What made the big disparity in wealth?

We all know the rich own most of the wealth in this country, but how did it come about? We have always had the very rich and the very poor, but not much was made of it. But now the Middle Class is a 1/3 of what it was and the poor are poorer. What happened to change things? We want to blame it all on greed, but people have always been greedy. So can anyone tell us what changed to make us so much poorer?

 

Here is a good explanation by an economist

 

1. Washington lobbyist used by the rich to reduce their taxes.
2. The tax code that is so full of loopholes that the rich pay almost no effective taxes (reducing taxes for the rich is now an industry).
3. The loss of a progressive tax system.
4. Poor people who have been convinced that voodoo economics works and giving to rich people is more important than giving to poor people.

In the prosperous 1950s, the rich paid up to a 91% income tax.

 

The tax code might explain the rich getting richer, but it doesn't explain the big loss of the Middle Class.

 

I don't want to seem simplistic, but if there are more rich people per capita and more poor people per capita, doesn't that make the middle class smaller?

 

Reagan...

 

It started in the 70's jobs being shipped overseas because of regulations and taxes. Wages not keeping up with inflation

 

I suspect it has something to do with the government. Last I heard, they're the ones who are making laws and enforcing them.

 

I don't think I can agree that in order for the economy to grow, we must go deeper in debt to do it. Debt has to be paid back and the interest on that debt could fund most things we have to borrow money to pay for.

 

The U.S. dollar used to be backed by gold, however now the U.S. dollar is backed by faith and available credit. The credit crisis made the dollar unsecure because debt cannot exist without credit. Remove credit and faith and the fiat dollar is worthless.

 

Have you ever stopped to look at the ACTUAL distribution of wealth? In the 1950s, the top 1% held 30-35% of the wealth quite steadily. Since 2000, they've held 30-35% of the wealth steadily (given exceptions for decimal outliers).

Also, complete side note, did you know Wayne considered himself a conservative?

 

Those double-digit interest 30 years bond were the result of those who came before Reagan. Interesting enough those are the bonds we are refinancing now at a couple percent.,

 

Here is what made the big disparity of wealth. Few believed him then, but he was right with everything he said.

http://www.youtube.com/watch?v=xQ7kn2-GEmM

 

Massive government spending takes about 40% from ALL working people one way or another. Many families have been reduced to subsistence levels because of this and the accumulation of wealth is not possible like it once was

Additionally, divorce is a leading cause of the household income disparity. Less earners per household equals poorer household.

Finally globalization has allowed people to make larger profits selling to a wider consumer base, and the lower production costs.

 

some, but not completely. there is no bumper sticker answer. there are a lot of issues. For one thing, self-employment income is hard to allocate between capital efforts and labor efforts so the comparative data is suspect. Then there is the technology changes--technology tends to be invested to make higher paid people more productive as opposed to lower paid workers--we have computers to do brain surgery but not to pick apples so the doctor is more efficient and can generate more additional income than the apple picker. That is where the global trade comes in. It is more economical to ship a lot of manufacturing jobs overseas for so long as their workers will produce for less cost. Then there is the suppression of demand of low wage workers' products because they largely are geared toward low wage consumers--food, clothes, housing, and the like--in sort of a black swan death spiral that will require government intervention in wages.

It is a little heady, but here is a recent Brookings study that does a decent job of framing it. Just skim around the technical stuff if that is not your cup of tea. It at least provides a decent overview of some of the things going on.

http://www.brookings.edu/~/media/Projects/BPEA/Fall 2013/2013b elsby labor share.pdf

 

Over the last two years Whirlpool just closed three appliance plants and fired 5,000 workers that were paying about $17.00-$18.00 an hour plus benefits. Granted they were probably not high skilled jobs, but they were good paying jobs. The kind of jobs that made the middle class. Many of these jobs are what we have lost over the years to NAFTA and Free Trade. When you lose jobs like that, you have very few jobs left for the lower skilled worker. This is what has brought down wages for the average worker and makes corporations richer. Now it's not all greed, but survival. LG and Samsung are making their big appliance in Mexico and Korea and cutting prices that Whirlpool just couldn't match.

