Forum Post: A 1% that does not spend is bad economics
Posted 13 years ago on Oct. 27, 2011, 11:58 p.m. EST by wavefreak58
(134)
This content is user submitted and not an official statement
Setting aside the questions of social inequity, I find it interesting that the concentration of wealth in a very small segment of the population is actually bad for the economy in general.
Why? Simple. A robust economy has money flowing through it. The velocity of this flow is a measure of its strength. When the majority of wealth is held by a tiny majority, and they don't DO anything with it, it is as if that money is removed from the economy and less can flow through it. Concentration of wealth decreases the velocity of money flowing through the economy.
The most profitable industries in the world (energy, healthcare, finance) have been given billions in government handouts and tax breaks. Meanwhile, they keep raising charges causing hardship for millions. With all those massive handouts, tax breaks, and obscene charges, profits rise to record high levels. Millions in bonuses are paid to the executives. With record high profits, record high dividends are paid. 40% of all dividends in the United States are paid to the richest one percent. The bottom 90 percent of Americans share about 10 percent (that's ten percent) of all dividends. The rest are paid to the top 5 percent and foreign investors. All of this causes a gradual concentration of wealth and income. This results in a net loss for the lower majority who find it more and more difficult to cover the record high cost of living, which again, is directly proportional to record high profits for the rich. As more and more people struggle to make ends meet, more and more financial aid becomes necessary. Most of which goes right back to the health care industry through Medicare, Medicaid, and a very expensive prescription drug plan. This increases government spending. It has been happening for 30 years now. During the same time, tax rates have been lowered drastically for the richest one percent. Especially those who profit from investments. These people pay only 15 percent on capital gains income. As even more wealth concentrates, the lower majority find it more difficult to sustain there share of the consumer driven economy. Demand drops as more and more people go broke. Layoffs results. Unemployment rises. This results in less revenue and more government debt.
Massive subsidies and tax breaks for Wall Street, massive tax breaks for the super rich, heavy concentration of wealth, record high charges along with record high profits and record high cost of living, more hardship for the lower majority, more government spending in the form of financial aid to compensate, more concentration of wealth, less demand, layoffs and unemployment. All of this results in slower economy and less tax revenue. At the same time more and more financial aid becomes necessary. It's a horrible downward cycle which gradually pushes the national debt higher and higher. The other big factors are the wars in the Middle East.
This post is not intended to excuse those who sit on the couch collecting welfare, make no attempt to find work, or squease out kids they can't provide for.
God damn it. You die hard winner take all bloodthirsty capitalists and filthy rich pigs absolutely refuse to understand the following: First, that record high charges in health care, energy, and finance also mean record high profits and record high dividends. 40% of which are paid to the richest one percent. This causes more hardship and more concentration of wealth. At the same time, more financial aid in the form of welfare, Medicare, and Medicaid becomes necessary. Especially with those record high charges and profits. As even more wealth is concentrated, the lower majority go into debt and lose their relative buying power. This results in less demand, layoffs, and higher unemployment. This results in even more legitimate need for financial aid, a slower economy, less revenue, and higher national debt. It's a downward cycle tied directly to the relentless concentration of wealth.
I'm not making excuses for those who sit on the couch, make no attempt to find work, and sponge off the government. I'm not calling for a welfare state. But God damn it. You die hard conservatives and filthy rich pigs need to stop being such cowards, open your god damn eyes, and finally admit that there is a downside as more and more wealth becomes concentrated.
The richest one percent now own 40 percent of all United States wealth. This is true even after you account for all taxes, charity, and financial aid. Mark my words: this equation will get worse.
THERE IS A DOWNSIDE AS YOU GET RICHER AND RICHER!
A word for my critics: I'm no expert but I'm no fool. I predicted this socio-economic crisis in writing 6 years ago. I'm aware of all the conservative and liberal talking points. Of course, I hate politicians. But I don't hate liberals or conservatives. I agree with both on some issues. For example: I agree that we need an adequate safety net for those in need. Not for those who sit on the couch and watch TV.I agree with tax cuts for small business. But not for Wall Street and not for those making $500,000 and up. A heavy concentration of wealth is what got us here. A gradual and partial redistribution of wealth is vital.
I don't want socialism, communism, or marxism. I want modest capitalism. A reasonable scale of income opportunity for all those willing and able to work. An adequate safety net for those in need.
A word for the rich: I have received quite a bit of negative feedback from you one percent club pigs. I must be doing something right. After all, you took time away from your money bath just for me. You might want to check your ass crack for soggy bills. In the meantime, let me just say this for the record:
You can't intimidate me. You can't embarrass me. You can't make me feel uneducated, unintelligent, or otherwise insignificant. You can't confuse me. You can't divert my attention. You can't exhaust me and you sure as hell can't break my will. I know I'm getting to you because you're here with another lame psychological trick. You're here in an attempt to shut me up. It won't work. I've had it with all of you.
