Being a Millionaire

Turns out that many of the people who have incomes greater than $1,000,000 don't have those incomes for very long.  From HERE. 

Income Inequality Over Time

People earn higher incomes as they get older.  Many of the people in the bottom income brackets do not stay there.  Economists have known this for years.  HERE is current information regarding mobility of Americans through the income brackets.  

Short version?  58% of households in the lowest quintile move up within ten years.  57% of households in the highest quintile fall lower within ten years.  Substantial other movement between all brackets.  The St. Louis Federal Reserve Bank just came out and said that comparing income quintiles as if they are static (which you have to do in order to talk about the increasing gap between the "rich" and the "poor") is "a proverbial apples-to-oranges comparison".  We know that, but coming from the "government" it's harder for a redistributionist to ignore.  Maybe. 

Best Comment Ever

Following is what is perhaps the best comment I have ever seen to a news article.  Seen and copied from the comments on THIS ARTICLE.  The article itself is pretty good, talking about how the OWS protests have caused a prosperous cafe to fire over 20 staff.  Interestingly, when the cafe owner tried to talk to the city government, no one would return his calls.  But when he tried to talk to his landlord (one Mr. Trump), he was able to speak directly to a very busy man. 

Anyway, the comment:

• “We are Wall Street. It’s our job to make money. Whether it’s a commodity, stock, bond, or some hypothetical piece of fake paper, it doesn’t matter. We would trade baseball cards if it were profitable. I didn’t hear America complaining when the market was roaring to 14,000 and everyone’s 401k doubled every 3 years. Just like
  gambling, its not a problem until you lose. I’ve never heard of anyone going to Gamblers Anonymous because they won too much in Vegas.
  Well now the market cr apped out, & even though it has come back somewhat, the government and the average Joes are still looking for a scapegoat. God knows there has to be one for everything. Well, here we are.
  
  Go ahead and continue to take us down, but you’re only going to hurt yourselves. What’s going to happen when we can’t find jobs on the Street anymore? Guess what: We’re going to take yours. We get up at 5am & work till 10pm or later. We’re used to not getting up to p ee when we have a position. We don’t take an hour or more for a lunch break. We don’t demand a union. We don’t retire at 50 with a pension. We eat what we k ill, and when the only thing left to eat is on your dinner plates, we’ll eat that.
  
  For years teachers and other unionized labor have had us fooled. We were too busy working to notice. Do you really think that we are incapable of teaching 3rd graders and doing landscaping? We’re going to take your cushy jobs with tenure and 4 months off a year and whine just like you that we are so-o-o-o underpaid for building the youth of America. Say goodbye to your overtime and double time and a half. I’ll be hitting grounders to the high school baseball team for $5k extra a summer, thank you very much.
  
  So now that we’re going to be making $85k a year without upside, Joe Main street is going to have his revenge, right? Wrong! Guess what: we’re going to stop buying the new 80k car, we aren’t going to leave the 35 percent tip at our business dinners anymore. No more free rides on our backs. We’re going to landscape our own back yards, wash our cars with a garden hose in our driveways. Our money was your money. You spent it. When our money dries up, so does yours.
  
  The difference is, you lived off of it, we rejoiced in it. The Obama administration and the Democratic National Committee might get their way and knock us off the top of the pyramid, but it’s really going to hurt like h ell for them when our fat a**es land directly on the middle class of America and knock them to the bottom.
  
  We aren’t dinosaurs. We are smarter and more vic ious than that, and we are going to survive. The question is, now that Obama & his administration are making Joe Mainstreet our food supply…will he? and will they?”
  
  

The Importance of People

People are incredibly important.  People are really the biggest reason I care about the "unseen", because usually when there are unseen, unintended consequences, people are the one who get hurt. 

People are incredibly important in politics as well, though not in the voting sense.  People are the only way that things actually happen.  ONLY PEOPLE DO THINGS. 

This point was very eloquently made by THIS MAN.  Read the whole fantastic thing.  Here is an appetizer. 

It means doing the hard work of volunteering your time and effort in the arenas you feel are important and allowing other to do the same, even if you do not agree with them. It means not assuming sending your kids to be educated by strangers is all that’s required to shape their minds. It means, Heaven forbid, skipping out on a few episodes of Dancing with the Jersey Shore Stars to be a part of the community you live in so that things get done and people don’t feel the need to demand the government fill the role you should have been doing from the start. It means standing up to the injustices and not just sitting back, hoping the regulatory alligator eats you last.

Context

Numbers are important.  But even more important is figuring out what those numbers mean. 

Say for example you see a statistic saying that US military spending is some huge amount greater than the military spending of say, China.  That may be true, is true actually, but what does it buy us.  Given that materials and manpower are substantially more expensive here in the good old USA, turns out that our military isn't actually as much stronger than our spending would seem to indicate.  Good to know. 

Proper context for numbers and statistics is important to understand the true amount of money the US has spent in Iraq and Afghanistan.  Yes, we have spent a lot of money.  According to THIS ARTICLE, total federal spending over the entire course of military operations in I&A has amounted to about 4.4% of total federal spending during the same period of time. 

Context is extremely important.  Is 5% large or small?  $10,879,442?  No idea.  Context. 

Recession in DC

What recession?  The economic doldrums have been felt in the NOVA/DC area, but only slightly when compared to the rest of the country.  An excellent article and discussion of this is HERE. 

Beyond all the discussion about how now government jobs are both secure AND lucrative, past the contractors who do not really have to concern themselves with the amount of consumable income possessed by their customer b/c their customer is Uncle Sam, there is the issue of isolation.

