[SinyugiN]

DST: Inflation reflects the

relative increase of the index of prices in the US, which includes necessities and the average of most, if not all,

goods. I don't know if/how real estate/rent prices are factored into that figure, though. If not, I will concede

that it would be much higher. It's just that inflation is the base number we use to determine the average increase

in the price of all goods in the economy, so I wanted to use an official number rather than one of those statistics

that people like to throw around until no one remembers how they arrived at it (cost of living doubles every 11

years...How long of a period did they measure that for? What did they measure as the cost of living? What

geographic location did they use? etc.). If Big Tim could give us the data on how they arrived at that number (I

reversed the math to get the average cost of living increase of 6.5% per year from the data provided of a $16

minimum wage in 2005 from a $.25 minimum wage in 1938; seeing as most stock portfolios have been lucky to see a gain

of 6.5% in the past few years (I concede that the stock market has increased 10-12% over the long term), I question

the size of that number because then nobody would invest if they were losing money relative to the cost of living

increase).

[BrodiKennedy]

P.S. I invite all manner of

criticism for this...I love a good fight.

[SinyugiN]

Tim, you make a fair

argument.

I forgot one more point:

We are also assuming that, at minimum wage, we are only working 40 hours

per week. I forgot how bad of an assumption that was...and actually can't believe I did because I work a hell of a

lot more time than that. If I got paid minimum wage for the hours I work, I'd be making not just the $11,000 I

estimated before but more like $17,000 or so. That is another assumption we are making.


Again, I am not

saying that this is great that everyone could afford to live if only they sacrificed their life. I just think there

is a skill and a will problem: the skill being the knowledge and ability of our government to do the best they can

to ensure that all have the opportunity to live a happy life, and the will being the determination to do what you

have to do to live the best life you can by putting in the time and effort to do so.


I think we need to see

both sides because one side pushes for social change, while the other pushes for people to help themselves. Blaming

the government when you control your own destiny (this is, after all, the land of opportunity) is bad, but so is

ignoring the problem when the laws are stacked against the poor (try getting a place to live if you do not already

have one; try finding a job if you do not have a place to live - such a catch-22).

Overall, with these

conflicting influences, I think that the government is doing the best that they can right now. However, it would be

nice to get some economists working with the government and other organizations to hypothesize some appropriate

solutions that wouldn't shake the economic foundations of United States capitalism.

[DoctorDulitlBest]

Your idea here idea is

localization (a more general word than "federalism") of societal cooperation, is it not? This principle needs to be

rigorously applied as appropriate. Certain standards can be even nationalized without Federal command and control

(as was the case with Reagan's block grant program).

At the same time, the power of unified societal

cooperation should not be underestimated. But this simple concept gets translated into bloated, hopelessly complex

inefficiencies somehow. What is responsible for this?

[BrodiKennedy]

Well...the general idea was that

the average "New American" didnt have alot of trust for a bloated and disconnected "Big Brother"style government

that was located many miles away.The purpose behind having a local government at all was that a local government can

identify and respond to the needs of the local people with far greater efficency that a federal government located

twenty days ride away.Try getting federal authorities to respond from Washington D.C. to Oregon or California or

Washington in 1890.It took many weeks and there was absoulutly no gaurantee that anything would come of it.All the

federal types were from the east coast and had thier own issues to contend with.

A local,county or state

agency,with federal guidelines to follow could respond much more quickly and have a better grasp on the local

political climate and conditions.Things that some city dweller from D.C. wouldnt have a clue about.Even in the

1970's folks in D.C. wondered to themselves if Oregon was still the "wild west." They had no idea that us folks on

the west coast (with the exception of hollywood) had real flushing toilets and electric lights.In 1983 I was in

Virginia and was asked quite seriously by a woman at a wedding reception if there were bears in our

neighborhoods.She had no idea that we had paved roads here in the west.I had a tough time believeing that people

could be so disconnected.

That disconnection is dangerous.Putting too much influence and power in the hands of

the terminaly stupid can have dire rusults for everyone.One need only look at the current mess in the middle east to

see that happening.centralizing government was what our founding fathers hopped to avoid.But we got it anyway.And

its very,very expensive.

