Who are the 1%?

We know that we have the widest gap between the rich and poor in our history.

This has transformed a robust middle-class driven economy into a fragile, weak, wealth-driven one.

Still Republicans, who helped create this income gap through government policies dating back to the Reagan administration, continue to claim that this 1% is the economic engine that drives our economy.  According to them, the 1% are the best, brightest members of our society who have earned their reward through hard work.  If we tax these folks, we are told, we are not only punishing them for their success, but  also creating a disincentive for others who might aspire to their wealth.  Speaker of the House John Boehner says, “”The top 1 percent pay 38 percent of the income taxes in America. How much more do you want them to pay?”  In other words, a progressive tax system (where the rich pay more than the poor) is like socialist graffiti on the capitalist Mona Lisa.

The reality, however, is far removed from this fantasy.

Successful people are lucky

Malcom Gladwell studied the phenomena of success in his book Outliers.  In quick summary, what he discovered is that success is the combination of good fortune and preparation.  For example, the billionaires created by the PC revolution (Gates, Ballmer, Jobs, McNeally, etc.) were all born within approximately five years of each other.  Those who were older were already working for Mini and Mainframe computer companies when the window of opportunity opened for a disruptive change to the computing industry.  Those who were younger ended up working for these seminal start-ups rather than founding them.  So it didn’t matter how talented, resourceful, and hard working you were.  If you weren’t born at the right time and in the right place, this particular opportunity passed you by.

The other component that these successful individuals had was early access to resources which allowed them to become experts in software and hardware technology at a young age.  Expertise met opportunity and a small number became some of the wealthiest people in the world.  The tax rate that they or their parents paid did not make it easier or more difficult for them to be successful.  In other words, the window opened for a fortunate few and the first ones through that window with the appropriate skill set took advantage of the opportunity that was available.

Bill Gates’ fortune was built on the Windows “tax” that virtually every PC manufacturer from 1995 on has had to pay.  Though Microsoft made many millionaires, their flaws have also been well documented.  The original DOS operating system that IBM purchased from Microsoft, was virtually stolen from a local Seattle developer who was unaware of the IBM deal that Gates had on the table.  The only reason IBM was talking with Gates was that they couldn’t come to terms with Gary Kildall for an x86 version of CP/M.  Windows was developed on the side by a skunk works group while IBM and Microsoft supposedly were working together to develop OS/2.  Microsoft was able to establish their Windows 95 monopoly in part by sabotaging their OS/2 partnership with IBM.  Did Microsoft do anything illegal? No.  Did they lie, cheat, and steal? Yes.  Were they in the right place at the right time? Yes.

Successful people don’t create opportunities, they take advantage of them

The same thing applied to those who became wealthy through the growth in the financial industry over the last decade.   While they may claim that skill was involved, Nobel Prize winning psychologist Daniel Kahneman has proven that their only skill was capturing a certain job.  That capture was not the result of talent or intelligence, but rather the combination of the accident of birth and ruthless exploitation of others.  When you actually look at their performance, someone far less educated could have been just as successful making the same bets using a random roll of the dice.  Those who got the biggest bonuses were simply lucky.

In his book The Haves and the Have Nots, Branko Milanovic tried to discover the richest person who has ever lived. Beginning with the loaded Roman triumvir Marcus Crassus, he measured wealth according to the quantity of his compatriots’ labor a rich man could buy. It appears that the richest man in the past 2,000 years is alive today. It’s Mexican telecommunications robber baron Carlos Slim.  Carlos could buy the labor of 440,000 average Mexicans. This makes him 14 times as rich as Crassus, nine times as rich as Carnegie and four times as rich as Rockefeller.

This begs the real question of economic value Carlos Slim brings to the vast empire he built.  His critics claim that his wealth depends in part on his focus on developing countries with weak government oversight and a culture of political corruption.  His Telemex Company, for example, has 90% of the landline business in Mexico and charges some of the highest usage fees in the world.  Do greed, bribery, and worker exploitation count as valuable contributions to society?  If not, how can you justify the fact that an hour of Carlos Slim’s time is 440,000 times more valuable than an hour of work from the guy stringing the telephone lines that supports Telemex?

I’m not advocating class warfare or socialism

What I am advocating is the free market in its most idealized form.  In that form every worker (rich or poor) would be paid EXACTLY based on what they contribute to the economy by choosing to work – no more and no less.  That means that the contributions of those making $30M a year deserve no more special treatment than the worker making $30K.

In this system, there is still the opportunity to become super rich.  Just produce an innovation that the world needs.  When you look at who really make up the 1% these days, most are wildly overpaid for their contributions because they are not innovators.  For every Steve Jobs, you have limousines full of corporate bigwigs, financial wheeler-dealers, lawyers, and real estate speculators.  In a study published by the journal Psychology, Crime and Law, Belinda Board and Katarina Fritzon tested 39 top paid British execs and found that they shared many traits with psychopaths.  Those who have these traits often possess great skill in flattering and manipulating powerful people. Psychopathic traits like egocentricity, a strong sense of entitlement, a readiness to exploit others, and a lack of empathy and conscience are also characteristics that companies look for.  The only difference is that poor children with these traits likely end up in jail.  Rich children with the same traits end up in the board room.

In current team-based corporate structures, paradoxically it’s the psychopathic competitive risk takers who are more likely to get promoted and rewarded.  These people make their money by getting lucky with big bets.  Companies let them take highly leveraged positions because they have also positioned the taxpayer to cover big loses.  The self-centered risk taker isn’t deterred by the potential impact that their actions have on others, so it is a perfect marriage for boards who are looking for a fall guy if the big bet fails.  As the Bank of England’s director for financial stability put it, “If risk-making were a value-adding activity, Russian roulette players would contribute disproportionately to global welfare.”

Wealth has weakened democracy

The challenge is that our democracy is warping under the influence of super-wealthy liars, cheats, and thieves.  The wealthy have created an extensive infrastructure of junk economics and pseudo academic studies.   They pay for a tide of media and legislation supporting the unprecedented concentration of capital occurring today as well as the wide safety net we’ve been convinced to fund to catch big companies when they fail.

The media, think tanks, academia, and even government are all telling us that we shouldn’t reign in the wealthy because it will limit our opportunity to become wealthy.  The truth is that the only people who will become wealthy in this economy are the ones who are ALREADY wealthy.  That’s why we have an income gap.  The door has firmly closed on upward mobility for children of middle class and poor families.

The scope of this wealth exceeds any that we have seen in human history.  They have been able to accumulate this wealth because we have allowed them to take it.  They were able to steal it from us because they convinced us that there was wisdom in their luck.  We trusted their delusional claims of superiority and believed them more trustworthy stewards of our wealth than we are.  This is what is behind the “wisdom of the free market” claims, when actually the market has been transformed into little more than a game of three card monte the wealthy play with the rest of us.  The truth is that these con artists have just bullied and bribed their way to the front of the line.  Their only success is that they have convinced everyone else that they deserve to be there.

It is past time to start rebalancing the economic scale

29 Responses to “Who are the 1%?”

  1. Keith says:

    Jeff,
    Your hyperboly is in full display. It seems to me a more balanced approach to the conversation would help both side and therefor us as a nation. Here’s the perfect example.

