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Old 05-16-2013, 09:08 AM   #21
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There has been a shift from labor to capital. There are things we can do and things we can stop doing to shift it back. But it's gonna have to have a strong grass root component. Any hippies left out there?
IMO, our economy works best -- and our middle class that drives the economy is strongest -- when there is a healthy equilibrium between the leverage and "clout" of both labor and capital. Without getting deep into politics, I think it's pretty clear that the economy of the last few years has tipped the scales *vastly* in favor of capital. The last decade has seen the "value" of labor lag horribly compared to top-line economic growth for capital.

(And I lived in Silicon Valley in the late 1990s, so I've also seen the balance in favor of labor, where for skilled professionals double digit wage gains were fairly common.)

So to rephrase what I say above, perhaps the big economic challenge facing this nation is to see if we can restore some semblance of balance without creating a system that causes vast amounts of capital to flee (or remain parked in cash) to the detriment of growing our GDP. I don't think the usual talking points can address this, as all they do is either continue to increase the current imbalance or replace one imbalance with another imbalance in the opposite direction.

We have a growing number of folks who feel like they will *never* be able to retire, let alone early, largely because they can't keep up with the cash flow needed to adequately fund it. Wages are flat (at best), *real* inflation felt in essentials like food, energy, education and health care is moderately high, and has been mounting for several years. There's just little left for a lot of folks to save for retirement any more in a lot of cases.

Demonizing capital isn't helpful, and neither is demonizing labor. So can we help the middle class rebound in a way that doesn't encourage mass amounts of capital to "flee" from our domestic economy? Perhaps someone who can crack that one would deserve a Nobel Prize in Economics.

(Also moving this to the Politics thread as a precautionary measure.)
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Old 05-16-2013, 09:08 AM   #22
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I thought many people ER would find this blog interesting. It discusses why there is a large wealth gap among very groups in the US and how it might be lessened.

Wealth Gaps are Large and Growing, But a Research-Driven Literacy Strategy Can Help | MetroTrends Blog
When I think of the wealth gap I always think of this guy in the cube next to me yrs. ago. We both graduated the same time and we both pretty much made the same salary. I had around 10 homes and banked my salary, he was broke and 30-40k in Credit Card debt.
If they took my money and gave half to him so we both had the same amount of money, in 5-10 years I would be banking my salary and he would be broke.
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Old 05-16-2013, 09:11 AM   #23
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When I think of the wealth gap I always think of this guy in the cube next to me yrs. ago. We both graduated the same time and we both pretty much made the same salary. I had around 10 homes and banked my salary, he was broke and 30-40k in Credit Card debt.
If they took my money and gave half to him so we both had the same amount of money, in 5-10 years I would be banking my salary and he would be broke.
AMEND
Sometimes true, but I think it's unfortunate that many folks today seem to assume that anyone suffering economic misfortune today only did so because of their own bad and/or irresponsible decisions, and that if they just would have been responsible and made better decisions, they'd be wealthy and able to retire at 50. A lot of good, hard working and responsible people are desperately thrashing around in the water in this economy, trying not to drown. And a lot of people just can't seem to accept that; it's more convenient to just believe that if they are struggling, it *must* be because they screwed up and they made their own bed. It absolves us of feeling any responsibility to help out or accept any personal sacrifice.
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Old 05-16-2013, 09:31 AM   #24
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Originally Posted by ziggy29

IMO, our economy works best -- and our middle class that drives the economy is strongest -- when there is a healthy equilibrium between the leverage and "clout" of both labor and capital. Without getting deep into politics, I think it's pretty clear that the economy of the last few years has tipped the scales *vastly* in favor of capital. The last decade has seen the "value" of labor lag horribly compared to top-line economic growth for capital.

(And I lived in Silicon Valley in the late 1990s, so I've also seen the balance in favor of labor, where for skilled professionals double digit wage gains were fairly common.)

So to rephrase what I say above, perhaps the big economic challenge facing this nation is to see if we can restore some semblance of balance without creating a system that causes vast amounts of capital to flee (or remain parked in cash) to the detriment of growing our GDP. I don't think the usual talking points can address this, as all they do is either continue to increase the current imbalance or replace one imbalance with another imbalance in the opposite direction.

