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Author Topic: As spending by wealthy weakens, so does economy  (Read 5416 times)

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Offline JudeTopic starter

As spending by wealthy weakens, so does economy
« on: August 01, 2010, 03:05:43 PM »
http://news.yahoo.com/s/ap/20100801/ap_on_bi_ge/us_wealthy_cut_back

Anyone else think it's disturbing that the wealthy have so much power and influence over our economic health as an entire nation?

Offline Neroon

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Re: As spending by wealthy weakens, so does economy
« Reply #1 on: August 01, 2010, 03:09:50 PM »
Yes, though sadly I'm not surprised.

Offline JudeTopic starter

Re: As spending by wealthy weakens, so does economy
« Reply #2 on: August 01, 2010, 03:15:44 PM »
It's kind of strange to think that economic policy has to be modeled to fit the economic reality we live in, not necessarily the opinions of the voters if we're going to have a sustainable economic situation.  Especially if we decide we're going to remain a pure capitalist nation and not delve into any democratic-socialist ideas.

This means those who have the means to control the economic reality have more influence over economic policy than the general populace, which really kind of makes me wonder how much of a sham democracy is when it comes to determining the role of government influence on the private sector.  And when you consider how fiscal issues can dominate politics, the wealthy really do an unfair amount of influence.  If the election doesn't swing in their favor, they can always vote with their dollars.  Wallstreet's been playing this game for some time now by dropping in points whenever the administration does something it doesn't like.

Makes me wonder if any of it is intentional power leveraging.
« Last Edit: August 01, 2010, 03:17:56 PM by Jude »

Offline MasterMischief

Re: As spending by wealthy weakens, so does economy
« Reply #3 on: August 01, 2010, 03:16:16 PM »
What's that quote again..."80% of the wealth is possessed by 20% of the population"...or something like that.

Offline itsbeenfun2000

Re: As spending by wealthy weakens, so does economy
« Reply #4 on: August 02, 2010, 11:03:20 AM »
In the past when the wealthy start spending money the recessions abated and better times economically came from it. This recession is so deep it even has the wealthy scared to start spending again. It might seem worrisome that the rich have that kind of influence but the sooner they start spending the better of everyone else will be.

Offline cassia

Re: As spending by wealthy weakens, so does economy
« Reply #5 on: August 02, 2010, 07:24:06 PM »
Has there ever been a centralized nation in which the wealthy didn't influence the economic stability and health of the nation much more than those who are not wealthy? Tiny villages or nomadic tribes off by themselves don't count.

It's a bit disturbing to think about, yes, but it doesn't seem unusual.

Offline Vekseid

Re: As spending by wealthy weakens, so does economy
« Reply #6 on: August 02, 2010, 07:45:25 PM »
The US during the 1950s comes to mind. Norway now.

Wealth disparity makes economies inherently unstable, and this is one of the reasons why.

Offline itsbeenfun2000

Re: As spending by wealthy weakens, so does economy
« Reply #7 on: August 03, 2010, 01:04:01 AM »
I do want to point out its just not the wealthy that have cut back on spending. Everyone has as well. The middle class doesn't go out and eat as much. People are putting off buying big ticket items. It might be new habbits or waiting for a sign to start spending again.

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Re: As spending by wealthy weakens, so does economy
« Reply #8 on: August 03, 2010, 02:24:53 AM »
Yes, but when people that have a large surplus (i.e., the wealthy) are uneasy about spending it, that means that the problem has reached a crisis point where nobody wants to spend (assuming they have anything to spend at all).  On the other side, when the people with a surplus go out and spend some of that surplus, it provides cashflow to the middle and lower classes that sell and manufacture and otherwise provide the goods that the wealthy buy.  This gives them something to spend, and they are that much more likely to actually spend it.

Offline Asuras

Re: As spending by wealthy weakens, so does economy
« Reply #9 on: August 03, 2010, 09:37:10 PM »
The article indicated that:

Quote
mainly because the richest 5 percent of Americans those earning at least $207,000 are buying less. They account for about 14 percent of total spending.

The richest 5 percent account for 14 percent of spending. So they only have power over 14% of the economy. I'm not convinced that this counts as a stranglehold.

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Re: As spending by wealthy weakens, so does economy
« Reply #10 on: August 03, 2010, 10:01:01 PM »
As far as their individual spending goes, that's right.  But I'm looking at the psychological 'chilling effect' on the remaining 95%.  They see that J.R. Ewing is hunkering down on top of his vault at Southgate, and they figure that if someone with so much money is afraid to let go of any of it, there must be a reason.

