Letters to the Editor

Income gap

November 18, 2011

Advertisement

To the editor:

Columbia University Professor Joseph Stiglitz wrote in the May 2011 Vanity Fair magazine, “The upper 1 percent of Americans are now taking in 25 percent of the nation’s income each year. In terms of wealth, rather than income, the top 1 percent control 40 percent; 25 years ago the corresponding figures were 12 percent and 33 percent. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall.”

As a consequence, the United States now compares to Russia and Iran in income inequality. And the wealth gap continues to grow toward economic totalitarianism led by the big banks and seemingly allowed by a Federal Reserve system that watches while the banks and traders, the financial sector, not only pocket the income but cast aside previous banking regulations via corporate lobbyists for their clients.

The median wage in the United States is the same as it was 30 years ago (“Deep Economy” by Bill McKibben, page 11). The real income of the bottom 90 percent has declined steadily. They earned $27,060 in real dollars in 1979, $25,646 in 2005.

We need to focus on a green revolution, renewable energy, food, health care, transportation and energy for all Americans. Instead we have had our economy nearly hobbled by the unaccountable excesses of Wall Street.

Comments

Ron Holzwarth 3 years, 5 months ago

The difficulty with "the unaccountable excesses of Wall Street" is that very few understand them in any sort of meaningful way.

lunacydetector 3 years, 5 months ago

a green solution has already been proven a failure to increase incomes....solyndra. why doesn't the president catch the blame for the income disparity between rich and poor? keep drinking the koolaid commies.

jafs 3 years, 5 months ago

Thanks for that.

It's a very interesting, and informative link, and shows how off-base many of the criticisms of this project are.

Unfortunately, those who throw around easy criticism based on soundbites are unlikely to read and digest that information, and allow it to change their view to a more reality-based one.

Carol Bowen 3 years, 5 months ago

How in the world do the critics come up with their "facts"? Do they just make this stuff up for entertainment? OK, next question. Why do people believe these sound bites of misinformation?

Richard Heckler 3 years, 5 months ago

This comment was removed by the site staff for violation of the usage agreement.

Cai 3 years, 5 months ago

"Obama is every bit as corrupt as any other politician"

Fine.

"Since Obama has failed so spectacularly? "

...

If they're all corrupt, then Obama is not the only one that has failed. It's not Obama alone that's responsible for this crap. Just like it isn't / wasn't Bush alone that is/was responsible. It's all tied up in congress and politicians as a body, because they all have a very vested interest in keeping the wealthy top percent from paying. If the top wealth has to pay more, THEY have to pay more.

Blame Obama all you want. Blame Bush all you want. In the end, we need to spread the blame to all of the people responsible, or it's going to keep happening.

Ron Holzwarth 3 years, 5 months ago

"some of what the author says is correct, and troubling."
I am absolutely sure that is true.

The Following Is All Strictly And Only My Own Personal Opinion, And Nothing More:

The taxation system in the US today has unbelievable inequalities that are all legal. The only solution is to change the tax code, which will be very difficult to do because there are so many influential citizens and corporations that have a vested interest in things staying the way they are.

It has been said many times that all boats rise together with the tide. But, they all sink together also.

I believe that while some taxation on income is perhaps necessary, at higher income levels, it shouldn't be increased by very much, if at all. In fact, maybe the income tax should be eliminated altogether, and completely replaced with taxation on consumption, with some exceptions that are free of taxes altogether.

For items that ordinary people need for their everyday lives such as reasonably priced food, some energy costs, and reasonable housing costs, there should be little, if any sales tax.

But, consumer purchases of anything beyond what might be considered reasonable, a very high national sales tax should be implemented. By that I mean that the national sales tax on the purchase of a Rolls Royce, Ferrari, Lamborghini, a yacht, a vacation cruise in the Caribbean, any home with a price of perhaps $400,000 or more, any airplane or jet for strictly personal use, or any of many items which are not at all necessary at all for a reasonable standard of life should be taxed at a very, very high rate.

My reason for that opinion is that it is a necessity for capital be be acquired and made available in order to increase the capital available for expenditures that are necessary to acquire tangible items, such as factory equipment, real estate, raw materials, and payment for workers that are necessary in order to return the USA to a leader in the manufacture of services and products that not only our citizens, but also the citizens of other countries, want to buy.

