Where Have All The Dollars Gone?
I grew up in a stable middle class family. We always lived in nice homes which I thought were beautiful and comfortable.We ate delicious dinners cooked from scratch by my moim and spent a lot of time close to home. We rarely if ever went out to dinner or the movies, though we did manage to make the annual Disneyland trip. Vacations consisted of camping. Outings utilized the local museums and bike rides at the beach. We spent a lot of time with family and friends swimming, barbequing, playing Ping Pong, Monopoly and Canasta and drank Koolaid instead of soda. My parents drove used cars and furnished our house with used furniture, or furniture that my dad built in our garage. My mom sewed a good portion of our clothes and baked delicious treats - we didn't have to worry about trans fats. I wanted for nothing - I always had books to read and crafts to make and friends to play with.
The subject of money was never discussed with me. It was understood that I would get a job when I turned 16, and that was easy to accomplish. I graduated from High School in 1980 and there were no college funds set aside for me. I was able to work part time and earn enough money to put myself through school without taking out any loans. Looking back, I was extremely fortunate. It all just seemed to work out. I had to live lean at times, but I never had to go without necessities. I was able to earn about $15 per hour take home from my waitressing job. Rent was about $350, utilities were nominal, car insurance about $600 a nnually, no cell phone data plan, no internet, gas was $1.25 a gallon, food, and clothing and schooling were a fraction of the costs today. I didn't have money left over to eat out or go to the movies so I rarely partook of those activities. Most of my time was spent working or at school with an occassional night out dancing and going to the beach on my days off.
What I am left wondering is where have all the dollars gone? Now Economics is not something that I know a lot about, and I am going way out of my comfort zone to even attempt to write about such a topic, but one of my Facbook buddies happened to share a link to a 2 minute explanation of what happened to our economy by former Labor Secretary, Robert Reich, that made a lot of sense to me. He states that since 1980, the American Economy has doubled in size but that wages have remained flat. I can vouch for that. After being back in the work force for nearly 7 years ( I took a break to rear our brood!) I have barely caught up to my hourly earnings from 1990! In 1980, the top 1% of highest earners took home about 10% of the total income, but today they take home more than 20% and the super rich have more than 40% of the nations' total wealth! Before 1980, the top tax rate was over 70% and now it is down to 35%. Keep in mind that much of the income is Capital Gains which is subject to only 15% tax according to the IRS. The richest 400 Americans pay only 17% tax and tax revenues are down to less than 15% of the total economy - the lowest in 60 years! This equates to huge budget deficits, and when there is no cash in the system, public services end up getting cut. More kids are crammed in smaller classrooms, libraries are closing, roads don't get repaired, Hospitals are understaffed, and I'm not even going to talk about healthcare.
I don't know about all y'all, but we are in a 30%+ tax bracket. Reich states that instead of working together, as we did in the past, the middle class is becoming more and more divided, union vs. non union, public employee vs. private, native vs. immigrants. The middle class, what remains of it, is no longer able to borrow as it could before, and no longer has the purchasing power to get the economy going again which results in continued high unemployment. And a stable economy depends upon a healthy middle class. If those who are willing to work can't find jobs, and those who are earning the most are paying the least percentage of taxes, where does that leave us?
So how did this happen? I googled it and landed on this article from the Department of State on About.com which seemed to sum it up nice and tidy. To paraphrase: We said good bye to Jimmy Carter and ushered in Ronald Reagan in 1981, who based his economic program on the theory of supply-side economics, which advocated reducing tax rates, so people could keep more of what they earned. The theory was that lower tax rates would induce people to work harder and longer resulting in more saving and investment leading to more jobs and higher wages.
I think instead of trickling down, that money saved by the tax cuts seems to have evaporated. In the early 1980's, while he was cutting taxes and slashing social programs, Reagan also reduced government regulations. The combination of tax cuts and higher military spending overwhelmed the modest reductions in spending on domestic programs. As a result, in the 80's the federal budget deficit swelled.
I then located this article on wikipedia which continues the saga. It states that during the 1990's, the national debt increased by 75%, GDP ( Gross Domestic Product ) rose by 69%, and the stock market grew more than threefold. From 1994 to 2000, real output increased, inflation was manageable and unemployment dropped to below 5%, resulting in the Dot-com boom. As is often the case, what goes up must come down, and in 2000 the stock market would give back some 50% to 75% of the growth of the 1990's. The economy worsened in 2001 with unemployment and business failures rising substantially, and triggering a recession, and then we were hit with the September 11 terrorist attacks.
Through 2001 to 2007, the red-hot housing market across the United States fueled a false sense of security regarding the strength of the U.S. Economy. Again, what goes up must come down, and the collapse of the housing bubbles in California and Florida led to a decrease in housing prices and construction industries. Milliions of mortgages ( averaging about $200,000 each ) had been bundled into securities called collateralized debt obligations that were sold worldwide. Many banks and hedge funds had borrowed hundreds and billiions to buy these securities, which were now toxic because their value was unknown and no one wanted to buy them. Congress voted $700 billion in bailout money - Troubled Assets Relief Program ( TARP ), banks tightened their lending policies and it became much harder to get car loans.
The government for the first time took major ownership positions in the largest banks. The stock market plunged 40%, wiping out tens of trillions of dollars in wealth; housing prices fell 20% nationwide wiping out trillions more. By late 2008 General Motors, Ford and Chrysler were on the brink of bankruptcy. This is what President Barak Obama walked into. How are we as a nation going to turn this mess around? Well, seems to me that there are a few lessons to be learned by all of this: if something seems too good to be true it probably isn't "true" - think dot.com and housing bubbles. Wars don't help the economy no matter how many jobs they create. Living above your means will eventually catch up to you. Outsourcing everything from product manufacturing to customer service jobs to third world countries which do not uphold our values and can provide cheap unregulated labor might result in lower product costs, but also results is less jobs- who wins here? We are down as a nation right now. I think we will recover, but it took us a while to sink this low and it will take some time to dig ourselves out of this mess. I look brightly upon our next leaders as I can see a shift in values. I just wish we had refinanced our house when it was at it's highest value and taken all of that equity money and invested in Apple Stock. We'd be sitting pretty now.
