Wealth 85 richest equals wealth 3.5 billion poorest.
- Thread starter mister dog
- 450 comments
- 16,827 views
- 1,033
uuhh, yes it will. The math is really very simple. 10 million dollars in income for wealthy families (it's $247K in pre-tax income, not $125K) will generate 4.97 million dollars in consumer spending. 10 million dollars in income for the average family will generate 7.8 million dollars in consumer spending.
You're making the mistake of focusing on one rich family vs. one poor or average family when the focus should be on one economic class in comparison to another.
They don't?
http://moneymorning.com/2013/05/01/check-out-whos-hiding-32-trillion-in-offshore-accounts/
There is much debate over whether private investment or consumer spending do more to drive the economy, but Tesla is a bad example if you're trying to make a case for private investment as much of the success Tesla has had comes from public investment.
Still, even if you believe that $1 invested is better for the economy than $1 spent there is no way 100% of the money the rich aren't spending is getting pumped back into the economy through investments so you're are still getting less money back into the economy with a wealthy household than you are with any other type of household.
- 87,559
- Rule 12
- GTP_Famine
Family, not individual. That's $247k/2 = ~$125k average pretax wage per wage earner; that's not rich.
Okay - you're forgetting about tax again! There's $2.4m in federal income tax to the rich guys, which makes it $7.4m in economic mobility in consumer spending and social programs.
Or is there?
You see, the article to which you linked provided more information than that and you seem to have been distracted by headline figures. It breaks down "spending" into 8 categories and the lead table merely adds them up. Three of the categories are housing (paying rent or your mortgage and utility bills), schooling (paying for your children's school where not public, plus any costs for trips, meals and extracurricular activity) and health (health insurance bills) - this is all money that largely circulates, with growth in line with inflation.
The things that actually represent consumer spending are food, transport, alcohol, entertainment and "other" - things you want to buy, but are not required to (yes, even food; there is a minimum level of food which is essential - after that it's choice). "Other" is defined as "restaurants, bars, personal insurance, personal care products, apparel, services, tobacco, cash contributions, etc."...
Let's look at those numbers:
Low income - $3,748, $4,019, $145, $1,098, $3,571 - Total $12,581; 51.2% of net income
Average income - $6,458, $8,293, $456, $2,572, $10,759 - Total $28,538; 44.8% of net income
High income - $13,055, $17,756, $1,311, $6,546, $36,215 - Total $74,883; 39.9% of net income
Well, isn't that looking a lot closer? Suddenly, the low income guys are generating $5.1m in consumer spending from their $10m, average income guys are generating $4.5m and high income guys are generating $4.0m. Oh snap, I forgot about tax again! The low income guys take $4m of tax, the average income guys take none and the high income guys give $2.4m, so now it's $1.1m generated by low income, $4.5m generated by average income and $6.4m generated by high income.
Yep, for every $10m earned, low income guys are putting only $1.1m of it back into the economy through tax and consumer spending, while high income guys are putting $6.4m of it back.
Oh, wealth inequality, you rogue!
Actually, that's your exact mistake - assuming that the numbers from one each of low, average and high income families are directly comparable, not the totals from those families.
There are way more low income families than average ones, and way more average ones than high income families - but both your low and average income families sit in the bottom 50% of all taxpayers (less than $34,823 personal income), while your high income one sits in the top 10% (more than $120,136 personal income).
There are about 4.5 of your low and middle income families per high income family - let's say it's 3 low income and 1.5 middle income:
Per $10m net income
Low & middle income families: $4.9m consumer spending (49%)
High income families: $4.0m consumer spending (40%)
It's as if we all value our leisure roughly equally or something and wealthier people are prepared to pay a little more. And they've paid federal income tax into the economy too. Oh, and remember that $2.4m of the low/middle income families' net income comes from tax. They've only actually earned $7.6m, while the high income families earned $14m and paid $4m in tax - presumably $2.4m to keep the low/middle income families in beer and tobacco and $1.6m directly to Uncle Sam.
Those evil, selfish bastards.
Danoff
Premium
- 34,039
- Mile High City
That kind of black market activity is only available to the absolutely insanely rich. Most of the people you're talking about, and which are classified as "rich", absolutely can't afford to play those games. Games which are created, btw, by the government. Nobody would hold their money in offshore accounts if it weren't for government policy, all of that money would be invested. Just imagine how much growth it could stimulate.
I'm confused. When you refer to public investment are you talking about publicly traded shares in the stock exchange that are bought by individuals (as opposed to government), or are you talking about some sort of government (another type of public) subsidy?
