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The Myth of Americans Living Beyond Their Means with Robert Reich

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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? https://twitter.com/RBReich http://robertreich.org/ Support The Point for FREE by doing your Amazon shopping through this link (bookmark it!) http://www.amazon.com/?tag=townsquaretyt-20
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Text Comments (385)
Ronald Stonecipher (6 months ago)
If people haven’t been living beyond their means why is credit card debt at such high levels?
James P (7 months ago)
The French knew what to do
Ben Chesterman (1 year ago)
small business owners salaries haven't grown 30 yrs
Thvndar (1 year ago)
I don't know what's worse: the fact that this problem persists, or the fact that s many people advocated for their own demise.
Ben Chesterman (1 year ago)
You talk out of your ass
bill dunne (2 years ago)
what about the blacks and how the white took all the property during slavery? that is why the blacks cant move ahead in todays economy and then end up in prisons and dealing drugs and stuff.
Ben Chesterman (2 years ago)
What about People that finance new cars
dmike3507 (3 years ago)
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.
Ben Chesterman (1 year ago)
Socialism for the lazy turds
Alexander Shaduri (3 years ago)
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".
DavyBaby (3 years ago)
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!
TheKyotey (4 years ago)
Wealth envy.
Richard Johnston (4 years ago)
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.
Ronald Stonecipher (6 months ago)
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.
Ben Chesterman (2 years ago)
Roberts a cunt
Kamaria K (4 years ago)
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'?
peter germain (4 years ago)
you could fund your health care system this way also.
TheJustinside (4 years ago)
I would say you're preaching to the choir here.
Sarge714 (4 years ago)
I disagree with the 2% tax on the wealthy. Should be 1000% until they fix their fuck up.
Ben Chesterman (1 year ago)
Unions fucked up it up . Forcing workers more pay that aren't worth it from the profit they produce
weshoottokill (4 years ago)
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.
Thvndar (1 year ago)
Hey I saw a meme on Facebook about a welfare mother getting $1,000 worth of groceries, so I'm obviously more informed than this Ivy league professor.
eckiuME23 (4 years ago)
Hey idiot did you even watch the video. You get an "F" . Try Again.
John McDermott (4 years ago)
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. JM
ltlwatcher (4 years ago)
Do you know a robot named Baxter? It will replace lots of workers.
ltlwatcher (4 years ago)
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.
ltlwatcher (4 years ago)
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.
Ronald Stonecipher (6 months ago)
While the business may have started in a garage an investor still had to fund the project.
Meshak VB (4 years ago)
Blaming either party is retarded, because they are one in the same, and they are both bought and paid for.
Meshak VB (4 years ago)
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.
Meshak VB (4 years ago)
Your statistics are incorrect, that is all. Especially the one about credit card debt... it's about 28.5k over :-|
Meshak VB (4 years ago)
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.
Meshak VB (4 years ago)
Australia's minimum wage is $15/hour... I bet we could do $20... just sayin... On 40 hours a week (without overtime) it takes roughly $26/hour to live comfortably in a 3 person home in America...
Meshak VB (4 years ago)
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!?!
Earthshine Rush (4 years ago)
I wonder if Tea Baggers can comprehend this and the fact that they're shooting themselves in the foot.....???
Jeff L (5 years ago)
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.
Iheartagoodstory (5 years ago)
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.
danny c (5 years ago)
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.
2357Brian (5 years ago)
What's your point?
LandInbetween (5 years ago)
If the minimum wage was raised then it'll be raised again. And again. There you go, Brian.
LandInbetween (5 years ago)
Really? I thought the current administration and liberals usually blame the conservatives for everything. Let's try not to ignore reality.
Red Account 1 (5 years ago)
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.
vchervil (5 years ago)
stfu
Skylar091 (5 years ago)
I know this is childish, but, "their", not "they're" which is a contraction of "they are". Was your education well within your means?
Skylar091 (5 years ago)
Well, at least those are coming down...
SIASLbyRAH (5 years ago)
To pay for food, clothing, shelter, and the artifice needed to convince the obscenely wealthy and their lackeys to "let" people work for less-than-a-living wage.
Tiwaking Tiwaking (5 years ago)
They should show this video to American school kids
Joseph Dubeau (5 years ago)
Let them eat cake, she said.
Victoria (7 months ago)
Actually, she never said that.
judyleasugar97 (5 years ago)
Maybe people are trying to survive? They aren't paid a living wage? Think of that?
judyleasugar97 (5 years ago)
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?
Clanki (5 years ago)
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?
