Replace Trickle Down with Middle Class up

[werepossum]

Inflation (deflation) is the sustained increase (decrease) in the general level of prices for goods and services. Has nothing to do with income.

I do enjoy your sarcasm when you can't even get the basic terminology right.

Disagree. If prices increase 50% a year, that's hyperinflation - everything costs more in real terms. If prices increase 50% a year but wages increase 100% a year, that's deflation - everything costs less in real terms, so you can purchase more goods and services. I don't think inflation or deflation have any valid definitions independent of income, otherwise we could easily cure runaway inflation by simply issuing a new currency, with one new Obama dollar to ten old racist white guy dollars. Presto chango, everything is now cheaper!

Except . . . everything isn't cheaper.

 

[glenn1]

Disagree. If prices increase 50% a year, that's hyperinflation - everything costs more in real terms. If prices increase 50% a year but wages increase 100% a year, that's deflation - everything costs less in real terms, so you can purchase more goods and services. I don't think inflation or deflation have any valid definitions independent of income, otherwise we could easily cure runaway inflation by simply issuing a new currency, with one new Obama dollar to ten old racist white guy dollars. Presto chango, everything is now cheaper!

Except . . . everything isn't cheaper.

The term you're looking for in your example of increased wages vs. inflation is 'purchasing power.' If prices increased 50% that's inflation by definition.

 

[Blackjack200]

And who told you that? Just taking a quick look at the political landscape implies the exact opposite is true. People on the left are going more extreme by supporting Bernie Sanders, and people on the right are going more extreme by supporting Donald Trump. That kind of political extremism only happens when the economy is bad. There are tons of examples of this throughout history. People didn't revolt against the king of France because the economy was doing awesome. People didn't vote for Hitler because everything was awesome. Even our own history shows this behavior. The revolution against Britain was economic in nature.

Your political analysis is as suspect as your economic analysis, but let's not go there. Are you disputing that the American economy is growing, quarter over quarter, and that we have been out of recession since June 2009?

Let's take a quick look at the numbers. Source:
http://www.federalreserve.gov/econresdata/scf/scfindex.htm

Median net worth of every age demographic is down:

Median income for every age demographic except those 65+ is down:

For the bottom 90%, there has been no economic recovery:

Economic growth does not require median net worth or income improves, nor does it require that anyone outside the top 10% see a recovery. It merely requires that the total amount spent on finished goods and services increases.

And their names are?

Apple, Google, Microsoft, and IBM (Samsung, South Korea, is the fifth)

The drug industry is as much about bribing politicians as it is about making products. Having your office located in the US makes it easier to bribe politicians. It's also done for regulatory reasons. The FDA wants to be involved in every step of the approval process, so you try to locate your company as close to the FDA as possible while the drug is being developed. You can base your drug company in India, but you'll have a bitch of a time getting products to market.
Did you ever notice that generic drugs are always made in India? Why is that? It's because the drug has already been approved. All of the bribery steps have been completed, so it's safe to move operations to India to cut costs. Companies could make already-approved drugs in the US, but they choose not to.

Okay. I'm not going to try to disect the pharmeceutical industry with you. I'd be curious as to which politicians are being bribed because I've never heard anyone suggest that FDA approval is a political process.

But it's rapidly shrinking in percentage terms. The population of the US is rising, but the number of manufacturing jobs is declining.

Okay, that's eminently true. But manufacturing is still a major US strength when compared to the rest of the world.

For whatever reason, people assume that there's a limited amount of stuff to manufacture, so they assume it's natural for our manufacturing to decline while China's rises. People assume that if I'm making a product, that means you can't be making a product. This type of thinking is deeply flawed because there are no limits to human wants. It's possible for me to make a product you want to buy, while at the same time, you are making a product I would like to buy.

Actually there's a fairly well known economic principal that contradicts this.

https://en.wikipedia.org/wiki/Diminishing_returns

The same weird logic is applied to jobs as well. People think that if you let a million people into the US, the number of jobs stays the same, and it leads to a million unemployed Americans. People also use this logic to assume that we'll all be unemployed when computers become mainstream. Here we are, with computers everywhere, and I'm working on right now, yet most people have jobs. The computer didn't take my job. It made me more productive at my job. It changed my job.

