every government job is made possible through taxpayer funds made in the private sector.

Remember how top tier tax cuts would supposedly boost job creation? That obviously didn't happen. It just boostedthe power of the financial elite.

Whatever else it may be called, capitalism is nothing but economic freedom. Allowing people to spend their money how they wish. This carries with it the same caveat that political freedom carries: we may not like what they spend their money on. I wish people wouldn't spend money on porn, spinning rims, and drugs.

It's only freedom for capitalists. Much of the population has been reduced to debt slave suckers who need to work to crack that nut every month. Any break in that sets them back for a long time thereafter because they have high overhead & negative net worth.

If we're to have a jobs based economy then we obviously need jobs to do that. OTOH, the private sector increasingly employs fewer people as a % of the population by utilizing offshoring & automation. It's simply more profitable. Govt doesn't operate under the constraints of profit and there are lots of useful tasks it can perform that private industry finds unattractive. Govt jobs also stabilize the economy.

 

[Knowing]

Meanwhile, at the census bureau.

Median household income was
$53,657 in 2014, not statistically
different from the 2013 median in
real terms, 6.5 percent lower than the
2007 (the year before the most recent
recession) median ($57,357), and
7.2 percent lower than the median
household income peak ($57,843)
that occurred in 1999

tl;dr- if you weren't in the top quintile or higher in 2007 you're probably worse off now than you were then.

Also, this is part of why the price of housing is increasing. It's okay though, because new home sales are doing great! Existing home sales are down, but that's only about 90% of the housing market so...

 

[Jhhnn]

Meanwhile, at the census bureau.
tl;dr- if you weren't in the top quintile or higher in 2007 you're probably worse off now than you were then.

Also, this is part of why the price of housing is increasing. It's okay though, because new home sales are doing great! Existing home sales are down, but that's only about 90% of the housing market so...

I'm not sure what that FRED graph really means because there are an enormous number of variables in such a broad measure. Really. Who owns them, where they are, length of vacancy & why they're empty aren't defined at all.

 

[OverVolt]

Wealth inequality sucks for all those poor people but I'll be fine

-A 1%'er in 1928, probably.

 

[Exterous]

Actually that did happen even though they didn't come to your door. Its called the financial crisis of 2007-2008.

Yeah I'm not sure thats accurate. I mean there are a very few people who got rich off of this but it generally wasn't the rich as a whole. For example:

http://www.incomediary.com/30-entrepreneurs-that-lost-lots-of-money-in-the-recession

And did middle class and poorer people get the recovery of the top 1%? The 1% are the only ones who have recovered and have gotten even richer.

This is going to be a factor of where the middle class chose to hold their wealth and where the recovery happened. The middle class holds about 63% of their wealth in their houses. I find it very interesting that we are talking about housing being too expensive at the same time we are talking about how the middle class isn't doing well wealth wise. For the middle class to do better housing needs to appreciate* - which leads to more complaints about the cost of housing.

(or they need to hold wealth elsewhere which is something the middle class has shown it doesn't want to do even when they were doing better income wise)

The Middle class has fled the stock market since 2008. By 2009 stock participation of the middle class is the lowest since it started being tracked in 1998 and has only declined since then.

So there is some culpability by the middle class in choosing to spend more on a house twice the size of a 1950s house despite having fewer people living in it. The 'all your eggs in one basket' type of thing. For the middle class who stayed in the stock market and continued to contribute they almost certainly have gotten richer.

This is not to say that there are not wage and short term stock price fixation issues

 

[Sonikku]

Maybe in a few decades the only houses will be hovels and mansions.

 

[Cozarkian]

This is going to be a factor of where the middle class chose to hold their wealth and where the recovery happened. The middle class holds about 63% of their wealth in their houses. I find it very interesting that we are talking about housing being too expensive at the same time we are talking about how the middle class isn't doing well wealth wise. For the middle class to do better housing needs to appreciate* - which leads to more complaints about the cost of housing.

Appreciating housing prices doesn't help unless you want to downgrade at retirement (and aren't hoping to upgrade now). Many people want to die in their home, which means they can't access the wealth without paying a bank for an equity loan or reverse mortgage.

 

[Cozarkian]

That chart shows some rapid growth around the time that society became more accepting of women in the work force. I suspect the massive shift in the supply of labor contributed to wage stagnation. Where there are suddenly a lot more college grads looking for professional jobs, you don't need to pay as much, especially given the large gender wage gap at the time.

I also suspect the increased prevelance of luxury goods is a contributing factor. Before we needed two cars, multiple TVs, video game consoles, computers, internet, portable computers, iPods, cell phones for the entire family, and tablets, people could build savings. Larger savings meant higher down payments on cars and houses and less money lost on interest payments, not to mention earning interest on the savings. Now the middle class takes their money and gives it right back to the corporations instead of using it to build wealth.

Finally, it feels like there is increased incorporation. The manager of "local bank" made lots of money. The same person still makes lots of money as the manager of the local branch of BoA, but now he has a boss at the corporate office that makes way more money, leaving less available for non-exec wages.