We have a growing number of folks who feel like they will *never* be able to retire, let alone early, largely because they can't keep up with the cash flow needed to adequately fund it. Wages are flat (at best), *real* inflation felt in essentials like food, energy, education and health care is moderately high, and has been mounting for several years. There's just little left for a lot of folks to save for retirement any more in a lot of cases.

Demonizing capital isn't helpful, and neither is demonizing labor. So can we help the middle class rebound in a way that doesn't encourage mass amounts of capital to "flee" from our domestic economy? Perhaps someone who can crack that one would deserve a Nobel Prize in Economics.

(Also moving this to the Politics thread as a precautionary measure.)
+1
Maybe we can study emerging nations as compared to developed nations to observe how and when and under what circumstances the
shift occurs. IMO, the biggest change that causes the shift from labor to capital is the formation of and migration to cities.
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Old 05-16-2013, 09:33 AM   #25
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Sometimes true, but I think it's unfortunate that many folks today seem to assume that anyone suffering economic misfortune today only did so because of their own bad and/or irresponsible decisions, and that if they just would have been responsible and made better decisions, they'd be wealthy and able to retire at 50. A lot of good, hard working and responsible people are desperately thrashing around in the water in this economy, trying not to drown. And a lot of people just can't seem to accept that; it's more convenient to just believe that if they are struggling, it *must* be because they screwed up and they made their own bed. It absolves us of feeling any responsibility to help out or accept any personal sacrifice.

I think SJ1 was talking about someone who was working the whole time... I know a few people like this... they make decent money (teacher) and have nothing to show for it...

The worst is a woman I know... was married twice.... divorced twice because of spending... she has had houses repoed, cars repoed etc. etc... she is in real bad shape because she had tapped into her retirement funds (I did not know you could do that, but her brother told me she did)....

Now, she has a sister who is also a teacher... raised two kids on her own (other one had one)... owns her house outright... is not in debt... will be able to retire in her early 60s... (heck, maybe sooner since she will be getting a good pension)....


I have sympathy for the people who are thrashing around in the rough water that the economy has created.... but I think that number is small compared to the number who make bad decisions....
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Old 05-16-2013, 09:35 AM   #26
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Sometimes true, but I think it's unfortunate that many folks today seem to assume that anyone suffering economic misfortune ...
I don't think SJ1_ implied that that story applied to 'anyone suffering economic misfortune'. But I do think it can explain a lot.

I've used this comparison before, but go and talk to a cross section of the top 10% of a high school graduating class, and then go talk to a cross section of the bottom 25% that should have been in that class (IOW, include drop-outs, those in half-way houses and detention centers, etc). Then tell me there would be any surprise that one group would acquire and grow significantly more wealth than the other group.

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Old 05-16-2013, 09:53 AM   #27
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I have sympathy for the people who are thrashing around in the rough water that the economy has created.... but I think that number is small compared to the number who make bad decisions....
+1

I have several 'acquaintances' who are obviously jealous of my retirement. They are older than me and will probably work until they are 70 since SS will be their only retirement income. One took 10 years off in his 40's to go back to school and travel. The other is the kind of person who says he "won't take any c#!p from anybody." As a result he switched jobs constantly and never amassed much savings or became eligible for a pension. He also drove fancy sport cars while I drove VW Beetles and plain Jane sedans.

They both were not willing to make the sacrifices that I, along with many people here, made to be financially secure. Now they grumble about my 'good luck' and how unfair life is.

My sympathy and my aid go to those hurt due to no fault of their own. The 'acquaintances" above basically took their retirement earlier in life and spent it. What did they expect?
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Old 05-16-2013, 09:58 AM   #28
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I don't think SJ1_ implied that that story applied to 'anyone suffering economic misfortune'. But I do think it can explain a lot.

I've used this comparison before, but go and talk to a cross section of the top 10% of a high school graduating class, and then go talk to a cross section of the bottom 25% that should have been in that class (IOW, include drop-outs, those in half-way houses and detention centers, etc). Then tell me there would be any surprise that one group would acquire and grow significantly more wealth than the other group.

-ERD50
I believe that might be a problem with how our education system is set up. We spend a lot of time and effort and money and attention on the top ten percent. These kids need the least help. They need to be put in the self check out lane. Self paced curriculum with guidance as needed. We also need some tough love. Instead of drug testing welfare recipients which is a total crock, let benefits be dependent on their child's truancy up to a certain age.
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Old 05-16-2013, 09:59 AM   #29
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Everyone around me that puts forth some modicum of effort seems to do really well.

