Rich people are leeching of our economy.

[spindoctor]

Thought of the day.

Every now and then I hear economic experts on tv say things that simply don't add up.
There's been a lot of talk lately about the monetary crisis, and always the adagio is brought up that in order for the economy to flourish, there has to be a constant influx of (investment) money.

Being Mr. Middle-Class here, this gets me wondering who they are talking about. Me? Am I not returning my money into the economy? Damn straight I am and I have my checkbook to prove it. Like anybody I know, I spend more than I earn. I even bought my house on credit (mortgage...totally different), so I know for a fact that I will be in debt until my dying day. The government more or less forces me to invest what little money I can safe for my retirement and my (un)expected health situations in mutual funds.

Bottom line, I don't have money that I can withhold from our precious economy. The only people that can do so are the ones that actually make more money than they can spend.
Sure, these people too invest their money. But they don't invest purely for money that will eventually be returned to the economy like mine (in case of health issues or -ha ha- retirement). These leeching rich bastards (my latest theory is forcing me right into the Marxist corner) only put their money IN the economy if they are sure they can get more money OUT of it. So the economy (who is the economy? Isn't that us schmucks working for a living?) is forced to grow to keep up with the blood that's being sucked out of it at an ever increasing flow BY the investors.

So from a different perspective, it is not investing that stimulates the economy but it's investing that forces the economy.

Does it matter either way if the effect is the same? Yes it does, because we are being told (over and over and over) to make sacrifices to "the" economy. We have to accept lay-offs, downsizing, inflation, cost increases, and all things that seem to make every day life more of a struggle every day because "the" economy can not sustain us. When in fact, the only thing we are sustaining are investments. Every investment is a loan that has to be paid back eventually. THE economy can only sustain itself as long as there is more money coming in than is being generated!!???
Eventually all the money that THE economy generates will end up in the pockets of investors, aka the upper class, aka the others.

Doesn't that really put us in the middle of this giant pyramid game? Isn't this system eventually going to implode? Doesn't this mean that rich people are a greater burden to society than welfare moms?

I know, I should just take my pills and go to sleep. It's late.

[Mythsaje]

1. Sounds about right to me...

K&R

[LeftCoast]

2. How much money do you need to be considered rich?

Your post seems to be one step before blaming some unknown "Them" for all our problems. I mean, let's face it. If you're Mr. Middle Class here in America you have God-like wealth in comparison with a refugee in Darfur.

[sandnsea]

4. If you're in a housing project in America

living on food stamps, you have god-like wealth in comparison with a refugee in Darfur.

So what.

The top 2% of Americans are wildly rich, by any standard. And they got that way through investments, from the labor of the other 98%, and they even pay less taxes on it.

[LeftCoast]

6. Thank you for getting more specific

I agree that we should have a much more progressive income taxation system.

I have to disagree with the OP at least in the sense that the Middle Class doesn't have money to withhold from the system. In fact we do. People decide where they're going to put their 401k and IRA money and those choices will reflect the realities of the market.

[sandnsea]

8. Collectively, it would matter

I agree. In the short term.

I think he was saying that, generally speaking, the idea that true middle class workers can build wealth that affects the economy is an illusion. You aren't building wealth, you're building chits to turn in for your health care in your old age or some similar emergency. You need real wealth to invest to effect the economy, to be able to take more out than you put in. Most of the middle class is going to put all their wealth back in, in other words, give it to the top 2% sooner or later.

[spindoctor]

13. Yes, thank you.

That's exactly what I am trying to say.

Also, the choices you have managing the average 401k account are very limited (understandably so, better to leave it to the pros). What if I wanted to invest all my retirement money in sustainable energy or cancer research?

[LeftCoast]

15. OK. I'm a bit confused

You said that 'the rich' are leaching of (sic) our economy.

You defined 'the rich' as "anyone making more money than they can spend"

?

On to personal investing. Yes, 401k's are limited. However I was addressing the point in your OP that only the rich have market power. People in the upper middle class certainly have the ability to taylor their investments in the way you're describing.

My point here is that you're painting broad strokes with a big brush.

[spindoctor]

25. Let's not get hung up on grey areas

I think we have general consensus on who is rich and who is not.

If you have an IRA you might have a larger choice in funds. with a 401k you are usually limited to what your provider has to offer. In my case that does not include "green" funds.

Anyway, we're getting lost in irrelevant details here.

