Have/Have-Nots Gap Widening - What does it mean?

[Jack]

That is how capitalism works. Is there a better system? Sometimes I think so, sometimes I don't.

[Walden]

For those philosophers, economists, deep thinkers out there, what does this mean in the long run?

It means I continue wishing I had a better vehicle than a 1983 F150, maybe a cellular phone to call for help when I get stuck out on the road in said 22 year-old vehicle. It means more Republicans to cut more people off of commodity cheese. It means I'll keep wishing I had money for gasoline so I could get stuck out on the road and wish I had a cellular phone to call one of the "haves" to come give me a ride home so I can eat some commodity cheese.

[susnfx]

For those philosophers, economists, deep thinkers out there, what does this mean in the long run?

It means I continue wishing I had a better vehicle than a 1983 F150, maybe a cellular phone to call for help when I get stuck out on the road in said 22 year-old vehicle. It means more Republicans to cut more people off of commodity cheese. It means I'll keep wishing I had money for gasoline so I could get stuck out on the road and wish I had a cellular phone to call one of the "haves" to come give me a ride home so I can eat some commodity cheese.

When the time comes, Walden, you can hang out in my compound and live on spoils.

Susan

[Walden]

When the time comes, Walden, you can hang out in my compound and live on spoils.

When the revolution comes it won't be broadcast on television.

[BillChin]

I have some thoughts:
* One factor in so many millionaires is the boom in real estate prices and the highest ever rate of home ownership ever in U. S. history. In many neighborhoods, $1 million gets a starter home or a nice condo.
* The illegal aliens drive down the cost of labor. Used to be that unionization could bring wages up, but with so many illegals this is not possible.
* Parallel with this is the industrialization of China, and their currency policy that artificially ties it to the U.S. dollar.
* Many third world countries have the same or even greater wealth disparities.
* Unions are weak, except for athlete and actor unions.
* An education guarantees almost nothing. Although it does improves a person's odds a great deal, I've met countless people with Bachelor's degrees or better that struggle to find a job that pays a living wage.

* The vast majority of wealthy people get rich through ownership, most commonly real estate or equities. Very few people get really rich from income, the main exceptions, again are actors and athletes.
* Focusing on income inequity will do very little to address wealth inequity.
* There are a LOT of foolish people out there. People that have terrible money habits such as using paycheck cashing services and huge revolving debt on credit cards. These habits that deplete wealth. In my opinion, no MATTER how much their incomes are boosted, they will be living on the edge. I personally know people like this and a doubling of their incomes would only give a temporary boost, before they have spent it all on "necessities" and are back deep in the hole.
* Poor in America is still rich in many parts of the world. Over 40% of Americans classified as poor by the poverty line get cable TV. About 15% of the world population lives on a $1 a day or less, ironically about what basic cable costs. In America, only Unibomber types can live on that.

+ At the end of the day, radical change occurs, either some type of violent revolution, and/or financial collapse is the historical mechanism to restore some balance. The analogy would be a forest fire to clear the tall trees so new seedlings can get light. When change comes it comes quickly.

[The Weekenders]

Wow, Walden really likes to cut the cheese!

[susnfx]

I appreciate your thoughts, Bill, although I'd probably argue a couple of them:

Getting wealthy through ownership - with housing costs the way they are now, fewer and fewer people will ever be able to own anything, let alone get wealthy from property ownership. You have to start someplace and it's getting harder to start.

If not income inequity, what do we focus on to address wealth inequity?

As far as Third World countries having the same wealth disparities and our poor still considered rich by other people in the world, I'm not comforted by that. I don't want my daughter or her kids to be living in a cardboard box before they're considered poor. All of us are deserving of some kind of decent life.

Susan

[emmline]

There is a big difference between being a "millionaire" in 2005, and what it meant in the 60's when Fred MacMurray was The Happy Millionaire (meaning really really loaded.) I guess djm pointed this out already.
Still, I don't know what to make of the trend, and wonder if it counts all the recent immigrants who, individually, don't have much in the way of fiscal assets but tend to have supportive familial networks.

I will say that panhandlers on intersections has boomed as a phenomenon around here, but it could be increased poverty, increased population, or increased acceptibility of the practice. Or all.

[missy]

panhandlers in this area are mainly schizophrenics and others that should be taking medication, but aren't. They therefore have a hard time functioning in society and holding down a job.
And I am in no way making a judgement of the mentally ill - I'm making a judgement of the groups who insisted on closing down the mental institutions in the 1980's without having some type of safety net in place for those who really needs some types of services to survive on a day to day basis.

I also, too, agree that a "millionaire" now adays is totally different than 20 or 30 years ago. I know people that have houses valued at over $500,000. Heck - I know someone living in a house valued at over $3 million (yeah - they ARE millionaires!).