 

[1prophet]

Stolen isn't the right term. Swindled is more like it.

The Reaganites chumped America long ago & it's been a rocket ride into financial orbit for the financial elite ever since.

How do we correct that?

Taxes. Reduce the difference in after tax income. Tax all income the same in a highly progressive fashion with the top marginal rate near 70%. Limit inheritance with highly graduated estate taxes.

Wages. Make Unionization a lot easier.

Redistribution through more govt jobs and greater benefits for everybody.

The gold standard has nothing to do with it & merely complicates the issue.

Financialized capitalism creates oligarchy which creates the need for socialism or revolution. I'll take the former.

And what good is unionization and higher wages when they are effectively negated by insourcing(illegals) and outsourcing?

Contrary to some pseudo liberal beliefs you are not going to fix the economic divide through government jobs or $15 dollar an hour burger flippers.

http://www.usnews.com/news/blogs/da...g-to-china-cost-us-32-million-jobs-since-2001

]“It becomes very difficult for us to do economic development at the local level when our macroeconomic policies like our trade policies with China are really putting us at a severe disadvantage and sucking wages and income out of our communities,” said Rep. Tim Ryan, D-Ohio, on the call. According to the report, the deficit with China resulted in 106,400 jobs displaced in Ohio.

 

[Cozarkian]

And what good is unionization and higher wages when they are effectively negated by insourcing(illegals) and outsourcing?

Contrary to some pseudo liberal beliefs you are not going to fix the economic divide through government jobs or $15 dollar an hour burger flippers.

http://www.usnews.com/news/blogs/da...g-to-china-cost-us-32-million-jobs-since-2001

For discussion purposes (not a proposal) what about policies that affect the top end?

Germany requires corporations operate in a manner that is not merely designed to benefit shareholders but rather that business decisions also consider the welfare of employees.

There could also be maximum wage laws, which could be specified amounts or a limit based on the amount exec pay exceeds the median wage of non-execs.

 

[Jhhnn]

And what good is unionization and higher wages when they are effectively negated by insourcing(illegals) and outsourcing?

Contrary to some pseudo liberal beliefs you are not going to fix the economic divide through government jobs or $15 dollar an hour burger flippers.

http://www.usnews.com/news/blogs/da...g-to-china-cost-us-32-million-jobs-since-2001

Unions oppose offshoring, obviously, & create a structure more capable of influencing policy in that regard. Certainly much more than individual working stiffs.

As you can see, unionization fell off drastically during the Reagan era & since, even though it was starting back up in 1980.

https://en.wikipedia.org/wiki/Labor...dia/File:Union_membership_in_us_1930-2010.png

Anybody who believes that the middle class would have attained the share of national income we enjoyed in 1978 w/o unions has shit fer brains.

Let's face it- hedge funds essentially swapping billions in assets adds to GDP but not in a way that increases cash flow or income share for the middle class.

 

[sm625]

Stolen?

Provide some evidence for that allegation.

STOLEN. If the Federal Reserve conducts monetary policy in such a way as to specifically benefit the top 1%, then yes that is stealing from the other 99%. Unless you think that wealth just appears out of nowhere?

 

[nickqt]

Not looking to jump on the 1% vs 99% here, interested in ideas why this wealth/income divide has come back since the early/mid 1970's. We had tax changes and we left the gold standard around this time. Given the recent jump since 2008 for the 1%, it's worth noting this was when QE and ZIRP polices from the FED were put into place.

Taken from:
http://charleshughsmith.blogspot.com/2015/09/time-to-trade-in-your-jag-benz-bmw-for.html


The US economy IMO has allowed for massive wealth skims through a model of granting productivity rewards to owners through the equity markets. How to return productivity rewards to the workforce when the main levers of the economy (The FED) appear to be beholden to wall street?

Unsure if a remedy is worse than the disease, ie) resolving the wealth inequality divide makes everyone worse off. Is cheaper really more expensive? ie) offshoring jobs to lower cost of goods hurts majority of Americans.

The recent "jump" in 2008 occurred after the F̶i̶r̶e̶S̶a̶l̶e̶ economic downturn, and all it did was show wealth accumulation resume to almost previous levels.

Tax cuts paired with "free trade: and the corporate strategy of maximizing quarterly profits so the CEO can make lots of money from higher revenues.
Starting right around 1981.

Currently it's corporations issuing stock buybacks, inflating their value. Kinda like a bubble.

Not the gold standard. Not QE. It goes back to circa 1981. I mean, look at your graph.

 

[Knowing]

I'm not sure what that FRED graph really means because there are an enormous number of variables in such a broad measure. Really. Who owns them, where they are, length of vacancy & why they're empty aren't defined at all.

Banks, it's irrelevant, it's irrelevant, and to keep housing prices elevated because those houses are on the balance sheet and if the balance sheet goes negative the feces strikes the rotating oscillator.

Or did you think that the reinflation of the housing bubble was organic?

 

[Jhhnn]

Banks, it's irrelevant, it's irrelevant, and to keep housing prices elevated because those houses are on the balance sheet and if the balance sheet goes negative the feces strikes the rotating oscillator.

