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Tuesday, November 27, 2007
Thomas Sowell :: Townhall.com Columnist
That "Top One Percent"
by Thomas Sowell
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People who are in the top one percent in income receive far more than one percent of the attention in the media. Even aside from miscellaneous celebrity bimbos, the top one percent attract all sorts of hand-wringing and finger-pointing.

A recent column by Anna Quindlen in Newsweek (or is that Newsweak?) laments that "the share of the nation's income going to the top 1 percent is at its highest level since 1928."

Who are those top one percent? For those who would like to join them, the question is: How can you do that?

The second question is easy to answer. Virtually anyone who owns a home in San Francisco, no matter how modest that person's income may be, can join the top one percent instantly just by selling their house.

But that's only good for one year, you may say. What if they don't have another house to sell next year?

Well, they won't be in the top one percent again next year, will they? But that's not unusual.

Americans in the top one percent, like Americans in most income brackets, are not there permanently, despite being talked about and written about as if they are an enduring "class" -- especially by those who have overdosed on the magic formula of "race, class and gender," which has replaced thought in many intellectual circles.

At the highest income levels, people are especially likely to be transient at that level. Recent data from the Internal Revenue Service show that more than half the people who were in the top one percent in 1996 were no longer there in 2005.

Among the top one-hundredth of one percent, three-quarters of them were no longer there at the end of the decade.

These are not permanent classes but mostly people at current income levels reached by spikes in income that don't last.

These income spikes can occur for all sorts of reasons. In addition to selling homes in inflated housing markets like San Francisco, people can get sudden increases in income from inheritances, or from a gamble that pays off, whether in the stock market, the real estate market, or Las Vegas.

Some people's income in a particular year may be several times what it has ever been before or will ever be again.

Among corporate CEOs, those who cash in stock options that they have accumulated over the years get a big spike in income the year that they cash them in. This lets critics quote inflated incomes of the top-paid CEOs for that year. Some of these incomes are almost as large as those of big-time entertainers -- who are never accused of "greed," by the way.

Just as there may be spikes in income in a given year, so there are troughs in income, which can be just as misleading in the hands of those who are ready to grab a statistic and run with it.

Many people who are genuinely affluent, or even rich, can have business losses or an off year in their profession, so that their income in a given year may be very low, or even negative, without their being poor in any meaningful sense.

This may help explain such things as hundreds of thousands of people with incomes below $20,000 a year living in homes that cost $300,000 and up. Many low-income people also have swimming pools or other luxuries that they could not afford if their incomes were permanently at their current level.

There is no reason for people to give up such luxuries because of a bad year, when they have been making a lot more money in previous years and can expect to be making a lot more money in future years.

Most Americans in the top fifth, the bottom fifth, or any of the fifths in between, do not stay there for a whole decade, much less for life. And most certainly do not remain permanently in the top one percent or the top one-hundredth of one percent.

Most income statistics do not follow given individuals from year to year, the way Internal Revenue statistics do. But those other statistics can create the misleading illusion that they do by comparing income brackets from year to year, even though people are moving in and out of those brackets all the time.

That especially includes the top one percent, who have become the focus of so much angst and so much rhetoric.

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About The Author
Thomas Sowell is a senior fellow at the Hoover Institute and author of The Housing Boom and Bust.
 
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We ARE living in a gilded age, though...

1928 was the peak of the last gilded age. Arguably we are at, or just slightly past, the peak of this one. And the thing about a gilded age is that people really don't realize that they are living in it until afterwards.

I don't know about SanFranSicko but housing prices in MetroBoston are what they are only because people are willing to pay them. There is a bubble of speculation that will, eventually, burst. Dr. Sowell will have the fancy terms for this, but bubble bursting is what it is.

And when the bubble bursts, when the baby boomers have to liquidate their properties (plural) to pay for their old age, when the various funds (including academic endowments) that have speculated in sub-prime mortgages have to absorb the losses, when people start defaulting on credit card debt and don't have attachable assets in bankrupcy -- when all of this starts happening, the bottom will fall out.

There will be an "adjustment."