Some Right Quotes
"Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime." -- Author unknown
"Every time you take a rich man down, you take a 100 poor men with him."
"I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it." -- Benjamin Franklin
"If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand." -- Milton Friedman
"I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible." -- Milton Friedman
"A rising tide (in the economy) lifts all boats" -- John Kennedy
"Nobody spends somebody else's money as carefully as he spends his own. Nobody uses somebody else's resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property." -- Milton Friedman
"Were we directed from Washington when to sow, and when to reap, we should soon want bread." -- Thomas Jefferson
"When everybody owns something, nobody owns it, and nobody has a direct interest in maintaining or improving its condition. That is why buildings in the Soviet Union -- like public housing in the United States -- look decrepit within a year or two if their construction..." -- Milton Friedman
"The record of economic success during the 1980's is clear: 18.6 million new jobs were created, increasing U.S. civilian employment by 20 percent. Only 12 percent of these jobs were in low-paid restaurant and retail areas, while 82 percent were in high-paid technical, managerial and professional areas. Once Reagan's tax cuts kicked in (fiscal year 1982), the country experienced 92 months of economic growth without a recession. This represented the longest period of sustained peacetime economic growth in American history. America's most successful achievers do pay a higher share of the total tax burden. The top one percent income earners paid 18 percent of the total tax burden in 1981, and paid 25 percent in 1991. The bottom 50 percent of income earners paid only 8 percent of the total tax burden, and paid only 5 percent in 1991. History shows that tax cuts have always resulted in improved economic growth producing more tax revenue in the treasury." -- Rush Limbaugh
"What pays under capitalism is satisfying the common man, the customer. The more people you satisfy, the better for you." -- Ludwig Von Mises
"Don't knock the rich. When did a poor person ever give you a job?" -- Laurence J. Peter
"We don't have a trillion-dollar debt because we haven't taxed enough; we have a trillion-dollar debt because we spend too much." -- Ronald Reagan
"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." -- Adam Smith
"Four things have almost invariably followed the imposition of controls to keep prices below the level they would reach under supply and demand in a free market: (1) increased use of the product or service whose price is controlled, (2) Reduced supply of the same product or service, (3) quality deterioration, (4) black markets." -- Thomas Sowell
"In a small town, an idiot breaks a shop window. He's called a vandal, until someone points out that a window installer now must be paid to replace the window. The window installer then will have enough money to buy a new suit. A tailor will then be able to buy a new desk. And so on. The whole town apparently gains from the economic activity generated by the broken window. Of course, if this made sense, cities should hire people to run though town, breaking windows.
But it doesn't make sense. It's a fallacy because the circulating money is seen; what is not seen is what would have been done with the money if the window were still whole. The shopkeeper, instead of paying the window installer, might have expanded his business, or bought a new suit or a new desk. The town is worse off because of a broken window." -- John Stossel
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Some Left Quotes:
Although it is not true that all conservatives are stupid,
it is true that most stupid people are conservative.
John Stuart Mill
A conservative is a man with two perfectly good legs, who, however, has never learned to walk forward.
The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have little.
It's much harder to be a liberal than a conservative. Why?
Because it is easier to give someone the finger than a helping hand.
A conservative believes nothing should be done for the first time.
I support and promote local and national gun control laws and organizations.
If a guy can't hit a deer in one shot, he sure as Hell isn't much of hunter.
Men never do evil so completely and cheerfully as when they do it from religious conviction.
Morality is simply the attitude we adopt towards people we personally dislike.
A man's ethical behavior should be based effectually on sympathy, education, and social ties; no religious basis is necessary. Man would indeed be in a poor way if he had to be restrained by fear of punishment and hope of reward after death.
Don't tell me you're a Christian. Let me figure it out.
"Malice toward none, charity for all."
The Republican Party has come a long way from that comment by its first President (Abe Lincoln) to its callous malice of today.
I suppose I can understand the callous selfish disregard of the conservatives.
It is their pride in it that passes me by.
The more they talk, the more being called a Liberal sounds like a compliment.
The whole problem with the world is that fools and fanatics are always so certain of themselves,
but wiser people so full of doubts.
If we believe absurdities, we shall commit atrocities.
Republicans stroke platitudes until they purr like epigrams.
The elephant has a thick skin, a head full of ivory, and as everyone who has seen a circus parade knows, proceeds best by grasping the tail of its predecessor.
Republicans portray the government as the enemy. Then when they take over, they prove it.
Mr. Nixon in the last seven days has called me an economic ignoramus, a Pied Piper, and all the rest. I've just confined myself to calling him a Republican, but he says that is getting low.
As people do better, they start voting like Republicans -- unless they have too much education and vote Democratic, which proves there can be too much of a good thing.
Talk about Republican pardons. George Bush protected himself by pardoning those linked to him in the Iran-Contra scandal. He pardoned a heroin drug trafficker and a terrorist who was responsible for 73 deaths. Clinton's pardons had no impact on the health and welfare of the American people.
You don't have to be ruthless like the republicans, but be strong.
The Republican National Committee has announced that it is changing the Republican emblem from an elephant to a condom because it more clearly reflects the party's political stance : A condom stands up to inflation, halts production, destroys the next generation, protects a bunch of pricks, and gives one a sense of security while screwing others.
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