Surprise! "Wealth gap" in US grows to record level under Obama
Look, I’m not one to play the politics of the “haves and have nots,” but Barack Obama has made a career out of it. However, under the leadership of the man who said, “I think when you spread the wealth around, it’s good for everybody,” the gap between America’s richest and America’s poorest has grown to record levels.
from LA Times:
The wealth gap between middle- and upper-income households has widened to the highest level on record, says a new report.
Using the latest Federal Reserve data, the Pew Research Center said Wednesday that the median wealth for high-income families was $639,400 last year — up 7% from three years earlier on an inflation-adjusted basis.
For middle-income families, the median wealth — that is, assets minus debts — stood at $96,500 last year, unchanged from 2010.
The result is that the typical wealth of the nation’s upper-income households last year was nearly seven times that of middle-class ones. By Pew’s calculations, that is the biggest gap in the 30 years that the Fed has been collecting statistics from its Survey of Consumer Finances.
“The latest data reinforces the larger story of America’s middle-class household wealth stagnation over the past three decades,” Pew said. “The Great Recession destroyed a significant amount of middle-income and lower-income families’ wealth, and the economic ‘recovery’ has yet to be felt for them.”
In Pew’s definition, middle-income households are those earning between two-thirds and twice the median income, after adjusting for household size. The median marks the halfway point.
For example, a one-person household was categorized as middle income if its earnings last year were at least $22,000 but less than $66,000. For a four-person family to qualify as middle income, earnings had to be at least $44,000 but less than $132,000.
Based on these thresholds, 46% of American households were classified as middle income last year. One-third were considered lower income, and 21% upper income.
Look, I don’t begrudge anybody their wealth. I don’t even care if they didn’t work a day in their life for it (because their parents most likely worked their tails off!). I don’t care if you literally have a Scrooge McDuck swimming pool where you keep your money. What you do with your money is your business.
Wealth is not a zero-sum game. It’s not a fixed pie. Just because you have, doesn’t mean I can’t have also. When one pie is eaten, basic economics teaches that we can simply make another pie. One person being rich does not mean that one person has to be poor. That’s not the way economics works.
What I do care about is when politicians claim they’re fighting the so-called “wealth gap” and turn around to pass policies that literally destroy wealth. Look, perhaps President Obama really does believe in the “wealth gap” nonsense. Perhaps he really has passed policies like Obamacare with the intent of punishing the wealthy and giving the poor more opportunity. But clearly, those policies aren’t working, even for his own stated purposes. They’re only exacerbating the gap.
I’ll leave you with a video of my favorite explanation of “the gap.” It’s from the fabulous Margaret Thatcher during her last visit to parliament as Prime Minister of the United Kingdom:
“He would rather have the poor poorer, provided that the rich were less rich.” That has Obama written all over it.
I think there’s such a thing as being too rich. I think there should be a maximum wage.
You can’t convince me that JP Morgan employees, senators, the Waltons, the Koch brothers & all these other exceedingly wealthy ppl work any harder than people who out here working 2-3 part time jobs to stay afloat.
Fifty-four percent of respondents to our online poll — which reached a sample of 1,884 registered voters nationally from Friday, January 29, through Sunday, January 31, 2016 — agreed that a “political revolution might be necessary to redistribute money from the wealthiest Americans to the middle class.” Just 30 percent said they disagreed.
Liberals and liberal-leaning demographics were most likely to agree with the statement. But majorities of independents, white voters, evangelicals, and even Tea Party supporters in our sample agreed too — showing that redistribution may no longer be a dirty word in American politics.
Of course, keep in mind that responses to a poll statement in a vacuum may differ quite a bit from how people will feel after hearing political debate and messaging from both sides.
And the poll contained one troubling result for Sanders. When people were asked whether big government or big business was a bigger threat to the country’s future, 55 percent named big government, compared with only 29 percent who named big business — suggesting the country hasn’t moved so far to the left after all, and that an agenda that will expand government remains a tough sell.
Still, Sanders is betting that his economics-focused electoral appeal can win over white voters who have tended to support the GOP. And this poll implies that they might like at least some of what he has to say.
It confuses me. They want these people to “redistribute the wealth” when they already are. They create jobs when they invest in companies. Do you have a MacBook or an iPhone? Steve jobs was nowhere near the “1%” when he founded Apple. Why do you want to start class warfare? If you want to be rich then work for it. That’s the beauty of America. You can get anything you want with hard work.
The redistributive economy: Households now worth a third less
In the interest of full disclosure, these numbers go all the way back to 2003, 5 years before Obama took office. But who is to blame isn’t nearly as important as what is to blame.
From the NYT:
Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.
The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.
…For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets.
…The reasons for these declines are complex and controversial, but one point seems clear: When only a few people are winning and more than half the population is losing, surely something is amiss.
Today, it’s seemingly impossible to go anywhere without hearing something about the “income gap.” This, of course, being the notion that richer people are getting richer at a faster pace than others. But, apart from envy, the income gap isn’t a real problem in and of itself, but, rather, more of an indicator that there might be a problem. Median income, however, is an actual, tangible economic problem. After all, I don’t care that my neighbor has more than he needs as long as I have what I need.
