Chart: You're Working More But Earning Less?!!

Your 38-42% range is totally arbitrary and irrelevant. What matters is when the upward trend began. And that was in the 1970s.

Coupled with all of the other information I gave you, such as the stagnation of real wages coinciding with the trend, that is clearly not the case. Again, if you look at all the data corresponding to that time period, it becomes clear that the end of the gold standard caused a reduction in wealth and income inequality. The trend is there whether you acknowledge it or not. If you actually cared about reducing income inequality, you would be driven to understand the data, but instead you manipulate it to make a partisan point.

Perhaps it would help if you understood why the end of the gold standard had such effect. Without a dollar tied to gold, the limits on expanding the money supply were severely reduced. During the years since the standard ended, the money supply has increased at rates unseen before in U.S. history. Yet you think such a massive change in the money supply has no effect on income levels and income inequality.

Apparently you didn't read the Forbes article, or you have a lack of not only graph interpreting skills but reading comprehension. Read what the article says about economic policies under Reagan.

Meanwhile, feel free to explain why real wages stagnated and income inequality began to increase after the end of the Bretton Woods standard.

 

It's not "arbitary at all. It is the actual range that the gini index fluctuated within from the early 1950s. Until the Reagan "trickle down" revolution.

What matters is when the upward trend began. And that was in the 1970s.c [/quote]

1) That "trend" began in 1968/9, 2-3 years before we went off the gold standard. So how do you figure that caused the "trend"?

2) We had "trends" e.g. 1957 were inequality increase a 2-4 percentage points but stayed within the 38-42% range when we stayed on the gold standard. So your claim that the 1969 trend was caused by the 1971 action getting off the gold standard is nothing but baseless causal speculation.

You're trying to take a normal fluctation that began 2-3 years before we got off the gold standard, and claim that gold standard caused it.

You're making an obvious causal argument where the evidence does support the causal claim. We had fluctuations of inequality increases when we were on the gold standard. We had huge inequality increases while on the gold standard. We had a sharp decrease in inequality when we got off the gold standard.

You're attempt to attribute the increase that started 2-3 years before we got off the gold standard is not supported by causal evidence, and logic for that matter.

Stagnation of wages doesn't necessarily indicate growing inequality. In the mid to late 70s we had several recessions that explain wage stagnation apart from more of the nation's income being redistributed to the richest, which started in the early 1980s with the Reagan revolution, as my numerous sources indicate.

Perhaps it would help if you understood why the end of the gold standard had such effect. Without a dollar tied to gold, the limits on expanding the money supply were severely reduced. During the years since the standard ended, the money supply has increased at rates unseen before in U.S. history. Yet you think such a massive change in the money supply has no effect on income levels and income inequality.

RW propaganda. I've seen the claims a zillion times by 1% apologists. But I'll take another look at it.

Just did. We had several recessions in the mid and late 70s, and real wages typically fall or stagnate in a recession.

 

It's all sour grapes Iriemon!

You only need to look back to 2001 when the income tax rate was 15% for $0 to $58K. Then in 2002, it was changed to 10% for $0 to $15K, and 15% for $15K to $59K. You mention above "that taxes were raised on the middle classes and slashed for the richest" which obviously is not true as the numbers above show. And these are book rates which means they are reduced to 0% and perhaps 10% for the actual effective tax rates. Go back a little farther and those earning $0 to $4000 per year had 10% tax rates...no such thing today! Your political bias only allows you to focus on the wealthy, but fact is, all Americans are paying less taxes today.

I have no use for unions.

If you continue to believe that Reagan is the root cause of all your problems today, then please explain the actual road blocks you believe were/are in place that prevent Americans from achieving their potential today? Be precise instead of your diatribe; how does Reagan prevent a kid today from finishing public education, obtaining good grades, obtaining a college education or trade certification, avoiding crime and drugs, and placing themselves in the employment areas...plus the big kicker...living within their means? You believe Reagan is the cause of so many Americans economic failure?

Place two people next to each other, one who earns $125K and one who earns $15K...you actually believe the reason for this disparity is caused by Reagan and the wealthy people? That the person earning $125K stole everything from the person earning $15K? Can you not identify some things for the $15K earner to do in order to achieve more in life...other than stealing more from the wealthy?

 

Were we paying less taxes before Obama let the tax cut expire yes or no? Yes.
We pay more taxes now !!! Thanks to Obama
Read the Huffington post I put their for you.

 

I read the article. As is often the case, it makes baseless causal claims with establishing causal evidence, and ignores other potentially causal claims.

For example, he has this chart:



And he says:

From 20 feet away, anyone can see that something bad happened to the U.S. economy in 1968. Prior to that, America experienced rapid income growth that was widely shared. The incomes of both “the ten percent” and “the ninety percent” increased by 80% in just 20 years. We had prosperity, without rising income inequality. This 21-year “golden age” then gave way to 14 years of income stagnation, which was also widely shared. Incomes didn’t rise, but neither did income inequality.

