There is a belief that Americans got into economic turmoil because of living beyond their means. Robert Reich (Professor of Public Policy at UC Berkeley, and former Labor Secretary) explains why this a myth, that most Americans do not live beyond their means and that their "means" have not kept up with the economy. Where has the wealth accumulated and why aren't the top of the top being surtaxed while average-earning and the poor shoulder the burden?
Support The Point for FREE by doing your Amazon shopping through this link (bookmark it!) http://www.amazon.com/?tag=townsquaretyt-20
To put it succinctly: capitalism is an economic system in which the rich systematically steal from the poor. And yet we have people in the comments here talking about "class envy?!" What a bunch of sick idiots.
The twisted nature of a class war in the US is that the ruling elites are very class conscious and are fighting a bitter war on unions, socialized healthcare, pensions, minimum wages, civil rights and other such things. It's an all out war, they don't shy away from spying, imprisoning, assassinating, harassing an bullying their opponents. At the same time the population is so indoctrinated not to see the class war for what it is that even bringing up the notion in a discussion is enough to provoke a mad rant about "wealth envy".
All these points do is create class envy. The rich are always evil, suppressing those with less.
I'm looking at buying a new home and how to budget that purchase. Guess what? We have a list of things we don't want to have to give up when buying a new home. If it looks like we have to go that way....we don't buy the home! Or we give those things up until we can maybe afford them again! Brilliant!
Living beyond your means is called "borrowing," Borrowing can make incredible sense. It can also be incredibly stupid. It is simply undeniable--just look at the national debt and the unfunded liabilities--that government has borrowed on our behalf. It is truly sad that people believe the "trust fund" is a trust fund in any meaningful sense. Even Obama has called the debt accumulation "unpatriotic." Of course, that was before he got into office. To understand why this country elects the people who cause so many problems, one need only listen to Reich and realize people are incapable of recognizing nonsense when they hear it. The "evil rich" narrative no doubt plays well with those who don't understand or won't concede many of the people to which Reich alludes produce very little. Of course, in Reichspeak, they are entitled to the fruits of others' labor. I am not poorer because Bill Gates or the Waltons are wealthy. We need economic growth. We won't get it demonizing the successful.
Kamari the factor you are leaving out is that “the money supply”as you call it is either growing or shrinking. There isn’t a set amount of money generated. we need to grow the money supply by creating new goods, services, and ideas that people want to buy.
You're not poorer because they are wealthy, you're poorer because they are SUPER wealthy and the wealth isn't going anywhere. It isn't being utilized...it's just sitting there at the top. Do you not see how there could be a problem with a small amount of people owning most of the money supply in the country?
Nobody wants to demonize the successful or take ALL of their money. A 2% tax wouldn't even scratch the surface of their wealth. Notice how this video never outright says the rich are 'evil'?
I love seeing the people here denying Reich's argument do so only using anecdotal evidence and baseless arguments. He lays down the math of why this is an issue, so if you're going to argue against him then you need to actually use facts too.
Dear Professor Reich, I can attest, as a first-hand witness, that the statement "living beyond our means" is certainly not a myth when it comes to the average middle class, and formerly poor-class American citizen. We have been obsessively keeping up with the Joneses so to speak at the expense of our savings and our financial futures for the past 30 years or so. Additional taxes placed upon the rich class will do nothing more than enable the era of conspicuous consumption to continue on.
Also, technology is advancing. Unless, people are willing to be slaves, it is usually more attractive to utilize machines, computers, and robots instead of human workers. Businesses are to make profits, not hiring people. If you walk in a factory of today, all you see is machines and robots.
The rich people don't provide jobs. Businesses do. As long as the businesses are funded, they can provide jobs. Funding for businesses do not have to come from rich people. Think about it. A lot of great businesses started in a garage. Was Steve Jobs always rich? Think about this statement: any persons and institutions can buy stocks and bonds, which fund business operations. If more wealth is in the hands of the middle class, they can also invest it in stocks, bonds, mutual funds, etc.
Because they're influencing the rules laid down by government through lobbyists, campaign contributions... oh, and there are several instances of government officials taking the role of Secretary of Treasury, after long careers with corporate banks, and then going back to their banking jobs afterwords, and after skewing government policy in their favor.