Folk who should have been in the middle class but who made stupid short-term decisions that got them into the upper class will become members of the lower class for a while, likely the rest of their lives. As happened in the 1930s...

And there will be a political change, but instead of FDR we may well see an anti-Washington movement...

Cheap tricks
Dr. Sowell's article demonstrates that the left employs two very clever but cheap tricks to advance socialist/liberal/progressive ideology: (1) Confusing a measure with the thing measured, and (2) converting the measure to a concrete thing.

To explain, let's say that "National Income" is a measure of all of the incomes of all Americans. Again, it is nothing but a measure. However, the left takes this measure two steps further, first by ignoring that National Income is nothing more than the sum of individual incomes and is thus a purely virtual number, and then by treating National Income as if it were a concrete thing just as real as individual incomes.

Once this final step is complete, the left starts talking about "shares" of National Income, as if individual Americans enjoyed a concrete, moral entitlement to a fair share of something that exists only virtually. By this slight of hand, the left legitimizes class war in theory.

But in practice, real Americans know that they can only spend what they earn, which is their real individual incomes, which fluctuate year to year. And because real individual incomes fluctuate year to year, the left's reification of class measurements also fails in practice.

Perhaps most Americans are too clever to be fooled by the left's clever bait-n-switch economic tricks. Perhaps not. We'll see.

Good one DR. Sowell
Kepp on debunking these liberal myths (lies) about the rich gettng richer and the poor getting poorer. Keep the Myth Busters going with the sunlight exposing the "money divide" in the country and how they do it with statistical number manipulation.

The conscience of a liberal (Krugman)
Paul Krugman (of the NYTimes) has a new blog that is titled "The Conscience of a Liberal".

In his introduction to the new blog, Krugman explains the name of his blog : "... because the politics and economics of inequality will, I expect, be central to many of the blog posts .."

The first thing that struck me, as I read Krugman's post, was that it exposes his view that economic equality is (and should be) the yardstick by which the success of a political or economic system should be measured. He doesn't seem to care whether equality is achieved by spreading poverty, or by raising the economic level of those who are poor. The 'great compression' that he speaks of in glowing terms was caused by the Depression; FDR's New Deal helped in prolonging the length and severity of the Depression . In Krugman's world, those were good times, because everyone was relatively poor!

Later in the article Krugman notes that: the great reduction of inequality that created middle-class America between 1935 and 1945 was driven by political change; I believe that politics has also played an important role in rising inequality since the 1970s. It’s important to know that no other advanced economy has seen a comparable surge in inequality .."

It is difficult to understand how a trained economist like Krugman can miss the point about Capitalism being a political and economic force for good. FDR's experimentation with socialism took America away from the path of Capitalism - and our society paid dearly for it. The period of equality that Krugman praises was actually one of unemployment and shortages.

http://voice.townhall.com/g/c61de289-ca22-4ff1-af35-7bb049f 00c67

Leftists are correct ...
... Capitalism IS harsh and gritty

Leftists often complain bitterly about the harsh grittiness of Capitalism.

In their view, Capitalism suffers from the following fatal flaws:

* it creates a society that is competitive - some would say that it is brutally competitive
* it rewards risk-taking, but punishes mistakes
* it does not provide a safety net for the less competent

The above flaws, Leftists say, can be removed by means of a layer of control (usually via the Govt), acting as a benevolent force for good. Although well-intentioned, those controls inexorably chip away at the source of Capitalism's power - the freedom of individuals to improve themselves, thereby reaching a higher level of success.

The result is often much harsher, and certainly a lot grittier! Opponents of Capitalism would say that the lack of success of the alternatives just mean that they (e.g. Soviet Russia, Cuba, North Korea) just didn't find the right mix of benevolent Government and freedom. They would like to tweak the recipe and keep trying, in the hope of finding that magic formula.

The reality is that the very concept of a well meaning 'nanny' Government kills the incentives and the accountability implied in Capitalism. The safety net of a mixed economy is not protectively under citizens - it is above them, keeping them down, eliminating that which makes people work harder, take risks and prosper.

