Relevant and even prescient commentary on news, politics and the economy.

Buffet wants to "soak the rich" too?

Well, at least equalize the rates at a minimum. But as you read from CNN, he seems to be suggesting something more at least for a certain means of income earning.

From the Washington Post:

Buffett cited himself, the third-richest person in the world, as an
example. Last year, Buffett said, he was taxed at 17.7 percent on his
taxable income of more than $46 million. His receptionist was taxed at about 30 percent.
A populist tone permeated the 70-minute talk with the billionaire
investor and philanthropist in Manhattan on Tuesday night. The
talk, given to about 600 Wall Street bankers and money managers, raised at least $1 million for Clinton’s presidential campaign,…
Buffett said that he and other privileged Americans must do more to help the less fortunate.
“We have the chance in 2008 to repair a lot of damage,” Buffett said.

CNN has this take on the speech:

The … chairman touched on a variety of issues in a question and answer session
with Clinton, including his disdain for private equity firm power brokers.

“The people that earn their living doing that should be subject to taxes that reflect their labors,” he said in the gathering at a hotel in midtown Manhattan.
Buffett said he makes $46 million a year in income and is only taxed at a 17.7 percent rate on his federal income taxes. By contrast, those who work for him, and make considerably less, pay on average about 32.9 percent in taxes – with the highest rate being 39.7 percent.
“I’m willing to bet anyone in this room $1 million that those rates are less than the secretary has to pay,” said Buffett.

Does he really mean it? I think he does. Unfortunately, just raising the tax rates is not going to solve the problem when the problem is pay. Raising the rates is a start, it will help with the deficit issue but it will do little for those who are earning a majority of their income via wages (which is 95% of the citizens if you recall my posts of the past). It does nothing to reverse the shift in share of income. If people in Mr. Buffet’s income bracket are truly concerned about the people, they can start by paying their help more. Doing such would be a true expression of the founders concept of freedom, that is the economic freedom part of the concept. Unfortunately I do not read anywhere of anyone suggesting that. Instead they seem to be focusing on a paternal benevolent model of helping the less fortunate (those earning less than the Wall Street Bankers).

Any thoughts on the fuel costs?

I was tanking up the other day. The Caravan fortunately and not the truck (33 gallons) when I noticed that diesel was about $0.20 less than regular. That seemed unusual from my recollection and got me wondering. So, I found this site by our government titled Energy Information Administration.

You can down load all sorts of spread sheets. I picked the ones that had pricing and gallons sold in total and by US refiners.

First the total sold.
The black line is gasoline, the red is diesel. Both are millions of gallons times 100.

Rather slow rising trends here. Infact, our gasoline use has only risen 39.53% from March 1994 to a peak in June 2005 at 39.53. Diesel peaked at 14.33 in June 2006. An increase from March 1994 of 53.1%.

Next is US refiners output.
Again., black is gasoline, red diesel in million of gallons times 100.

Notice the decrease? Interesting that diesel was declining first. Gasoline output peaks at 6.54 in the last quarter of 1998 and the same in June 2001. It comes close in June 2002 at 6.49. The grandaddy is June 2003 at 6.68. From there it’s down hill to levels below the June 1996; 5.74 in March of this year, 5.78 in June 1996. Diesel peaks at 2.44 in March 2001 and never sees past 2.0 after March 2002. The only other time we saw less than 2.0 was December of 1994.
Did we suddenly start loosing refineries? We were putting out more every year until “everything changed”. Hummmmmmmmmmm.
And now for the money. Gasoline is black, diesel is red.

Here is the world crude oil price by year.
It does look like the gasoline and diesel price lines. Your thoughts?

Longer view of savings vs disposable income

Updated below.

Cactus’ post got me thinking. And, holding true to my thought that we have changed our focus I decided to take a longer view.
First is at chart by year from 1929 to 2006 of the savings % of disposable income.

Notice the WWII years? This is the same time income from entrepreneurship was peaking. But, we don’t see the same relationship during the 90’s.