Rich people do invest in non-publicly traded companies too, they're called venture capitalists (you've probably heard the term). That term basically means investment in a company that's not traded on the exchange. I personally own yet another type of investment vehicle that rich people engage in that is actually neither of those things - a private trust (not publicly traded) whose goal is to make large real estate transactions that enable businesses to lease office space. There is yet another type of non-stock investment vehicle that rich people engage in as well - private trusts whose goal is venture capitalism. This is for rich people who can't afford to be venture capitalists by themselves, but who can pool together enough money with like-minded people that the group can finance budding companies.
I could go on, but I have a feeling people are falling asleep.
That's only true if you violate the principles of economics. You're making the classic mistake of looking at economics as a closed system of fixed wealth. There is actually an excellent article I read long ago (I'll never find it) that criticized bill gates for creating his charity foundation. How could they possibly criticize gates for that?
Because Gates's charity foundation does not create wealth, it distributes it. But when gates takes money and invests it in businesses, he has a history of creating far more wealth (out of thin air) than he put in. That means jobs, products... economic growth! Not economic stagnation... growth. Gates can do far more good for people by investing in his own business ideas and employing armies of people than he can by giving his money away. The article was actually iron-clad. Gates clearly does the most good for humanity when he works for his own profit.
Edit:
You might be referring to the laughably horrific half a billion venture capitalist loan to Tesla by the US government. It's pretty much a textbook example in how not to be a venture capitalist. Of, course since it was paid for by tax dollars, it is stupidly executed venture capitalism financed by the rich (through taxes), as opposed to intelligently executed venture capitalism by the rich. Tesla is an awesome example of why the government has no business playing that role.
Last edited:
- 1,033
What? Those categories are absolutely consumer spending. I know because they are officially tracked as consumer spending. What do you think happens when you pay your mortgage or health insurance bill? Does that money somehow not make it back into the economy? If you spend $100 on school supplies does that money go to some magical place where it's never seen again?
All 8 of those categories are consumer spending. Removing the ones you deemed unworthy only works to skew the numbers in your favor as the wealthy spend more than others on unnecessary expenses.
Once again, only focusing on the personal income tax only tells part of the story. All in (or at least much closer to all in) the numbers change quite allot. The taxes by quintile show as such
$0-$20,592. 12%
$20,593-$39,735. 19%
$39,736-$64,553. 25%
$64,554-$104,086. 28%
$104,087-. 31%-43%
Our rich family would be paying 34% in taxes by the way.
http://www.businessinsider.com/no-the-rich-do-not-pay-all-the-taxes-2013-12
http://fas.org/sgp/crs/misc/RS20811.pdf
So 10 million in income for each of our three families break down as such. Note that the number doesn't include taxes as spending because it's not tracked as consumer spending.
poor: 8.8 million in after tax income with 12.425 million back into the economy through consumer spending (including things like food stamps and social security).
average: 7.5 million in after tax income with 5.85 million back into the economy through consumer spending.
rich: 6.6 million in after tax income with 3.28 million back into the economy through consumer spending.
You can try and change the rules on what counts as consumer spending or by trying to say that only earned income counts, but the official numbers use all types of consumer spending and include income gained through programs like welfare.
- 87,559
- Rule 12
- GTP_Famine
Oh well that's fine then.
Consumer spending = spending on consummables. A house, a car and a private tutor are not consummables.
Home payments are, as I mentioned earlier, amongst a group of economic activities that see money circulate - rather than consumption and wealth creation. Your mortgage payment isn't money that is spent on anything - it services a debt. In general, depending on your mortgage terms, you may end up paying back 30% more than the value of your home... or 0% - I don't know if you noticed the 2008 economic crash precipitated by sub-prime mortgage lending, in which money was loaned to individuals to buy houses who could ill afford the repayments, missed their repayments and had their houses repossessed, whereupon they are usually sold at auction for considerably less than the value of the outstanding debt resulting in a loss for the mortgage lender at all?
At best, service payments like these are used to pay debts and invested in future debts - debts (through loans) are in fact how an awful lot of public services and property come into existence. You say how much value will be in the property and bet you can create that much over "x" years, so someone lends you the money to buy the property on the promise that in "x" years you've paid them back and both they (through interest) and you (through the increase in value on the property) make money, creating wealth.
Funny how it doesn't work the other way. Including service and debt payments and excluding tax only works to skew the numbers in your favour - and since it suits you to do so, that's what you do. It's not your fault - that's how IBTimes presented the numbers so you'd think that, but they did at least include a breakdown to show what's consummable spending and what isn't.