By ensuring the best use of resources, Capitalism reduces the overall level of poverty. The fact that this is achieved without it being a stated goal renders moot the effusive smarminess and sloganeering of Leftist propaganda.

(more)
Our country was founded on the basis of freedom. A novel idea, this meant that people were free but Govt was bound. Americans were free to do anything except those few actions that were legally proscribed (murder, robbery etc). On the other hand, Govt was bound to do only that which it was permitted, by the voluntary consent of citizens.

In economics, the above priniciples led to Capitalism. After all, unlike other economic systems, Capitalism isn't a rigid set of rules - it is what naturally evolves in the marketplace when there is an absence of Govt control.

With its philosophical underpinnings of freedom, and its economic incentives aligned with human predilictions, the American economy sputtered to life. Within two centuries of its birth - a relatively small time span in terms of societal evolution - it became a roaring engine that sustained the growth of a magnificent nation. Before long, it became the dominant economy in the world. This was because most of the other countries were mired in the muck of monarchy, feudalism or savage cannibalism (aka socialism) in which the economic incentives ran counter to individual desires. The stated intentions of the Governing class in those countries had very little to do with their actual outcomes - they were doomed because of their misaligned incentives.

Somewhere along the line, the "meddlers" awoke in America. (contd)

(contd)
Somewhere along the line, the "meddlers" awoke in America. Mostly these were 2nd or 3rd generation Americans who inherited (rather than earned) their affluence. A generation or two removed from the mostly virtuous actions that had led to their affluence, they felt culturally deprived, strangely envious of other cultures that had cultural legacy, but weak economies. They donned the mantle of "intellectuals" and embarked on the process of "improving" the barbaric conditions that Capitalism had imposed on America. They found many people in other countries who were envious of America's affluence, but who sneered at its perceived gaucherie and gaudiness. This didn't keep them from shamelessly riding the coat tails of American success (which they disparaged) while seeking economic and/or military support from Americans when their so-called elite & cultured societies faltered.

With altruism as a stage-prop American 'intellectuals' were able to convince many people that Capitalism was savage and unkind. In a way they were correct - Capitalism is all of those things, but it works because it is consistent with proclivities of free human beings.

The intellectuals used religion-inspired altruism to denigrate the very concept that had led to prosperity in America. This allowed the less successful, guided by morally fraudulent intellectuals, to seek the transfer of wealth from their betters. By codifying their concepts into subjective law and taxation, they were able to legalize robbery - and call it justice.

This is the secret weapon of the Leftists - and it is a one-two punch - the concepts of altruism and unearned guilt are the two components. Its a case of Heads - they win, and Tails - you lose!

Socialism's biggest victory (albeit a Pyrrhic one) has been the voluntary acceptance of the producers that they should live for the sake of their parasites.

http://voice.townhall.com/g/dd4ccb27-499e-4a97-999b-41b1187 19833

VOR
Excellent post. I daresay that you cannot espouse this to any Liberal thinker. They will just dance around the capitalism that has made many of them rich, all the while denying they are, and naturally, throw in the "little people".
Do you think they mean dwarfs?
How many times I mention Russia, East Berlin and that communism ruined lives and Countries and I still get the "level the playing field" stuff. It would drive me mad, except that I have friends who think like me, hahaha.

patriotdefender
Don't forget the EEEEEEEEEVIL corporations! These are the favored punching-bags of the Leftists, and the hinge on which they hang their hatred of free-market Capitalism (nevermind their oft-repeated assertion that because of Corporations, there *is* no free market, and therefore gov't is needed to restore the balance).

Thanks, patriotdefender!
Most leftists sincerely believe that socialism is an ideal, and all that it takes for their ideal to succeed is the CORRECT implementation of Socialism.

In reality, Socialism is inconsistent with human beings - and that is its fatal flaw!

However, there is something in the human DNA that responds positively to the seduction of collectivist thought. Otherwise, how can we explain the fact that so many people succumb to its temptation?