His chart and statement directly support my position. He is saying that from 1968-82, income inequality did not rise.

Thank you.

And then he doesn't even address the Reagan revolution that started in 1981 with its purpose of making the rich richer. Pretends like it never even happened. Instead, he blames the inequality growth on getting off the dollar standard, something that happened a decade earlier!

He acknowledges that the economy picked up in the 1980s, but that inequality shot up. And simply says "This was the best that could be done without actually re-fixing the dollar to gold."

Utter nonsense. In the 1990s Clinton raised taxes and partially reverse the Reagonimics, and (despite conservative claims of gloom and doom) saw great economic growth with real income increase across the board -- though there was still an inequality increase, mostly because of the booming stock market.

He doesn't even mention the Clinton tax increase and experience.

He claims that the richest got richer because the "a higher cost of capital will inevitably raise the incomes of “the ten percent” relative to the rest of society" but doesn't even address the effects of the massive income tax cuts under Reagan, nor the big investment tax cuts and estate tax cuts under Bush.

He blames the Fed for the 1999 stock market and 2000s real estate bubbles, but doesn't even mention the fact that investment taxes were cut to less than half the tax rate on earned income, and the effect that (according to conservatives) tax cuts have on behavior. And then he blames the Fed for the 2008 market crash on the Fed "allowing" gold prices to plunge 22%. Really? The Fed controls gold prices? It allows gold prices to change? How does it do that?

And do you think maybe this had something to do with the crash?



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1) what tax cuts, and 2) who is "we"?

If you're in the 1%, yes you are paying a few percentage points higher taxes.

Read it. See my comment above.

 

So again...the cause of all those lower wages is the wealthy people? All those unskilled and uneducated workers are clueless why they earn less than others?

Bottom line; A person who finishes public education, obtains a college degree, avoids crime and drugs and having kids, and who strives to be in the top performers of their job descriptions, are doing just fine today. Those who choose a different path are struggling. You only see forcing wages as a solution while I see a myriad of fundamental issues in this disparity. I see winners and losers and you see losers and evil people. I hate government meddling in the private economy! If government has 100 million Americans who are losers then let government provide all of them welfare but in the process don't mess with the economy and don't increase taxes on those who create jobs...

 

LOL, typical 1% apologist response. You people who think the "little people" should share in our country's prosperity are just "sour grapes"

How do those income tax numbers show that FICA taxes were not raised on the working poor/middle class folks?

FICA tax rates increased from 6.13% when Reagan took office to 7.51% when he left. And that is only the employee's half, it's effectively doubled when you include the employer's half.

http://www.ssa.gov/oact/progdata/taxRates.html

Of course. They leverage higher wages for workers. Can't have that.

Please point to my post where I said I thought Reagan was the root cause of my problems. Total straw man.

You keep repeating the same argument. You're argument is that middle class incomes have stagnated and dropped as a percentage of the nation's income because 90% of Americans are lazy, not finishing public education, not obtaining good grades, not obtaining a college education or trade certification, not avoiding crime and drugs, and not placing themselves in the employment areas.

It's utter bull(*)(*)(*)(*).

90% of Americans did not just get lazy, stop finishing public education, stop obtaining good grades, stop obtaining a college education or trade certification, stop avoiding crime and drugs, and stop placing themselves in the employment areas in 1981.

That is not what happened, and it is just ludicrous for you to argue it.

This is simply the 1% apologist claptrap we hear to excuse the "trickle down" policies that have helped redistribute the bottom 90% share of the nation's income from 65% to only 50%. It's not way the 1% is getting 20% of the nation's income, double from before the Reagan "trickle down" revolution.

But that's their excuse. the 90% just got lazy and stopped going to school and getting good grades stopped avoiding crime and drugs.

If it sounds completely inane it's because it is.

 

There is nothing wrong with the economy! The economy is a separate entity which will do what it does based on it's own merits. It doesn't owe anyone anything! It is there for business and individuals to participate at whatever level they are interested or capable. Politics gets involved and suckers people into believing the economy is bad and evil which could not be farther from the truth. Whether it's a business or a wage earner or unemployed, each of them makes 100% of the decisions how to manage their lives...no one wants to talk about why some succeed whiles others struggle and many fail? If I was counseling a young person today I would tell them they have choices and they alone make the decisions which path to take...and that time is very precious. It's easy for anyone to see who is succeeding and who is failing and why this disparity and no one ever said any of this process should be easy! In fact it's the most difficult thing we do managing our life and many of us suck! Contrary to what Iriemon and others believe, failure IS NOT caused by Reagan policies or the wealthy or profitable corporations or Wall Street.

 

The economy was doing OK, but it has been suffering because the great engine of spending, the middle class, has been gutted starting with the Reagan "trickle down" revolution, and now it doesn't have the purchasing power to drive a strong recovery.

The problem isn't the economy per se. It's the policies that have lead to this:

 

Right. Because obviously what has happened is that in 1981, the bottom 90% of Americans stopped finishing public education, stopped obtaining college degrees, started getting into crime and drugs, and stopped striving to be top performers.