Incidentally, when the wealthy spend more on unnecessary expenses, they also pay more sales tax. Have fun with that one.
Quite, but since federal income tax is the only one that's easy to work out - in which state are your three families residing? How much are their homes worth? Do they have a pension? - it's the only one I included and, unlike you and IBTimes, stressed that I was only including that one just to show how badly bent the figures are if you forget tax.
That's tax contributions. What about tax deductibles, breaks, refunds, rebates and credits? Your low income family is eligible for more than $6k a year for having two children! Your Business Insider link even repeats for you that, though your lowest quintile is eligible for around 2% federal income tax, they actually have a negative federal income tax bill due to entitlements! They still include that wee blue bar on the chart though, as part of their 12% figure for that group, probably because they only want to tell you about tax burden, not actual taxation...
Hey, guess who forgot to include taxes again?
Low income: 12.4m net income (earned + tax), 12.4m back into the economy (consumer + service spending)
Middle income: 10.0m net income (earned, no net tax), 8.3m back into the economy (consumer + service spending)
High income: 6.6m net income (earned - tax), 6.7m back into the economy (consumer + service spending + tax)
Gosh darn that wealth inequality.
- 1,033
No, consumer spending is money spent by households on durable and nondurable goods and services. A car, is a durable good, and private tutor is a nondurable service. If you take issue with that, tell one of your american friends to write his congressmen. Until then, you don't get to just change definitions.
Now, you are correct when talking about housing. I was mistaken as housing is tracked under investments as long as you are talking about the homeowner. Renting a property counts as investment on the part of the owner but the rent itself it consumer spending on the part of the tenant.
If we really wanted to go in depth we could talk about how the housing market breaks down into investment vs. consumer spending and a myriad of other variables that could change the outcome of money flowing through different economic classes. However, seeing as we can't even agree on which taxes to count or how to count them. It seems a bit futile.
So, I'll leave you with some articles on the subject.
http://www.businessweek.com/magazine/how-inequality-hurts-the-economy-11162011.html
http://thinkprogress.org/economy/2014/02/27/3339061/imf-inequality-growth/
http://www.huffingtonpost.com/2013/12/17/income-inequality-economy_n_4460725.html
http://money.cnn.com/2013/09/25/news/economy/income-inequality/
Danoff
Premium
- 34,039
- Mile High City
First one has nothing explaining why inequality is bad.
This isn't even about why it's bad.
This was your argument, which was debunked thoroughly.
That's not even on topic.
- 28,470
- Windsor, Ontario, Canada
- Johnnypenso
In one of the above articles I noticed this statistic:
Asians had the highest household income ($68,600), followed by whites ($57,000), Hispanics ($39,000) and blacks ($33,300).
If you listen to CNN, MSNBC etc. or read the Huffingandpuffington Post or the NYSlimes, the U.S. is a nation plague with racism, so how is it that Asians have the highest household incomes? Does this mean they are the subject of reverse racism? Americans treat Asians better than other races? Better than white? This is an amazing conundrum.
Asians had the highest household income ($68,600), followed by whites ($57,000), Hispanics ($39,000) and blacks ($33,300).
If you listen to CNN, MSNBC etc. or read the Huffingandpuffington Post or the NYSlimes, the U.S. is a nation plague with racism, so how is it that Asians have the highest household incomes? Does this mean they are the subject of reverse racism? Americans treat Asians better than other races? Better than white? This is an amazing conundrum.
- 23,800
- Philippines
Land of opportunity. Asia's best and brightest migrate to the US looking for a better life. To make it, given the high income inequality between regions/countries, you need to be hardworking, intelligent and relatively well-off (already) to afford a ticket and processing for a green card... all traits that would lead you to succeeding more wherever you go.
So, in effect, you're comparing the top 1% of Asian workers to the full spectrum of white and hispanic workers.
Then there's the clannish nature of most Asian subgroups and nationalities, which means they tend to seek each other out and form support networks.
How badly do migration and currency exchanges skew statistics? Given our college graduates can go to the US or UK as basic caregivers and still earn more than they would working at their degree course job here... and that our doctors emigrate there to become mere nurses... pretty badly, I'd say.
So, in effect, you're comparing the top 1% of Asian workers to the full spectrum of white and hispanic workers.
Then there's the clannish nature of most Asian subgroups and nationalities, which means they tend to seek each other out and form support networks.