I spend quite some time on my blog trying to analyse this apparent aberration. I invite you (and others) to visit ..

http://voice.townhall.com

VOR
I agree, but I think capitalism is on harsh and gritty to a few. These are the ones who either have no ambition or are lazy. The big question is "Why should the majority be dragged into the dirt because a few are too lay or incompetent to perform"?

answering VOR


because liberalism/socialism is all about catering to the lowest common denominator, and defining someone as lazy or incompetent requires one to abandon the current infatuation with moral relativity and non-judgmentalism

Top 1% fairness
I always notice the conspicuent lack of outrage over what people in show business or professional sports are paid. Just because a person can throw a ball accurately, or hit one with some kind of club or bat, should that person get top 1% income when someone confined to a wheelchair may make considerably less? Should some able to convince us that they are someone else in a movie or play make the top 1% income when others are not as capable of being a fraud do not?
All the outrage seems to be confined to executives making top 1% income, and especially when they bargain for and get "golden parachutes". Where is the similar outrage when athletes get paid while not playing due to injury or illness or when actors get their guarantees even though their movies or shows may bomb?
And why is one group of people greedy and the other not? Possibly because we KNOW we can't do what the atheletes and actors do, but don't think that we couldn't be top paid executives - such a conceit! These people are paid what other hard-nosed business people think they are worth - unfortunately, just like you and me. Which just proves jealousy is an ugly thing, but pretty easy to indulge in.

Jersey Devil
I agree with you 100%. For many years, I have wondered about exactly the phenomenon you describe. Athletes and celebrities are paid gargantuan sums of money for acting in movies or throwing a ball across a field and running -- and very few say a harsh word against either them or the payment practices.

Personally, I'd prefer to see large payments go to top corporate executives, especially those who direct companies with solid financial performances that I, too, as a middle-class investor, can participate in. At least I have a chance of improving my situation with these guys. With athletes and celebs, I have none. They are strictly for entertainment purposes and they get one heckuva lot of cash for being entertainers.

Spell check
Sorry, in my haste I used a non-word: I meant 'conspicuous lack'

About Krugmann
He illustrates again what has often said about the left.....for them it is all about feelings. Therefore, even a trained economist writes articles about fairness and evil companies etc.

Overly broad definition of socialism
voice of reason writes, "Most leftists sincerely believe that socialism is an ideal, and all that it takes for their ideal to succeed is the CORRECT implementation of Socialism."

Ah, bull pucky. If he's talking about American liberals, I've seldom encountered any who hold up socialism (in terms of producing and selling goods under government control) as an ideal. Certainly they believe that capitalism should be regulated and they may favor a wider range of publicly managed services (e.g., utilities, health care). Let's be clear about the distinctions here.

Profiles in Liberal Hypocrisy
"If incomes are equalized, they will be equalized at a low level." -- Vilfredo Pareto

Besides, people don’t want equality; otherwise, why do they work so hard to excel? Especially liberal professors who spout such trash. Consider Noam Chomsky, one of capitalism’s greatest critics:

TechCentralStation Editor's note: “In light of news that a British poll identified Noam Chomsky as the world's leading intellectual, we thought it would be a valuable exercise to run this excerpt from Peter Schweizer's new book Do As I Say (Not As I Do): Profiles in Liberal Hypocrisy.”

Note from the Author: “Whereas readers of The Prospect found the top public intellectual in Chomsky, I found a poster child for modern-day capitalism and, because of his anti-capitalist views, a complete hypocrite.”

http://www.techcentralstation.com/1019055.html

johninoregon
"I've seldom encountered any who hold up socialism (in terms of producing and selling goods under government control) as an ideal."

Very clever tactic, try and reduce socialism to just applying to producing and selling goods under government control.

It won't work though. Socialism is much more than that. It is government involvement in peoples lives and incomes, healthcare and much, much more. It is the "nanny state". And it is the WHOLE of socialism that conservatives rail against, not just your bogus reduction of the term.

It's all About Supply and Demand
"Just because a person can throw a ball accurately, or hit one with some kind of club or bat, should that person get top 1% income when someone confined to a wheelchair may make considerably less?"

In a word, yes.

There are many people who demand an accurate pitcher – we call them fans.