Income from interest looks similar too. As I noted in a prior post, the interest income curve followed the Fed Rate curve. The interest income peak coincides with the percentage peak of savings in the first chart. The savings % of disposable income peaks in 1982 at 11.2 and the income from interest peaks in 1981 for all 3 groups. (Note the scale range is different so that the peak for interest looks greater.)

What is most interesting, is that share of income from wages is peaking just after this for the top 5%. The 95 to 99 group at 76.4 in 1983, the to 1% at 66.1 in 1984 and the top 0.1% at 53.9 in 1984. Only the top 0.1% see an greater peak after this and it’s in 2000 at 58.2 % of their income from wages.
Income from rents and dividends decline from the mid to late 20’s until rent income starts to rise in 88/89 and dividends income changes direction in 2000.
I would say that savings is a function of income from wages (updated) and interest rates. There could be a factor related to people investing in entrepreneurship, but it is a special circumstance. That the trend for savings is down after the Reagan revolution continues to suggest to me that we have changed our thinking about how to make money.
As to Cactus’s concern about increased savings in a down turn, I looked a the individual quarters of each recession (years prior to 1947). Overall, savings goes down during the recession. When it goes up, it is an oddity. They are 1969, 1980 and 1990. The 1969 is truly odd in that the rise is a change of 1.5 where as the other two are only 0.5. And they we have 2001 with it’s one quarter that has a freakish increase followed by a death dive.
Recessions via NBER
8/1929 to 3/1933 43 months 4.5 to -1.5 (4.5, 4.1, 3.9, -0.9, -1.5 by year)
5/1937 to 6/1938 13 months 6 to 2 by year
2/1945 to 10/45 8 months 20.4 (years around the war 41 to 46: 12.2, 24.1, 25.6, 26.1, 20.4, 9.6)
11/1948 to 10/1949 11 months 8.0 down to 4.3 (8, 5.9, 4.7, 5, 4.3)
7/1953 to 5/1954 10 months 8.4 down to 7.4 (8.4, 8.4, 8.6, 7.4)
8/1957 to 4/1958 8 months 8.6 down to 8.3 (8.6, 8, 8.4, 8.3)
4/1960 to 2/1961 10 months 7 to 8 (7, 7.4, 7.1, 8)
12/1969 to 11/1970 11 months 8.5 to 9.9 (8.5, 8.4, 9.5, 10, 9.9)
11/1973 to 3/1975 16 months 11.7 to 9.8 (11.7, 11.2, 10.2, 10.1, 11, 9.8)
1/1980 to 7/1980 6 months 9.5 to 10 (9.5, 9.9, 10)
7/1981 to 11/1982 16 months 11.5 to 10 (11.5, 12.2, 11.6, 11.8, 11.4, 10)
7/1990 to 3/1991 8 months 6.9 to 7.3 (6.9, 6.9, 7.3)
3/2001 to 11/2001 8 months 1.9 to 0.5 (1.9, 1.2, 3.4, 0.5)
Cactus mentions GW’s worst years. It is interesting when we look at interest, rent, dividends and entrepreneurship.
For the 90 to 95 group we see their income coming from dividends (1.5 rise to 1.9) and rent (.03 rise to 1.2). Are we seeing the effects of investing in 401K’s and real estate? Interest goes down from 2.1 to 1.8% of total income.
The 95 to 99 group is the same. Dividend rise from 3.2 to 4.7 and rent from 1.8 to 2.2 with interest income declining from 3.9 to a low of 2.9.
Even the top 1% is similar. Dividend income rises from 4.2 to 6.6. Rent rises from 2.5 to 2.7 and interest declines from 5.1 to 4.8.
Income from interest is at it’s lowest in 2004 for all 3 groups.

But, when we look at the top 0.1% we see the greatest rises here. Dividends goes from 5.2 to 10. Rents don’t rise as great as the lower 2 groups going from 2.9 to 3.1. However, interest income does the opposite of what we saw, it rises from 6.7 to 7.1. The other groups fell.

