Not another NYT opinion piece on "inequality"?

Yes. And no. It starts by talking about Thomas Pikety's book "Capital in the Twenty-First Century", which everyone is talking about and buying, but also not actually reading, apparently:

An Idiot’s Guide to Inequality

We may now have a new “most unread best seller of all time.”

Data from Amazon Kindles suggests that that honor may go to Thomas Piketty’s “Capital in the Twenty-First Century,” which reached No. 1 on the best-seller list this year. Jordan Ellenberg, a professor of mathematics at the University of Wisconsin, Madison, wrote in The Wall Street Journal that Piketty’s book seems to eclipse its rivals in losing readers: All five of the passages that readers on Kindle have highlighted most are in the first 26 pages of a tome that runs 685 pages.

The rush to purchase Piketty’s book suggested that Americans must have wanted to understand inequality. The apparent rush to put it down suggests that, well, we’re human.

So let me satisfy this demand with my own “Idiot’s Guide to Inequality.” Here are five points: [...]

I can't repeat the five points, without reproducing the whole article here, so you'll have to follow the link.

I don't normally post about these kinds of articles, because they are often filled with "class warfare" rhetoric and drivel. And this NYT opinion piece has it's share of that as well. It's ironic that the author chooses to call it the "idiots guide", when I think some of the things he says are pretty idiotic (especially the option about rich people and expensive cars. Isn't it possible that rich people by expensive cars, because they like them and can afford them? Duh!).

But the article does have some moderate views, and does have a lot of embedded links to back up it's arguments. So while I may not agree with the article as a whole, it doesn't mean that it doesn't touch on some interesting facts or ideas. I'm not against rich people. But if indeed only the rich are getting richer, it's worth looking at why, and understanding why and how. I don't believe in communist revolutions redistributing the wealth. But a rising tide that lifts all boats IS preferable to one that only lifts yachts. Most reasonable people would have no argument with that.

     

Will the Middle Class Survive?

4 Things Politicians Will Never Understand About Poor People

Off the top of your head, how many of your friends can you think of make less than $11,000 a year? Maybe they work some mind-numbing part-time job, taking cover charges and stamping hands at a strip club. Or if you're a bit older, how many families do you know of who have one person working, bringing in less than $23,000 to support a spouse and a couple of kids? There's nothing wrong with either of those things ... but those numbers are the poverty threshold in the U.S., and in my area of the country, it encompasses a fudging poopload of people (sorry, I'm trying to cut down on my cursing).

Poverty is a hot topic for politicians, but it seems like every time they open their mouths about the subject, stupid falls out. There's a huge part of me that wants to grab them by their orphan skin lapels and scream reason into their preciously oblivious brains, but the logical side of me knows it won't matter.

[...]

But of all the poor people I've known over the years -- and I have known a lot -- I have come across very few able-bodied, able-minded people who didn't do something to bring in some money. Even the ones who didn't have so much as a part-time job still managed to at least find temporary seasonal work mowing lawns, shoveling snow, or standing on street corners and playing the guitar with their penis.

So if the issue is that these people are watching reruns and collecting government checks, guess what: 91 percent of government benefits go to the disabled, elderly, or working households. Not a typo -- 91 percent. You're free to speculate that some of those people could try harder or are faking their disability or whatever, but there's no way the reality lines up with this politician fantasy of the lazy masses who just greedily rub their hands together while leeching their unfathomable riches from the always generous American populace.

[...] 

OK, let's be calm here. Let's just take a deep breath and talk about this like the rational, well mannered, non-cursing people that we are. Here is an infographic that ran in the Wall Street Journal talking about how the new tax code would be "highly painful" for Americans. The graphic covers every possible scenario the Wall Street Journal can conceive of, from the single mom only making $260,000 a year to the retired couple trying to get by on a fixed income of $180,000:

Reading that dumb fucking mind turd of an image is like wiping my ass with my eyes. If you can look at that steaming pile of shit and not see what's wrong with it, you live in a different goddamn universe than the rest of us.

No, that didn't come from a politician, but this sure as hell does. That's Linda Sanchez, who is desperately trying to tug at our heartstrings by saying that she lives paycheck to paycheck. On her $174,000 salary. To pay for her multiple homes. Now, I understand that if you live a certain lifestyle and you're a limp dick at finances, it would be pretty easy to burn through that much in a year, but does that make us any more sympathetic? Fuck no, it doesn't. Even as one of the least wealthy members of Congress, she still earns three-and-a-half times more money than the average American household. And 16 times more than those at the very top of the poverty line.

So the question is, how can she possibly think of herself as poor? Because $174,000 a year is poor -- for a member of congress. They have no concept whatsoever of what life is like for someone getting by on what most working people make, let alone somebody subsisting on government aid. Although they can comprehend our income as a number, they cannot comprehend the lifestyle because they haven't lived it and they likely never will. You're not going to find these politicians hanging out in the poor section of town, scrounging change for weed (well, maybe Bill Clinton) -- they spend most of their time around other wealthy people -- other members of Congress (about half of which are millionaires), rich donors, high-powered business types, celebrities, etc. So their idea of "poor" or even "brokeass" is the pitiful bastard at the bottom of the chain who is living off of that measly $174,000 base salary because he or she doesn't have any other income on the side. Linda Sanchez is their version of poverty. [...]

My own income has always been a lot closer to $11,000 than those figures in the Wall St. Journal Info Graphic. And yes I get it, that a lot of people aren't sympathetic to people who make six figure salaries, complaining about taxes.

Yet that graphic was from an article in the Wall Street Journal last year. This year, 2014, many of those groups are getting slammed even harder with more taxes.