And that's why the middle class has stagnated and the bottom 90% of Americans are now only getting 50% of the nation's income, as opposed to 65% before the Reagan "trickle down" revolution.

It's just one big coinky dinky!

1% apologists make sense. If you ignore reality.

 

1) That "trend" began in 1968/9, 2-3 years before we went off the gold standard. So how do you figure that caused the "trend"?[/quote]
Actually, your point #1 makes the case even stronger, which you would know had you have read the Forbes article. From the article: In April 1968, the free market price of gold first moved above the official $35/oz Bretton Woods benchmark. This was the beginning of the end of our gold-defined dollar, and the smart money knew it.

Strawman.

The fluctuation is clearly not normal, as it was accompanied by a stagnation in real wages and the most massive change in monetary policy in modern history. I also find it ironic that while before you were denying income inequality increased before Reagan, now you are saying it started increasing in in 1968.

The evidence dramatically supports the claim. The gold standard does not prevent inequality. Nor does it's removal alone cause inequality. What causes much inequality is the expansion of the money supply. The reason the end of the gold standard led to inequality and wage stagnation was because it freed up the Federal Reserve to expand the money supply more than it could under the gold standard.

Strawman.

Yet both wage stagnation and growing inequality began around the time the link between gold and the US dollar was broken.

So criticizing the actions taken by a conservative Republican president (Nixon) is RW propaganda? Criticizing a massive private bank that serves the wealthy is right wing propaganda? Criticizing income inequality is RW propaganda? Really? No. It seems you just call anything that disagrees with your ill-informed preconcieved notions is "RW propaganda." Again, further evidence you are a partisan, not a thinking type.

And why is that? Because of reduced productivity. Yet once productivity was back up in the 70s, real wages remained stagnant. Prior recessions during the Bretton Woods period did not stagnate wages like this, and real wages were actually relatively unaffected. Your explanation doesn't cut it.

 

You are missing the big picture. When you have nearly all wages stagnating in an economy besides the wealthiest, there is largely a policy in place causing such a result. In free markets, inequality will always exist because some people will predict what people want better than others. But this inequality is coupled by wage increasing for all workers, not simply the wealthy.

The problem is current inequality is fueled by wage stagnation, even decreases, for those who are not wealthy. That is a problem. And it is a problem that begin when the link between the U.S. dollar and gold was severed, allowing the Federal Reserve to expand the money supply and effectively rob the poor and middle classes of real wealth and give it to the bankers and financial elites. It is no surprise that the financial sector of the economy has more than doubled since then.

 

It seems you missed the key points of the article. The end of the Bretton Woods standard led to stagnation for everyone. Reagan's policies helped the rich far more than they helped the poor. Yet Reagan did not cause the stagnation. Had the trend of stagnation caused by the end of the gold standard not existed, Reagan's policies would not have resulted in the degree of economic inequality that they did.
Let me get at it another way. What specific policies under the Reagan administration led to income inequality? I anticipate some of what you will say, but I want to hear you say it rather than just assume it. Name the policies specifically.

 

So your position is that even a change in the gold standard rate causes inequality to increase?

It's not a strawman at all. It goes to your failure to establish causality and the evidence against it.

It was well within normal until we got the Reagan "trickle down" revolution.

You argument is directly contradicted by your own article. As it points out, there was no increase in inequality in the 1970s, a period of strong monetary expansion. To the contrary, it was the period of monetary contraction in the 1980s that corresponded with inequality growth.

LOL, is that what you say whenever you cannot respond to an argument? How is that point a "strawman"?

You're attempting to make a causal claim when you've made no showing of causality whatsoever.

Post hoc ergo propter hoc (Latin: "after this, therefore because of this") is a logical fallacy (of the questionable cause variety) that states "Since event Y followed event X, event Y must have been caused by event X."

According to your article, inequality didn't start until 1981.

Addressed in separate post.

Because we didn't have "trickle down" as the dominant policy before 1981.

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So why have wages stagnated? Why haven't they increased? You blame monetary policy, how has that prevented wages from increasing more?

 

You (and the author) are simply making another Post Hoc fallacy. You have in no way established that economic stagnation in 1970s (which really was not stagnation at all, as the economy grew an average 3.0% real during the decade) was caused by the end of the gold standard.

Jeez, what a breakthrough. I've been saying that for umpteen posts now.

Pro hac fallacy.

That assumes that it was necessary to have economic growth. The '30s, '40s, '50s, '60s and 70's proved that was not so.

In no particular order, the FICA taxes that poorer working people pay at a 100% rate (and the super rich effectively don't as a percentage of their incomes) have been increased; the tax rates of the richest (top income tax rates, investment tax rates, estate taxes) have been dramatically slashed, the minimum wage did not kept with inflation, court rulings and public policy campaigns that have reduced the power and influence of unions (their own excesses contributed to that as well), though conservative courts that have reduced the scope of overtime laws, through taking the trillions of dollars in excess SS money the working poorer paid and using it to fund income tax cuts that mostly benefited the richer, through outsourcing jobs, reducing welfare, maintaining an insurance based health care system that takes a bigger and bigger portion of working people's incomes.

