PeakTrader.com

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PeakTrader:

Western Europe has much less income inequality than the U.S.. Yet, Western Europe’s per capita real GDP is over $10,000 a year less than the U.S.. Moreover, Western Europe lags the U.S. badly in the Information and BIotech Revolutions.

Pettis states:

“…rising income inequality must eventually lead to more productive investment or to more unemployment…”

Obviously, the U.S. had much more productive investment, along with much less unemployment, than Western Europe.

So, we should praise U.S. investment, and not follow the Western European economic model.

We need to put idle capital and labor to work.

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Edward, my views aren’t about how the economy should work, they’re about how the economy actually works, which is supported by your article.

I’ve explained before how more pro-growth policies and fewer anti-growth policies will not only raise living standards, but also go a long way in correcting a “market failure” in low-wage income.

You, and many others here, want the economy to work in a way that cannot work.

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Edward, in the production function, or aggregate supply curve, Y = t(L, K, R, E,…X), unless increases in technology or productivity (t) offsets higher production costs, e.g. labor, capital , raw materials, energy, etc., then real output falls. However, it’s been shown a higher wage can reduce other production costs, up to a point.

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Kaleberg, you have it all backwards. For example, why would anyone risk capital or work hard when the gains or income are taxed so heavily? Without risk and work, there’d be no growth.

There’s lots of old money in the blue eastern states. The rich are doing great. The working class and poor deal with a high cost of living.

When I lived in Colorado, it was a red state. Colorado had a low cost of living and a high quality of life. I moved to California, a blue state, and noticed there’s much more inequality and it was much more expensive, along with ridiculous state and local taxes.

If I worked this hard in Colorado, I’d be living three times better.

You should see how much better Americans live in the red Rocky Mountain states. Of course, good economic policies are neither red nor blue.

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You may want to look at red and blue by county:

http://usatoday30.usatoday.com/news/politicselections/vote2004/countymap.htm

Maybe, the rich are paying-off the poor to vote for them, preferably with other people’s money, like the struggling middle class. The rich sure have the money and the power.

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Greg, your conclusion doesn’t make sense and the article you cite is oversimplified.

Raising the minimum wage, in itself, will have a small positive effect on growth and a small negative effect on employment (e.g. through higher productivity and lower overall production costs). The positive income effect may exceed the negative employment effect up to $15 an hour.

Also, government, not the private sector, tends to allocate resources inefficiently (China is an extreme example). Tax avoidance and overregulation are “undermining” everyone’s prosperity.

Moreover, I may add, the U.S. has more global competition. It’s not like the 1950s and 1960s when Europe and Japan were rebuilding, and dirt poor countries became more involved in the global economy to begin raising their living standards at faster rates.

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GW, yes, Colorado is trending blue. Unfortunately when counties trend blue, there’s more inequality, between “the rich” and “the poor,” and a higher cost of living for everyone, particularly the poor. Moreover, small business start-ups and expansions will be more difficult, at least for the “middle class.”

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Bruce, the definition of “middle class” varies between states and regions or cities.

For example, I know, from personal experience, although it’s not scientific, my standard of living would be at least twice as high in Colorado than California based on my labor hours, and there are differences between regions, e.g. Alameda county and Orange county in California.

Moreover, there are budget constraints and trade-offs. Spending to comply with costly regulations, particularly for the “middle class,” means finding ways to reduce spending elsewhere, e.g. being forced to buy cheaper, and lower quality, inputs for production, which may have undesirable effects.

Also, it should be noted, the comparisons of those variables between 2007 and 2011 can skew the results, because there may be more variability in some states than others when the economy is doing well and when it’s doing poorly.

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Dan, I think, the housing boom took place mostly in four states – California, Nevada, Arizona, and Florida. And, I think, three of those states were GOP states. Yes, the housing market is still in bad shape. Chart:

https://research.stlouisfed.org/fred2/series/HSN1F

It’s unfortunate so many homeowners are becoming renters.

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And, GW, obviously, you dislike the free market. However, there wouldn’t be falling prices and rising quantity and/or quality of output, over time, without the free market.

Of course, there should be appropriate taxes and regulations in the free market, e.g. to correct for “market failures.” However, excessive taxes and regulations cause higher prices and lower quantity and/or quality of output.

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Moreover, it should be noted, federal taxes have become more progressive:

CBO: Top 40% Paid 106.2% of Income Taxes; Bottom 40% Paid -9.1%, Got Average of $18,950 in ‘Transfers’
December 9, 2013

“The top 40 percent of households by before-tax income actually paid 106.2 percent of the nation’s net income taxes in 2010, according to a new study by the Congressional Budget Office.

At the same time, households in the bottom 40 percent took in an average of $18,950 in what the CBO called “government transfers” in 2010.

The households in the top 20 percent by income paid 92.9 percent of net income tax revenues taken in by the federal government in 2010, said CBO.”

http://cnsnews.com/news/article/terence-p-jeffrey/cbotop-40-paid-1062-income-taxes-bottom-40-paid-91-got-average-18950

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David, yes, I’d like to hear more of Edward’s comments rather than comments that are hopelessly political, lack economics, simple declarative statements without any support or proof, contradictions in “logically consistent narratives,” and other “absurd” “dialogue.”

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JimH, massive idle resources for long periods of time, e.g. over the past five years, is completely unnecessary. The country just needs more pro-growth policies and fewer anti-growth policies.

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