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'Most Americans say Economic Structure favors the few'

posted 13 years ago by inner_recesses
37 replies | jump to latest

Extraordinary new Wall Street Journal/NBC poll.

http://www.huffingtonpost.com/2011/11/08/majority-of-americans-economy -favors-the-rich_n_1081595.html

"Most Americans consider the country's economic structure out of whack.

Sixty percent of Americans said they think the country's economic structure is "out of balance" and that it favors a "very small portion of the rich" over everyone else, according to a recent Wall Street Journal/NBC poll. The majority of Americans also said they believe the government should not financially help corporations or cut taxes on the rich.

The findings mirror other surveys indicating that Americans are fed up with the widening gap between the rich and the poor. Fifty-five percent of Americans said they think income inequality is a big problem for the country, according to a recent poll by The Hill. In addition, the wealth gap is one of the major focuses of the Occupy protests taking place across the country.

Americans are likely angered by income inequality because it has grown increasingly pronounced in recent years. The top 1 percent of earners saw their incomes surge by 275 percent between 1979 and 2007, according a recent study from the Congressional Budget Office. Over the same period, the bottom fifth of earners saw their incomes rise by less than 20 percent.

Many households are feeling the pinch of the lack of income growth, especially as the effects of the Great Recession continue to linger. The U.S. median income fell in 2010 for the second year in a row to $26,364 and Americans' access to basic needs such as food, shelter and health care dropped to recession lows in October, according to Gallup.

At the same time, reports indicate that the top 10 percent of American earners control two-thirds of the country's net worth, according to Mother Jones.

But wealth may not be all the super-rich control; they're more likely to be in touch with politicians, indicating that they have outsized influence on the political process. Nearly half of those with a median wealth of $7.5 million said they had contacted a member of Congress in the past six months, the WSJ reports.

The wealthy's frequent contact with congress may be helping to drive down their tax bill. Tax cuts for the wealthiest five percent of Americans cost the U.S. $11.6 million every hour, according to the National Priorities Project. In addition, 30 of America's most profitable companies paid less than zero in income taxes in the last three years, according to a study from the Citizens for Tax Justice and the Institute on Taxation and Economic Policy.

Some of the super-rich are using their influence to try and increase taxes on themselves. Famed billionaire Warren Buffett wrote in a New York Times op-ed in August that lawmakers should start taxing the rich at rates that are at least as high or higher as those of middle class earners. The president subsequently named a proposed millionaire's tax after the Berkshire Hathaway CEO in his September deficit cutting plan. Nearly three-quarters of Americans said they support the rule."

[–] 13 years ago

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[–] LLOwens 13 years ago

When the GOP talks about raising taxes for low income workers and making Bush's tax cuts on the wealthy permanent--I'll be very surprised to see a Republic president in the Oval Office next term--based on these surveys. The only way I see this happening if most of these people being surveyed fail to cast their ballots.

[–] Dejay 13 years ago

Election campaigns do everything to avoid real issues, which are complex issues and not easy to convey. Small soundbites about issues that stir emotions instead of intellect will prevail. Nothing will change as long as people get distracted by consumerism and dogmatic issues, and won't or cannot make informed decisions about complex issues. It's a problem of corporate media and the voting system.

[–] inner_recesses 12 years ago

I agree with you Dejay, I'd phrase things somewhat differently. It's not just a matter of people getting distracted by consumerism; the deeper problem may be that capitalism is now engulfing democracy to the point where we can't distinguish between politics as a citizen's activity and politics as consumer spectacle. In other words, more and more people seem to be self-identifying as consumers to the near-exclusion of their identity as citizens, and politicians seem to be addressing us more and more as if we were consumers skittishly shopping around for an attractive product.

The biggest problem with the growing obsolescence of citizenship and its replacement by "political consumerism" is that the latter has a largely passive, parochial and often irresponsible role in society. As consumers we gratify our desires and impulses but don't reflect on society-level consequences or work together to ensure that power resides with the people.