My question to you is, how has monetary policy prevented middle class wage earners from getting bigger raises?

 

I agree that if wages don't increase, they effectively lose purchasing power under inflation.

That is effectively they way the MW was suppressed.

But what you don't explain is why wages aren't increasing faster than inflation.

 

What? Gold standard rate? What are you even talking about?

You attacked an argument I never made, hence a strawman.

The data says otherwise, but that doesn't seem to change your partisan bias.

Only if you misread the article. The article supports exactly what I am saying.

No, that is what I saw when someone responds to an argument I never made.

So I take it you are finally admitting the correlation exists? If so then I can move onto a more detailed explanation of the why.

Yes, that would be a correct description of your argument thus far.

Not quite.

Yet the wages stagnated before Reagan was even elected. Interesting how Reagan caused that before he was president.

I will explain this at the end of my next post, in response to the same question.

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I will address this question too in the next post.

 

The rate of exchange for dollars to gold. So your position is that even a change in the gold standard rate causes inequality to increase?

To the contrary. You were making the argument that going off the gold standard caused the increase in inequality.

You are making a causal argument. But you've completely failed to establish any causality or correlation. You simply point to a date and event and assum causation. That is a "Post hoc ergo propter hoc" fallacy.

Me pointing out that we saw similar "trends" while on the gold standard is relevant to you causal claim. Because is shows that factors other than the gold standard could have caused it.

No it doesn't. The Gini percentage was well within range it had been for the previous 4 decades, until we got the Reagan "trickle down" revolution.

Hmm.

From 20 feet away, anyone can see that something bad happened to the U.S. economy in 1968. Prior to that, America experienced rapid income growth that was widely shared. The incomes of both “the ten percent” and “the ninety percent” increased by 80% in just 20 years. We had prosperity, without rising income inequality. This 21-year “golden age” then gave way to 14 years of income stagnation, which was also widely shared. Incomes didn’t rise, but neither did income inequality.

According to your article, in the 14 years after 1968, which would be to 1982, income inequality didn't rise.

Is that what you are saying?

That's funny, because it sounds exactly what I am saying.

Good thing. The gold standard never worker particularly well.

Funny, you claim "strawman" whenever I present an argument you don't want to address. Coincidence, eh?

So you're now saying you never made the argument that getting off the gold standard causes inequality? Because if that is the argument you made, my point about causation is no strawman at all.

Why would you even ask me that? Of course I'm admitting no such thing. To the contrary. You're entire position is a "post hoc ergo propter hoc" fallacy in which you are claiming one event caused the other simply because of their temporal relationship, when you made no showing of causality at all. You've failed to even present a legitimate argument for causation, much less prove it.

I'm not the one claiming a causation here.

Quite. See above.

I never claimed Reagan caused wages to stagnate. Now that is a straw man. Income inequality, which is what I was discussing, is not the same as wage stagnation.

 

Wage stagnation is what we are talking about--at least for everyone but the rich. I did give explanations for why this is the case.

No kidding. But with your partisan blinders on you ignored our common ground.

You say that before even finishing reading the argument.

That is not the assumption at all.

Okay. Keep in mind, however, that the charts you have used measure pre-tax income. To add some numbers to this:
1. The FICA rate in 1980 was 6.13% and in 1988 it was 7.51% (an increase of 1.39 points) That works out to about $14 additional dollars in taxes per $1000 earned. It is hard to believe this had a serious effect, nor does it explain why the wealthy would have higher incomes.

2. Income taxes: This is harder to state in words, so here is a graph:


From 1981-1986, income taxes were reduced not only for the rich but for everyone. I again find it hard to conclude this resulted in a serious systematic change in income inequality. The change in 1988 was more significant, as it was essentially a tax increase on those making lower incomes, but a massive tax cut on the wealthy. Yet the income inequality trend began far before this change, so to say it was the source is simply false.

3. Corporate income tax rates: In the early 1980s these rates were changed very little. From 1985-1986 there were a few minor reductions. In 1987 there was the ultimate larger cut. Because the rich rely more on investment income than the poor, this surely had an effect going forward. But the inequality began before 1985.

Those are probably the biggest tax reforms. For everything else you will have to provide more details. Ultimately, however, although these factors help explain why the rich did so well, none of them explain why lower incomes remained stagnant. Lower corporate income tax rates do not keep lower incomes stagnant, nor were income taxes significantly raised at all on the poor. The inequality resulted not only from the rich getting richer, but the poorer stagnating. Your position helps explain why the rich got richer during the 80s, but fail to address the stagnation of the 1970s in incomes, as well as why the stagnation continued for those with lower incomes.