If fans did not value that talent, pitchers would not command the pay they do. Baseball teams do not lose money. That fact alone proves the point. They pay good pitchers fantastic money because the fans pay for tickets (and watch television) to see good pitching: it makes them happy.

But there aren't many people who can pitch really well. So, the demand is high, but the supply is low. Thus, their pay is high ("The demand curve is the price curve, C.P.")

There is no demand for wheelchair-bound people, per se. If such a one can also program a computer or prepare gourmet meals or design bridges, he will be compensated for his ability. There are relatively few who can do any of these. His handicap is of no import to anyone, it's what he does for others that defines his paycheck.

Teachers, for instance, earn what they do because there is a virtually endless supply of people who could do the job government requires of teachers. The demand is fairly low compared to the potential supply. Hence, teachers earn little (although more than they should by free market standards).

People in this country simply do not understand economics or its parent, praxeology. Water is more important to people than diamonds, but diamonds are far more costly. That's because water is plentiful but diamonds are rare (at least deBeers wants us to think they are). It's just "Supply and Demand", nothing more complex than that.

Schools exist to indoctrinate children,
and the citizens and taxpayers they
will become. Any "education" provided
is simply bait.

Le
==
Please visit http://www.schoolandstate.org

johninoregon
As Clay pointed out your attempt to redefine socialism is pretty clever but it's not working. Also, when government writes endless and intrusive rules and regulations governing every aspect of running a business, they are, in fact, controlling business in a very real, very socialistic sense. They just don't confiscate the means of production. They let the business owners assume all risk, control the means of production in a very real sense and then tax the beejabbers out of any profit. Chickens**t socialism.

johninoregon
I would say that your post is a distinction without a difference.

johninoregon
Let me respond also. Your post illustrates vor's point. The left is simply searching for the right mix of capitalism and socialism hence we get ridiculous terms like compassionate conservative, progressive, etc. A federal government that spent ONLY on national defense and nothing else would still have a socialistic component namely the military.

Why should the government grant a monopoly to our current army, navy, etc? Might not competing security outfits provide just as good a defense against the crazies of the world at a lower cost or greater effectiveness?

Economics is NOT the study of how governments can best provide for the population. Governments can provide NOTHING to the population it does not first confiscate from the same population. Economics is the science of how things work when people are free to choose. It is the study of the natural world and how its components interact.

The choice between capitalism and socialism is simply the choice between two competing and non compatible ways to allocate resources. Should individuals make those decisions or should we have a periodic popularity contest to elect congress critters to make those decisions for us? Various levels of socialism have been tried across the globe from absolute control and everything less. The results have been easy for even non economists to judge.

The Heritage Foundation makes it easy to guage the effectiveness of government intrusions into the economy. They are inherently unhelpful in achieving higher living standards worldwide.

Speaking of entertainers...
I may have missed something here, but I would like to know, why is it that a pharmaceutical company can spend millions of dollars developing a drug, but they only get a patent on the product for 10 years and then it's open season? Entertainers, on the other hand, can produce a film or a record, and they have permanent "intellectual property rights" which even transfer to their heirs after they die.

Why do the beautiful people always get special treatment?

Socialism vs. Private Property pt.1
(God, I HATE this 2k char limit!!)

One of the things that modern Socialists attempt to do is to re-define themselves out of what they really are. That's why "liberals" are now "progressives", since the word "liberal" has acquired a negative taint.

Some noted Socialists do this deliberately, having learned that Americans will vote for Socialist policies, even though they'll never vote for anything labeled "Socialist". That's why so many programs are "For the Children." That's why you're required by law to get time and a half for overtime, whether you and your employer want to agree to other terms or not. It's always been on the Socialist agenda, but only successfully implemented without the label.

But one of defining characteristics of Socialism that can not be denied is the elimination of Private Property. Sure, you're allowed to "own" the clothes on your back; but little else. So far as the means to produce goods and services, factories, businesses, etc., that is all owned by The People. (Of course, the reality is The State, but try getting a Socialist to admit this publically.)