I worry that all democracies are in serious danger of becoming hybrid regimes (nearly wholly free & dynamic nor wholly despotic and servile) as long as money in politics reigns supreme.

[–] zenbudda 13 years ago

Good read.

Here's my take.

If all you do all day is control workers who make you millions of dollar, and you spend half your time in life on vacation, sitting around, making more money, doing nothing but owning a company, then screw you. You deserve NOTHING compared to those that made you rich.

Sorry, but that's capitalism out of control. At that level, it's no different than Marxism or Communism. An elite few controlling the lives of others, where the people's lives they control bring them their wealth.

[–] inner_recesses 13 years ago

This is truly a watershed poll or at least promises to be one. I'll be on the lookout for others like it in the months ahead to see if this is a fluke or a sign of a longer-term trend.

[–] 13 years ago

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[–] ricardo78 13 years ago

No one should possess five times more wealth than the average wealth of an individual. That should be plenty for reward and it would generate interest in making others richer, as it would mean you can get richer as well.

"All you get from killing monkeys is a deep sense of shame." - Alec

[–] 13 years ago

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[–] ricardo78 13 years ago

Your agitated reaction suggests otherwise. :)

Why 5 times? Why not? This number can also be fine tuned over time. It is much better than having no limit, where you are allowed to grow any kind of your personal (and more often than not sick, eg Murdoch, Exxon etc.) influence of wealth like cancer over billions of people, just because you were the first in something (getting there, coming up with the idea, etc. on the basis of the size of the selection pool, entirely random factors)

Limiting the height of wealth accumulation will NOT bring constantly down the average, as a LOT more people will be able to achieve it, as there won't be the selected few who will "cock blocking" them by their looming ownership over almost everything, including our souls and our children's future.

People, who choose specifically not to acquire any wealth, mathematically wouldn't count in the average as they would be automatically opted out from the division when the calculation occurs.

By the way that was Aldous Huxley's idea, not mine.

And regarding your judgmental attitude: even a broken clock is right 2 times a day, so I wouldn't entirely discredit people, cultures, or even animals just on the basis of some of their selected ideas, behavior or attitude. There might very well be an entirely legitimate reason why they are like that in a specific instance, and even if they appear completely random and raging nonsensical idiots, you can be ALWAYS sure that they are not actually 100% wrong (as nobody is), and that few percentages of actual wisdom would be an absolute waste not to consider and at least take away from the experience. You know what the alchemists said? "Look into everything and keep the good things only", I can only recommend this mentality for anyone who wishes to attain harmony with himself and with his environment on the long term.

"All you get from killing monkeys is a deep sense of shame." - Alec

[–] 13 years ago

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[–] ricardo78 13 years ago

Nah it wouldn't work like that. I imagine you'd have to allocate the average wealth to each person by law, whilst you could keep in an emergency reserve sort of thing the wealth that is wished by nobody. That is to say everyone would own an equal part of the country's wealth like it would be a shareholder's share.
And then who actually wanted to work, or achieve more, they would have the option by increasing their and others wealth by work, invention, etc. I don't mind letting them have more than 5 times the average, maybe 100 is a better number, but there must be a limit, because there is a limit of total wealth. I know there are anti trust and anti monopoly laws, but on what ground are these laws in place, when the lawful (and apparently wrong) system itself generates the (apparently unlawful) system in the first place? Its a total mess and inconsistency.

By the way on a completely different note, I have read your interest in the Venus project, and I used to be interested in it as well, but until there countries exist, the spread of democracy is more desirable because listen to this: "democratic countries are unlikely to go to war against each other". Introduction to Global Politics Richard W. Mansbach, Kirsten L. Rafferty
Routledge, Sep 21, 2007

"All you get from killing monkeys is a deep sense of shame." - Alec

[–] 13 years ago

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[–] ricardo78 13 years ago

Nobody's going to vote on a garden gnome with shaking hands. I'm sorry. People need their fix of being led by a powerful/authentic looking or in my eyes rather flashy/gaudy person.