 

The answer to that question is privilege. Privilege is when government acts to restrict or eliminate competition, with the privilege holder being allowed to do what everyone else is forbidden from doing. Every rich person holds some form of privilege which allows them to do things that ordinary citizens are not allowed to do. Privilege can be an occupational license, a title to natural resources, a patent, or even just cumbersome regulations which discourage new competitors from entering a market.

“Seems to me that a “right” is something everyone should have, like life, liberty, free speech, rewards of working and saving. A privilege is something A can only have by depriving B et al. Those with privileges have sought to expand the meaning of “right” to include their privileges.” — Mason Gaffney

“From its Latin origin, a privilege is a "private law," a law with someone's name on it, a law that permits someone to do what others may not do. We should agree to eschew privilege.” – Nic Tideman

 

Electrolux Making Mexican Moves
Ironically, Whirlpool's U.S. manufacturing optimization to date has included a rare site-selection U-turn: Mexican jobs crossing the border northward.
The company announced that it has completed a consolidation of its North American top-loading clothes-washer manufacturing in Clyde, Ohio. A small part of the manufacturing consolidated in the 3,000-worker Ohio plant was transferred from a Whirlpool facility in Monterrey, Mexico.
"The top-loading washing machine factory in Clyde is the largest of its kind in the world," said Wyse in explaining the company's rationale. "The sheer scale of that site and the capacity we have there made that determination, in part, for us, as did our need to create some space for the new product in Mexico."
But the migration of those Mexican jobs to the U.S. is an anomaly among appliance-makers. The current flow virtually always runs the other way - or to China.
Whirlpool North American Executive Vice President Region David L. Swift could well have been explaining why in discussing the company's U.S. manufacturing retooling, which has optimized processes and installed new product platforms at seven American plants (see accompanying chart).
"These initiatives," said Swift, "will strengthen Whirlpool's industry-leading position in a dynamic business environment marked by intense competitive pressures and rising costs,"
Those same pressures and costs are what are prompting companies like Whirlpool to shift more jobs to Mexico.
In October, for example, Sweden's Electrolux announced that it's considering closing its 2,700-employee refrigerator plant in Greenville, Mich., and relocating the work to Mexico. The company already has a Mexican vacuum-cleaner plant with more than 1,000 employees in Juarez.
Electrolux officials said that the company was concerned by the Michigan facility's "weak financial performance." Relocating the operation to Mexico, they explained, could cut costs by as much as $81 million over the long term. (Michigan officials are still fighting to retain Electrolux's Greenville plant, which is more than 100 years old.)

Maytag's Mexican Relocation
Demonstrates Labor-Cost Differential
Maytag has taken a similar path. The Newton, Iowa-based appliance maker over the last two years has announced the relocation of a U.S. refrigerator plant and two parts plants to Reynosa, Mexico. Labor costs were a dominant factor in those decisions, company officials said.
That cost differential will be obvious in the 160,000-sq.-ft. (14,400-sq.-m.) maquiladora refrigerator plant that Maytag is now building on a 62-acre (25-hectare) site it purchased in Reynosa. The production that the Mexican plant will take over is now performed in a 1,600-employee plant in Galesburg, Ill., that will close in late 2004.
Workers in the Galesburg plant average earning about $15 an hour. In Reynosa, Maytag will be paying the $2.60-to-$3 hourly rate (including benefits) typical in Mexican industrial facilities. (Some of the Galesburg plant's work will also be transferred to some of Maytag's other U.S. plants.)