You have asked why wages aren't increasing faster than inflation, and how monetary policy harms the middle and lower classes while benefiting the rich. To first answer your question, monetary policy transfers wealth from those who receive the new money last (the poor, the middle class, those on fixed incomes) to those who receive the new money first (wealthy bankers, the financial elite). The fact that monetary expansion leads to income inequality has been proven with statistical analysis, and is more than theory.
http://direct.mises.org/journals/qjae/pdf/qjae11_1_1.pdf

Not all inequality is a bad thing. For example, should high school drop outs make the same income as those who are college educated? Should a major in sociology make the same as a brain surgeon? Of course not. Yet these are examples of income inequality. In a healthy and growing economy, income equality is inevitable. Yet some income inequality is forced on the market by bad policies. And the worst policy is one of monetary expansion by the Federal Reserve.

The key to remember is this: changes in the money supply are disproportionately distributed in the economy. This is a known fact. When the Federal Reserve pumps money into the economy, it is pumping money into the hands of bankers and financial elites. By the time the new money circulates and reaches wage-earners, prices have increased. Money is redistributed from the poor to the rich by robbing the dollar of purchasing power.

 

Under Bretton Woods, the government pegged the $35 to an ounce of gold. As it expanded the money supply, however, the market price of gold increased. This led to countries handing in U.S. dollars to get gold. To prevent the U.S. from losing its gold, the government would have to curtail the expansion of the money supply. If that had been done, the inequality would have been but a blip. But it went on to form a larger trend because Nixon decided to severe the tie to gold in 1971, ending the Bretton Woods standard. This paved the way to even more money expansion.

They driving force here is expansion of the money supply. The end of the gold standard merely unleashed the Federal Reserve's ability to create more money without fear of losing gold reserves.

That is not what I have done. You made a claim that Reagan's policies caused the trend in income inequality. All I have to do is show the trend started before Reagan to debunk your claim. The very fact income inequality had been increasing a decade before Reagan assumed office makes your argument of causality less valid, regardless of what the cause of that increase was.

The primary factor is the increase in the money supply. And it is ironic that you make this point. By stating that the increase in inequality began in 1968-69, you are showing that factors other than the 1980s Reagan policy could have caused it. You are refuting your own argument.

Why are you focusing on the range? Whenever the increase in inequality started, it would be "well within range" for some time. If the range is between 30-50, the level is currently 40, and then it increases to 50 due to some policy, do we just discount the increase and ignore that it was caused by that policy? Of course not. That is horrible statistical analysis.

The income inequality would not have occurred if it were not for the factor that caused the stagnation. I've already addressed this point. From the article:
Note that even though, as of 2011, the income gains of “the ten percent” since 1948 have far outpaced those of “the ninety percent” (205% vs. 72%), “the ten percent” would have been much better off in absolute terms if the 1948 – 1968 trend had continued. In such case, the incomes of both groups would have risen to about 270% above their 1948 levels.

Reagan's policies were about the best that could have been accomplished short of refixing the dollar to gold (or simply halting money expansion).

Under the Bretton Woods standard, the U.S. had the highest GDP growth rate of the century, income inequality was at its lowest levels, individuals saw massive increases in real income, and the wealth increases were shared by those of all levels of income. I guess that constitutes "not particularly well." Under the current fiat dollar, inequality has skyrocketed, middle and low income families have seen at best total income stagnation and at worst a decline, and GDP has increased at a slower rate.

Your quote was that I sad the increase in inequality the 2-3 years before getting off the gold standard was caused by the end of the gold standard. I never said that. I did say getting off the gold standard caused inequality. Unfortunately, in your previous post that is not what you argued against.

You aren't making sense my friend. A claim of correlation does not require causality. We all know you disagree with my cause and effect claim. But you cannot deny the statistical correlation. It exists even if there is no valid causality to explain it.

Yes you are. You are claiming Reagan's economic policies caused economic inequality. That is a causal claim.

Not quite. See above.

Yet when the income inequality is caused by wage stagnation, it is relevant. Reagan's policies got the rich closer to the trend of real income growth seen during Bretton Woods, but failed to do the same for the lower and middle income people. Had the stagnation never existed, lower and middle income workers would have made gains in real income more in line with what the rich were making. Reagan may not have even been elected or enacted his policies had the gold standard not been repealed. One of his campaign ads featured his promise to bring back the gold standard.

 

OK, so, again I ask: So your position is that even a change in the gold standard rate causes inequality to increase?

So you are *not* claiming that getting off the gold standard caused inequality? Because it sure seemed like you were claiming that.

The data from the Gini chart shows inequality increasing in 1969, but it takes off and blows out of his 40 year range norm during the Reagan "trickle down" revolution, that was designed to make the richer richer. It could be a massive coincidence. But I don't see anything else to account for it.

It is buttressed by the fact that we started seeing the top 10% and top 1% share of the nation's income skyrocket after 1981, as my charts and your Forbes article prove.

Because the Gini percentage had fluctuated within that rage for 40 years. The fact that we had change in that time frame doesn't mean that it would have necessarily kept going for three decades. You have not established that there was some policy that caused it to change in 1969, much less monetary policy.