"All you get from killing monkeys is a deep sense of shame." - Alec

[–] LLOwens 13 years ago

Limiting the height of wealth accumulation will only lower the average wealth, constantly bringing down the average.

So what's your opinion on putting a cap on executive pay? Will this reduce the pay of the average worker in the company?

I was cautiously optimistic back in 2009 when the Obama administration planned on proposing a cap on CEO compensation at $500,000. Back to reality--newsflash--according to the GMI research group--CEO pay for FY 2010 was 27 percent higher than in 2009. And to add insult to injury--CEO's from S&P 500 companies pay shot up 36.5 percent! Even if CEO base salary were capped at a cool half mil--they could still receive hundreds of millions more in bonuses and other compensation.

[–] 13 years ago

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[–] LLOwens 13 years ago

How the hell should I know if that will lower the average worker pay?

I mistakenly assumed you knew the answer to just about everything--LOL!

All kidding aside--I felt compelled to point out that world renowned management consultant Peter Drucker once said that CEO compensation should not exceed the median pay of their workers by 25 times. Later he revised this to 20 times. The reason behind this being that the amount a CEO receives has a direct correlation to worker behavior in accordance with a growing body of research. This has prompted disclosure requirements on the part of corporations stating the ratio of CEO compensation to median worker pay as required by the Dodd Frank Act. Earlier this year--investors have been given the power to accept or reject CEO pay packages by way of advisory votes.

Some believe that CEOs pay should be commensurate with stock market gains. However, especially during the past few years--these gains have been mostly due to lay-offs and other means of cost cutting--and had little or nothing to do with growth. In stark contrast, workers in the private sector realized a measly 2.1 percent increase in their pay in FY 2010. This coupled with high unemployment numbers should hardly justify CEOs getting a bump in their bottom lines.

[–] 13 years ago

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[–] LLOwens 13 years ago

As an investor myself I am in favor of the idea of making CEO's take a big chunk of their pay in stocks. That way their incentives are tied to the value of the stock.

As a former investor who plans on never buying a single share of stock in the foreseeable future--I have a dissenting opinion. If CEOs were balanced in their approach I would see nothing wrong with this approach. On one end of the spectrum we see corporate execs who over leverage and assume great risk--while on the other end we've witnessed CEOs who take a more disciplined approach by spending record amounts (i.e., $455 billion) in buying back the stock of their own companies--or simply to pay for their raises and bonuses. However--even in the latter case--such investment does little to stimulate the real economy but rather promotes the mass transfer of wealth to the top echelon--instead of reinvesting this money in the company, as well as providing benefits and decent wages for their workers. So instead of putting emphasis on growth and stimulating the real economy--it seems their only concern is to please shareholders as well as increasing their compensation--which in my opinion is greedy and shortsighted.

Corporations have accumulated a record $2 trillion in profits--some of which could be used to jump-start the economy be creating millions of jobs. Instead--these corporations are more concerned with maximizing profits--which translate to maximizing their profits. To be fair--unemployment actually fell in November in 43 states--yet employment figures are nowhere near pre-recession levels.

In my opinion, corporations should be held partially responsible for mass layoffs if they have no justification for doing so other than to maximize profits. Case in point: Verizon earned over $21.5 billion in profits--yet went ahead and engaged in wholesale downsizing of its workforce (e.g., eliminating 40,000 jobs, drastic pay cuts for 45,000 of its union workers). When corporations are no longer concerned with providing some sort of safety net for their workers and assume the deadbeat role for the sole purpose of maximizing profits for execs and shareholders--guess who picks up the tab? The government of course--which is socialism/communism at its finest--LOL!

[–] 13 years ago

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[–] LLOwens 13 years ago

Investor extraordinaire Warren Buffet summed it up best by stating, "Now, repurchases are all the rage, but are all too often made for an unstated and, in our view, ignoble reason, to pump up or support the stock price. The shareholder who chooses to sell today, of course is benefited by any buyer, whatever his origin or motives. But the continuing shareholder is penalized by repurchases above intrinsic value. Buying dollar bills for $1.10 is not good business for those who stick around."