That's different. A million more people create more aggregate demand, which is what allows those additional jobs to be created. The computer thing has absolutely nothing to do with any of it. You're talking about short term labor dislocations resulting from new technology.

China making stuff DOES NOT explain why our manufacturing is in decline. We should be making stuff too. They can sell things to us, and we can sell things to them. We already do this on some level; it's not like America has zero exports. Those Chinese people want stuff too, and we could be the ones making it. We already sell things like trains and passenger jets, so why can't we sell them other things? Our manufacturing should be increasing to deal with China's increased demand for consumer products. It's not increasing, and we should try to figure out why. China is not our enemy. They're not stealing our jobs, just as immigrants and computers are not stealing our jobs.

Okay, so make a thread about it. The point is, Manufacturing remains a source of business investment in the United States.

Oh?
rent rising much faster than wages. That crazy Wall Street Journey and their conspiracy theories about rising cost of living.
CNN saying the same thing. But you can keep saying to yourself that the cost of living is not rising, the poverty rate is not rising, food stamps usage is not at a record high, child poverty is not at a record high.
(This stuff isn't Obama's fault. The system has been declining for many years.)

Yes, how does that contradict any of what I said? Is housing cost not 40% of CPI?

Poverty rates, food stamps, etc. have nothing to do with the rate of inflation.

Biflation is when inflation and deflation exist at the same time but in different asset classes or places. This is the logical result of a limited amount of capital chasing an unlimited amount of goods or services. If my job pays me $100, I must decide where that money goes. If I'm a renter and rent is getting more expensive, more of my money will go into rent (inflation), which means less of my money will go into consumer spending (deflation).
The best example of this was is during Germany's hyperinflation. The price of food increased dramatically in real terms, but the price of real estate crashed through the floor in real terms. Imagine a scenario where a loaf of bread is $10, but you can buy a house for $20,000. The loaf of bread is unusually expensive, but the house is unusually cheap. That's biflation.

So biflation is a meaningless term for something that happens all the time anyway.

I'm also not sure why people get on his case for being concerned about Peak Oil. So far, everything we've seen agrees with the general concept of peak oil. 100 years ago, you could drill a hole in the ground, pipe a pipe in the hole, and oil comes out for the next 40 years. Now we're resorting to weird stuff like fracking and tar sand to get oil (I'm very slowly starting to invest in Suncor for this reason). That tar sand was there 100 years ago, and it's at surface level. Nobody thought to extract the oil because there was no reason to. Conventional oil is getting harder to find, so we're resorting to more complicated and expensive ways of extracting oil. It's ultimately a race of technology. Chris is pessimistic about future developments in technology because he's looking at it in terms of energy in vs energy out. In the past, one could expend 1 barrel of oil to get 50 barrels back. For something like tar sand, one needs to burn a barrel of oil to get only 3 barrels of oil back. Chris believes that this trend will eventually get near a 1:1 ratio, so there won't be any feasible way to extract energy.
I'm a lot more optimistic. Oil is just one form of energy. That yellow thing in the sky seems to have a lot of energy. The wind has a lot of energy. Ocean currents have a lot of energy.

Peak oil was a reasonable hypothesis 15 years ago, when most drilling was fairly conventional. It made sense, to me at least, that eventually we would reach an apex where production has maxed out but demand was still growing, and given the inflexibility of oil demand, a major price spike and huge economic jolts would follow.

Of course, now we konw that's not what happened. As oil prices climbed past $60 and $70 a barrell, energy companies began extracting oil that we'd thought was not recoverable. To still be talking about peak oil today is silly. There's a lot of production that slack right now because of low prices.

 

[sm625]

Of course there's no inflation. Spoken by the local Fed mouthpiece.

This letter, and millions like it, do not exist. There is no inflation.

 

[Sonikku]

Americans make lots of money. They make more than enough to invest. The problem is lifestyle.

This. Just look at college spending. Americans are spending seven times as much on their college as they did three decades ago. They really need to be less frivolous and spend only as much as their parents did on this stuff.

 

[realibrad]

This. Just look at college spending. Americans are spending seven times as much on their college as they did three decades ago. They really need to be less frivolous and spend only as much as their parents did on this stuff.

There is nothing inherently wrong or right about spending as much as we did in the past. The issue is that people are spending money and not looking at the returns they get. It could very well be that spending more than we did in the past is the right thing, but I dont know. What I do know is that I see many people living well outside of their means.