Conclusion without proof, but that's not the point. The point is your own article directly contradicts you and says we didn't see inequality growth until 1982.

Can you at least concede that obvious point?

Which, assuming it is true, proves what?

Baseless nonsense.

Of course there are other factors that attribute to that. As others have pointed out, the US was the worlds dominant economic superpower after WWII and had little competition. We had a growing middle class and a growing population.

We've had decent economic growth, though that has slowed, not coincidentally IMO, with the decimation of middle class incomes. So you are wrong to say we've had total income stagnation. That is not true. We've had real income growth.

It's just that since the Reagan "trickle down" revolution, virtually all of it has gone to the 1%.

When did we get off the Bretton Woods standard? That was the date you were using before. Wasn't that in 1971?

How am I not making sense?

1) You haven't even presented an argument for why monetary policy would cause inequality. You've just picked a date and said it did.

2) Correlation may be evidence of causation. But of course I can deny it. You have shown no correlation. To the contrary, the evidence of money policy and inequality shows there is no correlation at all.

With no evidence of causation or correlation, you have nothing except a post hac fallacy argument.

Fair enough, but our argument has been about your claim that it was caused by monetary policy. I've at least presented rational arguments for my position.

See what? Are you seriously trying to claim that the author did not write that there was no inequality until 1982?

Inequality could only be cause by wage stagnation if the incomes of the owners/rich were increasing.

No kidding. You agree with me on this point. So why all the fuss over whether his "trickle down" policies caused it?

Clinton's did even better for the record. A point your author doesn't even acknowledge much less address.

Well that's no saying anything. That's like saying if their wages had not stayed flat they would have gone up.

I don't recall that promise. It wasn't a well publicized plank.

 

Gold standard rate is not an economic term. So each time you ask that question, who knows what you are actually asking. If you mean a change in the exchange rate of gold and dollars, then no. Nor was that ever the claim. To reiterate:

They driving force here is expansion of the money supply. The end of the gold standard merely unleashed the Federal Reserve's ability to create more money without fear of losing gold reserves.

I'm not sure how to be any clearer.

Oh I am. But I do not need to prove causality to disprove your claim. All I need is to show that a trend of increasing inequality began before Reagan's policies could have possibly had an effect. I have done that.

And you claimed I was making a post hoc fallacy? How ironic, considering you have done just that above. The trend towards inequality increasing began in 1969, yet you are ignoring that trend until Reagan became president. Your "40 year range norm" argument is complete nonsense and simply not valid statistics.

Meanwhile you ignore that the inequality would not have existed to the degree it did had the stagnation that began in the 1970s not existed.

That it fluctuated within that range is not relevant. There was a clear bottoming out and then an upwards trend beginning in 1969. And I have established numerous times why the trend began at that date.

Except it doesn't, because had the Bretton Woods standard not ended, the stagnation would not have occurred, and economic inequality would have been far less, in spite of Reagan's policies.

You are missing the larger point of the article. You are focusing on one piece of the big picture. Had the gold standard not ended, whatever inequality Reagan's policies caused would have been far less than what was observed in reality. The reason is because of the wage stagnation of the 1970s, caused by the end of the Bretton Woods standard.

That had the trend continued, income inequality would be far less. And when did the trend change? When the US severed the dollar's connection with gold under Nixon. In other words, it proves my point.

We had a growing middle class precisely because we had monetary policy that pegged the dollar to gold, preventing the Federal Reserve from expanding the money supply at a rate that would have transferred significant wealth away from the poor and middle classes to the rich.

I said the poor and middle income classes have had total income stagnation.

I did present such an argument. You just don't read through entire posts before responding to them, and take things line by line.

Correlation is not evidence of causation. And I have shown a correlation. Do you even know what a correlation is? I ask this honestly because the correlation is so obvious.

And by the same token, inequality can only be caused by the rich getting richer if the incomes of everyone else were stagnating. You see? Two sides of the same coin. You have to look at both factors:

(1) What caused the wealthy to get wealthier
(2) What caused everyone else to stagnate

You have given no argument as to why Reagan's policies caused #2. And really, you can't--because the stagnation began in the 1970s, correlating with the end of the U.S. gold standard.

Because if we attack something that is not the ultimate cause, we will never fix the problem. The economic inequality caused by monetary expansion is a great wrong that must be righted if this country is ever to get back on track.

It is indeed saying something. If the gold standard ending did indeed lead to wage stagnation, if that event had not occurred there would not have been wage stagnation. Thus the poor and middle income levels would have seen greater increases in wealth, and relatively less income inequality.

He had a television ad that touted that promise. He even appointed a group called the Gold Commission in 1981.

 

What explanations?

But you've been trying to claim it was monetary policy, not Reagan's "trickle down" policies, that caused inequality to grow.

You say that before even finishing reading the argument.

Then what is the basis for your unsupported claim that "Yet Reagan did not cause the stagnation. Had the trend of stagnation caused by the end of the gold standard not existed, Reagan's policies would not have resulted in the degree of economic inequality that they did."