[Unonounaple]

Let me begin

by saying that I agree with everyone is saying (I want world peace and an end to world hunger like everyone else),

but I do want to bring another side to the discussion because people start to take everything for granted or as

necessary when it is not.

There are a few things we are assuming every American is entitled to that is not

necessarily so...which I find to be ironic since I'm considered the "naive youngin'" compared to the other posters

on here. Some food for thought:

1. Using a basic economic model, raising the minimum wage would simply cause

employers to raise their prices accordingly, leading to inflation. What does that mean? Higher wages would lead to

higher prices, which would negate the point of giving higher wages in the first place.

True but do you have

an alternate suggestion? Food stamps and subsidised housing? We have that already and it is a crime ridden

disaster.

2. A lot of our estimates are assuming that several things are basic necessities

that simply cannot be.

a. A car - I have worked my whole career (outside of a 2-month period when my mom moved,

I came back from college, and I worked at my old job) without the use of an automobile. I use the Metro in DC, and I

walked to work/school every day since I was 15. You could also buy a nice bike and ride to work.

There

is no bus or transit system in the city I live in. Owning or at least having access to a car is a necessity here. In

large metro areas you are probably better off without a car. I've been in Washington DC and New York City many

times and I wouldn't even consider driving there. However, those transit systems are funded in all or a major part

by tax dollars. The more riders the more tax dollars needed.

b. Health insurance - Although

most countries have a socialized healthcare system, the US does not. What does this say about our government? They

must believe that health insurance is a privilege, not a right. After all, they won't fit the bill (I am

exaggerating here for effect; I know many Republicans' stands usually reflect the fact that the health system would

weaken or crumble if supported by the government - a valid worry). I have a neighbor that pays for her health

insurance, and I have a colleague whose parents are not covered at all and are hoping they get by until their

Medicare kicks in. Another point: health insurance is just that - insurance. The big insurance companies are betting

that you won't get sick, while you are protecting yourself in case you do. Instead of giving these companies

hundreds of dollars per month, put that money into a Health Savings Account or some other account and save it for

when you actually do get sick and have to pay a $1XX or $1XXX bill. Remember: insurance companies wouldn't be in

business if they weren't making money. They are just taking my money because I never get sick, and therefore they

are laughing at me because I give them money for no reason (for now, of course; I do agree that health insurance is

a good thing - I am just giving a different perspective).

who considers qhat the government decides as a

valid point? You do have a good point about the health savings acocunt but that is gambling too. I had cancer when I

was 21, the cost was astronomical. Without insurance I'd still be paying for it. I guess with insurance I am

too.

c. Independent residence - People seem to assume that everyone has the right to live by

themselves, one roomate, or a nuclear family. This is not the case. Once again, it is a privilege and not a right.

Most cultures have huge families living under one roof, and many countries are so overpopulated that dozens of

people live together and never get any time alone. In fact, in many Arab countries, it is perfectly natural for

someone to just space out and not talk to anyone for hours even though they have 10 people around them (introverted

time, anyone?) simply because they have no alone time - ever. If people would just group together, that rent

would go from $1,200 per month to $600 to $400 to $300, etc. This was true in the United States as well in the early

20th century. My history books in high school contained several pictures of a 3-person family living in a house no

bigger than my living room while the man worked 14-hour days 7 days a week in a polluted factory that was slowly

killing him to keep their home and put food on the table. These apartment units had no sewage, and the smell from

excrement flooded the building. Apparently, we as a society feel we deserve much more than that even for the poorest

workers (and I am sure that we do, but we must remember what things were like before so we don't take everything

for granted).

That's a good point but I can't really imagine anybody willing going back to those

conditions. Even if the government tried to force it, I don't think it would happen quickly. However, economic

factors may be forcing those type living conditions on us over a period of time.

3. Using the

4.01% inflation rate and a 25% tax rate (it is 30% for capital gains, but I'm using 25% because it fits easier in

my example as you'll see in a moment), an 8% return after taxes would be 6%, minus inflation would be about a 2%

real return. If inflation is higher (slightly lower than 6% at a 30% tax rate), your panhandler is right.