Anyone who denies this characteristic doesn't know what he's talking about. Without the elimination of Private Property, you don't really have Socialism. You can quibble over whether or not "The People" equates to "The State" (as it surely must), but Socialism simply can not have Private Ownership of the means of production. People who OWN property might not follow the dictates of Socialist dogma, choosing instead to selfishly better their own lives.

Socialism vs. Private Property pt.2
"Property" means when you OWN something, it is YOURS, and YOU get to decide what to do with it. When you own a car, YOU decide where to drive it, what kind of gasoline to use, when (or whether) to change the oil, when (or whether) to wash it, etc. When you own a factory, YOU decide what to build, who to hire, where to buy parts, how much to charge for the product, etc.

Socialists, in trying to erase the stigma of non-ownership, now advocate "Reasonable Regulation." But any regulation robs the owner of some ownership. If you are REQUIRED to wash your car on Sunday whether you want to or not, that's one small piece of ownership which is robbed from you. That is time taken away that you might use otherwise. That is forcing people who might be just as happy with a dirty car to purchase soap, when they'd rather rent a movie. That is Control that is abrogated by The State.

AND, that's "Getting Your Foot In The Door." Once you can steal a little bit of control, you can steal a little bit more. Then a little bit more.

Boil the frog.

The ultimate goal is to have citizens merely hold faux title to "property" which is completely controlled by The State. "Property" will no longer have any meaning whatsoever at this point, and the Socialists will have succeeded. Few of us will be the wiser for having been completely subsumed by The State.

It goes slowly, until few of us will even recognize that we will have ultimately become the United Socialist States of America.

So; my Socialist friends; forgive us if we get a little ... perturbed ... at your ideas for micro-improvement. Forgive us if it seems we make mountains of molehills. Consider that, from our perspective, we're trying to nip each weed sprout in the bud, before weeds take over the entire lawn.

Liberals Don't Miss the Point
Liberals do not miss the point of capitalism. The truth is liberals do not have an incentive for people to prosper. If people prosper, they no longer need liberals.

All liberals care about is power. Their incentive is to spread misery, to say lies like the rich are getting richer and the poor are getting poorer.

I will become a democrat on only one condition: if they change their message to getting off ones booty and getting a job. Liberalism has no incentive to do so. That would erode their power base.

two minor points
(1) To the original Thomas Sowell column here:
"A recent column by Anna Quindlen in Newsweek (or is that Newsweak?) . . ."
Well, no. Actually the more accurate label for that rag is NEWSPEAK.

(2) to Unca Alby above:
Yes, the 2K character limit can be restrictive, except to lazy typists like me. But it is automatic and not arbitrary. Remembering some of the exhastive rants that were posted on this site, and repetitive posted, before Townhall implemented the limit, we can understand why it was done.

Capitalism Defined
Under capitalism some drive Cadillacs some drive Yugos most drive Fords or Chevys. There are Jeeps, Hummers, BMV, Civics and Ferraris.

Under Socialism, all are promised Cadillacs, which the government leaders drive. The rest drive Yugos.

Wish I Had Said It
To a liberal the major fault of Capitalism is the unequal distribution of wealth. The major virtue of socialism is the equal distribution of poverty.

VOR
You are one darn fine writer.

Alby - yes, conservatives/libertarians are often plastered with the greedy, evil, uncompassionate labels because we are angry when the socialists steal from us.

Someday I'm gonna get up the nerve to steal something they've worked long and hard for from one of my socialist acquaintances and see how they like it.

JohnInOregon
You wrote: I've seldom encountered any who hold up socialism (in terms of producing and selling goods under government control) as an ideal. Certainly they believe that capitalism should be regulated and they may favor a wider range of publicly managed services (e.g., utilities, health care). Let's be clear about the distinctions here.

My response: Other posters in this forum have provided very effective rebuttals about your 'distinctions' (I personally liked the way Mrs. Paddy refers to them as 'distinction without a difference'.