Don't forget the employer's half, which effectively doubles it. For a family trying to get by on $20k, that's $300 in a marginal increase. Not by itself huge, but its a lot of money to someone in that situation.

You premise that these taxes were reduced for everyone is a well retread RW fallacy. Millions who pay FICA but not income taxes got no tax cut (a tax increase is what they got). The really rich are the ones who benefitted most from tax cuts. A guy like Romney who gets his $20 million a year from his investments essentially got a 50% tax cut from 2007 and 2003, dropping his effective tax rate from around 28% to 15%. These tax cuts, at the expense of running up more government debt, would cost the Govt trillions in tax revenues, almost all going to the richest.

It began before 1985 but that doesn't meant that continued "trickle down" policies in the 80s and 2000s didn't contribute to the inequality going higher and higher.

I gave several reasons for it you've just ignored. Tax policy was just one of them. Here are some others:

... the minimum wage did not kept with inflation, court rulings and public policy campaigns that have reduced the power and influence of unions (their own excesses contributed to that as well), though conservative courts that have reduced the scope of overtime laws, through taking the trillions of dollars in excess SS money the working poorer paid and using it to fund income tax cuts that mostly benefited the richer, through outsourcing jobs, reducing welfare, maintaining an insurance based health care system that takes a bigger and bigger portion of working people's incomes.

All these things cumulatively, I'd argue contributed to suppress wages. The decline of unions was a biggie, IMO, and a reason why the RW propaganda media has worked so hard to discredit them and weaken them. Unions do have some well publicized abuse, but there is no doubt they can leverage higher wages for their workers. There's a reason why unskilled workers on the auto line could raise a family in the middle class on one salary, while an unskilled Mart clerk isn't even making poverty level wages.

I knew we'd get to Mises sooner or later. "The foundation for this work comes principally from two prominent Austrian authors. Mises (1996) and Rothbard (1994) elaborate on Hume's theory on disproportionate monetary distribution ..." These folks are completely biased.

But let's put that aside. Your analysis is flawed. New money goes to the government, in effect, because it is Govt bonds the Fed (indirectly) buys when it expands the money supply.

But it still doesn't answer the question. Why aren't wage earners getting bigger raises? They were in the 1940s and 50s, and 60s and 70s.

It's not a monetary phenomenon. It's a supply and demand phenomenon. If there were greater demand for their service, or less of a supply, then we'd see real wage increases. Or if there is some other mechanism by which their wages more proximately represent their additive benefit to the wealth creation (like collective representation).

It's not big coincidence IMO that we've seen wages stagnate with the decline of collective representation in the wage bargaining process. And it is not coincidental IMO that companies like Wal-Mart fight against unions to the death. Their owners don't want to share the pie.

Of course not. I've never argued for equality. But too much inequality is not a good thing. Let me know if you disagree and I'll explain why.

Exactly

And the worst policy is "trickle down" economics.

That is not really accurate. The Fed isn't just giving money to rich folk. I know you want to demonize the Fed but that's not what happens.

The Fed buys US Govt debt, indirectly. US Govt sells a bond to a rich guy who gives the Govt $$. The rich guy is out the money, right?

So then the Fed buys the bond from the rich guy. Now the rich guy has money again. What is the net effect? For the rich guy, it is a wash (putting aside he may have made a few bucks on the sale). For the Govt, it is a net gain of money. For the Fed, it is a net outlay of money.

So it is really the Govt getting the money, not the rich guy.

That is putting the cart before the horse. It ignores the fact that the poor guy gets an increase in his wage. Wether he is "robbed" as you put it depends solely on whether his wage increases are above or below the inflation rate. When his wage increases above the inflation rate, he's not being robbed at all, but getting a real benefit in purchasing power. When his wage decreases, he's losing purchasing power.

It's not the inflation that is decreasing his purchasing power, it's the fact he's getting too small a wage increase.

You could have the same thing without inflation at all. If he got a salary cut, he loses purchasing power. If he got a salary increase, he gains.

The problem isn't inflation. The problem is that a number of factors, not the least of which is the "trickle down" policies of the Reagan revolution, have combined to deprive wages earners of wage increases above the level of inflation.

 

My most recent response addressed these points (the response you are probably still reading). In an effort to make this conversation a little less confusing I wont readdress them, but let me know if you think I left something unaddressed.

True, but that is the employers half, not paid by the worker. That $300 is hardly enough to create massive income inequality. Additionally, the income inequality measures you listed are based on pre-tax income, so regardless of the tax increase the income will be reflected as the same.

The wealthy got a bigger tax break, not denying that. And like I said, in 1988 the tax policy had essentially raised taxes on a large group of people. If you look at the chart, you will notice that tax rates were reduced for everyone until 1988 changed things. The small increase in FICA taxes did not outweigh those initial cuts. It was not until the 1988 rates were implemented that the disparity in income taxes existed so that the poor were actually paying higher taxes.

