The American Dream Is Now Officially Unaffordable

[fskimospy]

What I mean when I say net destroyer, is if you compared the total jobs pre tax, vs post, the economy would have more jobs.

The government currently is ineffective so even if it were possible for the government to in net create jobs, they can't for now.

Yes, I know. I disagree with both of those things.

 

[werepossum]

Yes, I know. I disagree with both of those things.

One has only to examine the resounding economic success of Cuba, North Korea, the Soviet Union, and Red China before it disastrously embraced capitalism to understand how the economy naturally blooms when government creates the jobs.

 

[Exophase]

So housing bubble aside ( it happens and really it's still a good investment), purchasing home is still the best investment you can make in your lifetime.

I'll give you an example the condo I bought is 2 bed and 2 fully baths and costs me $1,085 a month with only 3% down ($160,000 home). A comparable rental in this area would cost about $1450-$1650 a month.

Lets say I never go for a larger home. When I retire the person on rent is likely paying $2,000 or so a month (possibly more) for rent. Meanwhile my condo is paid for and I'm only shelling out $275 a month for taxes and lets raise the condo fees dramatically and say $225 a month for them. My expensive in retirement for my roof is $500, yours is $2,000. But somehow it's overrated?

There's also the fact that I'll still be working for some years with that lower income as well. Or the fact that I will keep the house, pay it off in 3-5 years, and then earn $1,200 a month immediately on rent that will go towards my next property. You may not like homeownership - but it's far from overrated. ESPECIALLY when looking at retirement.

I actually have a house that's paid up, it's a falling apart old mess though, and yeah I find that overrated I'm not talking about renting the equivalent of a house as an alternative, and I actually don't consider a condo to be a house to begin with (I'm much more open to buying a condo right now). And this calculation varies a lot depending on where you live (that is, a two bed/two bath apartment is not nearly $1500 here, you can get them for half that)

I think you're taking "overrated" way too seriously. That doesn't mean it's a bad idea, it means that I think some people are way too obsessed with owning a house at all costs.

 

[fskimospy]

One has only to examine the resounding economic success of Cuba, North Korea, the Soviet Union, and Red China before it disastrously embraced capitalism to understand how the economy naturally blooms when government creates the jobs.

One has only to laugh at your absurd hyperbole to expose how your statements are devoid of any empirical support. It's okay, emotionally you feel that it has to be true therefore it is true. Anyone who disagrees is part of the conspiracy.

 

[realibrad]

One has only to laugh at your absurd hyperbole to expose how your statements are devoid of any empirical support. It's okay, emotionally you feel that it has to be true therefore it is true. Anyone who disagrees is part of the conspiracy.

I asked tex this earlier.

Name a country that has had success for 20+ years that is not capitalist. Not pure capitalist, as there isint one. Just like there isint pure socialist. But still, try and find one.

 

[fskimospy]

I asked tex this earlier.

Name a country that has had success for 20+ years that is not capitalist. Not pure capitalist, as there isint one. Just like there isint pure socialist. But still, try and find one.

I don't see how that is relevant to what I wrote. I am a big supporter of capitalism, but the idea that government is a net destroyer of jobs is not empirically supported.

 

[ivwshane]

I asked tex this earlier.

Name a country that has had success for 20+ years that is not capitalist. Not pure capitalist, as there isint one. Just like there isint pure socialist. But still, try and find one.

China. I'd consider china one of the most successful countries in history.

 

[Fern]

China. I'd consider china one of the most successful countries in history.

Erroneous example.

China began the shift toward capitalism in the late 70's/early 80's.

https://www.mtholyoke.edu/courses/sgabriel/economics/china-essays/18.htm

Even I think they shifted too far. They're polluting the heck out of their country. The desperately need regulation.

Fern

 

[ivwshane]

Erroneous example.

China began the shift toward capitalism in the late 70's/early 80's.

https://www.mtholyoke.edu/courses/sgabriel/economics/china-essays/18.htm

Even I think they shifted too far. They're polluting the heck out of their country. The desperately need regulation.

Fern

Lol! Are you trying to make my point? China existed just fine for 5000 years, I'd say they did a pretty good job.

 

[Fern]

Lol! Are you trying to make my point? China existed just fine for 5000 years, I'd say they did a pretty good job.

I guess you and I have a different understanding of what "successful" means.