    YS) Speaker of the House John Boehner says, “”The top 1 percent pay 38 percent of the income taxes in America. How much more do you want them to pay?” In other words, a progressive tax system (where the rich pay more than the poor) is like socialist graffiti on the capitalist Mona Lisa.

    MR) You then translate his comments and use unfounded and extreme hyperbolly…..taken in context that is NOT what he said…He merely asked “how much more do you want them to pay?” I’d ask you how you reached that translation? How did you get that from the words you quoted?

    In context when 48% pay no federal income taxes at all and a very small portion pay a very large percentage and we are running historically very high deficites maybe we all should put on new thinking caps….

  2. Keith says:

    Jeff,

    YS)The media, think tanks, academia, and even government are all telling us that we shouldn’t reign in the wealthy because it will limit our opportunity to become wealthy. The truth is that the only people who will become wealthy in this economy are the ones who are ALREADY wealthy. That’s why we have an income gap. The door has firmly closed on upward mobility for children of middle class and poor families.

    MR) This is simply isn’t true…….I have many friends who are the 1%. I’ve even been a 1% guy a few times………ALL are from modest families and most still live that way………..Most have enormous appitites for giving to the poor and the needy……(and for this they are greedy simply because they have acheived??????????????????? Think about that?)

  3. Keith says:

    Jeff,

    YS)The scope of this wealth exceeds any that we have seen in human history. They have been able to accumulate this wealth because we have allowed them to take it. They were able to steal it from us because they convinced us that there was wisdom in their luck. We trusted their delusional claims of superiority and believed them more trustworthy stewards of our wealth than we are. This is what is behind the “wisdom of the free market” claims, when actually the market has been transformed into little more than a game of three card monte the wealthy play with the rest of us. The truth is that these con artists have just bullied and bribed their way to the front of the line. Their only success is that they have convinced everyone else that they deserve to be there.

    MR) “THEY WERE ABLE TO STEEL IT FROM US?” Jeff, You sold your company and made a bunch of money. So correctly stated, if I understand you, I need to rephrase that “YOU ARE A THEIF???” You bullied and brawled your way to the front of the line. (I simply cant picture you as a brawling bully!!!!!!!)

    I’m wondering what the alturnitive to our form of gov ‘t you’re looking for? Surely you can’t believe if we just raise taxes on the top 1% another 3% everything will be ok? Your class ware fare will get us no where and will solve nothing…….

  4. Keith says:

    YS)If not, how can you justify the fact that an hour of Carlos Slim’s time is 440,000 times more valuable than an hour of work from the guy stringing the telephone lines that supports Telemex?

    MR)Yes if someone is willing to pay for it.

    How else would you like this decided?

  5. Keith says:

    Jeff,

    MS)What I am advocating is the free market in its most idealized form. In that form every worker (rich or poor) would be paid EXACTLY based on what they contribute to the economy by choosing to work – no more and no less. That means that the contributions of those making $30M a year deserve no more special treatment than the worker making $30K.

    MR) Are you suggesting a flat tax? If the pay is to be treated equal, as you suggest, and the contribution deserve no special treatment, as you suggest, then it stands to reason their responsiblity to be taxed should be no different….

    You are more conservitive then I as I tend to believe the tax sysem should be progressive……

  6. Keith says:

    Jeff,

    YS) Psychopathic traits like egocentricity, a strong sense of entitlement, a readiness to exploit others, and a lack of empathy and conscience are also characteristics that companies look for. The only difference is that poor children with these traits likely end up in jail. Rich children with the same traits end up in the board room.

    MR) This is simply rubbish. Again see my post above about my friends. Also, you’ll need to explain those rich children that DONT end up as 1%ers…..if it take an evilness to reach the board room are you will to suggest that only nice rich childern become poor?????????

  7. Keith says:

    Jeff,

    Your arguement and solution are simply, while well intended, rediculous. We are both Christians. I believe God to play the ultimate hand in who is wealthy and who isn’t. You choose to ingor all the other ways one is wealthy and only focus on finacial wealth, which in itself isn’t wealth at all. (I know many very wealthy people who aren’t “wealthy” at all.) They’re are WAY more ways God has made man wealthy. Fisrt and foremost amoung them are fantastic relationships with HIM!!! I became wealthy when I first realised my sin was forgiven. NOTHING WILL EVER COMPARE TO THAT!!!!! Next would be the love of the person they spend their life with. After that a great family, work situation, which has little to do with money, friends, area where you live, areas of service,etc. In my view MONEY is not the deterniming factor of wealth. Whats your infatuation with other peoples BURDEN of wealth? This is simply silly…..

  8. Jeff Beamsley says:

    OK let’s go through these one at a time.

    Boenher quote.

    By asking how much more than 38% do you want them to pay, Boenher was suggesting at least one of the following things.

    1. 38% was too much.
    2. Asking the rich to pay more than the middle class or the poor isn’t fair
    3. There is a limit to what we can expect the rich to pay.

    Boenher has also been quoted as saying the Obama administration budget and stimulus package is “one big down payment on a new American socialist experiment”.

    Tax rates for the top 1% are historically low. They have been as high as 90%.

    So I don’t think it is too much of a stretch to suggest that Boenher has an issue with the whole concept of a progressive tax structure.

    1% are generous moral people

    I have provided references that describe how some of the wealthy acquired their wealth. If you would like to build a case for the top earners in this country all being Mother Teresa, please bring your references. Until then all you have brought to the table is your opinion and some personal experience with a small sample of people. I’m happy that you have good friends who are wealthy and are good people. That doesn’t change the data.

    Just so we are all on the same page, here’s the income data.

    The top 1% are earning something just shy of $400K a year according to 2010 numbers. You have to get to the top 1.5% to start to scratch the $250K a year level. So no, if you look over the last decade, I’m not part of the 1%.

    The fastest growing group in terms of income is actually the top .1%. Those are folks who are making $1.5M per year. Those are really the group who are investing in lobbyists and altering the economic landscape to their personal benefit.

    These Super-Rich are the ones that are best described as wealthy. They are the ones that most of this data were focused and are the ones that this post is directed to.

    Wealth based on theft

    I provided several examples of how super-wealthy people acquired their wealth through theft. The last time that we had a wealth gap this large was the turn of the century. The Super Wealthy then were called Robber Barons. Think that is a coincidence? I suspect history will look on this era and those at the top of the heap in a very similar manner.

    If you would like to provide examples of Super Wealthy people who accumulated their wealth the love and good deeds, please produce them. Until you do, regardless of how unhappy it might make you, you have not refuted this claim.

    BTW, as far as my sale was concerned, I did have the option to keep all of the money which would have doubled the amount that I took away from that deal. Even then it wouldn’t have put me even near the levels of the super rich. I chose not to do it. I’m not a psychopath, so it would have bothered me. I like to sleep at night.

    Form of government

    This isn’t about taxes. It is about democracy. What I am advocating is the form of government that we have – one man one vote. Eliminate the influence of money from the political system and we will solve the problem.