How badly do migration and currency exchanges skew statistics? Given our college graduates can go to the US or UK as basic caregivers and still earn more than they would working at their degree course job here... and that our doctors emigrate there to become mere nurses... pretty badly, I'd say.
- 17,865
- 509
If you listen to CNN, MSNBC etc. or read the Huffingandpuffington Post or the NYSlimes, the U.S. is a nation plague with racism, so how is it that Asians have the highest household incomes? Does this mean they are the subject of reverse racism? Americans treat Asians better than other races? Better than white? This is an amazing conundrum.
Please don't stereotype the entire country based on popular images from the more... southerly states. While racism is in the media often, the US is one of the most culturally diverse countries on the planet. And the more homogenous nations, like Japan or China or Finland, tend to be far more xenophobic than what the general consensus in the US seems to be.
For the economics of it, @niky covered it pretty clearly with the 1% bit and clannish nature, which leads to an odd bit of stereotyping of its own. Examples being Vietnamese nail parlors, Indians running convenience stores, etc.
- 28,470
- Windsor, Ontario, Canada
- Johnnypenso
I thought it was pretty obvious that I was being facetious
. If the "man" (white) were keeping everyone down as the leftist media like to make you think, then Asians could not possibly be ahead of other cultures economically, the man would have found a way to keep them down. The fact that Asian are above average economically, kind of blows apart the "racism is keeping us down" argument that is prevelant among some talking heads.
Danoff
Premium
- 34,039
- Mile High City
Then again, how many millionaires and billionaires in America are Asian?
At this point, unless you start up a new Apple, I'd think it's pretty difficult to get in on the ground floor of the 0.1%.
It doesn't matter. I don't know why anyone is concerned with what anyone else has. You still have lots of opportunity to better your own situation. Only 0.1% of the population will ever be in the top 0.1% of earners. There will not come a day when 50% of us can be in the top 0.1%.
- 23,800
- Philippines
Oh, not saying it matters. Just noting that while we do export highly skilled professionals to the US, we don't export billionaires.
Those with the aptitude to become billionaires are already billionaires at home. No need to migrate to a place where the money is already concentrated in other hands.
Those with the aptitude to become billionaires are already billionaires at home. No need to migrate to a place where the money is already concentrated in other hands.
- 23,800
- Philippines
It matters only if you want to become a billionaire.
You look for opportunities where there is untapped potential or growth opportunity... which you'll find a lot of in developing markets, but not so much of in developed countries, not unless you have something fundamentally, absolutely new.
This is the way the auto industry is growing. Nobody wants to expand in Japan. Nobody who isn't already in the US wants to build in the US in any serious capacity.
No, they're all looking for where the bar hasn't been set too high, and the competition isn't as entrenched.
You look for opportunities where there is untapped potential or growth opportunity... which you'll find a lot of in developing markets, but not so much of in developed countries, not unless you have something fundamentally, absolutely new.
This is the way the auto industry is growing. Nobody wants to expand in Japan. Nobody who isn't already in the US wants to build in the US in any serious capacity.
No, they're all looking for where the bar hasn't been set too high, and the competition isn't as entrenched.
Danoff
Premium
- 34,039
- Mile High City
I disagree, I think they're looking for places where the unions haven't strangled cheap labor. It's true that you're more likely to succeed someplace where there's less competition. But if you're hoping to make your fortune in children's toys (for example), you don't have to concern yourself with the annual earnings of the CEO of Exxon. Sounds like you were making a different point.
- 17,865
- 509
And this is why I shouldn't post right before going to bed, my bad.I thought it was pretty obvious that I was being facetious
- 24,553
- Frankfort, KY
- GTP_FoolKiller
- FoolKiller1979
I would think the primary reason for not seeing large numbers of Asian billionaires in the US is that as immigrants they are not as established and known. As natural born descendants of immigrants there appears to be a larger proportion who are in science fields, such as medical, research, engineering, etc. No one blinks an eye at an Asian person in a lab coat. In a suit and people assume they are an overseas executive.
There is a degree of stereotyping in that, but I have met few Asians in the business world, with the exception of the IT guys. I don't know if the stereotype leads to societal expectations or if there is a cultural expectation, but that is the anecdotal view I get from Kentucky. Listen to an Asian comedian, such as Jo Koy, and you'd think the mothers pressure their kids to be nurses.
I wish that study broke up ethnicity more than it did. Asians could mean Indian, Middle Eastern, Russia, and much more than just the eastern nations that we all picture. White also encompasses a large group as well, from Germanic, Anglo, Norse, etc. It may also include Jewish and other generic and/or cultural differences among the races, and that would create a whole new skew, as well as have your top earners be millionaires/billionaires.