I won't break any laws. I would never discredit the cause with a criminal act. But I'm telling you right now that I'm virtually impossible to stop. It's a big world and I have a lot to say. If you want to break my will, you're going to have to break my neck first.
If you pull a stunt like that, a lot of people will know what happened to me and why.
Now get out of my face. I have work to do.
Is this issue really the velocity of money flowing through the economy, or the distribution of that flow?
And check this out: The 1% speak in Chicago. Check out what they said. Wow. http://wwwtapolitics.blogspot.com/2011/10/word-from-1.html
Um....that "leaflet" is a printed piece of paper that appeared here a couple of weeks ago as an "email" that someone supposedly got from their "boyfriend" who works on Wall Street.
That you will take a dirty piece of paper found on the street and declare it as "the 1% speak" is disgraceful. If that's how you want to play the game, I'll take a photo of a piece of paper I WRITE up, and declare that I found it being distributed on Wall Street and that THIS is what "OWS stands for".
The wealthy are not spending because they are planning on moving out of this country.
So you're saying that the 1% "don't do anything" with their wealth?
You mean besides paying 70% of the Federal Tax receipts every year....and paying all the employees that work in their corporations....and donating to their charitable foundations...and traveling....and eating out and entertaining....and donating to political campaigns....and developing grants and scholarships for schools and college students....and investing in products and businesses and innovations that benefit everyone...and paying property taxes that build infrastructure....and hiring grounds-crews and cooks and maids and drivers and security people and construction workers and tutors and pet groomers and caterers and cleaning people and pilots and mechanics and artists and designers and.....?
They really SHOULD be circulating all that money!
Sometimes I wonder why I bother. Did I say that wealthy people do NOTHING with their money? The concentration of wealth changes the velocity of money through the economy. It slows it down. Did I say it STOPS? Geez. This is Economics 101.
"When the majority of wealth is held by a tiny majority, and they don't DO anything with it, it is as if that money is removed from the economy and less can flow through it."
I don't know....you tell me.
Read the last line of the post - you know, where the assertion is actually made.
Besides paying 17% of their total income in taxes you mean? Want me to explain it again? Only took 5 hours last time for you to agree with me.
From Politifact on Buffet and his secretary-
"Our conclusion
As we said at the outset, we don't get into questions of opinions such as whether secretaries should pay a higher tax rate than billionaire bosses. But that situation is possible under the current tax code, if an employee is sufficiently well paid and if the boss's income comes from stock market investments or managing a hedge fund.
Is it the norm? No. Millionaires who count on a salary pay higher taxes than those who draw most of their earnings from investment income. And most secretaries earn too little to pay such high rates."
http://www.dailyfinance.com/2009/08/17/top-400-taxpayers-in-the-u-s-pay-a-17-percent-tax-rate/
http://www.forbes.com/sites/berniekent/2011/10/17/musings-on-warren-buffetts-tax-disclosure/
Oh, excuse me, 17.4% And long-term capital gains are not adjusted for inflation? Ohnoes. Poor billionaires.
You need to be specific. Not all "billionaires" only pay capital gains tax. You keep trying to throw ALL "rich" people under the bus as being equally evil and un-properly taxed etc and that simply isn't the case.
70% of federal income tax, you mean. It's a really small fraction of overall taxation in the US.
http://abcnews.go.com/blogs/politics/2011/09/fact-check-the-richtheir-secretaries-and-taxes/
"The nonpartisan Tax Policy Center has crunched the numbers and found that Warren Buffett and his secretary are the exception to the rule. For the most part, the wealthy pay a significantly higher percentage of their income in taxes than middle-income workers."
"The key numbers: this year those earning over $1 million will pay, on average, 29.1 percent on federal taxes. Those earning between $50,000 and $75,000 will pay 15 percent."
"That’s not to say that there aren’t wealthy people who are even better than Buffett at avoiding taxes. In 2009, 1,470 people with incomes over $1 million a year paid absolutely no taxes. But that represents less than 1 percent of those earning over $1 million a year. Raising their taxes may be the fair thing to do, but it will not bring in much revenue."
"There were 236,883 taxpayers who earned more than $1 million in 2009. That’s less than two-tenths of one percent of all filers."
" $10 million a year paid 22 percent.- $1 million to $10 million paid 25 percent."
Are you ever going to GET this? Raising the taxes on the richest=raising taxes on 2/10 of 1% of all filers. And the crap about all the rich paying 17% is propaganda/spin/lies/distortion.
So let's talk about "overall taxation"
Payroll taxes? The Tax Policy Center, run by the Urban Institute and the Brookings Institution, recently studied payroll and income taxes paid by each income group. The richest 1 percent pay 27.5 percent of the combined burden, the top 20 percent pay 72 percent, and the bottom 20 percent pay just 0.4 percent.
You can document the others- Tell me what percentage of sales tax the rich pay in comparison to everyone else.
Tell me what percentage of property tax the rich pay in comparison to everyone else.
State taxes?
Just the facts ok?