Let me remind you of a historical fact that you may either:
* have forgotten
-OR-
* be too young to have experienced

Prior to the fall of the Soviet Union in 1989, most American Leftists were full of praise of Socialism. This praise was not of the form "we need Govt control of unbridled Capitalism", it was in the form of a full fledged cheering section. IMO, American Leftists bear a significant culpability wrt the longevity of the Soviet experiment. Although their complicity was mostly indirect in nature, it resulted in a prolonged agony for millions of people. So, when these people (or their intellectual progeny) pose as 'defenders of the little guy', you will have to excuse me as I reach for the barf-bag!

After the fall of the Soviet Union, American Leftists were forced to change their tone (slightly); after all the Grand Experiment that began in 1917 had ended with a whimper. The 'little people' voted with their feet, and also with their pickaxes & sledgehammers at the Berlin Wall.

Being experts of 'nuance', American Leftists now seek 'only' a muzzle on Capitalism. They 'only' seek to bring an additional sixth of our economy under Govt control.

Oh, it is for the benefit of the 'little people' this time? Well, in THAT case, let's just forget the miserable track record of past Leftist achievements that were also done (ostensibly) for the benefit of the 'little people'.

Home prices tumbled in 3rd quarter

Is this the end of the road for BUSH DEBT ECONOMICS?

MSNBC-Standard & Poor’s: Decline was biggest since index started in 1987

U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor’s began its nationwide housing index in 1987 and another sign that the housing slump is far from over, the research group said Tuesday.

The index also showed that prices fell 1.7 percent from the previous three-month period, the largest quarter-to-quarter decline in the index’s history.

The S&P/Case-Schiller quarterly index tracks prices of existing single-family homes across the nation compared with a year earlier.

READ MORE

http://controlcongress.com/uncategorized/home-prices-tumble d-in-3rd-quarter

life, liberty and PROPERTY
I must take issue with the underlying premise of the argument being based on what is termed a "share of the nation's income" as if that income belonged to the nation! It does not! It belongs to the person that gave up time (labor) or resources (capital) to obtain it. If we have no claim to our own time and our own property, then the Constitution is nothing more than tinder.

We must decry in every instance those that advocate permitting some to live by the sweat of others by compulsory means. "Not as slaves but as free men our money we'll give."

Socialism is fundamentally flawed
http://home.comcast.net/~cls.home/socialist.liberal.htm

http://home.comcast.net/~cls.home/alceu.garcia.htm.htm

If Everybody.....
When I'm on the highway I hope everyone drives faster than me for two reasons. First, no one will slow me down and second, if I do exceed the speed limit the chance of me getting a ticket is slim to none. When it comes to incomes, I hope everyone’s is higher than mine again for two reasons. First, it gives me something to shoot for and second, because I have and never intend to rely on the government for economic support, there will be no need for a vast majority of the entitlement programs that exist today.

Housing "Crisis"
quoth John Konop:

"U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor’s began its nationwide housing index in 1987 and another sign that the housing slump is far from over, the research group said Tuesday."

So what year does this set housing prices back to?

2005? 2003? 2001? I'd venture to guess 2003.

Real estate prices has up until recently been experiencing a "bubble." Prices, sales, construction, everything was skyrocketing, with no end in sight. Classic bubble.

Everybody knew it. Everybody knew that eventually the bottom was going to fall out, and the bubble was going to burst. At least, everybody in the industry with half a brain.

The only thing was, nobody knew exactly *when*. Nobody ever does.

Well, it's finally happened. And nobody should be surprised.

We'll recover nicely, just like we've done for every other real estate bubble that's burst.

Good Luck Capitalists
For all of you pure capitalist do you want to do away with the FDA or the FCC. Is it OK to have a porn channel on all the time? The demand for it will be endless and the ratings will be through the roof. It’s a free market and we don’t need a nanny state setting any standards do we?

How about the SEC? Shouldn’t companies in your 401K be forced to use the same reporting rules when they report their profit and losses?

Just for clarity’s sake you needed $365,000 of income to qualify for the top 1% in 2005 according to the IRS.

Also according to the IRS selling your primary residence doesn’t count as earned income. You only pay capital gains tax of 15% on the gain above $500,000 if you have lived in the home for 2 years and are married.

Don’t let the facts get in the way of your ideology.

LobaAzul
Thanks for the kind words!