Prior to adopting capitalist reforms China had a poverty rate of 85%. So in spite of existing for thousands of years they've only recently become successful as a result of adopting capitalism.

http://en.wikipedia.org/wiki/Poverty_in_China

Fern

 

[simpletron]

The survey's calculations has flaws.
http://www.usatoday.com/story/money/personalfinance/2014/07/04/american-dream/11122015/

First, the median home price is 213,400 as of may 2014, This would cut nearly 4K from housing to $13,134.

Groceries at 12,659 or 1055/month is a not trying to be thrift budget for a family of 4. I know you can feed a family of 6 for less than that easily if you're decent with sales/coupons.

Car expenses at 11,039 for a single 4WD SUV is outrageously expensive, but you can have two cars, buying a new car every 5 years and keeping them 10 years costs close to that, which is closer to my version of the american dream for family of 4.

Medical expenses is based on the milliman medical index with 5544 employee contribution, 3600 out of pocket expense, and 12,886 employer contribution. The family could use 2500 fsa for a tax deduction later.

what is the 4K for "education expense", you can't sent two kids to private school for 4K and public school cost + school supplies isn't 4K. Is this some weird average of the two because it doesn't list the source directly. let's use 500 for public school.

Apparel at 2631 and utilities at 1956, neither seems wrong to me.

Extras(Vacation - 4580, entertainment - 3667, restaurants - 3662, cable, internet, cell - 3100, Misc. - 2000), while none of these is outrageous, all of them are easy to cut down if you want to.

Savings of 5000 for college and 17,500 for 401K are good habits.

Taxes of 32,357 is a WAG(wild-ass guess). it pegged a flat 30% of income per a model for this income level, but is it no way close to this household(married with kids). The national average property tax rate is ~1%, so property taxes on the house are ~2500. Car taxes assumed to be 1000/year(probably high). Assuming state income tax rate is flat 6%(higher than most states' effective tax), then family would pay 8072 in FICA, 5281 in state, and 6141 federal(standard deduction/exemption, two $1000 child tax credits, 17500 401K deduction, 8044 healthcare deduction(5544+2500)). Total taxes of 21995.

Gross income is $113,567. If you cut 10,000 from the extras and food(coupons, drive on the vacation instead of flying, eat out only once a week, etc.) then this number drops below $95,000 because of the reduce taxes and 401K to maintain a 15% savings rate.

In 2012 for 4 person households, median income is 79698, 40% made more than 95K, 29% made more than 115K, and 23% made more than 130K. Hard to think the american dream isn't affordable.
http://www.census.gov/hhes/www/cpstables/032013/faminc/finc01_000.htm

 

[Attic]

Now it takes two workers per household to have a shot at the American dream, whereas before it was one worker. Even with two workers, it's more expensive today to live the american dream that it used to be.

Most gains in real income have been going to the top 5% (and mainly the top 0.1%) despite productivity gains for the past 30 years.


Should be clear why the American Dream has drastically changed. Offshoring.



Things are more expensive now as well, a result of the skim of our monetary system that delivers profits and interest to the top.

Loosely defining the American dream as a Home, Car and sending kids to college this article should be revealing.

Comparing the inflated cost of living today from 1950 to 2014: How declining purchasing power has hurt the middle class since 1950.
-note in examples it's talking about family income, not indvidual income. In 2014 it's much more common for two income families than in 1950 yet critical purchases like home/cars were still cheaper for a family in 1950 compared to a family in 2014. Price of college has of course exploded as well not just on a dollar basis, but on a ratio of family income.

Inflation has a subtle eroding effect that impacts entire economies. In the United States, we have been fortunate to have relatively stable rates of inflation for two generations. Even in times of high inflation like the 1970s, people were able to adjust unlike places that experience uncontrolled inflation like Argentina is currently facing. Also, wages rose in tandem which helped buffer the pain of higher costs. Today however, inflation has eroded the purchasing power of the middle class. Only when we look at longer periods of time do we see the large impact inflation has on our ability to buy real goods and services. People found a piece comparing 1938 and 2013 prices on various goods and items to be enlightening. Since our middle class did not fully emerge until the end of World War II, it might be useful to compare the price of items back from 1950 to where things stand today. Has inflation had a big impact on our purchasing power since 1950?

...

