The Poor Are More Generous Than Wealthy Folks: What This Means – Part Two

Continued from part one here

Which brings us to one last element that should be addressed here: what does this mean for the believers of the failed theory of trickle-down economics?  The rich having the bulk of the money and wealth is a good thing for the believers of this ridiculous theory because everything will trickle on down to the lower classes and everybody will be living in a utopia.  Except it hasn’t and the inequality only continues to get worse.  But the argument always goes further by saying if the rich had to pay less taxes, they would give more money to charity and that would make its way down.  Also not true as the article states:

Of the 50 largest individual gifts to public charities in 2012, 34 went to educational institutions, the vast majority of them colleges and universities, like Harvard, Columbia, and Berkeley, that cater to the nation’s and the world’s elite. Museums and arts organizations such as the Metropolitan Museum of Art received nine of these major gifts, with the remaining donations spread among medical facilities and fashionable charities like the Central Park Conservancy. Not a single one of them went to a social-service organization or to a charity that principally serves the poor and the dispossessed.

Yep. They are laughing at you, not with you.

In other words, when given the chance to give away their money, the wealthy are doing it in a way that only breeds more inequality by giving it to institutions that do not actually help the poor.

We claim to be a Christian nation and some even argue we should have a Christian government.  But the way we would do that is by actually taking care of the poor and making sure they have the resources they need to truly pull themselves up, such as a livable minimum wage, better childcare programs, and better access to a college education.

And it is clear by the actions of the wealthy in how they donate their money these needed changes will not happen by talk of cutting social spending (or foreign aid, because that’s not what Jesus would do, is it?).  The government is also at fault by not providing assistance on a level truly needed by the poor. But it is very capable of doing just that and we should be pushing for improvements in this area.

We can claim all we want to be a nation shaped and driven by Christ.  But our actions do not reflect that and every call for a cut to the poor is a scream of hypocrisy by the alleged followers of Jesus.

Growth Stifled by Income Inequality

New studies are showing the slow recovery from the recession might not be due to the skittishness of the “job creators” but due to the fact that a tiny minority has so much more wealth than the rest of the United States population.  Inequality is a serious problem and we have been fed the story that growth will come if we just concentrate even more wealth in a small group of people at the top.  But that hasn’t happened as summed up in these lines:

The recession seems to have cemented the country’s income and wealth inequality, not reversed it. The top 10 percent earn a larger share of overall income than they have since the 1930s. The earnings of the top 1 percent took a knock during the recession, but have bounced back. In contrast, the average working family’s income has continued to decline through the anemic recovery.

The Fat Cats
The Fat Cats

When the Great Depression occurred, the wealth disparity was recognized at the time and was battled through legislation and this was followed by real growth in the U.S., particularly in creating a strong middle class.  The United States became an economic behemoth in the decades after the Great Depression and did it with policies, such as progressive taxes and strong unionization, that reduced income inequality.  Then the policies began to change and the U.S. slowly came back down to the relative economic levels of the rest of the world.  Which begs a question: did they mimic our good policies relative to income inequality or did we mimic their bad ones and is this the cause of bringing the U.S.’ economic growth in line with the rest of the world?

Some may argue the rest of the world would have gained ground over time regardless of the policies but how do we know that for sure?  The fact is we can’t and it is worth pondering whether the growth in the United States would have been even greater in recent decades had the income inequality not been allowed to grow to such dangerous, pre-Great Depression levels.  It is a discussion we should have in this country and, ultimately, a battle worth fighting.

GOP & Social Darwinism

An article in the NYT reporting quotes from Mitt Romney from a closed door fundraiser posted on the Mother Jones website that must be read.

Talking about how 47% of the country’s population see themselves as “victims” and expect to be supported by the government. This is both false and sickening.

It seems that the social darwinist ideologies of the early 20th century are alive and well amongst the right wing and GOP.

(You can find a slew of op-eds on this subject in both the NYT and the Post).
Read Here.

Study: Tax Cuts for the Rich Don’t Spur Growth – U.S. Business News – CNBC

Study: Tax Cuts for the Rich Don’t Spur Growth – U.S. Business News – CNBC.

This headline and article speaks for itself.  Maybe this myth will be put to rest for good sooner rather than later.

A Serious Flaw of Trickle Down Economic Thought

The idea of trickle down economics is very simple and its simplicity is one of the reasons it sells so well to people who do not really benefit from it, otherwise known as 99% of the population.  Someone at the top of the economic ladder is given more money than they already have, they spend the money they are given, and the money then trickles down the ladder and everyone’s financial lives are boosted by this spending.  This is sold as a way to stimulate the economy.  Just one (of a few) problem here: what happens if the money isn’t spent?

An article appeared last week noting this problem is not only happening but could be getting worse.  Some key stats from the piece:

One Percenters…savings rate soared to 34 percent in the second quarter of 2012, up from 12 percent in 2007…Higher savings would normally be good for the economy. But not now, when capital is needed to invest in growth and jobs. The One Percenters put 56 percent of their available cash into savings accounts and money markets in 2012 – that’s up from 24 percent in 2007.  They’re investing just 44 percent in financial markets – down from 76 percent in 2007.

This highlights one of the key flaws in trickle down thought.  You can give the wealthy money, but you cannot make them or even guarantee they will actually spend that money.  Take a super-rich person as an example.  Let’s say someone (not naming any casino-owning names) has enough money to just blow $100 million dollars on a presidential election if they chose.  By giving that person an additional (paltry) $5 million dollars, what are the chances that money is spent relatively quickly and put back in the economy to trickle down?  Not great.