And government spending is not going to cut it, because it comes from the taxpayer's pockets, and it seems to be very rarely wisely invested.

There is only one other way for that capital to be acquired, and that is for the citizens of the USA to invest in it. But, only those in the higher income levels are able to do so. In their own self interest, I am sure that at least many of them will save their personal wealth by investing in various endeavors, and being wealthy people, many of whom acquired their wealth by utilizing their financial acumen, they will hopefully will make wise decisions, and thus force the economic situation in the USA to make a very quick and forceful turnaround from its present doldrums.

I can see no hope of any other way for the USA to return to being the economic powerhouse of the world that it used to be.

Ron Holzwarth 3 years, 5 months ago

The problem with that taxation policy is the USA would need a dictator in order for it to be implemented.

somedude20 3 years, 5 months ago

Did you catch that the USMC is going to have a base ina Australia? That would be a cool DS to have. I was happy with a year and a half at Kaneohe Bay, Australia would top that!

Ron Holzwarth 3 years, 5 months ago

Strictly My Own Personal Opinion: The US establishing a military base in Australia is not a good idea, because it is almost certain to antagonize the leaders of China whether or not their concerns have any foundation in fact.

Unfortunately, our nation is perceived by the citizens of some other countries to have a recent history of first stepping in, and then overstepping what they consider to be reasonable limits.

(By "recent history", I mean since 1945.)

tomatogrower 3 years, 5 months ago

How would you explain the Fannie Mae CEO getting big paychecks and bonuses by being a failure. Maybe you have no ethics, but most people do. Not many for the failure CEO's, of course.

Ron Holzwarth 3 years, 5 months ago

"What was Paris Hilton's "big idea"?"

She has two of them, and she carries them in front of her.

Flap Doodle 3 years, 5 months ago

Solyandra is an project that was mismanaged for political purposes by the current regime.

Flap Doodle 3 years, 5 months ago

It was the current regime that asked the Solyandra folks to delay announcing layoffs until after the midterm elections. (from a source)

jafs 3 years, 5 months ago

See the above link for accurate information on the project.

appleaday's post has it.

Windemere 3 years, 5 months ago

Just curious. Are there any legislative changes that you would endorse that would have to effect of reversing the trend that Sven describes? If so, what are they?

Ron Holzwarth 3 years, 5 months ago

Liberty_One, c'mon.

Surely you're not talking about how US legal tender, such as a $20 gold coin that was minted prior to 1933, is now worth over $1,700, are you?

Crazy_Larry 3 years, 5 months ago

It's ALWAYS the government's fault, isn't it....

FYI, L1, the person who suggested bailing out the banks back in 2008 (G.W. Bush's presidency) was Hank Paulson, Secretary of the Treasury. He's an investment banker by profession who came to DC directly from Goldman Sachs.

You see, things aren't as cut-and-dry as you'd like to imagine they are. The government has become a corrupted cabal who's only concern is themselves and not the welfare of this country as a whole.

Things that make you go hmmmm.

Crazy_Larry 3 years, 5 months ago

Sorry you feel I was criticizing you, I wasn't. A corrupted government will never function properly.

Hank Paulson is not a politician...he was brought into temporary government service in order to help the bankers and Wall Street, not the people of the USA. I'd also like to point out that the bailout was passed because Paulson and the Bush administration threatened Marshall Law if it didn't pass. A form of low-grade terrorism.

http://www.nytimes.com/2009/07/18/business/18nocera.html?pagewanted=2

"Congress felt bullied by Mr. Paulson last year. Many of them fervently believed they should not prop up the banks that had led us to this crisis — yet they were pushed by Mr. Paulson and Mr. Bernanke into passing the $700 billion TARP, which was then used to bail out those very banks.

Indeed, Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if Tarp wasn’t passed."

"Henry Merritt "Hank" Paulson, Jr. (born March 28, 1946) is an American banker who served as the 74th United States Secretary of the Treasury. He previously served as the Chairman and Chief Executive Officer of Goldman Sachs."

And the Federal Reserve Bank is not really "the government." either. In Lewis v. United States, the United States Court of Appeals for the Ninth Circuit stated that: "The Reserve Banks are not federal instrumentalities for purposes of the FTCA [the Federal Tort Claims Act], but are independent, privately owned and locally controlled corporations." The opinion went on to say, however, that: "The Reserve Banks have properly been held to be federal instrumentalities for some purposes." If the Federal Reserve Banking System was indeed "the Government" then why would we owe interest?