Clanki (5 years ago)
.... the conservatives are hanging them self's already in mass in ignorance like you yourself.
TheEqualizer2U (5 years ago)
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.
TheEqualizer2U (5 years ago)
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. Idiot!
Chris Sparks (5 years ago)
Great video!
Bill Roberts (5 years ago)
Boo just fuck off already. Judy has just shit all over you. Go home and wash up.
judyleasugar97 (5 years ago)
And I suppose you think everything you read on the internet put out by conservative think tanks is true. Now THAT'S pathetic. You are being played like a grand piano.
boohoo746 (5 years ago)
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.
judyleasugar97 (5 years ago)
You're the one making outrageous statements with no evidence. Still waiting.
boohoo746 (5 years ago)
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?
judyleasugar97 (5 years ago)
I would to hear specifically how Reich supports the counterfeiting of money by the fed? Specifically now, not just throwing a bunch of groundless accusations around like you people always do.
boohoo746 (5 years ago)
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.
boohoo746 (5 years ago)
Robert Reich is a rich stinking bastard. It's not like he takes a 1 dollar salary at UC Berkeley.
boohoo746 (5 years ago)
minimum wage should be at 1 trillion bajillion gillion dillion pillion dollars.
2357Brian (5 years ago)
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.
judyleasugar97 (5 years ago)
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.
Dave Ferris (5 years ago)
So what would you do with the people whose labor output is only worth $9 per hour?
judyleasugar97 (5 years ago)
Minimum wage should be in line with cost of living costs. That would be $12 or $15, at least.
Dave Ferris (5 years ago)
Why not make it $30? Or even better, why not $50 per hour?
judyleasugar97 (5 years ago)
$15 would be good, but at least $12.
Ronald Stonecipher (6 months ago)
When you raise minimum wage the cost is transferred to the customers more than the business. Basically it would just raise the cost of living anyway.
Dave Ferris (5 years ago)
What do you think the minimum wage should be?
judyleasugar97 (5 years ago)
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?
Dave Ferris (5 years ago)
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.
judyleasugar97 (5 years ago)
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.
Dave Ferris (5 years ago)
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.
judyleasugar97 (5 years ago)
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.
Dave Ferris (5 years ago)
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?
judyleasugar97 (5 years ago)
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.
LA nouveau (5 years ago)
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.
Dave Ferris (5 years ago)
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).
Dave Ferris (5 years ago)
I think you should do with less. Should I be able to take your wealth.
Dave Ferris (5 years ago)
Brilliant, if people rode more and walked less, we would have less obesity.
Dave Ferris (5 years ago)
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?
daveat191 (5 years ago)
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.
daveat191 (5 years ago)
You are not living obscene- that is not what Reich is saying.
daveat191 (5 years ago)
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)
judyleasugar97 (5 years ago)
Maybe not you specifically, I don't really know what your situation is, but there are plenty of one percenters who could do with a little less to save this country.
Dave Ferris (5 years ago)
It's easy to keep increasing our living standards, all we have to do is steal from others.
LA nouveau (5 years ago)
@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.
Bobbie Jean Pentecost (5 years ago)
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.
hotneo7 (5 years ago)
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.
judyleasugar97 (5 years ago)
Then you may have trouble finding renters, because rental property is a competitive market too. How about just being a little bit less obscenely wealthy?
ChaoticUtilitarianism (5 years ago)
... 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.
ChaoticUtilitarianism (5 years ago)
This is the central problem with capitalism and it seems to be well understood by everybody in the economics community except for modern western economists.
ChaoticUtilitarianism (5 years ago)
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)
ChaoticUtilitarianism (5 years ago)
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.
ChaoticUtilitarianism (5 years ago)
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)
ChaoticUtilitarianism (5 years ago)
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.
ChaoticUtilitarianism (5 years ago)
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.
ChaoticUtilitarianism (5 years ago)
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!
ChaoticUtilitarianism (5 years ago)
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.
ChaoticUtilitarianism (5 years ago)
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.
Trepur349 (5 years ago)
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.
Trepur349 (5 years ago)
40% of government revenue comes from the 1%. If they leave you will no longer have your beloved entitlement programs.
PrinceMyshkin22 (5 years ago)
You are such a piece of shit.
PrinceMyshkin22 (5 years ago)
And if they leave, then they shouldn't return. Like that piece of shit who co-founded Facebook, who gave up his citizenship in order to avoid taxes! I sincerely hope he never returns.
MrSteveSy (5 years ago)
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.

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