RSS 2.0
Add to Technorati
Save to Del.icio.us
Take it backA Boom That Wasn’t
The New York Times has an excellent article on the state of the current US economy.
One of the key points that they bring up is that traditionally, boom and bust cycles result in higher purchasing power and better lifestyle to the people during the boom cycles. Unfortunately, this is not necessarily the case in the US.
For instance, at the end of the 2000 economic expansion, the median American family’s income was $61,000. In 2007, it was $60,500. If anything, the American middle class is not just stagnating — it is recessing, made worse by inflation and high gas prices.
Contrast this between the real median family income that quite literally doubled from the 1940s through the late 1970s. In the three decades since, it has barely risen by 25%.
One of the most critical problems facing our country today is education. The US is lagging far behind compared to the rest of the world, and despite faulty programs like “No Child Left Behind” has one of the lowest graduation rates among developed countries.. Another one is public infrastructure — a lot of money that’s currently spent is on useless pet projects, while the larger infrastructure needs aren’t being met. And of course, there is the issue of health care and the fact that a significant portion of Americans cannot afford to take care of themselves.
Finally, there is the age old issue of tax cuts which are supposedly favorable to the higher-income bracket groups versus the lower-income bracket groups (this is the one point that I disagree on).
But either way, it is a good point, and a very insightful one in a very sad way.
Milorad Said,
April 14, 2008 @ 9:15 am
Those figures are interesting. I’m not sure I understand how it’s possible for a boom period not to result in an increase in wages. I’d be very concerned if that were the case here, during our current bounding economic state.
I’m with you on the tax cuts though. I can certainly see the need for paying tax in increasing brackets, as opposed to fixed percentages, but I don’t necessarily believe that the government should ever be able to take 43% of your income (the way they do here), regardless of how large the other 57% is.
Tax cuts often favour the higher brackets in terms of percentage, even here where tax is quite high… but ultimately the higher brackets are being tapped quite heavily in the first place.
While it’s not really fun for joe schlub to hear about how much extra his boss gets to sink into his new boat, it’s important to remember that there’s always a reason why people are in those higher tax brackets – and luck is rarely the biggest factor.
Karthik Narayanaswami Said,
April 15, 2008 @ 12:27 am
I think the point that they are trying to make is not necessarily that there are no increases during the boom period, but rather that the post-boom median figures are lower than the pre-boom median figures.
And I completely agree with you on the tax cuts. The thing is, while I do understand that a lot of people have insane amounts of money, I do not see how that could be the justification for taking a significantly higher percentage of your income.
The problem is that folks blame free market, but regulations have never let the market make its decisions. I doubt true Laissez Faire styled economies could exist anywhere where people think that it is okay to tax the rich purely because of their relative wealth. Even in the US, rather than the market play it out, protectionism and Fabian-styled capitalism are practiced.
I’m sorry for the rant, but it is something that irks me the wrong way.