Thanks, David, for tackling lie #1.

The gap between rich and poor narrowed in America between the New Deal and the early 1980s - not coincidentally, a period of economic growth and dominance for us.

The idea that "the poor get poorer" should aways be set in a historic and economic context, but it's clearly not (as the post states) "always" true. Poor Americans today are much better off than the poor peasants of Europe during the Middle Ages, or (in an extreme case) our pre-historic ancestors on the African plains.

Get some historical and policy knowledge before you pontificate like this, 20s Money Guy! Your post doesn't help us understand what's happening with our money at all - it's just a predictable rant, and it works *against* your purpose of advancing financial education by reinforcing inaccurate and incomplete ideas.

-howie

In response to the first comment, I do not say that rich people do not have debt. Many rich people use debt or leverage as a means to earn higher returns and build more wealth. There is a difference between good debt and bad debt.

Poor people, often times, often accrue more high interest debt (bad debt) simply to get by; especially, with today's inflationary prices of basic necessities.

Obviously, there are poor people who don't have a ton of high interest debt, and there are rich people who do accrue bad debt. But, overall, the trends speak in favor of what I describe. Debt is getting worse in America and who do you think is assuming most of this debt?

Thanks for responding, 20s.

"The article discusses the idea that the top portion of society continues to accumulate a larger portion of the wealth while the lower portion of society continues to command a smaller portion of the overall wealth of society."

OK, we're talking ratios, so I can understand in theory how you would argue that poor people possess an ever-smaller proportion of *society's* wealth while the rich have an ever-greater piece of the pie. But the pie gets bigger with time, so poor Americans still have more wealth than medieval peasants. I don't agree that that has happened, but the position is internally consistent; thanks for clarifying.

If I've paraphrased you correctly, and take the title of your post seriously ("always"), the eventual outcome of your position is that one person will have all wealth while everyone else has nothing. The richest person's money will always work the hardest by your definition, and they would eventually control it all.

Regardless of how we feel about the outcome, eventually the masses won't stand for it and some wealth will be redistributed. It could be taxes, it could be revolution.

So I guess my interest is, where is the balance? What are appropriate policies and values that reward individual success, maximize economic growth, and provide reasonably for vulnerable members of society (AKA revolution insurance!)

Tim started to nail it: "The gap between rich and poor is not a force of nature or an inevitable fact of
life. It's the result of a grossly imbalanced system and slanted policies."

I'd comment that the gap is something like a force of nature - an expression of humans necessarily sorting themselves out by low-/high-status - but it can be managed successfully via a combination of markets, regulation, and the public sector. We used to be pretty good at it in this country! And we could be again.

-h

I think this is going to be a touchy topic because people are sensitive about talking about money. I do think the gap between rich and poor is always going to be present. What I find more troublesome is that while the number of people that most would call rich stays relatively constant, the number of poor people continues to grow at a relatively rapid rate. @20s Money Guy, I don't know if you have any insight as to why the number of poor people is growing.

20s Money Guy, I do agree with your title mainly because I feel the poor need to change thier mindset about what's a necessity and a want. Many low-income people want to live beyond their means and then complain that they aren't getting paid enough.

It is also disconcerting to know that high level executive salaries continue to rise while it is difficult these days to find a decent job to pay the bills (without debt). But of course that attributes to the fact that while the cost of living has risen, wages have not.

Great momentum on this discussion.

Don't try to paint me as ignorant on business or the economy. I'm not some retarded Marxist marching through the street smashing windows.

I am fully aware of the value of leadership and strategic direction for individual corporations and for the economy at large. You can pay a brilliant CEO 5,000 times as much as your lowest line worker. But you can't say that their value is so great that it's too much to ask for a living wage for their employees.

It's not a matter of understanding, it's a matter of priorities. If you think that the free market trumps every other consideration, including human rights and the environment, then you're absolutely right and there's no room for interpretation.

Strategic direction is VERY important for everyone in the company. But what's even MORE important is being able to function comfortably above the poverty line.

@20s Money Guy When I think about human rights and income, I think about a living wage and I don't think that there is equality of opportunity to make that living wage. There are reasons why entire families remain in poverty for generations. Economic behaviors are transmitted from parent to child. This includes attitudes toward education, spending, saving, property ownership and more. I don't think that someone who grew up on a farm in Iowa has the same access to a living wage that I would.

I do think there needs to be some incentive to ensure that everyone has access to a living wage. One of the reasons that minimum wage doesn't work is that it doesn't even keep pace with inflation. Of course people have less buying power if the wage is raised only every 7-10 years. Minimum wage is complicated further when you consider that poverty in Montana is not the same as poverty in New York City. Unless there is some sort of safeguard, the free market is going to do what is best for the market which may not be the best for citizens.

Tiffany said "Many low-income people want to live beyond their means and then complain that they aren’t getting paid enough."