[sandnsea]

17. You can do that

I don't know why you think you couldn't. There are socially responsible mutual funds out there, others that focus on medicine or alternative energy. I've been suggesting people do that since the day after the last election. A few people have, most people preferred to try to make money.

[spindoctor]

5. I don't have to go to Darfur for that. Mexico is far enough.

And Mexico isn't in a civil crisis...quite yet.

So ok, this is the greatest country in the world and I'm better off because of that. Reaganomics work and my late night theory is wrong. But can you explain to me why?

[LeftCoast]

7. I think people misunderstood my point

I'm not defending anyone. I am trying to point out that the term 'rich' is highly relative.

[spindoctor]

9. I did give a definition

"Anyone making more money than they can spend"

So let's say anyone who does not have to see a bank in order to buy a (new) car or a house. I'm excluding people living in a shack and driving a jalopy but I have my eye on them too.

[LeftCoast]

11. Well how is that Middle Class?

:shrug:

[spindoctor]

14. huh?

We have a bad line here ;)

You asked me how I define rich people.

[LeftCoast]

18. My bad - let's try that again

If you're only making enough money to cover your day to day expenses you're not even middle class. You can't buy a home unless you can save some money above and beyond your daily expenses. Surely you're not saying that every homeowner in the US is 'rich'?

[sandnsea]

21. Over time, it gets spent back into the "economy"

They save, then they hand it over to gain an even bigger indebtedness on a house - the profits of which go to the same 2%. Only the 2% ever end up with real wealth beyond which they will never spend back in.

Let me add, I think the 2% have taken more than their share for a good 20 years now. But I don't know a better system, overall. Except to regulate them a bit more, and tell the truth about how the "economy" really works.

[LeftCoast]

22. People don't inherit money anymore?

:shrug:

[sandnsea]

24. Sure, to be given to the 2%

Right? You're either the 2% who will never run out of money, or one emergency away from giving them all your money. That's it. That's all there is.

[sandnsea]

10. 7.5 million - US millionaires

I don't think rich is relative at all, and I think it is very clear that most of us are never going to get there.

http://money.cnn.com/2005/05/25/pf/record_millionaires/

[LeftCoast]

12. You and the OP are working with vastly different definitions

See post #9

Edited to add: I think you and I are mostly in agreement about who is 'rich'.

[sandnsea]

16. Not needing a mortgage for a house???

You don't consider that rich?

[LeftCoast]

19. The OP defined rich as: "Anyone making more money than they can spend"

He or she also seems to have defined it as not needing a mortgage for a house. I'm not sure who we're talking about now, in terms of who's rich and who's poor.

[sandnsea]

20. It's clear to people who aren't rich

I don't know why you're having difficulty with the concept of being rich enough to buy a house without a mortgage.

[LeftCoast]

23. Well, that was just one of the definitions put forward

It also excludes far more people than the previous definition.

[spindoctor]

26. I also could say "anyone with an internet account"

Don't see too many of them in Darfur ;)

I will work on a solid definition of "rich" later, but don't let me catch you on the wrong side of the line!!

For the record, when I mentioned "making more than you can spend", I wasn't talking on month to month basis but rather in the course of a lifetime. Does anyone have some statistics on how many people die free of debt lately? I'm curious.

[Chulanowa]

32. We're not talking about Sudan's economy though, are we?

I don't live in Sudan. You don't, either. Neither does the OP.

So I ask... what in the flying fuck does Darfur have to do with this topic?

Yes, we have a higher standard of living than the people of Darfur. Did you know that the people in Darfur have a higher standard of living than the majority of people in Niger? Who in turn have a higher standard of living than most Palestinian refugees? Who in turn have a better life than the kids that glued your shoes together in China? I would bet that they have a better deal than someone else, too.

As fascinating as all this is, we are in fact talking about the United States economy. Not the Sudanese, Somali, Chinese economy. We are applying US standards to people in the US, and you know what? By US standards, "middle class" is "fucking poor"

[Deja Q]

30. True.

And that'll be used against the middle class as well, I should guess.

[sandnsea]

3. we are sustaining the investor class

Yes. Precisely.

Notice gas prices are lower this year, despite oil being at record highs.

Hmmmm.

The natives got restless. The stockholders had taken too much. So prices are lower, even though costs are higher.

Well that isn't what they taught us in high school econ at all!!

Right.

Yes, go to sleep now chldren.