 

[Blackjack200]

Of course there's no inflation. Spoken by the local Fed mouthpiece.

This letter, and millions like it, do not exist. There is no inflation.

If inflation is low that means that no individual price will ever go up by a large amount ever. Yeah.

 

[BoberFett]

Inflation (deflation) is the sustained increase (decrease) in the general level of prices for goods and services. Has nothing to do with income.

I do enjoy your sarcasm when you can't even get the basic terminology right.

Wow. Just wow.

 

[Spungo]

Your political analysis is as suspect as your economic analysis, but let's not go there. Are you disputing that the American economy is growing, quarter over quarter, and that we have been out of recession since June 2009?

Yes I'm disputing that. If the government says the economy grew 2-3% in nominal terms, but the inflation rate is significantly higher than 2%, that means the economy is contracting in real terms. This explains so much of what we see. A contracting economy explains why overall home ownership is at a 48 year low, and home ownership among young people is at an all time low. A contracting economy explains why child poverty is so high. A contracting economy explains why so many people are underemployed, working jobs well below their skill level. A contracting economy explains why wages have been falling. A contracting economy explains why the savings rate is so low.

Apple, Google, Microsoft, and IBM (Samsung, South Korea, is the fifth)

Apple: Approximately 12,000 good paying jobs in California. The other 100,000 jobs are either minimum wage retail jobs (Apple store) or located outside the US. The hundreds of thousands of people making Apple products are in China, Taiwan, South Korea. This means the overwhelming majority of economic activity created by Apple is happening in China, Taiwan, and South Korea. Most of Apple's profits are outside of the US because that's the direction money is flowing - from the US to China. This situation is why guys like Obama talk about giving some kind of tax amnesty and encourage companies like Apple to bring that money back to the US. Describing Apple as an American company is very misleading.

Google: About 55,000 US employees. That's a considerable amount, so you get a point on this one. Google is heavily invested in the US, and they cause money to flow into the US. Google is a great company.

Microsoft: About 42,000 good paying jobs in Washington. Like Google, this one does causes money to flow into the US, so you get a point on this one.

IBM: This company is running from the US as quickly as possible. They've actually stopped reporting how many US employees they have. story. The last report was 5 years ago, and it said about 1/4 of its employees were American. Since then, they've had huge layoffs. Simply put, the majority of IBM is not American.
On an unrelated note, the yearly report for IBM gives the impression that this company is a complete mess. It reads like something AMD would put out. Lots of talk about "restructuring" and "synergies" to cut costs. One would think the company is losing money like crazy, but they're not. It's a hugely profitable company. The scramble to offshore everything is puzzling.

Okay. I'm not going to try to disect the pharmeceutical industry with you. I'd be curious as to which politicians are being bribed because I've never heard anyone suggest that FDA approval is a political process.

Fair enough. Institutional corruption of the FDA.
The way it works is very simple. Suppose I'm making a drug, and you work for the FDA. If you rubber stamp my drug, there will be a multimillion dollar consulting job waiting for you, and we'll give you stock options so you can get a share of the profits. You'll get a bigger paycheck if you also slow down the competition's drug approval so my drug hits the market 1 year sooner than theirs.

We see the same corruption in the banking world. Also in national defense. Sometimes it's just blatant. They don't even try to hide it. Give a billion dollar contract to a defense company then immediately get a very well paying job at that same company? What are the odds?

Okay, that's eminently true. But manufacturing is still a major US strength when compared to the rest of the world.

Indeed, we still have strong manufacturing, and the US is still a relatively good place to start a business, but it could be better. We keep working with this assumption that absurd regulation has no effect on business, such as asking that woman to invest millions of dollars in equipment just to sell home made yogurt at a farmer's market, but it does have an effect. Sure it's just 1 woman selling yogurt, but that's how every business starts. McDonald's didn't start as a billion dollar company. It started with 1 person. These hurdles we put in place to slow the economy are preventing big things from getting started.