How about 100 wealthy $1 millionaires, and $990,000,000 off of our deficit? Sounds fair to me... nobody earns a billion dollars... you would have to earn $100,000 (A good yearly wage) every year for 10,000 years, without spending anything, to accumulate $1 Billion... Having billionaires in the same society as starving and homeless people is a disgusting disgrace, and it shows that our system has failed us. In a functional system, billionaires wouldn't exist.
And when they have financial struggles... they get a big fat bailout, and still get their mutli-million dollar bonus checks. Paid for by the citizens of the United States... that's right, every trailerpark family... every single mother... every soldier... every single one of us contributed to their bonus checks! And then our government has the audacity to defend the bailouts and give them tax brakes on top of it! What the fuck is going on!?!
I've watched several of this guys videos and I'm convinced this guy is living in some type of fantasy world where he twists facts to (loosely) fit his own opinion. When I see statistics that prove 50% of African Americans are on unemployment, and I still see them driving around in 50K vehicles, it's because they're living beyond their means. When I see statistics that say the average American has 30K worth of credit card debt, that too tells me they're living beyond their means.
The very government officials that have their campaigns funded by wealthy benefactors who they end up helping by forming and establishing policies that benefit the few rich people and not the country. That Government- right? The government that is suppose to look out for the welfare of the country in general not special interests known as the rich.
So we tax the rich because they are rich? It naturally make sense that the top 1% will always get richer at a faster pace than the rest of 99%, this will always be the case. Assuming the top 1% are following all of government laws, why are we penalizing them just because they are making more money than the rest? The rich are simply just playing by the rules lay down by the Gov.
No, what caused the economic down fall was giving insane tax cuts to the rich. While in a perfect world, that would mean that they have more freedom to employ more people, put more money in the economy and so on... but we're not in a perfect world. The rich just hoard their money, and only spend it in places that only the rich can shop.
I never said anything about immigration. Truth is, they're not coming to this country any more because there are no jobs. It's a non issue, but the conservative think tanks try to make it a wedge issue. Can't you see you're being used?
Americans do NOT live beyond they're means? Look at the MONEY people owe to BANKS due to LOANS. Your LOGIC falls short Robert Reich. If you are NOT living by your means then WHY do you need to ask for a LOAN?
Another liberal hypocrisy fail!
See how you support higher min wage for non skilled workers, but then you tell us we need more immigration and work visas for foreigners because Americans demand too much pay....lol
We conservatives wont have to do much to get rid of you liberals, because you will hang yourselves in no time at all.
I love the sound of liberal hypocrisy!
Its funny, how anyone can think their side is perfect and the other side is evil, only a dumbass liberal like yourself would think such thoughts...lol
BTW, the video is about as factual as you being smart..... zero chance!
I could cite a mountain of evidence, but it would be wasted on you. Besides, anyone can see we live WAY beyond our means. All one has to do is watch all the welfare moms driving their Escalades while chatting on their cellphone.
if your research skills and analytic abilities are so pathetic, i can't help you out
look at robertreichdotorg /post /10525888192
Here, Reich advocates for govt (and politically connected big business) spending the money counterfeited by the Fed via quantitative easing. The Fed monetizes US Govt debt to the tune of hundreds of billions. This money is then shuffled to politically connected big business.
It's really simple, but you will never learn. Enjoy your triple dip recession.
hey, you want evidence? How about I throw the gauntlet back in your face? Can you show me a single example of Reich opposing money printing aka Quantitative Easing?
Hello? You still there? Can you hear me?
Reich supports the counterfeiting of money by the Federal Reserve and transferring wealth to rich individuals. He then blames the rich to advance his Big Govt socialist agenda.
Intellectually dishonest vermin that he is, he will never acknowledge this most elementary fact.
Here you go Dave. Raise the minimum wage to $12 an hour, raise the top marginal tax rate to 55% (in line with the rest of the developed world), get rid of corporate welfare, have a HUGE increase in spending on infrastructure, education, renewable energy and basic research. You want to fix the problems with the U.S? Stop blaming the poor and claw backs some of the wealth that's been sucked out of the middle class in the last 30 years. OK, have a good time attacking that.
