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GregoryMK -> RE: At what point do we turn (socialist) ? (10/20/2008 9:52:39 PM)
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Redistribution of wealth can occur in a number of way, tax policy is only one. One of the startling facts that often gets ommitted in most of these discussion is the real decline in individual incomes over the last 35 years or so, particularly when compared with the significant growth in individual incomes from 1944 through the early 70's. Note that the period from the end of WWII through the early 70's was the single largest sustained economic boom in history of the US. Well paid workers drive a consumer economy, they have the money to buy goods and services.
Another interesting analysis show how how gains in worker productivity has increased steadily whil median family iuncome has, since 2000 actually declined.
In 1965 CEO pay averaged 24 times the average workers income, in 1989 it was 71 times the average workers, with a shaor incrreas through the 90's, peaking at 300 times in the late 90's and 263 in 2005. This IS wealth redistribution towards the upper end of the scale, what we are seeing is a greater concentration of wealth among the top few. It is an ever starker difference when you realize that much of that income is no salaries, but rather in stock, dividen and options wich are taxed at a much lower rate than ordinary income. Add to the fact that for individual incomes over $100,000 you get a 7.5% tax break (no more Social seculrity taxes are taken out for income above that point) and you see tht current tax policy in fact is a form of wealth redistribution, but towards the top end of the scale. This does no even begin to consider the benefits of the many grants, subsidies and tax credits afforded to the coprorations, which in turn increase the capital gain & divdends earned by upper income earners. What we are seing in the US since the end of the post war (that is WWII) boom is an increasing disparity of wealth, increasingly fewer and fewer people own more and more of the capital assets in the US. Household wealth fgrew form $26 trillion to $50 trillion between 1995 and 1994, but the vast majority of that wealth (nearly 90%) was acquired by the top 25%.
One can argue many points from these data points, but one legitimate argument is that the loss of real (adjusted for inflation) income experienced by the average worker and the increasing concentration of wealth among the few have stifled real economic growth because the workers (aka the middle class) simply no longer have the money to spend. And even the most conservative commentator agrees that consumer spending drives our economy (accouting for about 2/3 of all economic activity in the US) Get the middle (working) class incomes up, and you could very well see a return to the sort of unprcedented economic growth we experienced in the post WWII decades.
The driving question is how to do that. The theory promulgated by Reaganomics was that by giving more money to the wealthy elites it would spur capital investment, and that this would then "trickle down" to the lower income brackets. The facts however do not bear this out, as real incomes have been flat or declined since the mid 70's. Reagan's policies were implemented over 20 years ago, and repeated under the Bush 43 administration, and we still see declining real incomes, in fact under Bush the have declined more rapidly.
Evidently we can;t have everyone earning the same, ther are variations in skill, training, responsibility and expertise that will account for a great many variances in income. The question is not whether we redistribute wealth in the US, but how and to whom. The policies of the last 30 years or so have greatly favored redistribution of wealth upwards, the wealthiest 25% having had the greatest gains both in income and overall wealth. Perhaps it is time we took a look at that and dtermined if that is the direction we want this country to go, to one of the poor, and the very very rich, or do we want to implement policies that encourage a greater share of the wealth to be owned by a larger proportion of the people. I beleive that the latter is the best policy, that sort of income and wealth distribution fueled the longest sustained period of economic growth the United states has ever seen. It built the interstatn higway system and put a man on the moon. It but cars in almost everyone's driveway, and enabled millions more to buy hoses rather than rent. We today ride on the coattails of that period, but over the last 20 years or more we have not seen the kind of growth that could be, had we a more equitable distribution of income and wealth.
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