I must admit, the Hindu number surprised me, but I'm not aware of having met anyone of the Hindu faith. Looking at this, and comparing groups to the national average, if some sort of ism were to be claimed, it would be equally against Jehovah's Witnesses.
One thing I notice: The national average breakdown does not look to be distributed in any drastic way. Perhaps the inequality is just at the extremes. The statistical analysis in me says that sounds about right.
Sorry to to be off topic, but reading some of this thread is like watching a boxing match lol. bammmm, pahhhh, booomm, bakkkk,,,,,,bammmm bammmm bammm bammmm. Look like Famine is the heavy weight tough guy here lol 
Anyways, very interesting responses from all sides.
Anyways, very interesting responses from all sides.
- 23,800
- Philippines
I'd think it would be because the lower castes/classes don't typically travel away from India... most Indians I've met who've migrated tend to be middle class or higher.
Be interesting to separate the Arabic Muslim numbers from the Black Muslim numbers, though I don't think that would change the numbers all that much.
Don't know where the Oriental races would fall on that graph. Many Koreans are actually Catholic.
- 13,907
- Adelaide
- Neomone
Australia is pretty far to the heterogenous end, and is FAR more xenophobic and racist than Japan is. Massively so.
Homogenous countries tend to get away with pushing more xenophobic media, but if you actually meet the people they're on the whole pretty cool, because they're secure about their place in a country that's full of other people just like them. Unlike Joe Whitey in Australia, who's pissed off because his suburb is being invaded by insert racial epithets here.
Last edited by a moderator:
- 9,262
- Corsham
- lipming
I've always found Australian xenophobia very hypocritical. The majority of Australian citizens are descendants of European convicts and immigrants who settled within the past 400 years. The Aboriginal population has been there for as much as 40,000 years.
BHRxRacer
(Banned)
- 1,214
If they’re doing nothing, they deserve nothing. There is no such thing as a “right” without an obligation. If you want to benefit from those equally distributed goods, you’re obliged to do the best job you can, as others are doing.
So you’re basically saying yes, material rewards will fix this problem. Well, that’s what I think too. I don’t know why you’re arguing J
It still exists, but your benefit from it will be through recognition not money/material.
..Cutting down a tree? Whatever it is the punishment they serve now in most countries. I don’t know where you live or why it’s legal. If a tree is kept somewhere, it’s there for a reason. If you recycled materials you already own into something INNOVATIVE, you’re obliged to submit the “design” to the government. If you recycled It to something that already exists (ie chair into desk), then no harm is done. Keep it.
Keef
Premium
- 25,155
- Dayton, OH
- GTP_KeefRacer
- GTP Keef
What if I don't feel like it? I already own it and after I recycle it I still own it. That would be like getting my income taxed twice which is stupid.
I know a couple Hindu fellas. Their names are Rajesh and Rashaw Soin. I help keep the bugs off their jets and the birds out of their hangar at DAY.
I must admit, the Hindu number surprised me, but I'm not aware of having met anyone of the Hindu faith. Looking at this, and comparing groups to the national average, if some sort of ism were to be claimed, it would be equally against Jehovah's Witnesses.
One thing I notice: The national average breakdown does not look to be distributed in any drastic way. Perhaps the inequality is just at the extremes. The statistical analysis in me says that sounds about right.
Last edited:
- 24,553
- Frankfort, KY
- GTP_FoolKiller
- FoolKiller1979
Intellectual property is not recognized if you force an innovator to turn over his ideas.
Kentucky, where people own dozens of acres of their own land and are often allowed to do with it as they please. I grew up on 14 acres of wooded land. I can't count the number of trees I cut down for firewood, or as a kid, to just prove that I could.
We go camping and we collect firewood from the woods. Want smoke for your food, get some fresh, moist wood. That means cutting up branches from a living tree.
Oh wait, I see the problem. We own property. That's a sin in your fantasy world, unlike theft at gunpoint.
Obliged? I have to take the time and effort to send you the the designs for my awesomely new ergonomic chair?
Do you know how much inadvertent innovation goes on everyday? "I accidentally put nutmeg in my pancakes when I meant cinnamon. Hey, that's good. I'm going to do that from now on. First, I need to write it down and submit it before the secret thought police show up at my door." People will not think to do it all the time. You'll be throwing grandmothers out for failing to meet their "obligations."
Similar threads