Obviously no one in this economy would retain a job if they don't get the job done. That's obvious. Generally people work very hard. But there's no reason billionaire owners of companies can't pay their workers a living wage.
You're just playing with words. The only option is to raise minimum wage. What other option is there? Right now Walmart workers earn so little they have to apply for food stamps to get by. That means my tax dollars help support workers because the Waltons are too greedy to pay them decently. Why not just pay them a livable wage to begin with?
The minimum wage is zero. It always has been and always will be zero. What you call the minimum wage is the minimum labor value a worker must produce to be legally employable. Raise the minimum labor value and more people will earn zero. It seems to me that that is immoral, not the Waltons hiring thousands of people and supplying consumer goods at lower prices to the people.
The Waltons have a hundred billion dollars. They can afford to pay workers a living wage, and not take advantage of foreign workers as well. .It's extremely immoral what they're doing. RAISE MINIMUM WAGE.
You do not deserve the wealth you have. The Waltons started a huge retail operation that underpriced their competition and paid their workers more than they could have gotten elsewhere. If this were not true, they would have had fewer customers and insufficient workers. No one forces people to shop at Walmart or to work at Walmart. All wage and purchase transactions are voluntary. Your opinion of their prices and wages is irrelevant. Maybe welfare recipients should get a job at Walmart.
If you're speaking of heads of multi national corporations like the Waltons, they do not deserve all the wealth they have. Most of their billions were gained by underpaying workers and overcharging customers. They are the real thieves, not welfare recipients who are victims of a recession they didn't cause.
But if you won't give me your wealth because you pay taxes, why should people who pay far more taxes than you do give their wealth to me (or to you)? And how is a society that appropriates the wealth of others a decent society?
I won't give it to you, but I will pay taxes because that's the price of living in a decent society. You may want to go live in some third world country where you have to stay in a gated community, it's too awful on the outside.
Maybe you misunderstood me or maybe I didn't express myself well? Public transportation means walking MORE and therefore less obesity. I definitely think our car culture is part of the obesity problem. So riding cars LESS, and walking, biking and taking public transportation MORE.
I have listened to Reich speak and he is a very intelligent guy with tremendous insight. He is far too smart to believe this crap that he is peddling. I think he enjoys throwing fresh meat to the progressives and shallow envious (i.e., the voting base for the left wing party, who think wealth is created by winning the lottery).
What don't I get? Aren't you arguing for the stealing from others? BTW, the fact that every industrialized nation except for the U.S. was a smoldering ruin after WWII was a major factor in the real wage increases in the U.S. Once those destroyed nations finished rebuilding, our wages became constrained by external competitive forces. Should we also destroy all other industrial nations again, in addition to stealing from others?
When the very rich have tons of money and the average person is somewhat poor (income inequality) as is the case in the US-- don't expect a booming economy and a robust job market. The economy depends on customers and average incomes have been losing ground for 30 years. It now takes two average incomes to live- wives working.
You don't get it- the national economy creates wealth (GDP) but that additional wealth is not trickling down. It just increases the wealth at the top. From about 1937 to 1978 the income of all, rich and poor doubled, but no longer---- (after inflation)
@hotneo7 The obesity of America more to do with a lack of public transportation, a lack of affordable fresh food (vs processed)... and a whole host of other reasons. We are literally the starving obese -lots of empty food. Oh, and the middle class isn't too lazy, they're too tired... from working longer hours and producing more, for less pay and less benefits than other developed nations. Don't just repeat rhetoric you've been fed... it's as empty as wonder bread.
Yah. So? I know how to look up definitions and discern how the US compares in terms of education, literacy, science, medicine, health care, and equality. It is easy to conclude that other countries, many of which are more socialist, are faring better than we are for a number of reasons.
Look at the trade deficit and you realize that America doesn't produce anything to the world and yet we consume the most. China thanks liberal whackjobs like Reich for keeping the masses ignorant. Of course Americans live beyond their means. They literally overeat until they are so fat it is a national epidemic and embarrassment. The rich run Congress and Obama just signed the Bush tax cuts permanently. The middle class is too lazy to revolt and will rather let their children be slaves forever.