Ironically, the return on most investments (Savings accounts: almost 0% until the ING account, which is sitting high

at 3.X%; CDs, bonds, etc.: can vary from 2-5% give or take) is a lot lower than that. In other words: Are you saving

money or losing money? You're better off buying a house and letting the price increase offset inflation. Maybe

people shouldn't laugh at people with coin collecting hobbies... :-P


There's probably more, but I'll wait

until someone counters this because I'm getting tired.


Mtnjim: Thank you! It's been a while, and I

thought I'd come back and do some writing. I need a little escape from the stress of recent life events.

[SinyugiN]

Let me begin by saying that I

agree with everyone is saying (I want world peace and an end to world hunger like everyone else), but I do want to

bring another side to the discussion because people start to take everything for granted or as necessary when it is

not.

There are a few things we are assuming every American is entitled to that is not necessarily so...which I

find to be ironic since I'm considered the "naive youngin'" compared to the other posters on here. Some food for

thought:

1. Using a basic economic model, raising the minimum wage would simply cause employers to raise their

prices accordingly, leading to inflation. What does that mean? Higher wages would lead to higher prices, which would

negate the point of giving higher wages in the first place.

2. A lot of our estimates are assuming that several

things are basic necessities that simply cannot be.

a. A car - I have worked my whole career (outside of a

2-month period when my mom moved, I came back from college, and I worked at my old job) without the use of an

automobile. I use the Metro in DC, and I walked to work/school every day since I was 15. You could also buy a nice

bike and ride to work.

b. Health insurance - Although most countries have a socialized healthcare system, the US

does not. What does this say about our government? They must believe that health insurance is a privilege, not a

right. After all, they won't fit the bill (I am exaggerating here for effect; I know many Republicans' stands

usually reflect the fact that the health system would weaken or crumble if supported by the government - a valid

worry). I have a neighbor that pays for her health insurance, and I have a colleague whose parents are not covered

at all and are hoping they get by until their Medicare kicks in. Another point: health insurance is just that -

insurance. The big insurance companies are betting that you won't get sick, while you are protecting yourself in

case you do. Instead of giving these companies hundreds of dollars per month, put that money into a Health Savings

Account or some other account and save it for when you actually do get sick and have to pay a $1XX or $1XXX bill.

Remember: insurance companies wouldn't be in business if they weren't making money. They are just taking my money

because I never get sick, and therefore they are laughing at me because I give them money for no reason (for now, of

course; I do agree that health insurance is a good thing - I am just giving a different perspective).

c.

Independent residence - People seem to assume that everyone has the right to live by themselves, one roomate, or a

nuclear family. This is not the case. Once again, it is a privilege and not a right. Most cultures have huge

families living under one roof, and many countries are so overpopulated that dozens of people live together and

never get any time alone. In fact, in many Arab countries, it is perfectly natural for someone to just space out and

not talk to anyone for hours even though they have 10 people around them (introverted time, anyone?) simply because

they have no alone time - ever. If people would just group together, that rent would go from $1,200 per month

to $600 to $400 to $300, etc. This was true in the United States as well in the early 20th century. My history books

in high school contained several pictures of a 3-person family living in a house no bigger than my living room while

the man worked 14-hour days 7 days a week in a polluted factory that was slowly killing him to keep their home and

put food on the table. These apartment units had no sewage, and the smell from excrement flooded the building.

Apparently, we as a society feel we deserve much more than that even for the poorest workers (and I am sure that we

do, but we must remember what things were like before so we don't take everything for granted).

3. Using the

4.01% inflation rate and a 25% tax rate (it is 30% for capital gains, but I'm using 25% because it fits easier in

my example as you'll see in a moment), an 8% return after taxes would be 6%, minus inflation would be about a 2%

real return. If inflation is higher (slightly lower than 6% at a 30% tax rate), your panhandler is right.

Ironically, the return on most investments (Savings accounts: almost 0% until the ING account, which is sitting high

at 3.X%; CDs, bonds, etc.: can vary from 2-5% give or take) is a lot lower than that. In other words: Are you saving

money or losing money? You're better off buying a house and letting the price increase offset inflation. Maybe

people shouldn't laugh at people with coin collecting hobbies... :-P


There's probably more, but I'll wait

until someone counters this because I'm getting tired.