1950
Home price / income = 2.2
Car cost / income = .45
Tuition / income = .18

2014
Home price / income = 3.7
Car cost / income = .61
Tuition / income = .79
...
Housing has gotten dramatically more expensive. The cost of a new car has gone up but not so noticeably when looking at inflation data. Inflation has largely eaten away at income on other fronts like college tuition and healthcare. These were much more affordable back in the 1950s relative to overall income.

source: http://www.mybudget360.com/cost-of-living-2014-inflation-1950-vs-2014-data-housing-cars-college/


Folks aren't imagining that they can no longer afford the american dream, for an increasing number of folks, they simply can't.

Not an Obama vs world thing. But Obama is 100% better than Romney would be on this front. The issue drives much deeper than the current president.

 

[postmortemIA]

.

... Hard to think the american dream isn't affordable.
http://www.census.gov/hhes/www/cpstables/032013/faminc/finc01_000.htm

If you cut all that, it is not dream anymore. You think you can do it from year to year? I don't think so.

 

[OverVolt]

..

 

[werepossum]

Lol! Are you trying to make my point? China existed just fine for 5000 years, I'd say they did a pretty good job.

And pre-capitalism, China's national sport was fending off malnutrition if not mass starvation, while the West prospered.

 

[Tweak155]

Why don't you clearly define "the american dream"? Likely everyone's opinion varies. At least get on the same ground about what you're arguing over before you start arguing.

I haven't had financial problems since I started earning $5.50/hr as a teenager, then again ~$50k out of college when I was already living on my own. I have no idea if I was living "the american dream" though.

As long as you can support your lifestyle and will not run into financial burden due to good planning, what does it matter what "the american dream" is?

 

[boomerang]

And pre-capitalism, China's national sport was fending off malnutrition if not mass starvation, while the West prospered.

Don't forget mass murder. But, ivwshane feels they did just fine. That says a lot.

 

[realibrad]

I don't see how that is relevant to what I wrote. I am a big supporter of capitalism, but the idea that government is a net destroyer of jobs is not empirically supported.

The reason capitalist economies are almost always more successful when compared to socialist is the important issue.

The government has some very core things it does subjectively well. A socialized army has its interest inline with its nation vs a private army that goes to the highest bidder.

The issue for a socialist economy is the top does not get the feedback it needs to stay efficient. Market forces in capitalism direct where resources should go. It sometimes breaks, or may be slower to react than we would like, but it on net works out pretty well.

Socialism has a problem of incentives when done through a democracy. To get elected, they will do the peoples will. When other people decide what should be done with resources that are not directly impacting them, you get big problems. So when people think the pill is not moral, they lobby to get it removed from insurance. Or, when people think that ethanol should be put into gas, it happens, even though it is a net increase in pollution.

Socialism can force people to do good when it works, or force them to do bad when it does not. Capitalism, when costs are actually applied, gives people a larger return to do the right thing. We both agree that people can break the system, and that requires regulation. So, if you look at the total jobs in a socialist economy you see that there are fewer jobs compared to a capitalist one. Thus the logic is that capitalism is the optimal structure, and everything else has fewer jobs, so socialism on net creates fewer jobs.

 

[fskimospy]

The reason capitalist economies are almost always more successful when compared to socialist is the important issue.

The government has some very core things it does subjectively well. A socialized army has its interest inline with its nation vs a private army that goes to the highest bidder.

The issue for a socialist economy is the top does not get the feedback it needs to stay efficient. Market forces in capitalism direct where resources should go. It sometimes breaks, or may be slower to react than we would like, but it on net works out pretty well.

Socialism has a problem of incentives when done through a democracy. To get elected, they will do the peoples will. When other people decide what should be done with resources that are not directly impacting them, you get big problems. So when people think the pill is not moral, they lobby to get it removed from insurance. Or, when people think that ethanol should be put into gas, it happens, even though it is a net increase in pollution.

Socialism can force people to do good when it works, or force them to do bad when it does not. Capitalism, when costs are actually applied, gives people a larger return to do the right thing. We both agree that people can break the system, and that requires regulation. So, if you look at the total jobs in a socialist economy you see that there are fewer jobs compared to a capitalist one. Thus the logic is that capitalism is the optimal structure, and everything else has fewer jobs, so socialism on net creates fewer jobs.

Socialism and capitalism are not mutually exclusive, it is a continuum. Every nation on earth is socialist to some extent, the only question is how far they go. In fact, your post implicitly acknowledges that socialism in some areas will be a net benefit for society, and if we were to privatize those sections we would be worse off. That seems to be conceding my point.