    Carlos Slim and the free market

    We are on the same page here. The free market should decide. Carlos Slim is not operating in a free market. He has biased the system to his own benefit through his ability to create a virtual monopoly in country that is too weak to fight back. In this country we have laws (many passed to prevent the growth of Robber Barons) to break up monopolies or at least to regulate them. The reason Carlos Slim can charge the highest phone line rates in the world is because he has no competition. The reason he has no competition is because he is operating in a country with a weak government and a history of corruption. That’s not the free market.

    Value-based pay

    This is an admittedly idealized concept, but it is fairly simple to describe. In a free frictionless market, workers will know of all the jobs that they can qualify for and employers will know of all of the workers who are qualified for the jobs that they have open. There is no cost to hire and there is no cost to quit. Employers will end up with the best people at the best price and workers will end up with the best pay for the jobs they choose to perform. This has nothing to do with taxes.

    As long as this visibility and transparency continued all the way up to the boardroom, executive salaries would quickly come into line with worker salaries because there is currently no more shortage of qualified execs than there is a shortage of qualified workers. There would also be a direct relationship between corporate growth and executive pay because execs would NOT be able to increase their share of the pie by artificially holding down worker pay.

    Psychopathic tendencies

    You have to read more carefully. I did not say that every rich child was a psychopath. What I said was that rich children WITH psychopathic tendencies currently have a better opportunity to be successful than poor children. That’s because kids with psychopathic tendencies may be at risk in the general population, but appear to have an advantage in today’s business culture. If they come from a rich family, they can afford to get an MBA from a good school – which is the entry ticket to the executive level in big companies. That’s an opportunity that isn’t available to many kids from poor families, regardless of their personality make-up.

    There they can essentially take advantage of those who ARE moral and empathetic. They do that by taking bigger risks than those who are more responsible and concerned about the consequences of failure. There are certainly a lot of those psychopaths who crash and burn, but the ones who are lucky inevitably rise to the top faster that those with more normal personalities.

    I’m also not suggesting that nice kids finish last.

    I’m just sharing data with you that suggest that there may be more psychopaths in the population of the super-rich than in the larger population. AND, the success that they experienced was not the result of the value they contributed to society.

    If you have data (other than your anecdotal personal experiences) that disputes these claims, please bring it on.

    God is the banker

    God decides who is rich? You have to read your bible some more. Jesus said numerous times that wealth was a burden that made it more difficult to secure salvation. If anything, great wealth is the appropriate punishment for the sins required to accumulate it.

    So yes we are on the same page here. I’m only trying to figure out whether the people who have accumulated great financial wealth deserve the special treatment that they have been receiving.

    I can only aspire to emulate those who have great spiritual wealth.

    Conclusion

    The bottom line is that Republican claims that the top 1% or even .1% of earners in this country are the engine of our economy is wrong.

    Very few of the top earners in this country are paid based on the value that they deliver to the economy. They are instead paid based on speculation and risk taking which ultimately makes our economy less stable.

    As a result, we need to change the focus of our government policies away from creating more wealthy people to one where we create a more robust middle class. That means investment in education, social services, infrastructure, manufacturing, research, and innovation. Part of that investment is going to come from higher taxes and fewer perks and benefits for the 1%.

  9. Keith says:

    Jeff,
    Thanks you again for your answers….I have always appriciated this conversation. Your are tthe ONLY person who has ever engaged me. I’ve tried several times and continue to try, and this simply isn’t something any progressive has cared to do. Again I say thank you my friend.

    In your resposes you have stumbled on our differences and provided the answer that I’m looking for. It is simply this….there is a HUGE difference between the 1% and the .01%. Above you site the .1% which still is incorrect its more like the .01% or maybe even the .001%. I have personnal met 2 billionaires. One a very humble man. The other is amoung the richest men in the world. Believe it or not, me and the guys I was with, sort of believe he thought I was a hit man. I can tell you he legally stole much of his wealth in a very deceptive manner.

    As a whole, the progressives and dems need to re-address their focus. Way to often the net is cast with a very wide brush. The 1.5%ers at $250k are VERY hard working people. (If one is to steal then I’d suggest they’d steel more then $250k a year!!!) There is simply no comparison with them and the very super rich, or the .001%ers. This casual lumping togather; the two very distinct groups in your first comments, to segragating them in in your response shows even your side knows the difference. If a fella has a family of 5 and then does well and strings togather three or four years of $250k per year he hasn’t gotten rich. Not even close. All he’s done is secured his childerns education.

    Lets take a look at that. $750k after taxes and deductions he probably nets $525 over three years, or $175/yr. 3 childrens college at $100k (and that isn’t a private school)….as you can see this gentlemen and his family are not rich, they just have college paid for if they so choose. He’s living on $75k per year or $6,250/mth….gets even smaller for the Christian family that tithes and give offerings above that…..

    Can you see now why most of the 1%ers are simply up in arms with the class warefare waged against them with the 1%ers/fair share comments? Its seems to those that do reach that level they are being demonized, as you’ve done above. They see the reality of their situation and think your nuts as they aren’t “rich.” They can simply now comfortable be able to live, WITHOUT GOING IN MASSIVE DEBT. (I’m guessing thats the meaning of super rich, not having to use credit!!!???!!!)

    Jeff, even if I doubled the income to $500k per year it only changes the family situation to the extent that they are now able to genarate some wealth. But by NO MEANS are they super rich or even rich. I doubt they are millionaires even….They would need to have several years of this and some good investing to reach that number…and at $1 million in wealth, how wealthy are they? How about $2 million? $3 million invested in 30 year treasuries, safest thing, returnes about $100k per year.

    Please call Obama and redirect his comments regarding the 1%ers. They are terribly offended at the mis-charaterization He has place upon them…

    I hope this helps clean up our disagreement regarding this post.

    My experiances with the more common 1%ers and the your comments, more accurately applied to the .001% ers, isn’t the same conversation.

    Yopur side would be better ser

  10. Keith says:

    As to the .001%ers.

    Here’s a very worth while anology. The very best basketball players in the world play in the NBA. They’re are approximately 300 of them. It is now a global game. At least 3 billion people live in a socity where if talented they can progress up the food chain towards the NBA. (All of Europe, the USA and China…I’ll just stick with that.) From day #1 there is virtually no chance you’ll play in the NBA regardless of the physical atributues you’ve been given. None….The filter to the bottom of the funnel, 300 guys, is simply to fine. So how do they achive? And within that group of 300 guys, the .001%ers, there is a Micheal Jorden or Shaq. Is Warren Buffett and different then MJ? Is Bill Gates any different then Shaq? By comparision….The rest of the 1%ers are merely guys who made the team in 7th grade….They are hardly basketball players….

    How about politicatians? The same can be said of them. We have 535 in congress….double as to those in the nba but your chances are even less to make congress as the nba as there are more prime years to make congress…merely turn 18 (?) 21 (?) Comparing the top .001%, those in congress, to the 1% would be like comparing a US Senator to the class representitve for Mrs Jones 2nd grade class to the student council at Riverside elementry.

  11. Jeff Beamsley says:

    Keith,

    Based on the facts that I shared with you, the 1% are reporting incomes a little short of $400K a year.