As I stated previously, our "leaders", "the Government", is nothing more than a corrupted cabal between industry and professional politicians, and their only concern is for enriching themselves. They care not one iota for the welfare of this country and the people within it. Government for the people, by the people is no more.

I smoke idiots and bastards.

Crazy_Larry 3 years, 5 months ago

I agree, DC is part of the problem, but Wall Street BOUGHT OFF DC! There are many problems with our society...blaming everything on the government is wrong.

cato_the_elder 3 years, 5 months ago

For a more rational discussion of the cause du jour currently driving the Obama-approved OWS protests and the violence, drug trafficking, rapes, beatings, loss of income to middle-class small business owners and the overall human filth resulting therefrom, click on the following:

http://www.thefreemanonline.org/columns/tgif/not-insulting-our-mothers/

Jimo 3 years, 5 months ago

This from the fool who said "The notion that the Bush administration is responsible for the state of our economy when Obama took over is the biggest lie promulgated by the Hard Left in my lifetime."

cato_the_elder 3 years, 5 months ago

And this from Jimo the Marxist moonbat, who has previously said, "The only feudalism we have in America is the concentration of the nation's wealth in the hands of a few."

pepper_bar 3 years, 5 months ago

If he doesn't enjoy capitalism, the letter-writer is cordially invited to relocate to Cuba, where his equality-uber-alles society already exists and provides plenty of beaches for round-the-clock camping.

(Why has Occupy Lawrence focused so strongly on the evils of park camping laws, anyway?)

beebo 3 years, 5 months ago

“The upper 1 percent of Americans are now taking in 25 percent of the nation’s income ....TAKING??? NOW I get it.....up until now I thought that wealth was MADE via hard work and sacrafice. I pray that someday we'll discover exactly who Jobs, Gates, Oprah, et al TOOK from to obtain their wealth. I am enlightened.

parrothead8 3 years, 5 months ago

It's naive to think that the majority of the "upper 1 percent" started at the bottom and worked their way to the top.

George Lippencott 3 years, 5 months ago

Agree up to the end. IT always saddens me to see otherwise intelligent people misled by their "betters". The problem is a broken electoral system that allows the sale of public office for Wall Street, unions, teachers, the rich, the poor and on and on.

Wall Street just loves it when you focus on them – they will just buy more elected officials who will do silly things to make you think they are addressing your concerns. If we fix our political system we cut off Wall Street and all the others who profit through political favoritism.

imastinker 3 years, 5 months ago

It will continue to be that way until people realize what the consequences of their decisions are and how they are keeping themselves poor, or stuck in the middle class. If the OWS folks ever listened to the Dave Ramsey show I think they would feel awful silly. I enjoy listening to it, and how people making relatively small incomes are able to pay off massive amounts of debt and use a budget to accomplish a pretty good amount of wealth.

Earlier this week on the show he used an example of a guy that saved $20/week for 40 years and was a millionaire by 60. If I remember right, it takes 9 million to be in the top 1%. So, I just have to save $180/week or less than $10k/year to make it there.

beebo 3 years, 5 months ago

No fair. You're injecting LOGIC, math and responsibility into this argument. Now you know, we can't have that.

jafs 3 years, 5 months ago

You should check that math.

If you multiply $20/week by 52 weeks (1 year), you get $1040.

Then multiplying that by 40 years, you get $41,600.

Nowhere near $1 million.

If you assume they invested the money, and got a decent return, you might get closer, but all investments have risk involved, and lower risk investments generally have lower rates of return.

imastinker 3 years, 5 months ago

I was going off memory. I know his assumption was following the long term trends in the stock market, so 10-12% is about right. Maybe it was $30/week. I'm not going to go listen to the show again to find out.

Regardless - what risk is there? Most people spend this on lunch instead of brown bagging it! The point is that wealth is attainable for anyone that wants it. Right now it's actually more attainable than any time in the past 30 years because the price of investment housing and stocks are down relative to where they had been.

You can whine about risk all you want, but there is no risk in eating sack lunches and driving old cars while investing the difference. The biggest risk is in doing nothing. That's a sure way to lose.

jafs 3 years, 5 months ago

Go ahead and do whatever you want with your money - that's not my business to decide.