It's entirely possible that the 'reason' has nothing whatsoever to do with the economy or financial responsibility, and everything to do with personal greed, but T.C. Mits doesn't know that.

Offline Asuras

Re: As spending by wealthy weakens, so does economy
« Reply #11 on: August 03, 2010, 10:18:22 PM »
Quote from: Oniya
As far as their individual spending goes, that's right.  But I'm looking at the psychological 'chilling effect' on the remaining 95%.  They see that J.R. Ewing is hunkering down on top of his vault at Southgate, and they figure that if someone with so much money is afraid to let go of any of it, there must be a reason.

Everyone is afraid to let go of their money. That's called "wanting to spend it on something worth it."

Quote from: Oniya
It's entirely possible that the 'reason' has nothing whatsoever to do with the economy or financial responsibility, and everything to do with personal greed, but T.C. Mits doesn't know that.

I don't understand this statement.

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Re: As spending by wealthy weakens, so does economy
« Reply #12 on: August 03, 2010, 11:05:57 PM »
Everyone is afraid to let go of their money. That's called "wanting to spend it on something worth it."

That would be 'spending wisely' - in other words, buying the fuel-efficient car instead of the luxury gas-burner.  In the current economy, people aren't even doing that.

Quote
I don't understand this statement.

Sorry - that was the mathematician in me coming out.  T.C. Mits entry

Offline Lyell

Re: As spending by wealthy weakens, so does economy
« Reply #13 on: August 03, 2010, 11:10:18 PM »
The problem is not that the richest 5% have direct influence over 14% of the economy's spending. It's that the richest are usually the last hit in a depression. The remaining 95% already have a stranglehold on their finances.

Offline Asuras

Re: As spending by wealthy weakens, so does economy
« Reply #14 on: August 04, 2010, 12:01:38 AM »
Quote
That would be 'spending wisely' - in other words, buying the fuel-efficient car instead of the luxury gas-burner.  In the current economy, people aren't even doing that.

They're not buying the Prius because fuel prices fell. That is another story and not representative of "spending wisely" since fuel prices crashed in 2008.

So go on, they're cutting spending because...

Quote
The remaining 95% already have a stranglehold on their finances.

I don't think you know what finances having a stranglehold over you means. Visit south Texas and if that doesn't satisfy you visit Africa.

Offline Lyell

Re: As spending by wealthy weakens, so does economy
« Reply #15 on: August 04, 2010, 12:37:37 AM »
This is the part where you act suprized to find out I live in south Texas.

I specifically said that the people had a stranglehold on their finances. Not that their finances had a stranglehold on them. Cutting non-essentials out of your budget isn't the same as being denied essentials because you can't afford them.

Offline RubySlippers

Re: As spending by wealthy weakens, so does economy
« Reply #16 on: August 04, 2010, 07:32:03 AM »
I have a simple solution since I find alot of people with not needs, but wants. Higher taxes a redistribute the wealth if you can afford the "hot new i-phone" then you can afford part of thatin more taxes. Then provide for the needs of those that are on the bottom of the ladder.

And tax the very wealthy what they used to 69% and increase it as you go down the ladder, bringing back the 10% bracket and give tax break ONLY if they spend it to create and keep those jobs IN the USA. Lets say for every 1% so invested in American companies that create jobs and keeps them here a 1.5% tax break on income to a maximum of 9%. If they try to hide this money or employ people overseas when an American can do the job a tax penalty of 1.5% to a maximuim of 9% more. Do this for anyone earning at or over $200,000 who I consider having enough money to be expected they give something back.

What the poor should do is in mass vote for OUR self-interest if you want change adding all those into the mix voting for one party would be a game changer, politicians may want money but they need their fat rear ends in their seats. It will be two things a peaceful revolution with the ballot box or not so peaceful as the poor decide guns may be the best option to get a fair shake. Both have happened abroad in England after WWII and in China and Russia (pre-WWII) respectively.

If they won't spend their wealth then make them or take it from them for the good of all Americans, if they try to run with it overseas then confiscate their wealth here.