So the key here is that buybacks should only be made when stock prices are below intrinsic value--using only surplus funds. Buying back stock for any other reason could constitute a shady business practice. For example--buybacks can be highly advantageous for those who unload the stock as soon as the price rises--and is in my opinion unethical if the sole intention of the buyback was to create an artificial lift on the price-to-earnings ratio and book value of the stock in order to sucker in unwary investors. And when stock prices are on the verge of dropping sharply because the financial ratios of the stock is inflated and misleading--inside traders dump the stock on the market at fire-sale prices.

Boy was this point hammered home in the fictitious Hollywood interpretation of this practice in the movie Margin Call, starring Kevin Spacey, Paul Bettany, Jeremy Irons and Stanley Tucci. In the real world--in 2006 and 2007--Washington Mutual, Citigroup, and Wachovia spent $6.5 billion, $8.3 billion and $5.7 billion, respectively, on buybacks. By Q2 of 2008--these three banks were selling shares for half the price of what they had recently paid for them. However, despite the potential for tremendous downside--stock buybacks have risen for the 9th straight quarter--rising 49 percent higher than the year prior. Between 2004 and 2007--General Electric spent a whopping $27 billion on buybacks--only to see share prices plummet in 2008.

What the average investor does not know about buybacks is that--while this may artificially boost earnings per share in the short term like we both agreed on previously--what most fail to factor in to the equation is that for every share that a company buys back, the result is a corresponding drop in cash on the balance sheet. In other words--return on investment decreases while there is an increase in the debt ratio. So the only ones who really make out are savvy institutional investors in the know and insider traders who lack a conscience--leaving individual investors holding the bag.

[–] 13 years ago

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[–] LLOwens 13 years ago

Then there is the active investor that is constantly buying and selling stock depending on perceived value. A passive investor doesn't react to market fluctuations and therefore doesn't take advantage of them.

One small problem--high-frequency traders have taken this to the absolute extreme--leaving individual investors in the dust. Forget about day trading--I'm talking about nanosecond trading--LOL! In the computer age of powerful algorithm-driven programs with the capability of executing millions of trades in a few seconds--some experts are saying that this could eventually make stock analysis obsolete. What good would researching financial ratios do when computers have been designed to constantly analyze price variances of the markets millions of times per second--while perpetually monitoring dozens of marketplaces per second in efforts to spot trends? The market after all is often driven by herd mentality--and the lion's share of the smart money is earned by those who get there first--or to those who sell at the precise moment. So the individual investor will struggle just to play catchup to these millions-of-trades-per-second mainframe computers which make more than half of all trades and never tire or grow weary--not to mention increase market volatility exponentially.

So some investors have chosen the passive route since no human can compete against a machine. When I first took up investing--I sincerely believed that all investors were competing on a level laying field. However, it did not take long before I realized that the only way I could make money in the stock market on a consistent basis and for the long term was by putting my money in no-load Vanguard mutual funds. For me--attempting to beat the market on my own would be akin to throwing darts or catching falling daggers. This has been especially true in 2011--when most stocks declined--and as a result--most investors lost money.

In the world of high stakes investing where some rely heavily upon or incorporate flash trading, slippage, earning stag profits on IPOs, late trading after markets close, "Bagging the Street", insider trading, "Dark Pools", short sales, and high-frequency trading into their repertoire and portfolios--or buy simply creating elaborate and complex ponzi schemes involving trade in derivatives and other third-party market instruments in efforts to generate wealth in a way that small time investors could never dream up in a million years--ensuring that the house known as Wall Street will always win because this zero-sum game is rigged in their favor--some may come to the conclusion that they have little choice other than to take a passive approach--or risk getting caught holding the bag.