By contrast, what if you spread that money out in a new infrastructure project that puts many lower or middle class people to work building something to improve the country (roads, bridges, etc.)?  What are the chances this money gets spent and put into the economy quickly?  Extremely high since these folks are more likely to pay bills and buy necessities with their new earnings.  This is a big part of what happened during World War II as the emergence of the Unites States economy from the Great Depression occurred and government spending levels skyrocketed to levels never seen since that time (contrary to beliefs about the Obama budgets).  People, mostly unemployed, went to work in factories as part of the war effort and the economy healed after such a long downturn.

Another part of the problem with trickle down thought was not addressed when these theories were being born since it was not as much of an issue: where the money is spent.  Just because a tax cut (or corporate welfare) is given in one economy, it does not guarantee that money is spent in the same economy in a globalized market.  If the same person mentioned earlier is given that $5 million, how much does it help the U.S. economy if he travels to Italy and spends it all there?  “Not as much as the planners of the policy were hoping” would be the proper answer.

One last aspect of the article should be noted.  A quote from a supposed One Percenter:

One respondent in the study said “My savings rate has gone up and I’m not spending, which I realize is bad for the economy … but I like having a wide moat around me so that nothing can bother me.”

Remember that we are not to debate the economic disparity between people because that is “class warfare”.  What is it called when someone at the top has built a psychology that has them thinking in terms of moats when protecting themselves financially?  He is thinking along the lines of feudalism but the rest of us are not allowed to point out the problem?  And is it fair to point out that moats were used to keep out and inhibit enemies?  Does this person need to be reminded that his lack of spending is hurting, not his enemies, but his fellow countrymen?  Maybe another question should be asked here.  Are they his enemies in his mind?

I suppose we must remember it’s only “class warfare” if you aren’t rich enough to declare it apparently.

Where Did It All Go?

Fed: Americans’ wealth dropped 40 percent – The Washington Post.

The article speaks for itself.  I wonder where all that money went?  Did it just disappear?  Or maybe…it’s here!  “Trickle-down economics”, continuing its failure to the cheers of so many it’s failing!

To the Shock of No One, CEO Pay Hits Record Highs Again

The Associated Press reported on the pay of CEOs last year and as expected their pay has continued to increase at levels higher than the pay of everyone else.  CEO pay increased by over 6 percent while the pay of the average worker increased by only 1 percent, less than the rate of inflation.  These statistics exclude the high unemployment rate which makes life even harder for the average person versus the now even wealthier CEO.  All of this should make perfect sense (to the clinically insane) since those CEOs have done such a wonderful job of hiring people and getting the economy going again.  Or was it that they didn’t do that?  I get confused based on looking at their pay sometimes.

Lots of interesting points in the article such as the fact shareholders now have the ability to vote down a CEO’s pay package.  This helps to bring down the average pay of CEOs (not really as the stats show) and gives shareholders more power over what happens at the companies they invest in.  Right!…Right?…No.  Since their vote was given no teeth whatsoever you get what happened at Simon Properties:

Simon Property’s shareholders rejected (CEO) Simon’s pay package ($137 million) by a large margin: 73 percent of the votes cast for or against were against.

But the company doesn’t appear likely to change the 2011 package. After the shareholder vote, it released a statement saying that “we value our stockholders’ input” and would “take their views into consideration as (the board) reviews compensation plans for our management team.” But it also said that Simon’s performance had been stellar and it needed to pay him enough to keep him in the job.

That worked well.  Good to see being a shareholder at Simon Property matters to the company.  And I guess the company is correct.  I mean, seriously.  What kind of a desperate low life would stay at a company for a paltry $50 or $60 million?  The shareholders clearly have no idea how hard it is to make it in this world on only eight figures a year.

This ridiculousness was later followed by this incredible sentence:

Military contractor General Dynamics stopped paying for country club memberships for top executives, though it gave them payments equivalent to three years of club fees to ease “transition issues” caused by the change.

My apologies.  Need a second.  My head just exploded on my screen.

Message to General Dynamics: that is not a “transition issue”.  A real transition issue is when you actually lose something, like your job, and you have to figure out what to spend the last of your money on, food or bills.  In this case, no one lost anything.  When you take a lavish perk away then compensate the party enough money to recover said perk the only “transition issue” is filling out the paperwork yourself for your own country club membership.  That is not a real issue.  It’s a slight inconvenience at best.  Real issues, like unemployment and rising health care costs, are appalled by your attempt to associate country club memberships with them.

And, as if this even needs to be pointed out anymore, this article shows the continued failure of the absurd idea of “trickle down economics”.  A tiny group of people at the top of the income ladder increasing their pay by over 6 percent last year.  A far larger group’s wages not keeping up with inflation.  Obviously the trickle down effect is working like a charm…if you are one of the few at the top, of course.  I’m not sure how many times the theory has to fail in reality before people catch on that the only ones pushing hard for trickle down policies are the very few who stand to heavily benefit from them and they have so much money they are able to flood the media with their dreadful theory.  This propaganda tricks people into thinking they are right and it does somehow work.

But then again, even if we had a group of people who didn’t believe the theory become shareholders in a company, it’s not like it would matter regardless of what the majority says.