I really think that being economically isolated from the rest of the country (as in, "the "Great Recession" isn't so bad..., I don't know anyone who's lost their job") exacerbates the typical isolationism of being of the "Beltway Mentality". And that is one factor that

"Experts" and How Much Taxpayers Pay

There are so many ways for an expert to misrepresent information, whether they mean to or not.  Consider THIS ARTICLE, talking about the difference between assessing taxes paid on the basis of annual income or of total wealth. 

On the one hand, using annual income gives a relatively neat, clean, number to use.  If we are looking at tax rates, it makes sense too.  But like all technical tools, it quickly loses effectiveness when used for anything else.  For example, if we are looking at the real impact of various tax plans, than using annual income doesn't really make sense.  Not only does income not account for savings, investments, etc..., but also fails to account for some forms of wealth growth (capital gains, interest on muni bonds, etc...).   Read the article. 

Rich Getting Poorer

Interesting but true.  Despite what politicians and the occupy protestors are telling us, "income inequality" has actually decreased in the past three years.

The top 1% of income earners earned 16.9% of all income in 2010, but in 2008 the top 1% earned 20% of all income.  And the number of American millionaires has fallen 39% since 2007.  And the number of people earning more than $10Million/year has fallen 55% since 2007. 

Interestingly, as the number of "rich" has decreased and equality has increased, this country has had high unemployment and very slow (or no) growth.  Now, I recognize that this might be both correlation and  causation, but it remains very interesting. 

From HERE.

Income of the 1%

Did you know....

$50,000/year puts you in top 10%.

$250,000/year puts you in the top 1.5%.

$353,000/year puts you in the top 1%. 

Hmmmm.  Guess not everyone at the top of the income distribution are "millionaires and billionaires". 

Wealth and the Environment

Economists have long recognized that a clean environment is somewhat of a luxury good.  Any restriction of enterprise will increase cost of living, and when people are struggling to make ends meet.  Peoples' first priority, at least in the overall society sense, will always be the well-being of themselves and the people they care about. 

Bearing that in mind, I am really not surprised by accounts that I read about waning popular support for policies designed to "curb" global warming.  To the economics reasons for fading support, you have to add in the various unethical and anti-scientific actions of recent years by those that support climate change legislation.

THIS ARTICLE is about as charitable and generous as you can get. 

Tax Holidays

Tax holidays do not create jobs, permanent tax cuts do.  Why?  Simply because a business would be foolish, and the manager would get fired by his/her boss, if they hired an employee based solely on a short term tax cut.  Sure, based on marginal analysis, some employees will get hired, but the insidious fact is that the longer they work for the company, the less effect the tax holiday has.  Say a $5,000 holiday.  If the employee works for 10 years, that holiday is only able to bridge $500 a year difference between productivity and cost.  Less actually if you account for the time-preference of money. 

THIS is how free people do emergency aid.

See THIS ARTICLE.

Snippet version:  Wildfire threatens.  Local moms establish command/rest/food/supply/repair/first-aid base at local school.  Local businesses donate food/equipment/supplies.  Volunteers do an amazing job supporting the firefighters.

That is how it should be done.  That is how free Americans can do it.

Not that the government didn't try to help.  Here are the relevant paragraphs:

The Red Cross came in, looked at what they were doing, and quietly went away to set up a fire victim relief center nearby. They said they couldn’t do it any better.

FEMA came in and told those volunteers and Kenna that they had to leave, FEMA was here now. Kenna told them she worked for the firefighters, not them. They were obnoxious, bossy, got in the way, and criticized everything. The volunteers refused to back down and kept doing their job, and doing it well. Next FEMA said the HEB supplies and kitchen had to go, that was blatant commercialism. Kenna said they stayed. They stayed.

Uncertainty or Certainty

It is no secret that I believe that one reason businesses have not been willing to take risks and grow over the past several years has been a generous dosage of uncertainty, courtesy primarily of the federal government. 

However, recently I read an article that challenged my thinking.  Perhaps the uncertainty isn't the main factor businesses are frozen, perhaps it is the certainty.  

Uncertainty still exists, but Obamacare is certainty, political financial favoritism is certainty, increased future taxes are almost certainty, etc....  While businesses are still nervous about what they don't know, they are perhaps more worried about what they do know.  They things they have seen with their very own eyes. 

Minimum Wage and Poverty

HERE is an excellent article that does a very good job dismissing many faulty beliefs about people who work for minimum wage.  In particular, the column addresses the question "should we raise the minimum wage so that minimum wage earners do not live in poverty?" 

The answer?  No. 

Why?

Because the vast majority of minimum wage jobs are not the sole income for a household, or even the sole income for that single person. Think of all the teenagers who work their first job or adults who work an extra job for minimum wage. Further, even for those single parents who earn minimum wage, about 75% of them move out of single-parenthood status within 6 years. 

So, no, the great majority of minimum wage earners do not live in households at or below the poverty line. 


But even if they did, remember that being poor in the United States means you have about as much disposable income as a family earning $60,000. 

Very Interesting

Courtesy of the Economist, a Global Debt Clock.  Have fun. 

Cost of Regulation

Really, rather remarkable how so very often the very regulations intended to help the poor/middle income end up instead hurting them. 

Pass a bill designed to limit how much banks can charge for debit transactions, and banks look to recoup their costs by decreasing services or increasing other fees.

Require that banks look into the identities of customers, in an attempt to make money laundering more difficult, and create a situation where banks have to charge more money to the poor than to the rich b/c it is typically more difficult to establish the financial identify of someone without a financial past. 

More detail?  Look here.

Protest Song

Listen to the words.  While the protesters have the right idea talking about the corruption in government (though I'm upset at the government for encouraging the corruption, while the protesters are mad that businesses try to make money), they are profoundly mistaken in asserting that 99% of Americans haven't benefited from businesses.

Listen to the words.

Warning: Video contains images of protest signs with profane language.