Mtnjim: Thank you! It's been a while, and I

thought I'd come back and do some writing. I need a little escape from the stress of recent life events.

[DoctorDulitlBest]

"The government is doing the

best they can."

The question is "at what?"

The problem with economists is that they don't look at the big

picture, tend to stay within a party line, and spout cliches, like about unsolvable tradeoffs.

You'd have to

look at the real causes of prosperity, start to address injustices, and be willing to bring radical change to the

way you do things politically; and with lifestyles. Because the system won't allow this right now; no one even has

the courage and wisdom to call it like it is, get the public in a similar mindframe, and set long term goals. There

would be a violent reaction by the powers that be, including politicians, corporate interests, and the priviledged;

against even talking about what things would need to look like. Even pop culture would rebel. It has to start with

an aggressive push to enlighten people over time. The people doing this teaching would have to have courage,

brilliance, wisdom, and charisma. Unfortunately, to have this kind of effect on thinking in our current culture, you

have to be talking religion. Political and social philosophers -- people carrying on the fundamental level of

discussion that is needed -- are treated like freaks. The deep discussions simply cannot happen. Only preachers and

spiritual leaders are permitted to talk on that level with the masses, and taken seriously, in our culture. The

public would have to get used to thinking in some new ways. Our children are our hope.

But most politicians are

absolute idiots, compared to what they'd have to be. It's all useless cliches marketed to focus groups and the

lowest common denominator. No one has said anything new or had any better insights to offer in the past forty years.

Anyone that has some of these insights to offer gets marginalized. Eventually we will be forced to open ourselves to

new insights, and new ways of thinking about our lives, politics and public systems from the ground up. Right now

few are open to changing they way they think. These people have to die off.

This is of course very little help to

anyone right now. But that's the way it is. No such help is available right now.

[BrodiKennedy]

One of the unfortunate problems

that we face with the deflation of wages is that it didnt happen over night.It has taken forty years to deteriorate

to this level.Remember that the rising cost of government realy began in earnest in the mid 1960's and has become

progressivly worse since then.There is no easy "overnight" cure to this issue.But at the same time,there is no way

to reasonable argue that people are better off today than they were forty years ago either.

Corperate interests

had a very significant roll to play in keeping wages from staying up with the cost of living and inflation.The

single biggest expense in any business is labor.Many corperations,knowing how wages are calculated(based on minimum

wage,)sought Government intervention to help stop the bleeding that was caused by ever stronger labor unions and

thier demands for ever better wages and bennefits.Many companies were bled to death by the unions and I know several

people who worked for such companies.

By keeping the minimum wage down,it became possible to negotiate with the

unions from a position that "Hey,Joe bread winner doesnt do that well In a non-union job.Why should you do so much

better?"

Another aspect was the non-union companies and businesses that were going to be facing higher and

higher tax burdens over the comming decade.With a strong minimum wage,the ability of these companies to control

labor costs and still meet thier tax burdens would have shot prices thru the roof,creating a cycle of inflaton that

would have been extremely hard to control.That was a contributing factor in the inflationary period that we saw in

the 1970's.Prices durring both the Ford and Carter administrations shot up dramaticly and nobody could seem to get

a grip on it.Things finaly mellowed durring the early 1980's but even then we were experiencing the shockwaves of

declining wages and higher prices.

The end result has been a country in which we pay more and more taxes for

ever fewer services and cannot get living wage jobs that dont require bachelors degrees or more.And even with a

bachelors degree,I know a number of people who ended up working for...you guessed it,the government.Government jobs

at the state or federal level are the only non-private sector jobs that pay living wages anymore.Imagine if everyone

was required to pay the same wages that goverment employees get.

[SinyugiN]

These people have to

die off.

This is of course very little help to anyone right now." That is hilarious! I'm a fan of

dark humor.

Tim: You're right. I would love to work for the government. Bachelor's Degree? Pay Class X.

Master's? Pay Class X+2. That plus 2 years' working experience? Pay class X+4. What a great system.