You are always going to have a smallish wealthy upper class of elites, a big chunk of middle class with middling wealth muddling about, and a big chunk of the lower classes that will more or less get by but not always comfortably and not always for long.

We can move wealth around between the classes but I haven't yet seen an economic or political system that has effectively removed (in absolute terms) the overriding class structures. It must be a rule of natural law. Some immutable principle. Democracy, laissez faire, monarchy, despotism, fascism, state centric control, communism, socialism, benevolent dictators, genocidal dictators, totalitarianism.

All have tried, but so far the world hasn't seen a socioeconopoliticolegal system adequately capable of reaching some ideal egalitarian utopia. I think the biggest impediment to the institution of that utopia is that there is always some guy that wants to figuratively fill his Big Gulp cup at the gym's free coffee carafes. And in the mean time others are left paying the price.

Makes you wonder whether you ought to be the sucker brewing more coffee, or the one filling up your Big Gulp.
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Old 05-16-2013, 10:17 AM   #30
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Everyone around me that puts forth some modicum of effort seems to do really well.

You are always going to have a smallish wealthy upper class of elites, a big chunk of middle class with middling wealth muddling about, and a big chunk of the lower classes that will more or less get by but not always comfortably and not always for long.

We can move wealth around between the classes but I haven't yet seen an economic or political system that has effectively removed (in absolute terms) the overriding class structures. It must be a rule of natural law. Some immutable principle. Democracy, laissez faire, monarchy, despotism, fascism, state centric control, communism, socialism, benevolent dictators, genocidal dictators, totalitarianism.

All have tried, but so far the world hasn't seen a socioeconopoliticolegal system adequately capable of reaching some ideal egalitarian utopia. I think the biggest impediment to the institution of that utopia is that there is always some guy that wants to figuratively fill his Big Gulp cup at the gym's free coffee carafes. And in the mean time others are left paying the price.

Makes you wonder whether you ought to be the sucker brewing more coffee, or the one filling up your Big Gulp.
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Old 05-16-2013, 10:17 AM   #31
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I believe that might be a problem with how our education system is set up. We spend a lot of time and effort and money and attention on the top ten percent. These kids need the least help.
I have to disagree at least when it comes to K-12.

No Child Left Behind gives schools and teachers points when a low achieving student can be made to pass the test. OTOH, if a high achieving student passes with an even higher score next year, the system does not care. All the law cares about is that the student jumps over the bar. How much he/she clears the bar by is not important, just that they get over it. Thus, most effort is put into helping the lower achieving students.
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Old 05-16-2013, 10:21 AM   #32
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I believe that might be a problem with how our education system is set up. We spend a lot of time and effort and money and attention on the top ten percent. These kids need the least help. They need to be put in the self check out lane. Self paced curriculum with guidance as needed. We also need some tough love. Instead of drug testing welfare recipients which is a total crock, let benefits be dependent on their child's truancy up to a certain age.

You must not know anybody in education..... with the No Child Left Behind law, education has been dumbed down... they teach to the test.. the test is now ALL that matters... the top 10% are put into GT classes, but really don't do much extra in them (my son just missed the GT level, but he is in the same class with them)...

Edit...
Saw that Chuckanut also posted about this... but I kept mine anyhow...
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Old 05-16-2013, 10:40 AM   #33
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I have to disagree at least when it comes to K-12.

No Child Left Behind gives schools and teachers points when a low achieving student can be made to pass the test. OTOH, if a high achieving student passes with an even higher score next year, the system does not care. All the law cares about is that the student jumps over the bar. How much he/she clear the bar by is not important, just that they get over it. Thus, most effort is put into helping the lower achieving students.
I didn't know that. Thanks for that info. I also wasn't clear with my point. I think the bright kids should be self paced with guidance allowing them to reach levels not presented in the classroom. This will also allow the teachers to concentrate on those needing help. We are finding that even our best high school students are woefully unprepared for college. That is a function of the material not being presented to them in HS, not IQ.
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Old 05-16-2013, 10:51 AM   #34
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You must not know anybody in education..... with the No Child Left Behind law, education has been dumbed down... they teach to the test.. the test is now ALL that matters... the top 10% are put into GT classes, but really don't do much extra in them (my son just missed the GT level, but he is in the same class with them)...