But, if you think it's easy to get a million dollars without risk, I'd say you're way off base.

imastinker 3 years, 5 months ago

The real risk is inaction. That's my point. If you go through life without a budget and without a plan, you are probably destined to never be able raise your standard of living. That's OK with me too. But don't complain about it and tell me that average people can't make it, because that's flat out wrong.

jafs 3 years, 5 months ago

I'm not "complaining" about anything - I'm very comfortable with my financial situation.

I'm trying to correct your mistaken advice to people that may not be able to think about these things clearly.

jafs 3 years, 5 months ago

I used an investment calculator (Dave Ramsey's in fact), and plugged in some more numbers.

If you take an $80/month investment at 4%/yr over 40 years, you get about $95,000 at the end of that period.

In order to get to $1 million, you have to wait until 2112.

oldvet 3 years, 5 months ago

If, on the other hand, you earn 12% per year, you nearly make your million. Over the past 20 years, DJIA has averaged 10.2%, over the last 25 years it has been 11.2%, for 2010 it was 13.8%. It may take research and work, but it can be done.

Some succeed because they are destined to; Most succeed because they are determined to.

jafs 3 years, 5 months ago

Ok.

I'll assume that's true - in order to make 12%/yr you have to take quite a risk.

You do know that the stock market crashed in recent years, I'm sure.

If you cherry-pick the window, you may be able to find stats that look good, but the fact is that the market is inherently risky, and you can wind up losing a lot of money in it.

Especially if you happen to need it when it's lost a lot of value, as many people found with their retirement funds.

Since the example was 40 years of investing, what are the average returns over that span?

My original point was that the post makes it appear that it's easy to save a million dollars, when that's not at all the case.

imastinker 3 years, 5 months ago

By the way, I have investment property earning me over 100% return currently. Granted, that's using the leverage of a mortgage. One had the down payment paid back within seven months of purchase. Anybody could have bought this house.

IMHO, stocks are some of the riskiest forms of investments there. The only stocks we buy are in 401k's with employer match. We earn 100% automatically the instant we put it in there.

jafs 3 years, 5 months ago

It would take quite a while to save up even a modest down payment on a house at $20/wk.

So "anybody" couldn't have bought the house.

But, I completely agree that stocks are an extremely risky investment - that's what I said.

imastinker 3 years, 5 months ago

The down payment was less than what a decent used car costs. It was paid with the proceeds from the sale of my much newer truck. The decision to drive an older truck (1994) and work on it more means that I was able to earn more income than I would otherwise.

jafs 3 years, 5 months ago

Great.

So, folks that have a relatively new vehicle can do what you did.

Many, many people can't even afford a newer vehicle.

Some people can't even afford an older one.

imastinker 3 years, 5 months ago

A quick trip through any local trailer park would make you feel awful silly for that statement.

jafs 3 years, 5 months ago

Not sure what we're arguing about, really.

But, in order to buy even a modest house, you need a reasonable down payment, and very good credit.

Let's say you want to buy a $40,000 house (very low price) - that means you need an $8,000 down payment (20%).

In order to sell your vehicle and get $8,000 for it, you have to own a vehicle that's worth that much on the market, and you have to own it outright, not be making payments on it (as many people do).

Many, many people are not in that situation.

jafs 3 years, 5 months ago

And, actually, according to the same calculator, with a 12% return, you're about $50,000 short in 40 years of the $1 million goal.

It takes another couple of years past that to reach it.

Finally, the calculation depends on a steady consistent 12% return each year for the duration of the investment.

There is no such investment - that was the Madoff scam, offering consistent 12% returns each year.

In order to correctly calculate the value of an actual investment with differing annual returns, you'd have to calculate each year with the correct rate/amount invested.

jafs 3 years, 5 months ago

As far as I know, you can't invest in the DJIA.

But, index funds like an S&P 500 index fund aren't doing anywhere near that percentage.

Vanguard's shows numbers in the 5% area for a 15 year period average yearly return.

And those kinds of funds are probably the lowest risk way to invest in the market - they offer no load, extremely good diversification, and low administrative costs.

In addition, there is quite a bit of evidence that over the long term, actively managed investments don't outperform a passive index fund strategy.

parrothead8 3 years, 5 months ago

In related 1%-er news.