Or did you think that the reinflation of the housing bubble was organic?

Meh. I think you're seeing what you want to see. Witness the claim that new construction is doing great-

https://www.census.gov/briefrm/esbr/www/esbr051.html

It's not like I can explain the situation but I don't think you are, either.

 

[Knowing]

Meh. I think you're seeing what you want to see. Witness the claim that new construction is doing great-

https://www.census.gov/briefrm/esbr/www/esbr051.html

It's not like I can explain the situation but I don't think you are, either.

"Construction is doing great"

And yet...

and

and

and finally

So if the prices of all your inputs are down, and Cat can't sell equipment then why are houses selling for so much while houses are intentionally being kept off the market? Qui bono?

Two more things for your consideration:

and

okay, I lied, three

http://money.cnn.com/2015/05/21/real_estate/rent-prices-rising/

 

[fskimospy]

"Construction is doing great"

And yet...

and

and

and finally

So if the prices of all your inputs are down, and Cat can't sell equipment then why are houses selling for so much while houses are intentionally being kept off the market? Qui bono?

Caterpillar's recent earnings difficulties were attributed to weakness in China, other global markets, and oil/gas exploration, not the US housing market. Copper and lumber prices are also strongly affected by global markets.

Additionally, your FRED chart on US housing prices is about a year out of date. Here's a more recent one:

Looks like just a noisy dataset broadly trending upwards to me.

Can you tell us why you think lower trending global indicators despite higher trending US indicators is a sign of US construction doing poorly? That sure sounds an awful lot like seeing what you want to see to me.

 

[EduCat]

That ole' golden rule again eh.

 

[CADsortaGUY]

STOLEN. If the Federal Reserve conducts monetary policy in such a way as to specifically benefit the top 1%, then yes that is stealing from the other 99%. Unless you think that wealth just appears out of nowhere?

Do you think that it's a zero sum system?

 

[OverVolt]

Please no chart dumps.

One chart with explanation is worth way more than 4 charts.

 

[Knowing]

Caterpillar's recent earnings difficulties were attributed to weakness in China, other global markets, and oil/gas exploration, not the US housing market. Copper and lumber prices are also strongly affected by global markets.

Three years of weakness. Your short term is surprisingly long term. How long did CAT think China was going to keep building empty cities?

Additionally, your FRED chart on US housing prices is about a year out of date.

Looks like just a noisy dataset broadly trending upwards to me.

With positive correlation to the data set that shows that vacant homes are being kept off the market.

Can you tell us why you think lower trending global indicators despite higher trending US indicators is a sign of US construction doing poorly? That sure sounds an awful lot like seeing what you want to see to me.

That makes me wonder what your excuse was for the poor performance before it was evident that the whole planet was moving toward the end of the business cycle. Seems to me you always had some excuse. But, if it's more data that you want then more data I will provide.

Then there's the lowered expected capital expenditures (because stock buybacks are better for bonus season).

We're back to full employment now so I'm sure this will all be turning around soon and we'll finally exceed 2007-2008 numbers. NBER says the average business cycle length from '45 to '09 is 58.4 months. Janet and Co. have been kicking the can for 55. Clock's ticking.

To tie this firmly back to the OT, zillow has some interesting research.

This high debt load has become part of the narrative for why millennials are delaying buying homes longer than any generation in recent memory. More student debt means recent graduates will struggle to save a down payment, run into debt-to-income constraints when they apply for a loan and face credit ramifications if they default or miss payments. All of this will dramatically hurt their odds of successfully buying a home.

tl;dr - the housing bubble has been reinflated by a combination of factors including keeping vacant homes off the market (for some raisin). Too big to fail, followed by too big to jail, followed by the brave new world that is too big to prosecute has created this situation that you like to call a recovery even though it's pretty evident that the gross majority haven't recovered.

If the global economy suffers a recession after we achieve liftoff (snicker), wouldn't the capital flight from the rest of the planet force interest rates in the US? What happens if we haven't achieved liftoff when that happens?

After their stock markets crash are they going to buy AAPL or are they going to buy bonds and treasuries?

 

[Knowing]

Please no chart dumps.

One chart with explanation is worth way more than 4 charts.

Sorry.

 

[Jhhnn]

We're back to full employment now so I'm sure this will all be turning around soon and we'll finally exceed 2007-2008 numbers. NBER says the average business cycle length from '45 to '09 is 58.4 months. Janet and Co. have been kicking the can for 55. Clock's ticking.

This is *not* a normal post-WW2 business cycle any more than the great depression was normal. Had the FRB & the govt not acted we'd be in much the same sort of deflationary spiral. The true cause in both cases is creation of unserviceable debt based on fractional reserve lending & leveraged over valued assets as collateral in the repo market. When investors sensed that they pulled out of the repo market & credit dried up. Non bank lenders couldn't generate enough cash flow to keep the doors open.

We're not really at full employment, either, given the low labor participation rate. American families just learned to settle for less while the financial elite hogs the pie.