People in those income brackets used to put away money for their children's college education, buying a home, buying their own health insurance, saving money in 401k accounts for their retirement, invest in their own businesses in order to supply themselves with jobs and an income. They would use the money to become independent, and maintain their independence, by not having to borrow excessively, or rely on others to supply their needs for them.

That used to be considered a good thing, and why it used to be said that the middle class was the "backbone of America". They knew how to take care of themselves, and not be a burden to other people. The more of their money that is taken in taxes, the less they will have to do that with. Or to invest in their own businesses.

I can sympathize with people who struggle with only $11,000 a year. I've been there, and I'm not far from it now. But destroying the middle class isn't going to help the most people in the long run. A tide that lifts all boats, would be preferable to sinking the most productive boats.

A congress that is more interested in lifting all boats, instead of just looking out for it's own interests, might be a good step in the right direction. They could start by actually passing a budget, and living within it, like the majority of the people in this country have to do.
   

Advice for America from a Mexican Tycoon

Carlos Slim Fixes the Economy

Mexican telecom tycoon Carlos Slim Helú—whose family fortune of about $74 billion makes him the world’s richest human (well ahead of Bill Gates and Warren Buffett on the Forbes list of billionaires—plays against type.

[...]

How do we fix this recession?

“With the same things that were done in 2000 and 2001, when it was temporarily solved with big expenditures and very aggressive monetary and fiscal policy,” he tells me. “Aside from lowering taxes, we should be directing more money to the real economy, not to the financial economy. The volatility of the markets is so great that more is won or lost in a single day than in five years of accumulated interest. And that’s not a good thing.”

I ask if he agrees with President Obama’s so-called Buffett rule, which would mandate that rich people like Warren Buffett—who benefits from a 15 percent tax rate because his money comes from capital gains—pay at least the same rate as their secretaries.

“I don’t know what Warren Buffett pays,” Slim says, “but I think that the fiscal policy should be fair. You don’t need to raise taxes on rich people, because they create capitalization and investment. But you need to tax speculation—meaning capital gains. Why should it be just 15 percent? Salaried people pay 35 percent. Why shouldn’t that be paid on capital gains?”

Anything else?

“The welfare policies that you are following—you and Europe—are unsustainable,” Slim argues. “You cannot have people retiring at 60 years old, and you cannot provide universal health care the way you do. That’s crazy. The focus should be the support of small- and middle-size business. That is where the employment is. And there should be investment in the real economy. Infrastructure is an example. And the best way to do that is with the private sector. It’s more efficient.”

I ask what should be done about the terrible violence surrounding the illegal Mexican drug trade, with grisly murders in the tens of thousands.

“It’s a problem coming from the United States,” Slim says.

Because of the demand?

“Because of everything. You stay with the money and the drugs. We stay with the weapons and the violence. And you’re selling the weapons to the consumers in Mexico. And the retail price [of the drugs] is, I don’t know how much bigger, let’s say 10 times in the U.S. what it is in Mexico. And that means the demand is here and the money is here. It’s like what used to happen during Prohibition in Chicago. You had a lot of violence there.”

What’s the solution?

“Follow the money.”

Would it help to legalize the drugs and, as with Prohibition, eliminate the incentive for crime?

“It doesn’t ‘help,’ ” Slim says. “It finishes.” [...]

Interesting. The article has a photo.
     

Democrat economics VS the creation of wealth

Why Tax Rate Reductions Are More Stimulative Than Rebates:
Lessons from 2001 and 2003

With slower economic growth raising fears of a recession, Washington is abuzz with economic stimulus proposals centered on tax rebates. Tax rebates, however, don’t stimulate the economy. Lawmakers currently examining economic stimulus proposals should reject rebates in favor of tax rate reductions.

Tax Rebates Don’t Stimulate. By definition, an economy grows when it produces more goods and services than it did the year before. In 2007, Americans produced $13 trillion worth of goods and services, up 3 percent over 2006.

Economic growth requires four main factors:

(1) an educated, trained, and motivated workforce;

(2) sufficient levels of capital equipment and technology;

(3) a solid infrastructure; and

(4) a legal system and rule of law sufficient to enforce contracts and contain a functioning price system.

High tax rates reduce economic growth, because they make it less profitable to work, save, and invest. This translates into less work, saving, investment, and capital—and ultimately, fewer goods and services. Reducing marginal income tax rates has been shown to motivate people to work more. Lower corporate and investment taxes encourage the savings and investment vital to producing more and better plants, equipment, and technology.

By contrast, tax rebates fail, because they do not encourage productivity or wealth creation. To receive a rebate, nobody has to work, save, invest, or create any new wealth. [...]

Read the whole thing, it goes on to give examples from recent history: the failed 2001 tax rebates, and the successful 2003 tax cuts, which illustrate this dynamic in action. You can't "fix" the economy, without a basic understanding of how it works.

I always thought this understanding of wealth creation was common sense. But is it? We've elected a government that is going to do the opposite of creating wealth, at a time when wealth and job creation is most crucially needed. It seems common sense isn't so common anymore.

Yet ironically, the latest Rasmussen poll shows that a majority of Americans see a problem looming:

59% Fear Too Much Government Spending Is Coming

Hat tip to Neal Boortz for the link. He said about it:

Well duh! What did you expect when you voted these people into office? A bit late to worry about that, don't you think?

If you vote in a Democrat majority, expect them to behave like Democrats and do Democrat things. Duh, indeed.


Related Links:

Dave Ramsey's solution for the financial crisis

Financial Crisis: a free-market solution?