The key to the puzzle I believe is in the income from entrepreneurship and the amount of income in the top 1%. For the lowest 2 groups income from entrepreneurship rises. 5.0 to 7.4 in the 90 to 95 group, 18.9 to 21.5 in the 95 to 99 group. The top 1% has a healthy change from 26.5 to 29.1, but the top 0.1% only rises form 31.3 to 35.1. As a % change this is the smallest.

The income in 2005 for the top 1% was approximately 2.5 trillion dollars. In 2005 the top 1% has about 22% of the income, the top 0.1% has 11%. We are talking a lot of money in the top 0.1%. I think it is enough to influence savings when you consider that the 0.1% group is earning a rising percentage of income from saving type investments than from income generating investments. They are the only group with an increase in income from interest. The rest of the people, mainly the 90 to 99% group are putting their money into things that make income. That is business, income generating real estate and stocks .
Thus, what we are seeing is a trend that as income goes up (with the majority from wages for all) people put their money in to savings vehicles of less risk. The 0.1% crowd is packing it away in interest bearing stuff. Those at the lower end will try to increase their income via income generators; entrepreneurship and rents. Being that equity does not count as savings, such only shows up in rents. Entrepreneurship would not show up in the savings rate either. It appears we have a transition from trying to increase income via work through entrepreneurship and real estate to more passive income of dividends to just plain playing it safe with interest when you have income that puts you in the stratospheres (about $5.5 million per year) as oppose to the $96K entry fee to the top 10%.

More on Income and saving the rustbelt

This is a continuation of looking at the income of the top 10% of this country. Before we go further, let’s look at what kind of a money machine we are when compared to other countries.
This is a chart of GDP by country for 2005 based on data from

We seem to be quite the money generator. Japan, being next in line is only 36% of us. However, look at GDP per capita:

To accomplish what Switzerland has achieved we would have needed 16% more in GDP for 2005. That is raising our’s from $12,455 trillion to $14,453 trillion. Switzerland is considered to have a more equal distribution of income with the top 20% taking 40.3% compared to us (or US) at 49.7%. The wealth held by the top 10% is 71.3% for Switzerland and 69.8% for us. If you would like to see more on distribution, this article has a bar chart of income for the middle class as a percent of the top 10% by country.

Households in the top quintile, 77% of which had two income earners, had incomes exceeding $91,705. Households in the mid quintile, with a mean of one income earner per household had incomes between $36,000 and $57,657.

Recall that for the top 10% we are talking breakouts of:
90 to 95% $110,424
95 to 99% $176,925
99 to 100% $812,497
At 90% $96536, at 95% $130,373 at 99% $310,062.
The low limit for the top 20% is $88,030 (Wikipedia). The average individual income for a college graduate is $45,500 (2004, Wikipedia).

I point all this out because I believe our thinking about what middle America is, as defined by the American dream needs to reconsider the income it actually takes. The bottom of the top 20% is not far from the start of the top 10%. I thus question what are we talking when we talk “middle America”? Is it based simply on an income number at the peak of a curve, or does it refer to a defined life style? Part of the American Dream is home ownership (yes we all know that ownership is at record highs, for now anyway). Yet according to this study, they find:

However, most of the gains have been among families without children and upper-income families with children. The study defines upper-income families as those families that earn above 120 percent of local area median. In 2003, the homeownership rate for upper-income families with children was 90.8 percent, while the rate for their low- to moderate-income counterparts was significantly lower at 59.6 percent – yet in 1978 some 62.5 percent of low-to moderate-income working families with children owned their homes.Ultimately, had the 1978 homeownership rates for working families with children prevailed in 2003, an additional 2.3 million children would now be living in owner-occupied homes.