[Deja Q]

31. It's still $3/gallon, and oil prices had dropped. Indeed,

I noted the price of oil going down by $2.64 last week (to about $72/barrel), yet the day after the price of gas went up 30 cents/gallon; to $2.95~$3.05 gallon.

[Phoebe Loosinhouse]

27. A corrupt management tier with the collusion of their BOD's are draining the coffers of publicly

held companies. To me, that's the problem in a nutshell.

Publicly held companies are supposed to exist in order to provide value to shareholders, not to be gigantic cookie jars that give gazillion dollar salaries to their CEOs who then turn around and put it in unregulated hedge funds in order to play 3 card monte with the rest of the monetary system.

The stock market is a large group hallucination and someday the little guy is going to wake up and say, "why am I buying stocks in companies that pay little to no dividends, are doing little to no new research and product development,and that decimate the American labor scene by outsourcing employment to third world sweatshops, just so I can pay the head honcho 100, 200 , 300 millions, (plus give him stock options in order to skew his booty even more)????

The stock market has been stagnant for years, but performance doesn't matter to the guys at the top.

[OzarkDem]

28. Krugman agrees with you

He says efforts to bail out the mortgage mess should be focused on homeowners, not investors and banks. Even Robert Rubin knew that the way to stimulate economic growth was to focus tax cuts on the middle class.

The US economy is fueled by consumer spending, not just investments by the wealthy. Its been proven time and again that allowing middle class consumers to suffer only hurts everyone. The current system isn't sustainable and they know it.

[spindoctor]

29. I'm glad to be in good company

But that wasn't quite the point I was trying to make.

Of course spending is required to keep an economy going. I imagine that spending is also the primary requirement for economic growth.

So are we overinvesting?

[satya]

33. "...only put their money IN the economy if they are sure they can get more money OUT of it"

IMHO, that is a brilliant argument against the "trickle-down" tripe they've been trying to sell us for years now. How do these free-marketeers account for the Carlyle Investment Group (to name only one) investing their money in Communist China instead of here? Just as you said, they'll only do it if they can make a profit, and the US is no longer a good investment, precisely because of their pillage-and-plunder economy.

Where you and I differ is that I think we CAN withhold money from their economy, but it ain't gonna be easy. In my utopia, we would form co-ops to produce the food we needed locally and our grocery dollars would go there. And we would invest the money we now spend buying their gasoline in another co-op to buy and maintain old diesel vehicles that would run on the biodiesel fuel yet another co-op produced from algae, hemp or some other non-food crop. These activities would also reduce CO2 emissions.

And if enough of us did this, we'd be rich in the way that matters -- instead of spending our lives working for them to make just enough to buy the crap they want to sell us, we'd be working just enough to produce what we need. This is why Corporate America has invested so much into telling us what we "need" and that we can't do it without them.

[WHAT]

34. My question, similar to yours...

is the effect the "rich" have on depletion of resources. In the carbon footprint thing, I would guess that the top tier, economically, has an enormous impact environmentally, what with private jets, multiple homes, 40,000 sf homes, etc. Yet, I've never read anything about it wrt the carbon use; they compare countries and as in:

sandnsea Donating Member (1000+ posts) Click to send private message to this author Click to view this author's profile Click to add this author to your buddy list Click to add this author to your Ignore list Fri Aug-24-07 02:26 AM
Response to Reply #2
4. If you're in a housing project in America

living on food stamps, you have god-like wealth in comparison with a refugee in Darfur.

So what.

The top 2% of Americans are wildly rich, by any standard. And they got that way through investments, from the labor of the other 98%, and they even pay less taxes on it.
Belief in a cruel God makes a cruel man. - Thomas Paine

wealth is freely associated with standard of living but not narrowed-down to class consumption.

That's what I wonder about. If the consumption practices of the top 2% were wiped-out, would there be an overall increase in the standard of living while decreasing resource depletion. Often, it seems, population increases are implicated in scarcity, but I don't know if that is true.

I wish someone would study that and write about it in layman's terms. Otherwise, I don't care about class distinctions...I guess I focus more on an individual's uniqueness.

[Johonny]

35. I wrote a post on this last week

The current ownership society has shrunk the amount of my paycheck available to start consuming is less than 30 %. And I don't have any debt. And my fear of lay-off and health crisis prevents me from not trying to save as much of that 30 % for an emergency.

I would point out thanks to the ownership society I now own my own retirement. Which means I have to invest 15.3 % of my paycheck into the stock market every week.