[DoctorDulitlBest]

There are a lot of mainstream

people that identify problems like labor unions, lawsuits (healthcare, paying benefits, etc.), and taxes. People and

politicians have been talking about these all along. Yet no one has been able to solve anything thinking about it

this way.

Why?

Could it be something bigger and deeper?

[BrodiKennedy]

I know a guy who works at

Washington State department of Labor and Industries.He has been with them about twelve years and he and his wife

just bought a new boat.They have a very nice four bedroom home,two newish cars(they were bought new) and they have a

nice vacation a couple times a year.These are things I have NEVER had.

[BrodiKennedy]

orriginaly posted by

DST

There ae a lot of mainstream people that identify problems like labor unions, lawsuits, and taxes. Yet

no one has been able to solve anything thinking about it this way. Well,all of those things play a

certain roll in the larger picture.I am not simplistic enough to assume that the only problem is the minimum

wage.There are alot of various reasons behind the backsliding of the American standard of living.But the biggest are

greed...and people who want to protect thier cushy government jobs.

[DoctorDulitlBest]

Same goes for people working

for huge, "evil" corporations. I just think there are patterns to all of this besides the common ones people point

out.

[DoctorDulitlBest]

People are greedy when not at

their best. Can't change that. But if people were greedy to be fulfilled, it wouldn't be all that bad. We

can support that kind of "greed". What we can control is whether we systematically support greed for

meaningless, useless wants. We are capable collectively of more than we are individually, and when at our worst

individually.

That seems to be a problem with no ghost being in the machine, so to speak.

For example -- and

there is more to it than capitalism, but -- capitalism is like a machine with no soul. It has ends by virtue of the

way the mechanism works, like cancer has ends independently of the host organism. It is cut off from human interest.

It is disconnected with the big picture and ends of humanity, just like the economics that reflects it. Wealth

maximization is the only end of the machine. The machine is not answerable to human interest. But it is not

independent of human interest. It teaches interest in whipping up and trying to "satisfy" greed.

[BrodiKennedy]

Well...in terms of meaningless

and useless wants,one need only watch television with a jaded eye for a couple hours to discover that people are

largely controlled by meaningless and useless wants.Between hollywood and marketing firms bombarding our children

with all the things that will make them happy,we train peoples perceptions to the point that if we arent spending

money,then life just doesnt have purpose.

BTW,the machine of capitalism does in fact have a soul.It soul is

warped and twisted and dark and it feeds on the misery of others for profit.

[SinyugiN]

Earn under $57,343? Watch

out
Rising inflation and interest rates put the bottom 75% of

Americans behind the financial eight ball.

By

Scott Burns

A

visit to the glitzy section of any city in America will give you the idea that we don't know what to do with all

the money we have. You get the same impression at any high-end mall in suburbia.

In fact, income

thins out pretty quickly. According to the most recent (2003) IRS statistics on tax returns,

households needed at least $295,495 to be in the top 1%, $130,080 to be in the top 5%, $94,891 to be in the top 10%

and $57,343 to enter the top 25%.

Yes, you read that right. If your household income is over $57,343, you're

well toward the front of the line when the checks are handed out. If your income is below $29,019, you sink into the

bottom 50%.

Train wreck
Increasingly, those in the bottom 75% -- households with incomes below $57,343 -- are

starting to look like a long, slow train wreck. Without recognition of the problem, the entire country could find

itself in dire straits pretty quickly.

Let me show you why.
In the 10 years from 1993 to 2003, income has

continued to concentrate. While the bottom 50% of earners had 14.92% of income in '93, they had 13.99% in '03.

Similarly, the top 25% have enjoyed an increased share of total income, rising from 62.45% in '93 to 64.86% in

'03. This is pretty much what you'd expect over a period of rapid change. Those with leverage increase their

incomes. Those without leverage don't.

Over this period the dividing line income for the bottom 50% has risen

from $21,179 to $29,019, rising 4.3% a year. Had the income line risen only with inflation it would have risen to

$26,504. And that's an important fact: Even the bottom of the income scale has gained some purchasing power over

the period -- about $2,515 (see table below).