Dr. Sowell makes a great point
It's not about income.

It's about wealth.

According to the Census Bureau, net worth in constant dollars changed as follows:

1995 mean net worth of all families was 261,000, whereas the median net worth was 71,000.

In 2004, mean net worth was $448,000, whereas median net worth was $93,000.

http://www.census.gov/compendia/statab/tables/07s0702.xls

I suspect net worth is much more stable than income, since as Dr. Sowell points out, selling a SF home brings the seller into the top 1%.

Let's stop this foolish discussion of income. The deltas in mean and median net worth speak volumes for what is happening with the increased concentration of wealth.

RedEyeRex -- Facts? Which Facts?
"For all of you pure capitalist do you want to do away with the FDA or the FCC. Is it OK to have a porn channel on all the time? The demand for it will be endless and the ratings will be through the roof. It’s a free market and we don’t need a nanny state setting any standards do we?"

That's exactly right, especially given that EVERY television that was EVER produced comes equipped with an OFF SWITCH.

I suggest you Puritans learn how to use it.



"How about the SEC? Shouldn’t companies in your 401K be forced to use the same reporting rules when they report their profit and losses?"

How about you don't invest your 401K in companies that don't report profits and losses? And have companies that report fraudulently imprisoned or fined for committing fraud?



"... according to the IRS selling your primary residence doesn’t count as earned income. You only pay capital gains tax of 15% on the gain above $500,000 if you have lived in the home for 2 years and are married."

And if you didn't, you're screwed.



"Don’t let the facts get in the way of your ideology."

Which "facts" are you talking about? The only bona fide fact you've mentioned is a particular tax law.

I'm reminded of a professor who commented on a student's thesis, that it wasn't right -- indeed, it wasn't even wrong.

Equality
I also think we have taken "We are all created equal" to a point that was never intended. We are ALL created equal as human beings...no one is more or less a person than the other.

But we are NOT EQUAL in many things...

Can all of us play baseball like A-Rod, or run a company like Berkshire Hathaway, or act like Robert Dinero, or sing Frank Sinatra, or govern like Reagan? Didn't the valedictorian of a high school or college class achieve that by being the BEST?

Why do some earn more than others...because they ARE better, smarter, willing to take bigger risks, work harder, more athletic, etc. And yes some by pure dumb luck!

That is what has made this country great...the greatest. And I do not believe socialism is the threat it is Communism.

"From each according to their abilities, to each according to their needs" Karl Marx

To see where we are headed read "Atlas Shrugged" by Ayn Rand. While many of the thoughts and ideas are extreme it really does give an accurate portrait of where we are headed...and she wrote it 1957.




Income is a red herring
Income is simply a red herring. A lot of increase in wealth is not income.

I have a lot of sympathy for people keeping their money, I don't like the massive federal government interfering with the market, particularly subsidies for behavior we could do without.

That having been said, the accumulation of wealth in this nation is an increasing problem, from my perspective, and cheers to Warren Buffet and Bill Gates for realizing massive intergenerational hoarding of wealth is unhealthy, and for coming up with a reasonable way of disposing of the wealth, including that the trust is meant to expire after some time.

I agree with almost all of Dr. Sowell's points. But I fail to see any value in this discussion of income, or how the rich are paying their fair share because they pay half of the income tax (in fact it is closer to 25 or 30% because of social security, the other income tax).

The discussion ought to be about the increased collection of wealth by a very small minority in this country, and a serious examination of whether that wealth remains inter-generational.

It's my belief that inter-generational wealth can stifle innovation and remove capital efficiency.

Earned Income
Most of us "earn what we are worth". But, how do you ignore 34,000 lobbyists and a govt composed of 80% attorneys and still think the "playing field is level.

re: speaking of entertainers
Entertainers rarely have that sort of deal on their work. copyright holders do, but they are rarely the "beautiful people". The Mickey Mouse Law is absurd and should be repealed. the copyright provisions as they existed prior to that were reasonable considering that someone may spend many years creating something like a novel and in the rare case when it continues to sell for many many years they generally have created something of true worth and an important addition to the culture of the country.
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