    I agree with you that there IS a gap between these earners and the .1% who are reporting incomes in excess of $1.5M year. These are really the folks who have been investing their resources in warping government policy.

    The Obama administration HAS been focusing their attention on the .1% as evidenced by the “millionaires” tax proposed to pay for an extension of the payroll tax cut.

    As far as what Obama himself has been saying about the 1%, I don’t recall anything derogatory other than that they should be paying their fair share of the cost of operating the government. He has blamed the Republicans for the policies which disadvantage the middle class and the poor to the benefit of the 1%.

    As far as your analogy, it has a basic flaw in the premise. That flaw is the fundamental message of my whole post about the 1% (or more appropriately the .1%). The flaw is the claim that the super-wealthy achieved their status through talent and hard work.

    Bill Gates IS different from Shaq. Bill Gates achieved his great wealth for two reasons. He was at the right place at the right time AND he was an unethical business person willing to lie, steal, and cheat to advance his own cause.

    As long a there is an NBA, ANYONE born with the physical attributes of Shaq will make a lot of money as a professional athlete.

    The opportunity to be the founder of a company like Microsoft only existed for a brief period of time.

    Those who possess the same skill set as Bill Gates and the same psychopathic traits as Bill Gates, don’t have the same opportunity to become the billionaire that Bill Gates did because the opportunity that he had is no longer there.

    Here’s what the data that I’ve been able to find says.

    1. The super-rich come by their wealth because they are lucky.
    2. There are a higher percentage of people who exhibit psychopathic tendencies in the super-rich than in the population in general.
    3. The risk taking strategies that resulted in the wealth of some of the super-rich damage our economic stability.
    4. The super-rich are NOT the economic engine that conservatives claim they are.

    So that brings us the bottom-line question. Why do Republicans continue to perpetuate the myth that tax cuts for the Super Rich are vital to any economic growth plan?

  12. Keith says:

    You’ve now said super rich………I’ve made progress.

    So why did Obama cut there taxes? (His extention of the bush tax cuts) If
    he was repulsed by them and if he would have lived up to his campain promises he would not have. He also said “this is not the time to be cutting taxes.” Don’t answer he had a republican house to deal with, principle is principle. Unless you are willing to suggest the only principle he has is getting re-elected. SO TO DO SO HE HAD TO QUICKLY DEFUSE THE ANOGEST OF LOSING 64 OR 68 SEATS AND A BUCH OF SENTATE SEATS.

  13. Jeff Beamsley says:

    I’ve already said why I think he cut a deal with the Republicans.

    I’ve also pointed you to the pundits from both sides of the aisle who, at the time, thought it was a brilliant political move.

    Looking at what has happened over the past year and a half, you have to agree with them. The Republicans were successful after the mid-term elections in turning the discussion from jobs and economic stimulus to deficit reduction. As a result, the economy recovery slowed, but Republicans opposed every attempt at additional stimulation because of concerns about rising deficits. He knew that this deal was his last chance to pump some more money into the economy and he took it.

    What he got in return for extending those tax cuts were the payroll tax cuts and extensions to unemployment benefits that are set to expire this month. That timing was not an accident either. Obama knew that he was going to be able to use the extension of those tax cuts and unemployment benefits against the Republicans as we enter the 2012 campaign season. Now that public are more interested in jobs than deficits, Obama has effectively backed the Republicans into a corner. Either they cave on some sort of tax increase on the wealthy, or they are going to prove themselves to be the party that Obama claims they are – the party who is willing to raise taxes on the middle class and end benefits for the unemployed in order to protect the rich. If they do cave, it will give Obama a clear win indicating that he CAN get things done. It will also cause the Republican party to further fracture along the ideological/pragmatic divide which will only make it harder to elect Republicans in November.

    As I’ve said before, Obama is also going to be able to RUN on the issue of letting the Bush tax cuts expire for the wealthiest Americans which will clearly have a positive impact on the deficit. This is something that has wide popular support. So he will make the choice simple for the american people. Vote for me and we will let these tax cuts expire. Vote for them and they will make these tax cuts permanent.

    I’d say all in all he did a pretty good job given what he had to work with.

  14. Keith says:

    In my opinion the Rebulicans blew it……….HE did back them in a corner and it was a fastball right down the middle of the plate. But look what occured. At first the payroll tax cut as a “holiday” for temopary rerlief. Now that the holiday is over it the nasty republicans are raising taxes on the poorest amoung us, $1,000 a year for the working family. To pay for this he pits the poor against the wealthy….Just like healthcare by the way and the increased taxes for that on the wealthy. So this will play out as you have said….but this is insane!!!! SS is now running at a deficit. And all who are paying into it will be getting back out of it. So the social enginering the Obama is doing is cutting taxes for the poor and middle class who DON”T PAY TAXES. SS isn’t a tax its a retirement plan. SO most will pay less but get out the same. If this “holiday” continues what president will ever be able to raise it?

    This is the nonsence I can stand. This is the problem with health care. The Obama program will be insufficent, as parts already have proven to be, and more will be asked of those at the top.

    ALso you have now recognized Obama to not be different then other politicans. He is political and is willing to trade principle for political gain…..

  15. Jeff Beamsley says:

    Read the whole thing carefully.

    This proposal is revenue neutral. Obama has proposed extending the current payroll tax cuts (for individuals only) and extending unemployment benefits and paying for them with a tax increase on people making over $1M a year. So he is not stealing anything from SS.

    The reason he want to extend this “tax holiday” and unemployment benefits is because the economy is still growing too slowly and there are still a lot of people out of work. I haven’t found a mainstream economist who things this is a bad idea.

    The whole thing is temporary and will expire on its own. If things are still bad, the Dems will have a chance to extend it. If things are better, the Repubs will have a chance to kill it. Not sure what the problem is. It just happens to put the Republicans in the uncomfortable position of advocating a tax increase.

    If you have issues with the Obama healthcare reform plan, please state them more specifically. I think that we have gone through this in some detail before. The bottom line is that you have to provide coverage for everyone in order to start to get some control over the price. The current plan takes a huge step in preventing the insurance companies from “cherry picking” the population AND disconnecting health care coverage from employment.

    But just that won’t be enough to bend the curve to where it needs to be. We also have to change the re-imbursement model from transactions to outcomes. So there is another step to take to really bring costs under control.

    As far as Obama being an effective politician, I think that runs counter to the current Republican narrative – so I guess I’m making progress too.

  16. Keith says:

    http://www.detnews.com/article/20111207/METRO/112070418/Group–40-Wayne-County-retirees-make-$100K-or-more-in-pensions

    Corruption knows all forms of private and public group. The problem is human nature. Capitolism at least allows for anyone to succeed

  17. Jeff Beamsley says:

    Did you read the whole article? It just isn’t accurate to look at a big pension and draw the immediate conclusion that the amount is the result of fraud. The amount could be the result of a large lump sum that was paid into the fund by the pensioner. The amount could be the result of years of paying into the fund at a high amount. This Michigan fund is currently capitalized at 75% of its obligations which is around the national average. The key information that wasn’t shared in this article is what the managers of the fund feel are the prospects for recovery of this fund as the economy recovers. Clearly Michigan is changing the pension plans for future employees, but to simply assume because someone is getting a large pension that they have somehow stolen it is inappropriate. You need more information before you can make that claim.