Combine that additional income with recent low interest rates on

home mortgages, a period of weak-to-declining rents for apartments, a multitude of low-interest and no-interest

offers from stores and car manufacturers, and the people who do a lot of the heavy lifting in our society have been

getting along.

Better to be on top
Those with earning power have done a lot better than just get along. Earners

at the top 1% line have gained $63,040 in purchasing power. Earners at the top 10% line have gained $12,198 in

purchasing power, while seeing the portion of income they spend on income taxes decline from 20.2% to 18.5%. Earners

at the top 25% line have gained $5,570 in purchasing power.

The vulnerable bottom of the income pyramid



_____________Top 1 % Top 10 % Top 25 % Bottom 50 %
1993 Income (1) $185,715 $66,077

$41,210 $21,179
2003 Income (2) $295,495 $94,891 $57,343 $29,019
1993 Income Adjusted for Inflation (3)

$232,415 $82,693 $51,573 $26,504
Gain (1)-(3) $63,040 $12,198 $5,570 $2,515
% of Income Taxes Paid

34.27% 65.84% 83.88% 3.46%
Average Tax Rate as % of Income 24.31% 18.49% 15.38% 2.95%

Source:

The Tax Foundation


That isn't the case for

those in the bottom 50%. Their entire $2,515 purchasing power gain since 1993 may already be history. Skeptics

should consider this brief list:

• With the typical household consuming about 1,000 gallons of gas a
  
  year, an increase from $1.50 a gallon to $3 a gallon means a purchasing power loss of $1,500.
• Rate increases for
  
  electricity and natural gas.
• Rising medical co-pays and other out-of-pocket expenses for health care, plus
  
  rising employee health-care insurance premium costs. Premium costs were up 10% in 2004 alone.

Another way to

see the same thing is to examine wage gains. In 2004 the average weekly earnings of private, nonagricultural workers

rose by only 2.2%. The Consumer Price Index rose by 3.3% over the same period. This year has been a replay --

year-over-year wage gains are running less than 3% while inflation has ramped up toward 4%. And all this assumes we

believe the CPI is an accurate reflection of the inflation we experience.

Can the politicians work magic with

tax reform?

No way. If the federal income tax was simply eliminated for every household in the bottom half, it

would only liberate about 3.46% of their income -- less than inflation for one year.

Bottom line: Unless there

are some real wage gains for working stiffs -- soon -- we're heading for a recession.

[BrodiKennedy]

Thanx Pancho I apprciate

you posting that for me.

[DoctorDulitlBest]

Well...in terms

of meaningless and useless wants,one need only watch television with a jaded eye for a couple hours to discover that

people are largely controlled by meaningless and useless wants.Between hollywood and marketing firms bombarding our

children with all the things that will make them happy,we train peoples perceptions to the point that if we arent

spending money,then life just doesnt have purpose.

BTW,the machine of capitalism does in fact have a soul.It

soul is warped and twisted and dark and it feeds on the misery of others for profit.

That is not a soul, but

a psuedo-soul, the way I am casting it. It's a virtual soul, a cyber soul, an imitation soul, or a poor abstraction

of soul. It can be that because it has no tether or lifeline to actual soul, that would feed it soul.

I don't

think capitalism was originally intended to be that way. It originally came from human beings and their

souls.

Again the theme, like any theme of foolishness, is a state of being cut off from a big picture -- in this

case a big picture of humans that created a machine to meet human interest. Now the machine "operates independently"

from that interest or soul; as does the psuedo-understanding of that machine -- contemporary economics.

You seem

entirely correct with your first point.

[SinyugiN]

Ironically, this article

actually supports my argument in another threat (an old one) about the rich paying more taxes. Can we please use

that table (well, what used to be a table but is now just a bunch of hard-to-read text) to prove that the rich pay

all of the taxes in this country? If you make less than $29K per year, you pay an average of 3% in taxes...and

everyone complains about how the rich get all the tax breaks...they're the ones paying all of the taxes!!!

I

noticed this exact situation this year. When I was a student, I got every single federal tax dollar back in my

paycheck. Now, I pay a truckload of taxes. I can't complain, though, because I make a lot more than I used to.