[–] 13 years ago

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[–] LLOwens 13 years ago

When I first invested in the stock market back in 1999--one of my stocks--an insurance stock--made a 40 percent gain within the first week. I had an idea of what to invest in--but had no exit strategy. Keep in mind that many investors still clung to the buy and hold mantra at the time. And how can one not fall in love with a stock like that--I naively believed? Being the young punk that I was--I got greedy--mistakenly reasoning that if I could make this much money in one week--imagine how much money I could have earned in a year. So I held on to the stock for two months--and within those two months the stock rapidly loss value week after week--losing almost all of its value two months later. I sold all my shares of this stock just days before it became a penny stock--and then it was only a matter of few weeks 'till this company went completely under.

Another stock I purchased around the same time--a NASDAQ networking stock--received strong buy ratings from several distinguished stock pickers and analysts. Yet on a particular afternoon--this stock received the worst possible news after the markets closed--and this stock lost 80 percent of its value within a few minutes of its severe downgrade. I immediately put in a sell order--yet by the next day the stock was worthless. At the time I subscribed to Forbes, Kiplinger's, Money Magazine as well as tuned in to MSNBC on a regular basis--so as you can imagine--I took investing quite seriously--at least I myself thought so. Yet I soon discovered that by the time financial information hit the press--or posted on the net for that matter--it's already been factored into the market. So much for doing my homework and buyer beware. I did in fact mistaken the expression "flight to quality" as buying market leaders in any sector of the economy--when in reality I should have took it for buying only the market leader in the most dominant sector of the economy--or better yet--to buy gold back in the summer of 1999.

Relatively speaking--I was actually relieved that my Vanguard 500 Index Fund was down only around 25 percent over the course of the few months that I owned it. All in all I lost roughly half of my savings in a matter of a few months. Of course this mutual fund would have recovered its value if I was willing to hold onto it long enough--the only problem is I needed to cash out of all my paper investments because of a large purchase. That was another grave mistake that I made--being I was investing money that I would need access to soon after. Since then I've completely stayed away from purchasing stocks.

If you don't want to get caught holding the bag, then simply don't hold the bag without letting it go.

Although you put your own spin on a well know axiom--that was seriously funny--XD. If only I had such advice as a teenaged stock investor.

[–] 13 years ago

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[–] LLOwens 13 years ago

.... but they were invaluable lessons that I learned from the knowledge and experience I gained was well worth the money I lost.

Although I am a bit sour grapes as far as losing all that money in the stock market--this education was priceless. For example I have developed a knack for buying products at their bottom. I actually get all worked up when I purchase something for X amount of dollars just to find out a week later that another retailer would offer it 5 percent cheaper. So even if I lost several thousand dollars in the real world--I probably wouldn't have learned that lesson if I spent that same amount on an investment seminar.

[–] hardwood53 13 years ago

Controlling" (organizing) workers is not easy work, and it is usually a lot harder than the the actual work being done.

This statement is naive unless you have actually worked every conceivable job to acceptable standards. I think about the asbestos workers who brought that poison home to their families resulting in whole families becoming diseased. I think of the foundry workers laboring in extreme heat and suffering debilitating lung disease. I think of construction workers who can get injured miles from a Hospital. I see that the average American worker is paid little more than it costs to live. It is sad that in the richest country in the World our dreams are to have a safe and stable place to live that can grow with our family situation, and/or send the most deserving of our children to College. I see that almost everything you need to know about management can be learned from books, but that books are non existent for many jobs. I see that the biggest and richest of employers inherited the business, many of them have not even been to the sweat shops they control. Lastly I see that Managers can be hired just like any other worker. Too many people use credit to buy things they don't want, to impress people they don't like.