Edit...
Saw that Chuckanut also posted about this... but I kept mine anyhow...
Thanks. I'm not aware of what goes on the classroom. But I was very surprised when my son who graduated number 5 in his class couldn't test into college algebra. He had to take some prerequisites. I know he was in school. And I know the taxpayers spent a lot of money on him. As you say, he was getting a dumbed down curriculum.
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Old 05-16-2013, 10:51 AM   #35
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I didn't know that. Thanks for that info. I also wasn't clear with my point. I think the bright kids should be self paced with guidance allowing them to reach levels not presented in the classroom. This will also allow the teachers to concentrate on those needing help. We are finding that even our best high school students are woefully unprepared for college. That is a function of the material not being presented to them in HS, not IQ.
I don't fully comprehend this post. Kids (bright and dumb) are free to pursue all kinds of self paced learning on their own. They do have to generally meet the requirements to graduate. Rarely does education get in the way of learning, but formal education by itself doesn't always lead to optimal learning.

In my case I try to let me kids learn as much as possible and supplement in areas where their formal schooling falls short. I had the epiphany that my kids' school is only partially responsible for educating my kids. When I questioned their kindergarten teacher about why they weren't giving out more homework, they kindly remarked that I was free to make up my own assignments for my own kids. I'm not sure why that never occurred to me before!
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Old 05-16-2013, 11:05 AM   #36
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I think the bright kids should be self paced with guidance allowing them to reach levels not presented in the classroom. This will also allow the teachers to concentrate on those needing help. We are finding that even our best high school students are woefully unprepared for college. That is a function of the material not being presented to them in HS, not IQ.
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Old 05-16-2013, 11:15 AM   #37
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I don't fully comprehend this post. Kids (bright and dumb) are free to pursue all kinds of self paced learning on their own. They do have to generally meet the requirements to graduate. Rarely does education get in the way of learning, but formal education by itself doesn't always lead to optimal learning.

In my case I try to let me kids learn as much as possible and supplement in areas where their formal schooling falls short. I had the epiphany that my kids' school is only partially responsible for educating my kids. When I questioned their kindergarten teacher about why they weren't giving out more homework, they kindly remarked that I was free to make up my own assignments for my own kids. I'm not sure why that never occurred to me before!
You were on the ball more than I was. I assumed my son was getting the same education I was. The cream always rises but it took him a little longer to graduate due to the prerequisites.
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Old 05-16-2013, 11:24 AM   #38
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Demonizing capital isn't helpful, and neither is demonizing labor.
The problem is that measures suggested to prompt a more balanced relationship are invariably characterized as demonizing capital. It's like nothing that helps reestablish the balance enjoyed in the 1990s or 1960s for that matter could be considered anything other than anti-capital.

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Sometimes true, but I think it's unfortunate that many folks today seem to assume that anyone suffering economic misfortune today only did so because of their own bad and/or irresponsible decisions, and that if they just would have been responsible and made better decisions, they'd be wealthy and able to retire at 50. A lot of good, hard working and responsible people are desperately thrashing around in the water in this economy, trying not to drown. And a lot of people just can't seem to accept that; it's more convenient to just believe that if they are struggling, it *must* be because they screwed up and they made their own bed. It absolves us of feeling any responsibility to help out or accept any personal sacrifice.
Precisely. The modus operandi of the defense of overweighting the right-hand side of the scales is to characterize anything that would call for re-establishing that balance in a disparaging way.

So effectively the challenge here starts not with policy, but with perception - how to get both sides to acknowledge that there is an imbalance, and that the imbalance isn't due to scurrilous behaviors by those getting the short-end of the stick.

The first step to recovery is acknowledging that there is a problem.
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Old 05-16-2013, 11:34 AM   #39
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But is there really a problem? I mean one that demands a solution? Or is it just a phenomenon, a fact? I think most agree that income/wealth inequality exists. Maybe "so what?" shouldn't be ruled out as a response to the "problem".
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Old 05-16-2013, 11:41 AM   #40
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But is there really a problem? I mean one that demands a solution? Or is it just a phenomenon, a fact? I think most agree that income/wealth inequality exists. Maybe "so what?" shouldn't be ruled out as a response to the "problem".
I guess that was part of my point. *Is* there anything we can reasonably do about it? If there is, I think we should seek a solution. If there isn't, we may unfortunately have to watch the middle class die by a million paper cuts over a number of decades.
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