 

[realibrad]

Socialism and capitalism are not mutually exclusive, it is a continuum. Every nation on earth is socialist to some extent, the only question is how far they go. In fact, your post implicitly acknowledges that socialism in some areas will be a net benefit for society, and if we were to privatize those sections we would be worse off. That seems to be conceding my point.

I agree that there is not a pure form of either type and for good reason. I think the issue here is how we are subjectively defining negative and benefit. GDP will be higher under Capitalism compared to Socialism. When I said it was a negative, I was talking in GDP terms and jobs.

So when werepossum said

The only way government can give someone a job is to take enough from others to fund that job plus the inefficiencies of government. That's a net negative for the economy.

he was correct.

For your view to be correct in job creation, it would have to come through efficiency gains greater than the cost of collection. It can happen, by when look at all the social programs and how they are typically run, you see that net its a "negative" in almost every way.

So when something is done that typically does not create more jobs than it takes or stops from being created, you can call it a net negative.

 

[fskimospy]

I agree that there is not a pure form of either type and for good reason. I think the issue here is how we are subjectively defining negative and benefit. GDP will be higher under Capitalism compared to Socialism. When I said it was a negative, I was talking in GDP terms and jobs.

Disagree. See below.

So when werepossum said he was correct.

For your view to be correct in job creation, it would have to come through efficiency gains greater than the cost of collection. It can happen, by when look at all the social programs and how they are typically run, you see that net its a "negative" in almost every way.

So when something is done that typically does not create more jobs than it takes or stops from being created, you can call it a net negative.

Yes, and I think for certain segments that a socialized answer is more efficient than a capitalist one is obviously the case. If we didn't have a socialized army everyone would have to contract out private armies. That's likely to lead to duplicative efforts and more army-ness than is necessary, not to mention societal interruption from the minor wars that are likely to break out. GDP under such a situation is very likely to be lower.

There are many examples of this.

 

[realibrad]

Disagree. See below.



Yes, and I think for certain segments that a socialized answer is more efficient than a capitalist one is obviously the case. If we didn't have a socialized army everyone would have to contract out private armies. That's likely to lead to duplicative efforts and more army-ness than is necessary, not to mention societal interruption from the minor wars that are likely to break out. GDP under such a situation is very likely to be lower.

There are many examples of this.

There are a lot of assumptions, but the core seems to be the worry of duplicated efforts. So in theory, Socialism should eliminate duplicated efforts. In reality, socialist countries tend to have more redundant positions than the Capitalist counterparts. Short run Socialism usually seems like a good idea, until those broken feedback loops start to mount up inefficiencies.

There is a reason just about every successful country is more capitalist than socialist.

 

[TheSlamma]

I disagree,

there is a new American dream now and it's not the same as it was from 1776 - 1999.

Now it's all about just balancing credit out so that you can look like you are living the high-life and MILLIONS of Americans are doing it just fine, dream accomplished.

You are living in a dream world Neo that we call the "Credit Matrix". Best part is you don't even have to know you don't own a single thing, you are a Lessee for everything. And here if you take the blue pill (liberal) or the red pill (conservative) they both still drop you off right in the same matrix, though a placebo effect might trick you into thinking your favorite color has a different outcome, fact is it doesn't.

 

[fskimospy]

There are a lot of assumptions, but the core seems to be the worry of duplicated efforts. So in theory, Socialism should eliminate duplicated efforts. In reality, socialist countries tend to have more redundant positions than the Capitalist counterparts. Short run Socialism usually seems like a good idea, until those broken feedback loops start to mount up inefficiencies.

There is a reason just about every successful country is more capitalist than socialist.

You're retreating to generalities. Are you arguing that if the average country disbanded its army and police forces in lieu of individuals relying on their own private security that overall economic performance would improve?

 

[realibrad]

You're retreating to generalities. Are you arguing that if the average country disbanded its army and police forces in lieu of individuals relying on their own private security that overall economic performance would improve?

You are making the assumption that every individual would hire their own security, vs banding together to pool resources to hire security. I dont presume to know how the society would implement security beyond the current structure. Thats not really the point though, because its such a complex issue that is not truly what we are talking about here.

Its why I summed up your argument as socialism being about organizing resources which includes labor and directing to efficient uses. Its far less productive to try and argue a topic through a "what if" because the parameters are almost endless.

The issue is, can government create more jobs than the taxes is levies ends or holds back?