Until 2007, median household income was rising. Then came the recession. Since the recession began, Median household income has fallen dramatically and the income gap has gotten wider. But why?
A Keynesian reaction to a sluggish economy is to spend – borrow, print and redistribute – unfathomable amounts of money to keep the economy afloat (something that both George W. Bush and Barack Obama did). But even by their own standards, it didn’t work. In fact, it made things worse by giving us massive amounts of debt, more people on welfare rolls, inflation, fewer people in the work force, a lowering of the median income and a widening of the income gap, etc.
This is because redistributive policies, or even the mere threat of them, generally cause those with capital to spend, hire and invest less. This shouldn’t be surprising. After all, If a wealthy person knows that their money is going to be targeted for redistribution, why would they spend it? When an investor suspects that the federal government is primed to raise the tax on a particular item, service or company, the he would be stupid to invest in it. Similarly, the owner of a company of 49 employees would be out of her mind to hire a 50th employee, knowing that, because of Obamacare, they’re going to be taxed tremendously for doing so.
Disincentives and uncertainty like this cause the wealthy to hold on to their money, which exacerbates things like the income gap, the unemployment rate, and median income. In short, when the government tries to alleviate income inequality through taxes and legislation, it usually makes it worse. This shouldn’t be controversial. It’s economics.
Per usual, the solution to this problem is more liberty.
‘We were curious whether the phrase “political revolution” would excite people or turn them off, so we asked half our sample whether they agreed or disagreed with this statement: “In the next decade, a political revolution might be necessary to redistribute money from the wealthiest Americans to the middle class.”
A redistributive revolution turned out to be popular. Fifty-four percent of registered voters said they either strongly or somewhat agreed that it might be necessary, compared with 30 percent who either strongly or somewhat disagreed.
Agreement with the statement was strongest among African Americans (68-12), Hispanics (65-15), Democrats (68-17), and 18- to 29-year-olds (68-20). And support was weakest among Republicans (36-51) and seniors (38-43).’
All of these programs have in common that they, like taxes, reduce incentives to work and earn. The cornerstone of “The Redistribution Recession” is to quantify the sum total of these incentives and their changes over time. That’s what I call the marginal tax rate, by which I mean the extra taxes paid, and subsidies forgone, as the result of working. Waves of new programs increased the typical marginal tax rate from 40 to 48%.
Businesses just want to increase their profits; it’s up to the government to make sure they distribute enough of those profits so workers have the money to buy the goods they produce,” Mujica told businessmen at the U.S. Chamber of Commerce. “It’s no mystery — the less poverty, the more commerce. The most important investment we can make is in human resources.
College Student: Hey, let's redistribute our grades
No, this isn’t a real suggestion by a lazy D student, it’s a tongue and cheek suggestion by a student to show just how hypocritical redistributive liberals are. And so far, he’s doing a pretty good job of it.
From Fox News:
A California college student is conducting a social experiment where he’s trying to get his peers to sign a petition in favor of distributing grade point averages to show how the federal government distributes wealth.
Oliver Darcy, a recent college graduate, proposes that students with good grades contribute their GPA to their academically sluggish friends. He argues that this is how the federal government takes wealth from the country’s high wage earners and distributes it to the low income earners.
“They all earn their GPA,” said Darcy in an interview with “Fox and Friends.” “So we asked them if they’d be interested in redistributing the GPA points that they earned to students who may be having trouble getting a high GPA.”
Darcy, who films his encounters with teachers and fellow students, doesn’t have much luck selling this theory.
Now we’ve reported before about how most college students, even though they say they’re for affirmative action, didn’t like the idea if it were applied to their school’s basketball team. And their grades are no different. Of course they don’t want anyone to redistribute their grades. And why would they? They worked hard for them. They live in a meritocracy. This is just more proof that even college students are conservatives, they just don’t know it.
I just don't believe in taking money from those in which have earned it just to have it swept beneath your feet for someone else
That thinking is all well and good, but fiscally it’s irresponsible for the nation as a whole. When you don’t have any sort of “redistribution of wealth” income inequality escalates to the point where it creates an economic aristocracy with little room for mobility, as has been the case in the United States since roughly the 1980s. This income inequality arises from low growth rates coupled with high rates of return on capital and it negatively impacts the economy and the overwhelming majority of people who aren’t born into the upper class.
lets not pretend that the only reason you want guns isn’t so that you can practice that “non-aggression principle” of yours by gunning down anyone who looks at you funny/socialists redistributing your wealth “aggressors”
there’s a big difference between owning a gun because the group you are in is at high risk of being victims of murder and owning a gun because you’re an angry white reactionary man with a power fantasy
This is why I cannot support Bernie Sanders in his run for the Democratic nomination: He’s just another white brogressive who thinks that that the economy is the only issue that matters, and that all other problems will be magically solved once the wealth is redistributed.
Hey Senator! Appealing to young white men instead of old white men makes you only a little different from the GOP.