If you would like to see how your area is performing, they have an interactive page that let’s you choose the location and the jobs.
The dream seems now only to be a definite with a 2 person, college educated and working household. That combination is not far from being in the 10% group. Thus, we have raised the dream to something beyond which a large portion of the population will not reach considering only 28% have a 4 year degree even though 64% of high school students are entering college. It looks even worse with people suggesting that you need an IQ of 110 to succeed in college. I mean, can we push the dream any further out or be anymore aristocratic in our arguments? While we have done this, the median income for a bachelors has been going down from a high in 1999 of $70,925 to $68,728 in 2003. In fact, all levels of education have seen a decline and anyone with an associates degree or less has seen the median decline to less than that earned in 1991. But it does suggest that 2 people with an associates could even be in the top 10%!

Was the American Dream based on 2 people working or 1? Was the dream that more people would obtain it or fewer as time passed and the country earn more?

We have now arrived at that entity called income. The thing that is so necessary to get the American Dream (or save a state or few). The following 4 charts look at the 4 sources of income: wages, entrepreneurship, dividends and interest based on sub groups of 90 to 95%, 95 to 99%, 99 to 100% and 99.9 to 100%. The first is dividends. It is obvious, the top is not getting the money from this.

The next is interest. The only curve I found that looked similar to the post 1950’s is the federal fund rate. So, it appears that as THE bank raises what it will charge, people will take some advantage of it. There is a lag in the time the rate starts to decline and when the population moves from this form of income.

Next is entrepreneurship. I think this shows, that something more than freeing up capital has to happen to generate a shift of earning money from just going to work to earning money from creating work. Note how it moves counter to income from interest.

Even those in the low end of the top 10 take advantage of a life altering event. But, it is clear just going to college is not going to push an entrepreneurial spirit considering this lower 90 to 95% group is at the upper end of the college degree for a single person working. They show minimal initiative toward self reliance in producing income for themselves. The next chart confirms this. They do take advantage of interest rates rising, but they are not buying companies or shares of companies to make money. They are following the what I would consider the American Dream, go to work, earn a comfortable living that supplies the comforts and advantages of modern living.

Finally is the share of income from wages.

The lower end of this group is not seeing an increase of income from wages. But look at the change in the top 1% and the top 0.1%. They have the greatest increase of their income coming from wages. The entire top 5% sees this, but it is the very top that is seeing a doubling (32 to 63% for the top 1%) and tripling (18.1 to 58.2 for the top 0.1%) of the percentage from wages. Where do you suppose such an increase in income via wages could be coming from? What is the motive or reasoning?

So, the very top is getting a higher share of the income we (all of US, they don’t do it alone) generate via starting companies and then are paying themselves greater shares of the income said company generates. Is this not greed? Or is there an insulating effect do to globalization? I believe it is both and frankly don’t care which came first. Is this what we would expect if supply side tax cutting was raising all boats as suggested? It sure is not trickling down. I say it is not what would be expected. I would not hypothesize that we would see only the top 5% contributing to growth via entrepreneurship as compared to the pre 1929 crash when the top 10% contributed toward growth via entrepreneurship. Loosing the 90 to 95% group to wages is most telling as to how much the American Dream is one of an implied contract based on labor and not on entrepreneurial freedom. It is also a sign of failure of policy if promoting entrepreneurship as a viable means of obtaining the American Dream was the goal.

These charts show that everyone is earning the majority of their money by working for someone. Again, the American dream is based on labor supplied to another, even for the highest income earners. If we are going to change what is happening in Michigan or Ohio or in this country, we are going to have to figure out a way to get those who decide how much some one will be paid to start paying more to those below the top 1% because the top 1% is where the greatest concentration of income is happening and it’s happening through wages. It is not that we don’t have the growth and thus don’t have the money. We have it.
Update: I have fixed the link for the dividends chart and removed one that was a dead end. Sorry for the mix up.

Tax breaks for dogs?

