Does it bug anyone else how often this phrase is thrown around? One thing that drives me crazy about it is that it is merely a axiomatic statement within any inflation based economy. We have an economy based upon a fiat currency which requires a steady inflation of the dollar upward (in terms of quantity) and downward (in terms of value). This means that the gap between the rich and the poor will always and necessarily grow. What this does NOT mean but is oftentimes (almost always) implied is that the rich are getting richer WHILE the poor are getting poorer. It seems that either everyone is getting richer or everyone is getting poorer generally speaking. Here is a hypothetical I just wrote out for some left leaning and right leaning friends in an email discussion I started: "Let's suppose it is somewhere back in the past where a "rich" person is making $1,000 per year. His "poor" counterparts are only making $100 per year. Let's then propose that the rich person increases his income by 20% to $1200 per year. Now let's say that the poor do something unheard of and double their income, thus increasing their income to $200 per year. Your average liberal media person would STILL declare that the "gap between the rich and the poor" had grown. Why? Because it has! So even though the poor increased their income by 100% in my hypothetical and the rich only increased their income by 20%, the gap went from $900/annum to $1000/annum." Now I recognize that even in terms of percentages the rich have grown wealthier faster than the poor. Having said that, the poor have grown wealthier too! Between 1979 and 2007 even the lowest quintile had a growth of income by about 18%. The top 1%? They grew by an astonishing 275%. That offends some people greatly. It does not offend me (and I have spent MOST of my life in the bottom quintile so I am not justifying my own existence in terms of being wealthy (as I am not). But if everyone (generally speaking) is better off, why am I supposed to be upset? So yes, the gap between the rich and the poor WILL always grow in a growing economy, but the rich are not getting richer WHILE the poor get poorer. During the recession of 2007-2009 everyone got poorer but the RICH got poorer faster. The gap actually shrunk during that time (in terms of percentage of GDP, probably it grew in terms of real dollars) but why was that a good thing? Thomas Sowell has a great piece on this: Thomas Sowell in the National Review
Mop, You explained that well. It's like the libs don't want to argue facts as they focus on the emotions of the weak.
It's not a case of the poor getting poorer but that the gap continues to widen. I've personally felt the cost of living rise and seen a lot of people struggle, yet the richest 1% pull away. That's not a good thing in my book and before I get some dumb-arse comment about me being a commie or some asinine comment like that, I'm more than happy for people to have wealth. I would just say how much do they really need? With executive pay, rich pull away from rest of America
In your example, I think the poor would be fabulously happy. By about 4.5 yrs, they would have surpassed the rich. So please, design a system like that for me. The reality for most, is that they won't even see that 20% bump that the rich guy got, even in the good years. The reality for most, is that their hopes of sending their kid to college with college cost going up substantially faster than their income, gets dimmer each year. The reality for most, is that healthcare cost are going up much faster than their income and it is a much, much higher percentage of their income. The reality for most, is that they are not able to pursue better opportunities the way a rich guy can because they can't scrape together the $1200 bucks it takes to put down a deposit on a new apartment. You can certainly make a case that most of these people made choices that either 'got them poor' or 'kept them poor', if they were already there. But IMO, what pisses people off about the 'gap' is the perception that the deck is stacked and getting more so everyday. I've been on both sides of the track by virtue of my parents getting divorced and I can say emphatically that wealthy people(or the kids of wealthy people) get a substantial head start in life. It's not insurmountable for the poor, but the deck is certainly stacked against them. It's the same arguement that minorities have had and the same arguement women have had for decades. In terms of economic achievement, poorer kids are already having to make up huge ground by the time they graduate from high school.
Why do rich people make more money when things are going well as compared to poorer people? Isn't this one simple. If I bet $1000 on the longhorn game and they win I get a bigger payoff than someone who bet $100. I risked more and therefore if it goes well I get the bigger reward. If I have 50$50,00 invested and the stock market does well I make a lot of money compared to someone who has $1500 invested. I don't see where people get upset with this. Now if lawmakers and big corporations scratch each others back to keep each other in a constate state of prosperity outside the flow of the rest of the economy that puts us in a viscious, sprialing catch 22.
I don't think there are many, at least not on this board, that would argue the virtue of investing and growing your wealth. I think most of the rhetoric of anti-business, anti-wall street is intended for the portion of that group that does play with a stacked deck, of which there are many examples. Like so many of our discussions on this board, the examples we cite(left or right) are the minority but they are typically egregious. Solyndra- example of lefty run amuck Enron - example of righty run amuck Countrywide et al - example of righty run amuck Teachers Unions- example of lefty run amuck Both sides can cite examples of the other sides failures. while the vast majority of the world plays by the rules and is reasonable in both their efforts and their expectations, there will always be a select few that take advantage of any room the system gives. give an inch, they take a mile. we just have to decide, how much 'run amuck' are we willing to tolerate in order to achieve the good that the other 85% do? And to which side are we willing to lean when giving that inch.
I don't think it really matters or comes down to left or right, it comes down to the well healed elite as Musburger alluded to.
Not exactly the same analogy because in gambling that is money you have decided you can afford to lose if it doesn't go well. I think the key is in the statement about more experienced poker players. Experienced investors know where to take the risk. Look at ex-athletes that invest in ridiculus things with the same idea that I have millions of money but invest 2 million in something with no chance and get nothing for it. Also, in regards to the post about Countrywide, maybe I am oversimplifying things, but why is it the loaners job to teach the borrow how to budget money. I could have bought a more expensive house but know better as to what I can actually afford regardless of what the bank approves. Dumb people (and sometimes inexperienced) make dumb decisions often.
Another thing that comes to mind w/ the poker/gambling analogies: Money has a tendency to flow up the food chain, so as you move up stakes the edges become smaller and smaller. Just because you can afford to sit into a $500/$1000 No Limit poker game doesn't make you a winner. The vast majority of people are orders of magnitude more likely to lose because of the huge increase in talent the higher stakes attracts.