What are the areas where the US has the most growth? Software and entertainment. Why? Because they have no government barriers of entry. Facebook started with 1 guy. The government didn't try to stomp on him or regulate him out of existence, so he was able to grow a very large company. Most entertainment has no barriers either. If you want to make music, pick up a guitar and start playing. You don't need a guitar license, you don't need to send your guitar to a licensed guitar inspector to make sure it's in tune. What are the areas that have the most regulation? Manufacturing, and look what's happening to it. The American entrepreneurial spirit is alive and well in the world of software, and people start new software companies every day, but it's completely dead in manufacturing. That woman just wants to make some yogurt, and the government is cock blocking her. Why? It's not a space shuttle. It's not a bridge. It's yogurt.

Yes, how does that contradict any of what I said? Is housing cost not 40% of CPI?

Ok so we agree that housing costs are exploding, we agree that medical costs are exploding, we agree that education costs are exploding, but there's no inflation because the CPI says there's no inflation?

 

[SMOGZINN]

These hurdles we put in place to slow the economy are preventing big things from getting started.

That is what they are intended to do.

What are the areas where the US has the most growth? Software and entertainment. Why? Because they have no government barriers of entry. Facebook started with 1 guy. The government didn't try to stomp on him or regulate him out of existence, so he was able to grow a very large company.

But once he got that billion dollar company he started to work to get the government to make it hard for others to do the same thing. Now if you write any code you better hope that someone like Facebook doesn't decide to sue you for patent infrigement for having a like button.

Most entertainment has no barriers either. If you want to make music, pick up a guitar and start playing.

But you better hope it is not too similar to some music someone else has already played. You might have no knowledge of that obscure song, but you will need tens of thousands of dollars to prove that in the courts.

 

[BoberFett]

That is what they are intended to do.


But once he got that billion dollar company he started to work to get the government to make it hard for others to do the same thing. Now if you write any code you better hope that someone like Facebook doesn't decide to sue you for patent infrigement for having a like button.



But you better hope it is not too similar to some music someone else has already played. You might have no knowlage of that obscure song, but you will need tens of thousands of dollars to prove that in the courts.

Agreed. But I'm always curious why we expect the entity that causes the problem to begin with (government intrusion in the form of enforcing horrible patents, copyrights, regulatory capture, and other forms rent seeking) will also provide the solution.

You might not want to throw the baby out with the bathwater, but how exactly do you fix some of these things without starting over? Copyright length is a problem, but the pendulum has never swung the other direction. It only gets longer.

 

[Spungo]

You might not want to throw the baby out with the bathwater, but how exactly do you fix some of these things without starting over? Copyright length is a problem, but the pendulum has never swung the other direction. It only gets longer.

A lot of the problems are caused by the ability to sue people for bullshit reasons. Right now, I can sue you for any reason. I won't win, but I can still crush you financially.

There should be some kind of crime for abusing the legal system. In Babylon, the punishment for abusing the legal system was extreme.
http://mcadams.posc.mu.edu/txt/ah/Assyria/Hammurabi.html#Hammurabi.Law.1

[1] If any one ensnare another, putting a ban upon him, but he can not prove it, then he that ensnared him shall be put to death.

Some of the other laws were less logical.

[2] If any one bring an accusation against a man, and the accused go to the river and leap into the river, if he sink in the river (drown) his accuser shall take possession of his house. But if the river prove that the accused is not guilty (what?), and he escape unhurt, then he who had brought the accusation shall be put to death, while he who leaped into the river shall take possession of the house that had belonged to his accuser.

In theory, we have similar laws, but it doesn't seem to be the case. If lawyers were disbarred for going along with bullshit cases, the practice would stop immediately.

 

[JEDI]

I think this segment from the documentary hits the nail on the head (1hr 5min mark):
When you give rich business people tax breaks all in the name of job creation, all that really happens is that the fat cats get fatter.

and that's what happened in the past 30yrs.

the tax rate on the rich never went below 70% till Reagan. He dropped it to 38%.
and that's when the economic problems started w/the middle class.

less tax revenue meant states had to cut funding for public higher education (college), which lead to higher tuition.
higher tuition = less people going to college

less educated people = lower wages
lower wages = less tax revenue

vicious cycle...

 

[Jaskalas]

Having watched the full length of that documentary, I have to give Robert Reich credit.

The man is a well reasoned intellectual who authentically and accurately argues his economic points with impactful data. His presentation here demands respect and a well constructed response. Failing to rise to that challenge would suggest we lack a proper alternative.