Here’s a little fun one for you. Should pets, in this case dogs, be tax deductible like children? That’s right. From a person comes up with this proposal:

My husband & I have no children because we cannot afford to have children living on Long Island. But we do have 2 dogs – 2 very expensive dogs – and they are our kids. If I should mistreat, neglect, abuse or deprive my dog of health care in any way, I can be arrested for animal cruelty. But yet, here we are, spending thousands and thousands of dollars each year giving my dogs the best care in emergency and non emergency situations, what do we receive? My proposal is to be able to declare my dogs as dependents on my taxes at the end of the year.

Just to put this in perspective, page 13:

The number of families with children under 18 is projected to increase minimally from 32.6 million in 1995, peak at 33.2 million in 2001, and then slowly decrease to 32.2 by 2010

Google Answer presents:

New figures just released from APPMA’s 2005-2006 National PetOwners Survey (NPOS) show pet ownership is currently at its highest level, with 63 percent of all U.S. households owning a pet which equates to more than 69 million households. That’s up from 64 million in 2002 and 51 million in 1988 when APPMA’s tracking began.

There seems something odd about these numbers for a nation that professes to be pro children.

If you would like to read more letters for or against you can go here. There are 2500 already with 49% running in favor.
If you would like to send your own letter go here.

Click on either the dog should be or should not be letters. At the bottom of the page is a letter that starts with should or should not be depending on which you clicked.

Has Jacob Marley been visiting?

After reading Stormy’s post on global warming posted Thursday, 3/12, I heard on NPR’s Market Place today, Thomas Friedman’s solution to the problem – Greed. (Green with a D) Now, there is something wrong I think when a negative character trait is professed as a good thing and a necessity to solve a community problem. It’s to bad he did not stop at this:

that basically argues that green is the most strategic capitalistic — and I think progressive — ideology now for rebuilding America’s future. By confronting climate change, by taking the lead in doing that, by setting really high standards for our industries and businesses, we are gonna stimulate, we can stimulate an enormous amount of innovation. Innovation that will really strengthen our companies to compete globally in what is clearly going to be the next, great, global industry

Is this the work of the ghost of Marley?
But, then I read PGL’s post on a review of a book that challenges the Church of Global Trade. In the interview of Gomory at The Nation, and the author notes:

Public investment in new technologies and industries, I would add, may not achieve much either, if there is no guarantee that the companies will locate their new production in the United States

Mr Gomory’s solution:

He wants to re-create an understanding of the corporation’s obligations to society, the social perspective that flourished for a time in the last century but is now nearly extinct. The old idea was that the corporation is a trust, not only for shareholders but for the benefit of the country, the employees and the people who use the product. “That attitude was the attitude I grew up on in IBM,” Gomory explains. “That’s the way we thought–good for the country, good for the people, good for the shareholders–and I hope we will get back to it…. We should measure corporations by their impact on all their constituencies.

You think old Marley’s bones got to him too?
Which leads me to Bruce Webb’s comment (comments I agree with) in Stormy’s post:

Any changes that don’t ultimately cut costs or boost productivity are in that light a violation of his charter.

Charters are granted by “we the people”. They are a privilege. They are not a right. We have the ability to solve the destruction of the environment. We just have to remember that the economy functions for us. What do we want it to do?

I think Lee Iacocca had a visit too. He has a new book out. It begins:

Am I the only guy in this country who’s fed up with what’s happening? Where the hell is our outrage? We should be screaming bloody murder. We’ve got a gang of clueless bozos steering our ship of state right over a cliff, we’ve got corporate gangsters stealing us blind, and we can’t even clean up after a hurricane much less build a hybrid car.

But it is this bit, almost at the end of the excerpt that made me chuckle:

We didn’t elect you to sit on your asses and do nothing and remain silent while our democracy is being hijacked and our greatness is being replaced with mediocrity. What is everybody so afraid of? That some bobblehead on Fox News will call them a name?

Yup, Marley’s been a very busy ghost. Can’t wait to see the results after they all get their visits from the past, present and future ghosts.