Whirlpool Has Plants in Four Mexican Cities
Reynosa may also be a contender for Whirlpool's new plant. Whirlpool already has a manufacturing facility in that border town, where more than 200 non-Mexican firms have operations that employ some 70,000 workers.
The company also has Mexican plants in Celaya, Monterrey and Puebla. And it could eventually turn out to be significant that Whirlpool isn't closing down the Monterrey plant from which production was shifted to Ohio. Instead, the company is now redesigning that facility to produce a new, unspecified "laundry product" that it says will be announced in 2005.
How Whirlpool's new plant affects employment at the Ft. Smith facility remains to be seen. With the company's ongoing manufacturing optimization, jobs could conceivably be shifted to - or from - the Arkansas operation.
The company's Mexican plans, though, do throw a shadow over a local expansion that was announced late last year. Whirlpool at that time said that it planned to add 700 jobs in Ft. Smith to make a new refrigerator line. The company hasn't commented further on its plans for the Ft. Smith expansion.
By chance, former Wal-Mart President and CEO David Glass discussed the migration of U.S. manufacturing jobs offshore in Little Rock just a few days before Whirlpool's announcement. Glass told the Little Rock Rotary Club that, as Wal-Mart's CEO, he had tried to encourage the company's vendors to manufacture in the U.S. But vendors, he said, usually decided to manufacture elsewhere due to cost considerations.
The nation's loss of manufacturing jobs could put the U.S. in peril, maintained Glass, now owner of the Kansas City Royals.
"Those of you that were around in World War II, I can tell you that we won World War II only because of the manufacturing capabilities in this country, nothing else," he said. "Had it not been for that, we would all be speaking German

 

does this include giving $85billion to banks monthly to shore up their crappy books ?

what was "rich" and what was their effective tax rate ?

 

More low skilled but high paying jobs go to Mexico Can we still say that free Trade and NAFTA hasn't killed the Middle Class in America?


Chrysler announced in February that it's spending $550 million to retool its factory in Toluca to assemble the subcompact Fiat 500 model. Last month, Ford reopened an assembly plant in Cuautitlán to build Fiesta compacts for the 2011 model year. The factory will generate 2,000 jobs and is part of $3 billion in investments in Mexico announced since 2008. In the U.S., Ford has closed four assembly plants since 2006 and plans to close four more facilities by the end of 2011.

Mexico's gains will come at the expense of workers in the U.S. and Canada, says Dennis DesRosiers, president of DesRosiers Automotive Consultants in Richmond Hill, Ontario. Mexico's share of North American auto production will rise to 19 percent over the next decade, from an average of 12 percent from 2000 to 2009, according to DesRosiers. Over the same period the U.S. will lose 7 percentage points, to 65 percent of the market, and Canada's share will hold at 16 percent. "There is going to be more capacity put into North America—and Mexico is going to get more than its fair share," he says.

Story: Mexico's Surprising Engineering Strength

Moves to Mexico may speed up as Chrysler and GM pay back government bailout money and the political scrutiny they face eases, says Michael Robinet, vice-president of global forecasting for CSM Worldwide in Northville, Mich. The reason isn't hard to fathom. GM workers in Mexico earn wages and benefits of 340 pesos a day ($26.40) on average, or less than $4 an hour, says Tereso Medina, head of the union for GM's 5,000 workers in Saltillo, a city about 180 miles (300 kilometers) south of the Texas border, where one in four Mexican autos is produced. GM and Ford workers in the U.S. earn about $55 an hour with benefits.

 

NAFTA.
Easy credit, allowing consumers to keep buying while their jobs were leaving.
Reserve currency statues, allowing the US to rack up incredible debt, in order to pay for trade deficits, while still having access to cheep foreign goods. The people allowed their wealth to be transferred over seas while they were busy sleeping with their eyes open, living high off of cheep credit, dreaming that they could retire off the money in their inflating home prices.

 

A one word answer:

Government.

 

The top tax rate of something like 90% in the 1950's affected well less than a score of people and they mostly moved elsewhere as the decade went along. It cost well less than 20% of GDP to run the federal government in 1950 and government at other levels was far smaller as well. Nearly all the Budget went to the military, which created thousands of private sector jobs. SS taxes were lower for everyone, the regulatory burden, comparatively speaking, was all but nil. There was no meidcare and medicaid being yanked out of everyone's pay check and social security took well less than half what it does now. Median inocme was also, likely less than half what it is now. But housing prices for a three bedroom home were about half of 1 weeks pay on the princely salary of 4 bucks an hour.

 

Only about 0.6% of the population owns about 40% of the wealth. Soon, it will be 0.5%, then 0.4%. Are you fine with that.

Once upon a time, all business was small business. Now, about 80% of businesses are small. Eventually, less than half of business will be small. Are you fine with that too?

Take up archery because the hunger games are looming.

That seems to be a safe assumption.

 

Pardy you are a never ending source of bad information. Even wiki says the top 1% own 34.6 percent of the wealth.