 

[Gonad the Barbarian]

Having watched the full length of that documentary, I have to give Robert Reich credit.

The man is a well reasoned intellectual who authentically and accurately argues his economic points with impactful data. His presentation here demands respect and a well constructed response. Failing to rise to that challenge would suggest we lack a proper alternative.

:thumbsup:

But I think there simply isn't a proper alternative.

 

[Jaskalas]

"Inequality For All by Rober..." This video is no longer available due to a copyright claim by The Weinstein Co..

So they don't want anyone seeing this...
Why bother making a policy documentary if we cannot spread it far and wide and change people's minds?

 

[MagickMan]

Yup, the wealthiest of Americans accrue their money at the same rate the lower classes build up debt. That's not a coincidence. Stop spending with reckless abandon and you'll weaken the upper class while reinforcing your own financial positions.

Then the #1 focus should be to educate Americans to stop buying things with debt.

This was simply too much for the ProgLeft to handle?

 

[Ausm]

Start with the largest area of spending in the budget and cut it.

Military and\or Corporate Welfare?

 

[MagickMan]

Military and\or Corporate Welfare?

Yup, great place to start.

 

[MovingTarget]

Video unavailable due to copyright claim by the Weinstein Co.

Blargh.

 

[Fanatical Meat]

Video unavailable due to copyright claim by the Weinstein Co.

Blargh.

Relax everyone its here on the publisher's YouTube page:

http://m.youtube.com/watch?v=q-rpkZe2OEo

 

[MovingTarget]

Relax everyone its here on the publisher's YouTube page:

http://m.youtube.com/watch?v=q-rpkZe2OEo

Thanks.

 

[Darwin333]

Jesus Christ Almighty.

No one wants to tax anyone at 100%. You can keep flouting that red herring all you want. It just makes you and Paul Ryan, the scam artist, look like idiots trying to argue against something that no one is even talking about implementing.

There's a logical fallacy for that, I believe.

Having a higher tax rate that requires your dear JobCreators™ to pay a little more can be offset by, perhaps, not sending jobs overseas. By reinvesting a little of their or their company's profits back into the business. Etc.

Higher tax rates didn't stop people from becoming rich before. And no millionaire ever decided that because taxes are just too high, that they wouldn't go out and try anyway. Funny that.

I don't understand this logic. You are saying the rich will stop taking profit at 5M and instead re-invest the money into the company to make more profit that they won't be able to take. So they will just continually make more and more money that they can't actually personally take in profit year after year? What exactly is the motivation in that?

 

[Darwin333]

Fair enough. Institutional corruption of the FDA.
The way it works is very simple. Suppose I'm making a drug, and you work for the FDA. If you rubber stamp my drug, there will be a multimillion dollar consulting job waiting for you, and we'll give you stock options so you can get a share of the profits. You'll get a bigger paycheck if you also slow down the competition's drug approval so my drug hits the market 1 year sooner than theirs.

We see the same corruption in the banking world. Also in national defense. Sometimes it's just blatant. They don't even try to hide it. Give a billion dollar contract to a defense company then immediately get a very well paying job at that same company? What are the odds?

Even worse is the way Congressmen and aides that are instrumental in passing laws then leave Congress and become absurdly high paid lobbyists for the very same people they just passed laws for. This is especially true for medical and pharma bills (probably defense too). Medicare Part D is particularly disgusting:

http://www.propublica.org/article/medicare-drug-planners-now-lobbyists-with-billions-at-stake-1020

How is this not outright bribery and conflict of interest. Does anyone really believe that these guys weren't promised those jobs in order to pass the bills or add certain language to the bills, like no negotiating for drugs, beforehand? I'm not sure about aides but lawmakers should be barred from ever becoming lobbyists ever. It's a clear conflict of interest, don't like it then don't run for public office.

 

[Darwin333]

Agreed. But I'm always curious why we expect the entity that causes the problem to begin with (government intrusion in the form of enforcing horrible patents, copyrights, regulatory capture, and other forms rent seeking) will also provide the solution.

You might not want to throw the baby out with the bathwater, but how exactly do you fix some of these things without starting over? Copyright length is a problem, but the pendulum has never swung the other direction. It only gets longer.

Take the money out of politics and remove the lure of being a public servant as a pathway to high 6 figure salaries as lobbyists for passing bills that benefit certain industries.