Offline Wolfy

Re: As spending by wealthy weakens, so does economy
« Reply #17 on: August 04, 2010, 11:04:35 AM »
But then you'd get cries of "GASP! SOCIALISM!" and people boycotting all over the place. o-o

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Re: As spending by wealthy weakens, so does economy
« Reply #18 on: August 04, 2010, 11:46:40 AM »
Well, if they're not buying anything anyways, who is going to notice a boycott?

Offline Wolfy

Re: As spending by wealthy weakens, so does economy
« Reply #19 on: August 04, 2010, 01:05:05 PM »
Well, if they're not buying anything anyways, who is going to notice a boycott?

Ooh believe me..the Media (Especially Fox News) will have a field day with it...and they have enough idiot followers that it will really explode with the whole "GASP! SOCIALISM!" aspect of it.

Offline Noelle

Re: As spending by wealthy weakens, so does economy
« Reply #20 on: August 04, 2010, 01:34:19 PM »
I have a simple solution since I find alot of people with not needs, but wants. Higher taxes a redistribute the wealth if you can afford the "hot new i-phone" then you can afford part of thatin more taxes. Then provide for the needs of those that are on the bottom of the ladder.

The problem you run into here is that you start getting into the argument of not only being told how to spend your money, but marking a whole group as a Paris Hilton stereotype. Not all of the wealthy are excessive or brainless in their spending...Warren Buffet drives a modest car and doesn't live especially affluently despite his billions. He's got a house in Omaha...the cost of living in Omaha is considerably less than, say, NYC or LA. That's not really a stereotypical "rich" thing to do. Besides, there are middle-class people who buy iPhones and the like -- there's nothing wrong with owning "stuff", somebody has to make said "stuff" and somebody has to buy it to support those people making it. Which kind of circles back around and shows how much trickle-down economics sucks, but yeah.

Quote
And tax the very wealthy what they used to 69% and increase it as you go down the ladder, bringing back the 10% bracket and give tax break ONLY if they spend it to create and keep those jobs IN the USA. Lets say for every 1% so invested in American companies that create jobs and keeps them here a 1.5% tax break on income to a maximum of 9%. If they try to hide this money or employ people overseas when an American can do the job a tax penalty of 1.5% to a maximuim of 9% more.

Do this and say hello to higher prices everywhere. American workers doing the same job as the poor in underdeveloped nations are expensive, and what do you think that does to the cost of goods? We have labor laws here that require a certain wage per hour as well as certain working conditions and the like. Again, what do you think those things do in relation to the cost of things? It's a double-edged sword; you give the underskilled jobs to Americans who demand more pay than others, and sure, more people have jobs, but you also drag everyone else down when the cost of things like food and basic necessities gets driven up and people earning the same wages get less for more. Fact is, a lot of Americans don't even want those jobs.

Quote
Do this for anyone earning at or over $200,000 who I consider having enough money to be expected they give something back.

This is completely relative to the region you're living in. $200,000 in Des Moines is worth a lot more than $200,000 in NYC or LA. Cost of living is the key here.

Quote
If they won't spend their wealth then make them or take it from them for the good of all Americans, if they try to run with it overseas then confiscate their wealth here.

I'm pretty sure this impedes on someone's rights, somewhere..."forcing" someone to spend their money will, at best, cause severe backlash that probably only sets us even farther back. America has not been inherently developed in the same way Europe has -- our culture does not breed the same ideals because America was more or less developed on individualistic ideals, that each person has the right to make their own way and that the successful will rise to the top. It's not to say it's perfect or just, but this is just getting into really...excessive, unrealistic measures. You have to work with both sides -- you can't abandon either in favor of the other because they're both reliant on one another to make the economy work.

Offline Maeven

Re: As spending by wealthy weakens, so does economy
« Reply #21 on: August 04, 2010, 02:19:58 PM »
Since when does $200,000 per year make you wealthy? And what they aren't saying is that 207K figure represents a married couple (that in all likelihood has children too). 200K -- or, really 140K after taxes -- does not go very far when you have a mortgage payment, daycare/school tuition payments, student loan payments for both spouses. Daycare alone for 2 kids can be 20 to 25 thousand A YEAR if you live in a major metropolitan area.  Then you've got to start putting away another couple thousand per kid per year for college tuition.  30-40K for a mortgage (on a home that's probably now not worth as much as they owe thank you Fannie Mae)... insurance, real estate taxes of 5-6K depending on your area.   Not to mention that you really need to invest 15% of your income for retirement because last time I checked relying on social security isn't going to do it. That's another 30K a year or 2K a month. Ideally. That's 105K a year.