  18. Keith says:

    I am not assuming someone stole…..much to the contrary. This is continuing my comentary towards those who cry the 1%ers cheat. In any form of gov’t you will have the haves and the have nots. If govt is the answer and the private secture is subservenat, dare I say socialist at the exteme, then it won’t be fair either. There will ALWAYS be precieved winners and losers in any form of human collectiveness…..The articule is just an example I’ve given to illistrate that Gov’t is just as likely if not more so, then private business to treat its people unfairly. The guy who drives the garbage truck for 35 years will have a hard time understanding the guy who’s getting $159k per year……. I did not accuse anyone of stealing.

    All pension are unsusainable….They also COUNT on the stock market performing at a given rate, which most have exagerated/wished the annual returns. It also counts on health dividends and interest to assist the assumptions that have been made…………. In other words while the unions< both private and public, are bashing corp profits they are also bashing the companies that their pension count on the return their DEFINED pensions.

    My point is they are unsustainable. Their first answer is always higher taxes to bail them out……… (also and you know this, if wall street wasn't bailed out their pensions would already be gone)

  19. Jeff Beamsley says:

    Keith,

    Your Luddite roots are showing. You may need another trip to the library to refresh what you studied in econ class.

    Pensions are CLEARLY sustainable. It’s just an actuarial exercise. The whole insurance business is built on balancing the number of potential claims with the premiums paid and the return those premiums bring in the stock market. Insurance companies seem to do just fine in the marketplace. The challenge is that states decided to get into the insurance business and some didn’t do as well as others. That is not the fault of the concept of a pension; it is the fault of those who administered the plans that now find themselves short in a down market. It is entirely likely that many of those funds will recover when the economy recovers.

    The ONLY difference in a 401K for example is that the risk of managing that fund is transferred from the institution to the individual. Otherwise, the whole idea remains the same. I contribute some money from every check. My employer may contribute something to the fund too. That money grows depending on how it is invested. At some point in the future I get to take the money out and it supports me and my family when I can no longer (or chose to no longer) work.

    You also don’t seem to be a very good listener/reader regarding the impact of the current gap between the rich and poor. I’ve posted bunches of data which suggest that the door to upward mobility for poor and middle class kids is closed. The fundamental promise that those who work hard and play by the rules will succeed in this country is NOT being kept by this economy. So please don’t trot out that timeworn conservative narrative that poor people are just not willing to work hard enough.

    Show me the data to support your claims.

    Until you do, you have to accept the data that I’ve provided which support my claim that the success of the HAVE’s in today’s economy is based on taking an unfair share of the profits that would otherwise be going to what you call the HAVE NOT’s.

    You also seem to cling to the conservative notion that it’s government’s role is to pick winners and losers. So the choice in your world is either to benefit the wealthy who “deserve” it, or the poor who clearly don’t “deserve” it because they haven’t figured out how to support themselves.

    Government’s role (at least economically) is to implement the sort of policies and make the sorts of investments to promote the greatest good. The “free market” policies that started during the Reagan administration clearly have not gotten the job done. After enjoying steady reliable growth under both Republican and Democratic administrations since WWII, the earning power of the vast majority of the population has stagnated over the past twenty years. That’s why we need a change.

  20. Keith says:

    Hey Jeff,

    I’m begining to think you simply don’t read my responses and only assume what I say to you in response…….That or your glasses are so colored in your own opinions that you truely can’t understand mine, even if you disagree. Now one by one…..from your most resent response.

    #1) YS) Pensions are CLEARLY sustainable. It’s just an actuarial exercise. The whole insurance business is built on balancing the number of potential claims with the premiums paid and the return those premiums bring in the stock market. Insurance companies seem to do just fine in the marketplace.

    MR) They simply increase premiums to do so. In a defined public pension, or a privite, to comparitive would be to raise the inpute to make it sustainable. Thus RAISING TAXES for the public employees retirement. Also my point above was the incompatence of those doing this. EX; leading up to the recession the tax base grew with every home sale. The higher the price for the last hoime sold the higher the price for the whole neiborhood. This increased artifically tax revenue genarated. While this was happening incompetent person gave more and more genorous benifits the the union employees and simply overstated future projects of revenue and assumed returnes in the market. (They over hired at the same time) The assumption WERE and still ARE unsustainable!!!!! The only solution is raise taxes, cut benifits or get a greater return for the money invested, (in the case of SS there is no money invested)……once you’ve DEFINED something the game will be short lived. Once you’ve defined something then over extended on top of that, dissater is not far away….(read about the abuse in teacher retirements in the state of IL for just one example.)

    #2) YS)The ONLY difference in a 401K for example is that the risk of managing that fund is transferred from the institution to the individual. Otherwise, the whole idea remains the same. I contribute some money from every check. My employer may contribute something to the fund too. That money grows depending on how it is invested. At some point in the future I get to take the money out and it supports me and my family when I can no longer (or chose to no longer) work.

    MR) “THE WHOLE IDEA IS THE SAME???????????????”
    Your response is silly and I can’t believe you’ve made it. Are you really comparing a DEFINED pension with a 401k?????? Your 401k has no defined outcome…. for this to be comparable the following would have to happen. Someone would have to promise your 401k would have “X” vaule at a certian date. If that date comes and the
    value is “X” – “g1″ then somebody has to kick in the “g1″ to make you whole……who’s that going to be? I really cant believe you’ve made this comparision………and don’t even know what else to say???!!!???

    #3) YS) You also don’t seem to be a very good listener/reader regarding the impact of the current gap between the rich and poor. I’ve posted bunches of data which suggest that the door to upward mobility for poor and middle class kids is closed. The fundamental promise that those who work hard and play by the rules will succeed in this country is NOT being kept by this economy. So please don’t trot out that timeworn conservative narrative that poor people are just not willing to work hard enough.

    MR) I have way too much personal experiance to believe the door is closed…..what can you possible mean???? my niece just graduated in 2008 from Toledo. She had a very difficult time finding a job. It took about a year and a half….she landed with a fortune 500 company and so did her fiance….they make ALOT for kids!!!! Interest rates are a 3.70ish for home loans, the price of houses are off by 30% – 50% in most ares……what do you mean the door is closed???? Its better for them then is was for me…..They are very VERY middle class kids!!!!!!!!! You need to get out of the house more Jeff, this is so……..

    I’ve NEVER, EVER said poor people are just not willing to work. I have said not everyone is will to pay the price for the American dream. You have said as much when you discussed your regret for incentiving some in your people with your business prior to sale. Also the American dream is not super luxury or the top .0001% thats not promised to anyone….

    #4) YS)You also seem to cling to the conservative notion that it’s government’s role is to pick winners and losers. So the choice in your world is either to benefit the wealthy who “deserve” it, or the poor who clearly don’t “deserve” it because they haven’t figured out how to support themselves.