... We have a strong dollar because of our unhealthy asset booms have swamped normal supply and demand forces. There is a simple test which anyone familiar with basic chemistry will recognize for recognizing cause and effect in our trade deficit. If our trade deficit is caused by greedy consumers, then you will see weakening dollars as the deficit grows. If foreign goods are continuing to get cheaper even as we buy more, then the strong dollar must be causing increased consumption.
Actually the 2% wealth tax is very close to being the same as a 50% tax at death, but with less friction. It is not a question of whether it can be done so much as what happens if we don't do it.
I think what you are missing here is what it means for interest rates to head toward zero. This means that the number of dollars providing return on investment has become small compared with the number of dollars buying the investments. (cont)
It didn't transcend politics. It was a direct consequence of Reaganomics. In 1984, you saw problems with the trade deficit begin, problems with income inequality launch, problems with our national debt start, decrease in our growth rate, increase in our money supply, increase in our prison population, etc.
In fact, 1984 was the last year of 5% growth in this country. We made our tax system less progressive and our unions less competitive and we suffered for it.
Oh, and about national accounting? If you notice our big trade deficits all started the same time as the rest of our big problems, around 1984, which is about the time that Reaganomics became fully implemented (also our last good growth year, a swan song rebound from the tight money recession).
The reason turns out to be surprisingly simple. A physical economy generally operates under opposing forces of supply and demand. An asset economy follows trends. (continued)
Wait. So you are saying that if we set the tax rate to 100%, then that would be the wrong tax rate and the economy would suffer? Oh my god! That's it!!! The missing principle of economics. It all makes sense now!!!
But seriously. I think you need to re-read what I wrote about interest rates going to zero and asset bubbles forming. In a left wing economy we need to allow more money to accumulate with rich people. In a right wing economy like the US, we need to help the bottom 90% more.
Here is the key. This middle class you brag about was built under the New Deal. The economy actually grew more after adjusting for inflation under 12 years of FDR than under our last 48 years of Republican presidents. His secret? He understood that bargaining leverage is as much a factor in wealth accumulation as value creation and without a middle class available to consume created value, the value will not get created no matter how cheap loans get.
Oh, and you can see whether increased capital dollars are leading to actual growth or just to higher asset prices by looking at three things.
1) interest rates and ROIs across all investments. All have declined since 1980.
2) Inflation-adjusted growth rates under increasing capital dollars. The number of capital dollars in the market has exploded since 1980 and growth is down by at least 1/3 per year. About 80% of that growth has been under Clinton and Obama.
3) Presence of Asset Bubbles!
Here is the real significance of the wealth label:
If you double the number of dollars that want to buy the factors of production, you don't magically somehow double the factors of production. You just increase their asset prices and decrease the rate of return on dollars invested. If the economy is starved for capital, then this could spur production, but if small businesses need customers more than loans or investments, then it will have little effect.
If you tax dollars that are invested in assets, then you reduce the money supply that is chasing after assets. If you tax dollars that are chasing after consumption, then you reduce the money supply that chases after consumption. A working economy requires money to be available for both purposes.
How do you consume wealth? You could consume excess inventory, but if you sell a factor of production, it remains a factor of production, but in someone else's hands.
Median not Mean. Median means the middle man. If we had 3 people. one making 10,000, one making 20,000 one making 2,000,000. The median would be 20,000.
Medians measure the income of the middle class not skewed by the super wealthy, and America has the 3rd highest in the world.
Go compare his graph of how much richer the rich have gotten compared to consumer debt over the same period. They're getting rich off of us living beyond our means. Without us spending like drunken sailors they couldn't have gotten that way. Look at our personal savings rate...we're addicted to spending. Just like Greece, Cyprus, Spain etc...we'll end up like them to before too long.
The class of drugs that Levitra, Viagra, Stendra, and Cialis belong to are called PDE5 inhibitors. They work by relaxing tight blood vessels, allowing more blood to surge into the penis and cause an erection, says Gregory Bales, M.D., an associate professor of urology at the University of Chicago.
The little pills do the trick for more than two-thirds of men with Viagra protects the heart (ED). They also work for guys who simply need them for a short time to get their “confidence back,” says Michael Eisenberg, M.D., director of male reproductive medicine and surgery at Stanford University.