More info for saving Michigan and Ohio

This is a continuation of my previous post on what to do to help out Michigan and Ohio. (or the rest of the nation for that matter). I suggested that there is plenty of money in this country, we just need to find a way to reduce a trend that has lead to the top 1% gaining a larger percentage. Currently at almost 22%, up from 8.8%. We have been living under the theory that high tax rates (personal or otherwise) have harmed the entrepreneurial spirit and thus harmed growth. We as a nation have prided our self on the free spirit industrialness of our character. We bragged about the small business being the engine of our economy. Jobs, jobs, jobs is the answer we’re told. But consider this by Harold L. Wilensky, U of C , Berkeley, written in July of 1991:

“Not only is job creation unconnected to unemployment but it is
unrelated to economic performance generally. Take real GDP growth per capita
for 18 countries (exclude Israel):
In the pre-shock period, the more job creation, the less growth but the relationship is insignificant (r – -.14).
In 1974-79, the relationship is positive but insignificant (r = .33).
Only in 1980-84 is job creation significantly and positively related to real growth (r = .57); the more job creation the more growth. But in the three years after that the relationship disappears (r = -.07 for job creation 1985-87 and growth 1985-88).
Further evidence of the ambiguous meaning of job creation is the absence of any relationship to inflation (r = -.23 in the pre-shock period; r = .13 for 1975-79;r= .13 for 1980-84; r = .13 for 1985-88).
The statistical picture for 18 countries from 1965 to 1988 is consistent. There are no statistically significant correlations between job creation and the index of economic performance for any period.”

Dr. Wilensky at the end of his paper writes: If employment is expanded by the rapid creation of low-paid service jobs, an increasing number of them part-time or temporary jobs taken by people looking for fulltime work; a steady drop in real wages; and increases in the rate of family breakup (forcing single parents to work with grossly inadequate childcare arrangements), while productivity increases fade and international competitiveness and trade balances deteriorate, we can ask, “Is this progress?”
He then goes on to predict based on the resultant low wages: we incur all the costs of mass insecurity, industrial conflict, ungovernability, and unproductive welfare spending evident in my analysis of economic performance and party decline…
And here we are in 2007!

That’s the job issue. Concern about the types of jobs are always voiced when we discuss the numbers. I believe Cr. Wilensky has qualified that concern. We need to consider what we are creating. But, what about the actual creation that has gone on? Is there more entrepreneurial activity if we free up the money? We have allowed faster depreciation, cut corporate taxes and the top income tax rates along with capital gains tax. All things that effect the upper income earners. Using Piketty and Saez data which looks at the top 10% of income earners and then breaks out the subgroups within, I have graphed three groups: 90 to 95, 95 to 99 and 99 to 100. This posting is looking at each of the three groups make up of income. I will post each type of income in the next posting.

At AB we look at GDP over time and job growth as indicators of how well one time is doing compared to another. I did not think there was a need to post graphs of these, especially considering the above. But, we are trying to determine if all this freedom from taxes has benefited us. Is the money going back into the country in a manor that raises all boats? So, lets also look at capacity utilization (BEA does not go back further than 1967 for this number).
And Net Non-Residential Investment

And Export % Change

What follows are the 3 graphs of subfractions of the top 10%. The income for each group is:
90 to 95% $110,424
95 to 99% $176,925
99 to 100% $812,497
At 90% $96536, at 95% $130,373 at 99% $310,062.
It appears that the lower part of the top 10% is not much out of the range for what would be middle class had wages kept pace with GDP and productivity.
Note that each group is benefiting from rising wages and not so much from the passive incomes of interest, dividends and rents. Interestingly, interest income starts to decline after 1930 and doesn’t see a real bump until the 80’s ending in the mid 90’s. The largest increases in share of income from wages is the 95 to 100% crowd. Rent’s and dividends just seem to be going down. But the real line to look at is entrepreneurial income (self-employment, small businesses, partnerships). Is this what is referred to in the supply side theory/ownership society? Every time this line is going up, income from wages is going down. Only the top 5% are showing any real initiative. Yet, before the big crash, even the lower half of the top 10% had an increasing share of their income from personal initiative. Some say that the Clinton years were do to the luck of the computer age reaching a critical mass. When you look at the entrepreneurial lines, there appears good reason to believe so. The only other time when everyone was rushing to be an entrepreneur was WW2. Funny that we are in a “war footing” now and entrepreneurship is rising?
The first graph is what I would expect considering the income levels. Is not the middle class looked at as being the class who goes to work every day for the business owners?
The second graph suggest that this is the level of income at which people will consider moving toward self sufficiency. What we would expect from our upper middle class?