    MR) This is huey…..The choice is neither one or the other…..thats simply your silly childish views that we are divided into to groups like America is based on the CAST system, see response above, and no one can move in or out……..was Henry Ford a 1%er before he invented the car? how about Steve Jobs? how about any of them…..I wasn’t, were you??? Do you walk around with a notion you aren’t free to improve your position in life. Do you feel that burdened? Thats nuts…..NONE of my nieces and nephews feel this way. ALL OF THEM are between the ages of 15 -26. They are all from VERY VERY middle class families.

    The rules are for everyone……regardless of ANYTHING…..one set of rules, you are free to move in and out of them as you choose…..I really don’t understand you line of reasoning as it simply doesn’t relate to anything I’ve said. When have I said its the gov’t role to pick winners and losers………unless of course you do subscribe to the thought we live in a cast system based on all the data you’ve provided….

  21. Keith says:

    Jeff,
    I am still stunned by your comment “Pensions are CLEARLY sustainable.”

    Tell that to the UAW three years ago, all City of Detroit union workers today, the teachers in Wisc last year or someone in Spain or most anyone in Europe for that matter..to name just a very few. Then ask anyone who thinks they are getting a SS check in the next 50 years….whats sustainable about any of those? Under funded pensions are EVERY WHERE……… They are unsustainable. Concessions are EVERYWHERE and are the norm…..your statement is made inspite of every newspaper articlue in the detroit news for the last two months. Ask Dave Bing about Pensions………….

    NOTHIG EVER can be gaurenteed, unless you are a socialist and in Marget Thatchers famous quote, “its good only until you run out of other peoples money.”

    It should not be anyones responsibilty to assure someone elses finacial future in the form of a defined number….this is ludicrist. How can anyone resonably make sure a bet. If someone does make this agreement, foolishly I’d contend, its made more difficult by your view of wanting to punish business and therefore corparate profits thus driving down stock prices, LOWERING the return necessary to meet such an absurd agreement.

    Under the Clinton Administration the stock market nearly tripled in value. Many companies Pension funds were grossly over funded as the huge returns from stock market had their pension fund stocks on steriods. Under the Clinton Administrations policies those companies were allowed to withdraw those excess funds and bring them to income thus greatly exagerating their profits….thus feeding the value of the stocks making them reach even higher returns….

    This allowed companies, under the Clinton Administrations watch, to raise to unsustainable levels the assumptions for extended returns. So its very logical to see what happened next. The market falls and pension funds are very quickly under funded. The assumptions are no longer good but somehow still being used. GM, Ford and Crysler for example, had to make very large cash contributions to return the pension funds to an acceptable level putting the future of those companies in peril. In fact two failed and the third would have.

    If the Clinton Administration had been more focused they would not have left the working mans pension to the whim of corporate greed and excutives bonus plans and used as food for the stock market, all of which the administration used at great sucess to get the deficet under control and run a surpluss….

    Bill Clinton’s Administration used the pension funds of working Americans to balance the budget and provide for huge bonus’ for corporate excutives by NOT PROTECTING THE MONEY THAT COULD HAVE PREVENTED PENSION FUNDS FROM BEING UNDER FUNDED WHEN THE VERY PREDICTABLE BUBBLE BURST.

    As proof of his commitment to this, he lowered the long term capital gains rate to 20%. This excess money should have gone to SS as EVERYONE then knew there was a problem and not nearly enough was being done to shore it up. Bush had his tax cuts for everyone and then Obama has done the same with equally HUGE tax cuts for everyone.

    If a two Dem Presidents and one conpassionate Republican cant look after the working mans pensions and keep them secure, then who can be expected to?

    Your statement “Pensions are CLEARLY sustainable.” might be the most outlandish one you’ve ever made……….Comparing the to 401k plan is a close second. This begs the question Jeff, what did you eat that day? I’ll send food if required to get you back to your normal self of just being wrong!!!! :-)

  22. Jeff Beamsley says:

    OK let’s go through this one more time slowly.

    1. Defined benefit pensions in and of themselves are a reasonable retirement program and are provided through private insurance companies today. The private insurance companies call them indexed annuities. Met Life has one for example that offers interest at the rate of the stock market from the past year or six percent, whichever is greater. They are able to do this because they know how long the people who purchase these tools are going to live and they know how the stock market is going to perform over a long period of time. The insurance company takes the risk, but they also charge their customers for taking that risk.

    I realize this is philosophical challenge for you, but the facts on the ground are that there are plenty of companies who make lots of money helping individuals mitigate the risks that you suggest are unmanagible.

    2. You again have FAILED to do your homework regarding public pension plans. As with many things, there are some that are well managed and some that are poorly managed. You also need to understand how the term “funded” is used because that is where all of the public hysteria comes from.

    What it means is that if all of the beneficiaries of the fund were to retire today, what percentage of the total liability can the fund pay. A 100% funded pension has sufficient assets to pay all of their current and future obligations. The reality is that no pension fund is at risk of all of their obligations coming due tomorrow. Yet this is where this huge numbers in the headlines are coming from.

    So even after a bad stock market, there ARE two state funds that ARE 100% funded. They are New York and interestingly enough Wisconsin. As of FY09, 21 states were at or above the 80% funding threshold which qualifies them as well funded. So you are just wrong with your claim that defined benefit plans are unsustainable and are all failing.

    What all of the plans are doing are evaluating where they are, readjusting their contributions, readjusting their benefits, and buying out their existing members. While it is true that if these some of these plans don’t make adjustments, they are going to have problems, but making adjustments is what responsible managers do. So claiming that the pensions are going to bankrupt cities or states or that all of these adjustments are going to be funded by taxpayers is simply not accurate. Most of these adjustments are going to be funded by the plan members who are either going to be willing to take a payout, pay a more for the same benefit, or accept a smaller benefit.

    3. The reason why New York and Wisconsin have fully funded pensions is because they have had the financial discipline to make their part of the annual contribution to the pension fund. One of the reasons why other states are in trouble is that they have chosen to skip making their part of the pension payments because they were dealing with larger deficit issues. One of the other reasons is that some of the fund managers were irresponsible. The reason is not that the members of the plans got gold plated deals. Public employees are paying three times as much of their salary in pension contributions compared with private employees performing similar jobs. The average annual pension payout for public pensions is under $30,000. That said there is considerable evidence of state legislators artificially inflating their pensions.

    4. What the future looks like is a mix of strategies. It is likely that there will be fewer pension plans and more 401K-type plans. What that also means is that salaries of public sector workers are likely to go up as the quality of their benefits goes down. What is highly unlikely is that pension plan obligations are going to widely bankrupt state and local governments. There will be some, certainly, but those are the result of mismanagement rather than some inherent weakness in the model.

    5. Blame it all on Clinton? It is true that some plan managers did reduce the member contributions during the time that their funds were performing above expectation. But if you are going to blame Clinton, you also have to blame Bush for the market collapse due to the explosion of the housing bubble. The bottom line is that responsible fund managers have been working on an 8% long term growth number and are readjusting their forecasts based on the slow recovery that we are in. Those managers that didn’t adjust their contributions during the times that their funds were making way more than 8% have fared better when the market did worse.

    6. I’ve already posted plenty of data demonstrating that corporate profits have little or nothing to do with corporate or personal tax rates. If you want me to take any of these claims seriously, please post your data. Right now it is just regurgitating the sort of stuff you’re hearing from whatever talking head happens to be on your radio.

