Obamanomics: the rich get richer, the poor get poorer
How’s “income inequality” looking after six years of the most left-wing president in modern history, Reuters?
The gap between the richest Americans and the rest of the nation widened after the Great Recession, a survey by the Federal Reserve showed on Thursday, suggesting deepening U.S. income inequality.
Though incomes of the highest-earners rose, none of the groups analyzed by the Fed had regained their 2007 income levels by 2013, underscoring deep scars from the financial crisis and its aftermath.
The data comes from a massive survey of consumer finances conducted by the Fed Board of Governors every three years. Many other studies have also shown the lasting effects of the recession and documented rising income disparity in the United States.
Well, I’m sure the toddlers with say it’s all Bush’s fault. Once we’re down to just adults in the room, we can talk about this as part of Obama’s failure to steward anything resembling a healthy recovery. He handed off a lot of money to his rich cronies, he worked up monetary policy that amounts to running an IV tube from the Treasury to Wall Street, he implemented policies that crushed job creation and encouraged the conversion of full-time jobs to part-time work, and he’s given us a titanic Food Stamp Nation whose residents find the notion of seeking employment illogical. It’s not surprising that the rich would get richer, while the poor got poorer.
The Fed survey released suggests that wealth and income is concentrated not just within the top 1 percent, as some analyses have suggested, but actually among a slightly broader slice of the ultra-rich: the top 3 percent.
From 2010 to 2013, average income for U.S. families rose about 4 percent after accounting for inflation, the survey showed. All of the income growth was concentrated among the top earners, the survey showed, with the top 3 percent accounting for 30.5 percent of all income.
The disparity was even greater by wealth, with the top 3-percent holding 54.4 percent of all net worth in 2013, up from 51.8 percent in 2007 and 44.8 percent in 1989.
People that have a lot of money tend to buy a lot of assets? Shut up. I did not see that coming. Meanwhile, thanks to Democrats such as Barney Frank, Chris Dodd, and Barack Obama, the housing market has been taken on a roller-coaster ride that prevents the middle class from employing its traditional means of converting income to wealth: buying a home.
Fed Chair Janet Yellen has called income inequality a disturbing trend, attributing some of it to the weak jobs market but also to underlying trends like technology and globalization.
Oh, no, we’re not going to start blaming Obama’s failures on ATM machines again, are we? Are we going to pretend he’s the first President who had to deal with technology and global trade? A competitive and robust economy has no reason to fear such forces. Instead, Democrats are trying to build higher walls on the coasts, to prevent job creators from escaping their tax-and power-hungry system, while erasing the southern border entirely. Let’s see how “income inequality” is looking after we dump a few million unskilled, low-income, asset-free illegal immigrants into the equation.
There was a healthy trend of the middle class becoming an investor class that ran from the Nineties into the mid-2000s, but that’s all behind us now:
Overall for U.S. families, wealth stabilized from 2010 to 2013, after falling sharply during the prior three years. Fed economists attributed that pattern to the declines in home and business ownership during the recession, which stripped many families of their biggest sources of wealth.
Families with income in the bottom half of those surveyed reduced their participation in retirement plans, continuing a trend seen from 2007 to 2010, but middle-income families increased their participation somewhat, the survey found. Still, overall participation rates were down from levels seen in 2007.
Although wealth did not change much overall, many measures of debt decreased, the survey found, driven largely by declines in home ownership. On average, debt fell 13 percent.
If the reduction in debt came because people aren’t buying homes, that’s not very good news. Incurring debt to purchase an asset that will hold or increase its value, or if nothing else provide people with debt-free housing after the mortgage gets paid off, is preferable to a lifetime of paying rent and having nothing to show for it. I guess we’d have to know some more about which income group was lightening its debt burden, and exactly why, to draw any conclusions about economic health.
Income-inequality politics remain a highly subjective game, in which extremely complex economic statistics are blended into factoids that support political agendas, convicting society for an ill-defined “crime” it somehow committed without breaking any laws. It’s a game that gets people in the lower and middle classes comfortable with a declining standard of living, provided they can be made to believe some rich guy somewhere is suffering worse than they are – a laughable proposition even when the rich do get soaked, and can’t find a way to avoid confiscatory taxes. But Obama brought his loyal supporters the worst of both worlds: a declining standard of living and a widening gap between the rich and poor.
Since empowering a gigantic activist government to micro-manage the economy is making income inequality worse, how about trimming that government back, unleashing entrepreneurial energy, stimulating massive full-time job creation, and seeing how the inequality stats look… or whether a prosperous middle class really cares about how well the Top Three Percent are doing? We always talk about “job” creation, but what the middle class really wants are careers. Long-term employment with a stable company is the mechanism average people employ to accumulate both wealth (investments, assets) and capital, as their labor becomes increasingly valuable.
Therein lies the rub, of course. The Left likes a moribund economy, declining standards of living, and increased dependency on government because that makes people bitter – more likely to see themselves as victims, more willing to support politicians who promise to punish their “oppressors,” more inclined to see life as a zero-sum game in which everything is given or taken rather than earned. In a vibrant and prosperous land of abundant employment and wealth creation, nobody gets really worked up about “income inequality.”