Several Wall Street bankers ruined a nation's economy, destroying the lives of millions. Families have broken up, homes have been lost, and crime and suicide rates have risen. No charges have been filed.

But, you know...some dude hit another dude in the head with a hammer. That group is clearly the problem here.

tbaker 3 years, 5 months ago

Well Sven, lets pretend you're 5' 4" and are not athletically inclined. Would you insist the 6'7" NBA star with a gift for basketball be forced to share his millions with you? You say the top 1% are "taking" too much money? Taking? Really? From whom are they taking it? Have you considered the fact they may be earning it? All of us are born unique individuals, no two of us are the same no matter how much income you and your ilk would redistribute. We need to focus on Green Energy? How about focusing on liberty? How about focusing on getting the government out of the way so people can make their own way?

Tony Kisner 3 years, 5 months ago

How much does "Social Critic " pay $1.0 mm?

Carol Bowen 3 years, 5 months ago

This is demographic data. It is a summary of how our distribution of wealth has evolved. Many of the comments above are way too pointed for summary data. There are no bad guys. It is what it is. Ask the following questions:

  1. The distribution of wealth has changed. Can it continue as is, or is this distribution losing stability?

  2. Do we need to make corrections because of the side effects of the current distribution of wealth?

Jim Phillips 3 years, 5 months ago

It irks me that people think what other people earn is any of their business. Instead of belly-aching about how unfair it is, get off your backside and go earn your own money.

pace 3 years, 5 months ago

Best remark I heard, is I am glad when someone makes enough money for his dream home or his dream yacht, not glad when he buys his dream congressperson or senator.

parrothead8 3 years, 5 months ago

That's easier said than done when the people with lots of money are buying the government.

tbaker 3 years, 5 months ago

We should demand our members of congress support the Stock Act (HR 1148) and at least try to take some of the money (aka; income potential) out of serving in congress. They need to be serving us, not their investment accounts. All of us would be in jail for what they currently do legally. Check it out. http://www.cheatingculture.com/stock-act/

bszemere 3 years, 5 months ago

Whats lost in this discussing is comparison of the facts of who makes this money. What are the ages, education, amount of marriages lost, kids who won't speak to them, time in the business, time away from home, overtime, travel for the people making the high incomes compared to those not?

The focus is on CEOs (the number is about 300) but do you realize there are at least 1500 players in the NFL and their average pay is about 1.5 mil? As for the NBA, there are at least 300 players at about 2 mil per player? The average age of a CEO is about 56. For an NFL player? Maybe 30? NBA? Maybe 30? And, by the way, the CEO might have 20, 30, 40 years in his business (and an advanced education) and the ball players maybe 3 to 5 (with a BS if they are lucky).

The actors (if you call them that) on "Friends" made 1 mil an episode (about 40 minutes).

bszemere 3 years, 5 months ago

Pace, how do you know Guardian makes? who cares? I agree with him, and I have an average house and no boat.

So what do you say about KU paying their football and basketball coaches a total of 5 mil while they are unable to fix dorms or keep their engineering and computer departments viable?

Hummm??????

verity 3 years, 5 months ago

Perhaps that is because the KU Athletics Department is a separate entity.

bszemere 3 years, 5 months ago

Poor excuse, they are on the property, using the KU name, trademark, facilities but I would expect that hypocrisy from you...

By the way, who hires the Athletic Director, who hires the coaches?

And ultimately, where do the funds come from? All from the same place? Thats correct..the taxpayers

Most college sports cost more than the revenue they bring in...

verity 3 years, 5 months ago

I wasn't making an excuse, just stating a fact.

bszemere 3 years, 5 months ago

Wasn't the argument a few years ago about the smaller difference between what senior Japanese managers made compared to their workforce? A ten year recession and reduced stature in the world kind of threw out the virtue of that, didn't it?

bszemere 3 years, 5 months ago

Verity, its not fact, the AD, as well as the coaches are ultimately paid and their programs funded by the same DOE funding and paid for by us. You didn't address the long term debt by the AD at KU, as well as the resources allocated by them on the school property they don't pay for.

Coaches pay at public universities ultimately is paid for by the taxpayers, not the athletic dept., at public schools.

Commenting has been disabled for this item.