I know you gave other reasons. The problem is you didn't give any actual data, so I have nothing to analyze. I went and dug up the tax data myself, but if you want to make a point you are going to have to gather the data for everything else. To quickly address your minimum wage point--the increase in prices was largely caused by an expansion of the money supply, made possible by the end of the Bretton Woods standard. Another example of the long term effects of such a massive change in monetary policy.

That they are Austrian economists does not mean their work is invalid or that the study was biased. What you have committed is a genetic fallacy, and it is not a valid response. If you find disagreement with the methods of the study, by all means point them out.

False. The Fed buys bonds on the market. That is why the policy is called "open market operations." The Fed is buying government bonds and securities from the banks. You are mistaken they are buying everything from the government. In fact, the Federal Reserve website even states it clearly: the Fed does not purchase government securities directly from the U.S. Treasury.
http://www.federalreserve.gov/faqs/what-are-the-federal-reserves-large-scale-asset-purchases.htm

What do people demand with? Money. Money is involved in every single transaction in the economy. The supply and demand for money will effect the end price of something--including wages--just as the supply and demand of the good (or service provided) itself. Of course if the supply of workers decreases wages will increase. Of course if there is more demand for a particular service wages will increase. But that does not mean money has no effect. Pointing out another factor effecting prices does not discount other factors.

Of course owners of corporations don't want to pay workers more than they have to. Why would they? The reality, however, is that the vast majority of workers make above the minimum wage--even without unions helping them. So the idea that wages will stagnate without unions doesn't really hold water. Considering unions began their decline long before inequality in incomes began, it seems hard to pin it as the primary factor.

How much is too much? How do you determine this? The level of inequality is not so much a cause for concern as the cause behind it. Furthermore, the greater cause for concern is when the wealthy are growing at a high rate, while everyone else is stagnating.

Obviously it isn't a wash, as the rich guy (aka bank) just made money. Not only that, it was money that did not exist before, giving the bank the power to inject the economy with money wherever it so desires. That is a huge power, not something minuscule. I'm not demonizing the Fed and the banking system, I'm pointing out what it is. The money is created by the Fed. It's an outlay, but not in the traditional sense. It really is just new money. The big bankers win and the government wins--hmm, nothing could go wrong there, right?

If I get a $5,000 raise, but a robber only takes $2,500, was I not robbed because I still ended up with an additional $2,500? Of course not. I was robbed, plain and simple. Likewise, even if wage growth surpasses inflation, that does not mean redistribution did not take place.

Say that without inflation caused by money expansion a man would have his real wages double every 10 years. In 2000 his wage is 20,000, in 2010 his wage is 40,000. Yet due to monetary expansion, there is inflation. The effect is that his real wage in 2010 is 25,000 instead. His wage increased, so he gained purchasing power. But clearly a redistribution has occurred, for that 25,000 wage should have been 40,000. He was robbed nonetheless.

The fact that real wages might manage to outpace inflation caused by monetary expansion does not mean the expansion has no effect on real wages.

That does not mean we should support Federal Reserve policy of giving all middle and low income families salary cuts and transferring that money to the rich.

Except that is not the case. The expansion of the money supply made possible by the end of the gold standard has led to a prolonged and systemic stagnation of wages for the middle and lower classes never before seen in this country. Empirical and logical evidence supports this claim.

 

FICA is not income tax which is used to run the nation...FICA payroll withholding benefits the contributor directly at retirement. SS and Medicare demands continue to increase yet the contributors don't wish to pay for it...you and them just want to pay the same amount you paid 40 years ago...too bad you can't get the same benefits that were paid 40 years ago.

IMO a union today has no benefit to anyone. Hijacking a company and demanding higher wages and threatening walkouts, etc. with zero increase in productivity is total BS. In my area today and tomorrow 18,000 nurses at Kaiser are on strike! If I owned Kaiser I would shut the place down and go fishing and never deal with (*)(*)(*)(*)(*)(*)(*) unions again.

What is your explanation for the failures in the workplace? Why do so many earn so little? Why according to you are all of them hopeless and helpless? Do you believe all of them have the credentials to be in upper management but are not because wealthy people prevent them? In every area where you have low wage jobs you also have higher wage jobs and businesses...what is preventing 'your' people from obtaining higher wage jobs or starting a business?

No matter which past decade you wish to review, always...you had wage earners from low to high...nothing has changed today! You refuse to discuss why a person is relegated to earning $15K and why another is earning $100K...you don't care why you just demand that society give the un-achievers more money for nothing in return...heck of a plan.

If any given person, assuming they are not physically and mentally incapable, puts forth the effort to achieve skills and education, places themselves in employment areas, avoid crime and drugs, lives within their means, etc. etc. etc. they will do just fine...those who refuse to put forth this effort then complain are lazy.

As always you refuse to ask those who complain so much to put forth some effort to achieve something better...this is called enabling! You refuse to believe that ALL Americans should pay for the government which they demand...this is called welfare. So your entire platform is based on enabling and welfare...