So this supposedly wealth family that's just rolling in the dough is now down to around 3500 dollars a month and hasn't eaten or transported themselves to work or school. Add in your car payments (because everyone is expected to finance a car...) and you are down to 2500 dollars a month. Water, electric, gas, food, clothing, entertainment/activities for the kids, cable/internet, health insurance, co-pays, medicine... it goes fast.  And we are also assuming they don't have an average of 10-15K in credit card/consumer debt. And they haven't saved any money either.

They aren't exactly hurting, I'll give you that, but to refer to folks like this as "the wealthy?" Give me a break. These are the people buying their groceries in bulk at cosco or Sam's every week and cutting out coupons for diapers every Sunday.

/end rant. I just hate articles like this that throw around statistics but don't bother to explain.

Okay, I'm done!

 

Offline Zakharra

Re: As spending by wealthy weakens, so does economy
« Reply #22 on: August 04, 2010, 06:13:21 PM »
I have a simple solution since I find alot of people with not needs, but wants. Higher taxes a redistribute the wealth if you can afford the "hot new i-phone" then you can afford part of thatin more taxes. Then provide for the needs of those that are on the bottom of the ladder.

And tax the very wealthy what they used to 69% and increase it as you go down the ladder, bringing back the 10% bracket and give tax break ONLY if they spend it to create and keep those jobs IN the USA. Lets say for every 1% so invested in American companies that create jobs and keeps them here a 1.5% tax break on income to a maximum of 9%. If they try to hide this money or employ people overseas when an American can do the job a tax penalty of 1.5% to a maximuim of 9% more. Do this for anyone earning at or over $200,000 who I consider having enough money to be expected they give something back.

What the poor should do is in mass vote for OUR self-interest if you want change adding all those into the mix voting for one party would be a game changer, politicians may want money but they need their fat rear ends in their seats. It will be two things a peaceful revolution with the ballot box or not so peaceful as the poor decide guns may be the best option to get a fair shake. Both have happened abroad in England after WWII and in China and Russia (pre-WWII) respectively.

If they won't spend their wealth then make them or take it from them for the good of all Americans, if they try to run with it overseas then confiscate their wealth here.

 This entire post is awful, but the last paragraph is the worst. Who would decide  how much is too much wealth?  Why would should the wealthy be penalized for succeeding? A lot of people work hard for their money and to se it taken away so they can only take home a much smaller amount will piss off a LOT of people.  All of that hard work done for nothing. 

 Why would someone work their ass off to make $300/400/500k when they can only keep $200k? It removes a lot of inventive for people to work when they are taxed at a much higher rate simply because 'They can afford it' That sort of thinking is stupid and dangerous.

Offline Vekseid

Re: As spending by wealthy weakens, so does economy
« Reply #23 on: August 04, 2010, 06:25:30 PM »
For the past five years now, I've been living off of roughly $10k a year, in the middle of a major metropolis (Minneapolis). I suffered in blinding, writhing agony for years, because I could not afford a $300 checkup. There were days when my throat swelled shut, days when I could not stand, and days I could not sit. For want of that checkup, I lost more business than I would have paid in taxes to make that back.

The average American family is not much better off than me. One tragedy from complete destruction. Once financial mistake from destruction. One layoff from destruction. That's the baseline. I went through all three, I learned a bit about how the world works.

A family spending $25k on child care is spending more than most American workers even earn, even though the average laborer earns $100k. The income disparity in America is enormous. To the person who worries about keeping a roof over their head (if they even have one), the one whose worries are instead about their children will seem wealthy to them, even if those earners do not actually hold wealth by the technical definition of it.

Wealth is a different concept than income, though it is related. Someone making $200k per year may or may not be wealthy in any given portion of the world, it largely depends on how free they are from debt traps and other liabilities, and how much of their income depends on their labor versus returns on investments.

A lot of this is simply just knowledge. No one who knows how car dealerships work will finance a car through the dealership, for example, and many of the truly poor are trapped in usurious loan contracts. But knowing where debt traps lie - and how to avoid them - is an important factor in being secure and, consequently, happy with your place in the world.

Offline Serephino

Re: As spending by wealthy weakens, so does economy
« Reply #24 on: August 04, 2010, 08:46:40 PM »
I guess it depends on your point of view.  I live on about 22k/year, so yeah, 200k/year is wealthy to me.