    7. As far as the upward mobility door being closed, I’ve also posted data on that. I’m happy you know some people who are doing well, but please go find some data rather than just sharing your stories. The fact is that middle class wages have stagnated while to costs to go to college have skyrocketed. College is the gateway to a better career than your parents, but fewer and fewer middle class and poor kids can afford to attend the best schools in the country regardless of their academic talents. The income gap itself is a function of the wealthy getting wealthier while the middle class and poor are not. Finally, the workers who are currently doing the worst in this economy are the young. So much so, that there is a school of thought that suggests that it no longer makes sense to take out big loans in order to finance a college education. The jobs just aren’t there to pay those loans back.

    Here are some links supporting my claims. Please find some of your own if you want to dispute any of them.

    Best and Worst State Pension Funds
    http://www.thefiscaltimes.com/Articles/2011/03/24/States-Short-Change-Pension-Funds.aspx#page1

    Fact Check on Pensions
    http://www.seiu.org/a/publicservices/fact-check-on-public-sector-pensions.php

    Data on buying out pensions
    http://www.bloomberg.com/news/2011-07-05/how-to-make-states-public-pension-funds-solvent-edward-glaeser.html

    What 100% funding means
    http://www.imrf.org/pubs/100_percent_funding_goal/100_funding_article.pdf

    CS Monitor editorial on Public pensions
    http://www.csmonitor.com/Commentary/the-monitors-view/2011/1117/Public-pensions-must-be-on-the-table

    State Legislators inflating pensions
    http://www.usatoday.com/news/nation/story/2011-10-11/1A-state-lawmakers-pump-pensions/50522036/1

    College a good investment?
    http://www.prnewswire.com/news-releases/fewer-americans-believe-college-is-a-good-investment-98814039.html

    Unemployment among college graduates
    http://www.nytimes.com/2011/05/19/business/economy/19grads.html

  23. Keith says:

    Quickly not much time….

    #2) I’m Full aware of how they work….I have one and am aware of how they are funded and to what %ages are requied. If you think they are all fantastic then you’ll need to explain what this is for. http://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corporation

    I hope it lasts my life time. However I can see the burden it places on my location. For this to continue for 50 more years will be quite a feat. If the market jumps another 10% per year over that period of time then all will be ok. I know the pain it causes when I have to “throw in some more.”

    #3) you’ve made may point by saying the following;
    a)The reason why New York and Wisconsin have fully funded pensions is because they have had the financial discipline to make their part of the annual contribution to the pension fund.
    ——— 2 out of 50 leaving 48 with no discipline……my point about competency.

    b)One of the reasons why other states are in trouble is that they have chosen to skip making their part of the pension payments because they were dealing with larger deficit issues.
    ———wonder why? they are OVER EXTENDED and CAN’T!!!!! (this is the number one reason a defined plan is so dangerous)

    c)One of the other reasons is that some of the fund managers were irresponsible
    ———-again to compatency……..is lacking in. (not a reason in itseft to indite a defined plan)

    #4) I was expressing intrest in how you could possible compare a 401k to a defined pension plan…..

    #5) I didn’t balme it all on Clinton………I was also treating that answer in a fashion a dem would make against Bush…..exagerated.

    #7) You said the door was closed. They means no one gets in. Provide all the date you want to support you thoughts but if my niece is the only one to get through then that means the door isn’t closed. She’s not the only one…………

    Yopu also said in #7 the following; “So much so, that there is a school of thought that suggests that it no longer makes sense to take out big loans in order to finance a college education. The jobs just aren’t there to pay those loans back.”

    MR) I was struck by a wall street protester who said the following, “A few years ago when I graduated college there weren’t many jobs availible that I wanted so to avoid that I went to grad school. Now I can’t find a job and I’m that much fuyrther in debt.”

    She was soooooo smart she went into further debt because “she didn’t want to deal with that.” Stupid move….Logic says if you are in dire straits and in debt take a job, PERIOD. She choose to NOT take a job and get in further debt because the land scape wasn’t of her liking. Now she’s protesting that, in essence, she cant have it the way she wants it and is in further debt!!!!!! Just whom is it that owes her “WHAT SHE WANTS?”

    When are the colleges going to be held accountable for producing more grads then necessary? When are they going to stop raising prices? When are they going to be held accountable for the debt of so many that are counting on the degree they’ve recieved to off set the debt yet they know will not be there for them??????????? Talk about a scam. How is this different then the wall street banker who provided loans for houses they knew wouldn’t be in a million years be able to pay back. The bankers got paid at the origin of the loan, and it was backed by, amoung others, feddie and fannie. The colleges are backed by who??????????? They are as wrong as the bankers.

  24. Jeff Beamsley says:

    OK – one more time around the block.

    The issue you raised is whether public pensions are going to bankrupt the country.

    I’ve posted lots of data which suggests that public pensions ARE sustainable if they are well managed. We have examples of 21 (not 2) states who currently meet the “well managed” criteria of 80% funded even at what is more or less the low point in the market in terms of tax revenue.

    The Pension Guaranty Corporation covers private pensions, not public pensions. It is intended to protect workers whose pension plans are damaged as a result of bad corporate management. I don’t know if the fund is going to survive because bankruptcy as a cynical tactic to shed pension liabilities has been pretty popular lately.

    The fact that you can mismanage a pension plan doesn’t prove that pensions as a financial vehicle are inherently any more risky than anything else that requires responsible management. You could use that same argument to claim that the whole capitalist system is unstable because it depends on individuals behaving in a responsible predictable way. This was Greenspan’s defense of letting the housing bubble grow. He said that he trusted that the managers of the largest financial institutions in the world would reject short term gains if those short term gains included potential long term risk to the health of their companies. He was wrong. Should we now abandon the world financial system because we have evidence that some of those who manage it are greedy and unethical?

    I agree that pension plans in the hands of irresponsible people can get local and state governments in trouble. So can public water systems, police and fire departments, public school systems, the permitting process, and just about anything else that a local or state government manages.

    As far as how you define the word “closed”, this is a semantic argument. My conclusions are based on statistical data which suggests that the previous paths for middle class and poor kids to become wealthy are no longer working in the ways that they worked in the past. Wealthy kids are the ones who are getting wealthy. There are certainly going to be a small percentage of kids who will be the exception since there are very few absolutes in statistics. As an example if 20% of college grads in 1980 were able to enter the 1% class and now only .1% make that move, the door is “effectively” closed. So sorry, no, your niece in this case does not disprove the rule. I’m not sure you claimed that she was making more than $400K anyway. I think you just said that they were both working and could afford to buy a house.

    To disprove this claim, you have to come up with statistics which show that just as many middle class and poor kids are graduating from good colleges as did in the 80’s when the wealth gap was much smaller AND that those college grads are able to move into the 1% as easily as they did in the 80’s. Good luck.

    Your “get a job” response ignores that reality that there just aren’t enough jobs to satisfy the number of kids who are graduating. Our colleges graduated approximately 1.6M students last year with bachelor’s degrees. Private employers added only 1.3M new jobs total in 2010. So even if EVERY new job in 2010 was filled with a 2010 college graduate, there would be 300K who couldn’t “get a job” because THERE WERE NONE.