The third chart is where the big payday is. If the theory is correct would we see a somewhat similar curve in the rise of entrepreneurship as we see in wages? Is this what we would expect from the supply side, tax cutting crowd?

Lets put it all together. We sense that it is about quality of jobs and not quantity and have correlations from 1991 that suggest such. We seen a decline in capacity utilization over time, a peak in net non-residential investment that coincides with the computer age along with similar peaks in entrepreneurship. But, non of it shows the activity of WW2. And, none of it puts a dent in the fact that everyone is basically just going to work and earning a living. With these charts, the better the quality of the job, the better the income. I don’t think these charts support that we need to keep freeing up capital. They certainly do not bode well for the idea that everyone is independent and just needs to apply themselves to get be more financially secure. Instead it is more like that feeling that everyone just wants a “good” job that will allow them to have the American dream. A home, couple cars (used even), college for the kids, vacation and freedom from fear of financial ruin. The charts suggest to me that our economy needs a real, new to the human race event to spur growth via investments. Like say an industrial revolution, or a war or electronics revolution. Something where an existing core technology reaches a critical point in development that then creates a new sector of an economy. Something where there are no established players (think the failure of Tucker, DeLoraine, Bricklin, etc). I would say maybe energy could be the next biggy. Certainly anything related to environment; like getting rid of garbage.

Answering the Vicious Cycle

Well, Save the Rust Belt inspired me to make my first, self posted posting.

Save the Rust Belt appears to be asking for help in his posting about the downturn of Michigan and Ohio. So, I thought this is a good post to jump on to start a line of solutions as oppose to just looking at data and trends. Let’s put that knowledge to work on his question: is there anything anyone can do, …?

I answer: Yes, there are things that could be done. But it means reversing years of rhetoric about what the purpose of an economy and a government are. I mean, what is a company’s only purpose, only reason to exist?
Is an economy truly an entity unto it’s self?
Is government us or not?
Who or what is serving whom here?

I’ll start. Lets produce policies that reverses the rise of income to the top 1%. Letting them have all that money has not caused the economy to grow any faster than in the past. It certainly is not being turned into investment in this country in an amount equal to their acquisition.

We’ll take it back to 1981 the beginning of St. Reagan. From 21.83% (2005) to 10.02%. Using BEA’s table 2.1 total national personal income and Saez-Piketty’s data we free up $1209.27 billion in 2005. That leaves 1025.97 billion to the top 1%. Or $2.578 million to each of the 397, 900 tax units that make up the 1%. Using the labor force for 12/05, that gives $8055.73 dollars to all those potential workers.

To much you say? We’re being to hard on the top? Ok, how about we go to the end of St. Reagan’s time and let them have 14.49%? We free up 751.56 billion and leave them with 1483.66 billion or $3.728 million each. This gives those potential workers another $5006.52. I’ll even be progressive in this top 1% being that the average income goes from $370,887 for the top 1% to $695,764 for the top 0.5% to $2,316,353 for the top 0.1% to $14,027,614 for the top 0.01%.

Remember, these are numbers just for 2005.

So, there is the money. Now, how do we want to get this extra $5K to $8K each to the labor force? I assume it will not all be give as a direct payment. Anyone?

Divorced one like Bush