Do you know many of these people personally? Or is it just your impression from the news? The vast majority of low-income folks I work with (at an HLC-accredited professional college) are working their tails off to make ends meet while studying for a degree that will help them *earn* the salary they desire.

Tim said "It’s not a matter of understanding, it’s a matter of priorities." Right on. So we've invented this great tool called a market economy; *to what end?!*

20s said "By human rights you are saying a certain level of income. It is not a right to have a certain level of wealth. It is a right to have the opportunity to acquire wealth... I do not think that government intervention is the right path. I think it will result in a weaker economy which is bad for everyone ESPECIALLY the lower/middle class who depend on the jobs that a strong economy creates."

20s, you're blindly asserting Standard Conservative ideas without evidence or argument, and David already nailed you on what looks to be a blind spot in your knowledge of the relevant history and policy. We could have an interesting discussion of what human rights are and mean if you could step off your pedestal and engage us in some conversation! Again, David already brought great evidence into the conversation that a 90%+ top tax bracket coincided with a long historical period of middle class growth. How do you explain that?

Vanessa said "I do think the gap between rich and poor is always going to be present," and later "Unless there is some sort of safeguard, the free market is going to do what is best for the market which may not be the best for citizens." Will added his vision of our society's ultimate goal.

My vision for our society is 1) survival! 2) systems that maximize personal freedom and well-being. Freedom and well-being are in tension, but are not zero-sum; both can increase! (And they have here; we are both more free (more possibilites and fewer inhibitors) and healthier than the folks who founded our country.) So the question for me is "How can we use markets to achieve these goals? How can we channel the human need for economic reward and status differientiation in ways that work for both individuals and society?"

Here's what's frustrating about your post, 20s - you haven't said what you think markets are *for* other than ends-in-themselves, and you've made sweeping assumptions that a narrow type of market we currently have with certain characteristics is the natural, unalterable, and inherently good state of things. I'm just not buying it yet. -h

@Tim: Yeah... I guess I'm hoping that since 20s cares enough to write about this stuff, he'd care enough to go another step and consider the implications of the post at a deeper level with us. I've been trying to open up some avenues for that.

Markets are a fabulous tool, but I feel like nobody (not even 20s!) gets to their deathbed and thinks back about how awesome markets were, you know? Most of us believe in or value some other end, such as family or liberty, and I'd like to know what other people think about that so that we can seek out some common ground and talk about how markets and help us build that society.

20s has some good advice in his conclusion, and he bothered to write in the first place, which shows that he's smart and that he cares. We want all the smart, caring people we can get thinking about the problems we face, because we're going to need them. We need them now. We need us now!

(Can you tell it's been a slow week at work for me? ;-)

-h

For some reason, I'm reminded of something a friend of mine said several years ago.

"There are not enough bullets in the guns or fences high enough to stop hungry, angry, desperate mobs with nothing to lose from taking what they need from those that have it."

It's been seen in different places in the world many times this millenium already.

We are seeing the results of eight years of efforts to stimulate investment by concentrating capital in the hands of the top 1%, or, perhaps, the top .1%, of Americans in income and assets.

The story we were told to justify cutting taxes from the rather reasonable 39% top marginal rate, with capital gains taxed as ordinary income, to current marginal income rates and capital gains taxed at 15%, was that we sould stimulate investment in job-creating infrastructure - factories, IT, offices and the people to run them.

Of course, in the recession of 2001-3, businesses weren't in a buying mood. The dot-com bubble had burst, and 9/11 had just happened. It was only the combination of low interest rates, perhaps artificially so, and sketchy mortgage lending based on buyers' fantasies about jobs they may have had degrees for but that were never in fact going to materialize, that kept consumer spending up -- but farther up the food chain. nobody was buying.

As a result, the cash from those tax breaks stayed in corporate coffers - who in their right mind would build factories and offices, and hire people, with no orders to back them up?

Contrast that period in the 2000s with the equivalent in the 1990s. On the heels of what the GOP complained was the biggest tax increase in history, those enterprising folks we like to talk about (until they decide they want to get paid) created a new industry that looked as if it could print money at will -- from the demand side. And, I'll submit, it had a dose of government help at the beginning: this series of tubes, as the distinguished senator from Alaska called it, on which we now converse. It started out as a Defense Department project. Blackwater aside, I believe DoD is still a government program (though I haven't checked this week to make sure).

The trunk lines and the copper and fiber are the private property of the telcos and the cable operators, but the inconvenient truth there is that we took tax money - the wealth of the citizens - and redistributed it in the form of the most valuable asset our generation could possibly have produced to about six giant corporations who already benefit from lucrative government contracts for all sorts of things, and whose executives get Social Security and Medicare at 65 just like everyone else. Unless of course the wireless spectrum that just got handed to these same companies is even more valuable.

Then, of course, we have the no-bid contracts we hand out to companies after they relocate their headquarters outside the US so they don't have to pay any corporate income taxes at all.

Now, what was that about redistributing a trivial amount of money (relatively speaking) to some poor people?