    So facing that sort of picture, the person you referenced “doubled down” on her education investment. She figured that if she got an advanced degree she might be more employable than someone with just a bachelor’s degree. Whether or not that was a wise financial decision is a different discussion, but as a country I think that we should be encouraging our kids to get as much education as they are willing to get. Education is ultimately one of the basic ways that our country competes in the global marketplace. Unfortunately, we are also falling behind there too.

    http://www.nytimes.com/2010/07/23/education/23college.html

    You can feel free to blame the colleges if you’d like, but it would be like blaming the car for running out of gas. The root of the problem remains our wealth-driven economy and the increasing concentration of wealth in a smaller and smaller percentage of people.

  25. Keith says:

    I don’t believe I said that defined pension would bankrupt our country. I also didn’t distingues public from private. (I did use your states as examples though) My point is still a defined outcome is not sustainable….

    As to my niece, you said originally the door was closed to upward mobility for middle class and poor. I agrued this verse them joining the 1%ers…..upward mobility broadered then ending up in the top 1%. if a middle class kid is from a 50% family and makes it to 45% he/she has be upwardly moble.

    Your fixation continues to be on the 1%………..

  26. Keith says:

    Jeff,
    To be even more clear. Here is exactly what you wrote;

    “You also don’t seem to be a very good listener/reader regarding the impact of the current gap between the rich and poor. I’ve posted bunches of data which suggest that the door to upward mobility for poor and middle class kids is closed. The fundamental promise that those who work hard and play by the rules will succeed in this country is NOT being kept by this economy. So please don’t trot out that timeworn conservative narrative that poor people are just not willing to work hard enough.”

    You then in response to me wrote;

    “7. As far as the upward mobility door being closed, I’ve also posted data on that. I’m happy you know some people who are doing well, but please go find some data rather than just sharing your stories. The fact is that middle class wages have stagnated while to costs to go to college have skyrocketed. College is the gateway to a better career than your parents, but fewer and fewer middle class and poor kids can afford to attend the best schools in the country regardless of their academic talents. The income gap itself is a function of the wealthy getting wealthier while the middle class and poor are not.”

    Then in again to my next response you wrote;

    “As far as how you define the word “closed”, this is a semantic argument. My conclusions are based on statistical data which suggests that the previous paths for middle class and poor kids to become wealthy are no longer working in the ways that they worked in the past. Wealthy kids are the ones who are getting wealthy. There are certainly going to be a small percentage of kids who will be the exception since there are very few absolutes in statistics. As an example if 20% of college grads in 1980 were able to enter the 1% class and now only .1% make that move, the door is “effectively” closed. So sorry, no, your niece in this case does not disprove the rule. I’m not sure you claimed that she was making more than $400K anyway. I think you just said that they were both working and could afford to buy a house.”

    Lets review your changing comments

    First you wrote ” I’ve posted bunches of data which suggest that the door to upward mobility for poor and middle class kids is closed. The fundamental promise that those who work hard and play by the rules will succeed in this country is NOT being kept by this economy.”

    Here its UPWARD MOBILITY you are suggesting the door is closed for the poor and middle class.

    At the end of the three posts you’ve escalated you bar to be jumped by poor and middle class kids to “My conclusions are based on statistical data which suggests that the previous paths for middle class and poor kids to become wealthy are no longer working in the ways that they worked in the past. Wealthy kids are the ones who are getting wealthy.”

    and further you wrote;

    “As an example if 20% of college grads in 1980 were able to enter the 1% class and now only .1% make that move, the door is “effectively” closed.”

    Then conclude and dismiss my comments by saying;

    “So sorry, no, your niece in this case does not disprove the rule.”

    You progressed from upwardly moble being impossible, door closed, to being wealthy, 1%er, being closed. Please clearify what you’d like to discuss as my niece is clearly upwardly moble……

    I wonder if your concern would have been the same in 1934? Was the door closed as previously closed to those from 1915 – 1929?

    Also my good friend your data isn’t a tell all story, It merely looks at total numbers. You seem to forget that one can enter and exit the 1% without increaing the number thats in it. Axcess isn’t CLOSED in that case its just the number of those there did change. Jeff, please disregard the notion we live in the case system…..My niece is proof of that….

  27. Keith says:

    Jeff,
    Here’s the heart of our disagreement

    In your writing you made this outlandish remark;

    The fundamental promise that those who work hard and play by the rules will succeed in this country is NOT being kept by this economy.

    You clearly have the wrong view of “succeed? I’m lead to believe, from your collective posts over the recent months, that “succeed” means becoming rich. I have no other conclusion to reach as the sentence from your writing that is referenced above says exactly that.

    These comments are even more puzzling as you recently posted that those who have gotten rich have do so by cheating, using others, etc. and NOT BY HARD WORK!!!!!!!

    Its astonishing to realize, but my progressive friend defines success as getting FILTHY RICH while his conservitive friend thinks nothing of the sort!!!!!!!!!!!!

    My position for the record, WEALTH AND MONEY HAVE VERY LITTLE IN COMMON.

  28. Keith says:

    To expound further; surely you wouldn’t say to the minority child from humble beginings that getting himself through high school and landing a job which in time pays him $80k a year quailifies him as a failure? (The opposite of succeed is fail)

    If he has a wife and children should they consider him as such? You’re probably right, the wife should probably divorce the bum and marry up, this way she can winter in St. Thomas and summer in Vail or Lake Como, Italy with the other succussful people. Her kids could then rightly attend Harvard, so their path to wealth won’t be blocked by the invisible door, and then rightfully get a job on wall street making million, if not billions, to ensure her grand children will be properly cared for…….

    AHHHHHH Success…….

  29. Jeff Beamsley says:

    What we are talking about here is social mobility. I admit that I did struggle to express myself and apologize for any confusion that struggle may have caused. I’ve since had some time to dig into this in more detail and organize my thoughts. You’ll see that in my Denmark post.

    Here’s the wikipedia definition of Social mobility.

    Social mobility refers to the movement of people in a population from one social class or economic level to another.

    Social mobility is at the heart of the American Dream. It is exactly what you have been describing the various anecdotes that you’ve shared. It is the reward that our economy is supposed to offer for those who work hard, invest in education, and play by the rules. It is a meritocracy where your ability to move from one economic level to another is based on your ability and value to society. It is at its most fundamental level equality of opportunity where everyone has equal access and success is self-determined.

    Fortunately social mobility is something that can be measured. The way is to compare generational income. Where the incomes of parents and their children are largely unrelated, there is broad social mobility. Where there is a strong relationship between incomes of parents and children, there is low social mobility.

    Now that we have laid this foundation, I can get to what my point has been all along. Income inequality in this country has damaged social mobility and as a result broken the American Dream. Here’s the graph and the data.

    By creating a winner-take-all economy, we have transformed the meritocracy we had from 1940-1980 into the aristocracy (rule by the elite) that we have today. It used to be that this country was a magnet for bright, talented, hardworking poor kids from other countries who wanted to make a new life for themselves. Today their chances of building that better life are much higher in Canada or one of the Scandinavian countries than they are here.

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