Missy

[Walden]

Getting wealthy through ownership - with housing costs the way they are now, fewer and fewer people will ever be able to own anything, let alone get wealthy from property ownership. You have to start someplace and it's getting harder to start.

If I buy a house, here, my payments will be lower than if I rent.

[chas]

As it says in every prospectus, "Past performance does not guarantee future performance." The wealth gap tends to widen and narrow. Yes, it's been growing for 20-odd years, but it narrowed for a few decades before that. Around the turn of the century there was a yearly meeting of a dozen or so people who owned over half the wealth in the nation. We don't have a concentration of wealth like that now.

I'm not saying I'm not concerned about the wealth gap, in fact I am. But I don't think it will continue to widen indefinitely. For a start, I think there will be shareholder revolt over executive compensation in the not-too-distant future, and their salaries and options will come back to earth. At that point, companies may focus on intermediate-term returns instead of the next quarter, which will be even better. There's likely going to be a real-estate bust in the next year or two, and a stock bust when all the boomers begin retiring and drawing from their 401(k)'s.

As Bill pointed out, those are where most of the wealth of the wealthy is concentrated, and as Jack pointed out, these things tend to be self-limiting. I hope it's a soft self-limit, like the postwar expansion after WWII, rather than something in the vein of a French or Russian Revolution.

[IRTradRU?]

Getting wealthy through ownership - with housing costs the way they are now, fewer and fewer people will ever be able to own anything, let alone get wealthy from property ownership. You have to start someplace and it's getting harder to start.

And yet home ownership (as a percentage of the population, which is growing, too) is at an all time high. More people own homes than ever before.

[MurphyStout]

Getting wealthy through ownership - with housing costs the way they are now, fewer and fewer people will ever be able to own anything, let alone get wealthy from property ownership. You have to start someplace and it's getting harder to start.

And yet home ownership (as a percentage of the population, which is growing, too) is at an all time high. More people own homes than ever before.

Yes, but who actually owns the homes? Stop paying your house payments and see what happens.

[IRTradRU?]

I have some thoughts:
* One factor in so many millionaires is the boom in real estate prices and the highest ever rate of home ownership ever in U. S. history. In many neighborhoods, $1 million gets a starter home or a nice condo.

Huh? Million-dollar "starter homes" ? Wow. You must live in San Francisco or Manhattan, am I right?

* The illegal aliens drive down the cost of labor. Used to be that unionization could bring wages up, but with so many illegals this is not possible.

But those "savings" are never passed on to consumers. And illegal immigration takes a very high economic toll that is largely unseen. Until one looks at, say, hospitals. Health care costs cover treatment at a great many hospitals - there are some in Arizona that have been bleeding red ink for years, and illegal immigrant care is the chief reason. That costs citizens money.

* There are a LOT of foolish people out there. People that have terrible money habits such as using paycheck cashing services and huge revolving debt on credit cards. These habits that deplete wealth. In my opinion, no MATTER how much their incomes are boosted, they will be living on the edge. I personally know people like this and a doubling of their incomes would only give a temporary boost, before they have spent it all on "necessities" and are back deep in the hole.

We must know some of the same folks. I know of several pro football players - the ones with the big $ salaries, who are near bankruptcy from livin' large and making foolish investments.

+ At the end of the day, radical change occurs, either some type of violent revolution, and/or financial collapse is the historical mechanism to restore some balance. The analogy would be a forest fire to clear the tall trees so new seedlings can get light. When change comes it comes quickly.

And then the seedlings grow too quick and then TIMMMMBERRRRR, it starts all again.

[IRTradRU?]

Getting wealthy through ownership - with housing costs the way they are now, fewer and fewer people will ever be able to own anything, let alone get wealthy from property ownership. You have to start someplace and it's getting harder to start.

And yet home ownership (as a percentage of the population, which is growing, too) is at an all time high. More people own homes than ever before.

Yes, but who actually owns the homes? Stop paying your house payments and see what happens.

Sure.

But that was as true 100 years ago as it is today.

What hasn't changed is that it's all about building equity. I think the main problem today (and by that I mean the past generation +) is attitude - "I want it all, and I want it now" type of approach. When's the last time you heard someone openly say, "We can't afford this." Instead, it's "Hey, no problem, you CAN have it now - just put it on the credit card!"

Remember buying something on "Layaway"? Do stores even have that feature now?

I have possessions (big deal) that would make my Father go pale. By the same token, my Father had possessions that would make his Father pale. And so it goes. Where does it end? I surely don't know, but this isn't new by any stretch, it's been going on in the circle of live for many many years.