[–] 13 years ago

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[–] hardwood53 13 years ago

You choose to attack a complete stranger for disagreeing with you. That says a lot about your emotional maturity. First off let me say that I do not owe you anything, including a kind word. However, I will try to point you in the right direction. Sounds like you have finally worked yourself up to a position of some limited responsibility, but have found yourself in over your head. Even though you still do the same work with your buddies, to be an effective manager you must accept the fact that you are no longer one of them. Since you are the boss now, it is not a good idea to have employees as friends. You have to accept that and so do they. In fact you may have to do some firing to get control of the situation. I see you have a lot of opinions posted here about things you have an incomplete understanding of. After reading your partial resume, it is obvious you are suffering from a very bad case of bigshotitist. You need to get over that, it is a very unflattering sickness that will drive people away from you, and you sure do not want to replace them with the kind of friends you can buy. If you expect to get ahead in life you should use your time learning what you need to know, not forming and communicating opinions that you have little or no background in. Effective use of time is a core management concept. That being said you should study the topics of Theory X, Span of Control, and Interpersonal Skills. Too many people use credit to buy things they don't want, to impress people they don't like.

[–] 13 years ago

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[–] hardwood53 13 years ago

Work on your Emotional Maturity, Interpersonal Skill, and get Counseling. Any order you want.

Too many people use credit to buy things they don't want, to impress people they don't like.

[–] deeveed 13 years ago

I see that the average American worker is paid little more than it costs to live. It is sad that in the richest country in the World our dreams are to have a safe and stable place to live that can grow with our family situation, and/or send the most deserving of our children to College.

After reading about how very difficult it is now for Americans to "rise" from their original stations to a higher economic level it is stunning to further read that, comparatively speaking, the USA lags behind others when it comes to achieving those dreams. From the looks of it, if you're parents were in the bottom economic rungs here in the US you're more likely to stay there as you aged than if you lived in say Denmark or Canada. The trend is there and it can get worse according to economy watchers. The US is not in a good spot. Frankly, this has to be a stunner. I'm surprised there hasn't been a "French" revolution already in our society.

[–] nivenjohn 13 years ago

I'm surprised there hasn't been a "French" revolution already in our society.

I think that was pretty much what people were going for with the whole 'occupy Wall Street' actions. I haven't yet seen any result of this movement. I learned from the paper here, in Belgium, that it's due to a lack in organisation and to their inability of stating what they exactly wanted to achieve. However, I imagine that the protestors of the French Revolution were not all that organized either.

I've recently seen 'sicko' by Michael Moore and he argued that the health system in France is way better than the one in the US because of the nature of the public. The French seem much more eager to go on a strike (or come out on the streets) when they feel unrightly treated, than do the Americans.

So maybe that's it? Maybe US citizens are generally, for whatever reason, hard to get engaged in protesting activities as a means to display their discontent?

[–] deeveed 13 years ago

I think that was pretty much what people were going for with the whole 'occupy Wall Street' actions

You know I think you're right but I guess I'm alluding to the fact that they perhaps haven't gone far enough. When the French peasants revolted, they threw all caution to the winds. It got to be a life or death battle with them against the other two "estates". Frankly, the OWS movement is far from it though there are no doubt very low echoes of how the French say felt during their desperate times. I think that the stat I noted is incredible regarding economic mobility in US society. It's a real gamechanger with the population. I'd say that perhaps the OWS movement is now a bellwhether for all that angst that will eventually have to be expiated within the workforce. No jobs no money no jumping classes. Not a very good incentive at all.we're now just getting the tip of the iceberg. I don't know how it is in Belgium but I'd say comparatively speaking workers there may be in a better position than US workers when it comes to jumping class and wanting to do "better" than our fathers.

[–] HankTuff 13 years ago

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To say that people who are competent enough to take on some responsibility
and make things happen don't deserve anything is ignorant at best. Job, projects, "work", would not get done if it was organized by someone with authority. People will not just come together and get projects done without oversight, so having managers is crucial to anything getting done, without them, low level workers wouldn't have a job.
-------------------

This is a naive point too. To say that every manager is working harder than the worker is wrong too. There are many incompetent managers out there who got in because they know somebody. You only have to watch the movie to see that kind. You are not going to tell me that the manager in Inside Job are good and deserve their money?

Hank Tuff - when the going gets rough!

[–] 13 years ago

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