Rich Getting Richer, ever wonder why?

Interesting theory. Riddle me this, then ...

 

I think it was a combination of things. Episodes of high inflation coupled with wage stagnation and periods of recession led us (the generic us) to the credit trough in order to maintain the comfortable quality of life we'd grown accustomed to post WW2. Monetarism and consumerism, declared as the rite of passage into "real" American Society suckered us in and the media blitz convinced us that to have the American Dream we must possess more and more .

Where have you been? It probably shifted back in the mid to late 70's and has been teetering on the brink ever since.

I've been assuming here that you mean the shift from families and individuals behaving frugally to behaving irresponsibly. I hope I'm correct in that assumption. The shift in thinking to has been steered brilliantly and the increasing wealth gap (yes, it does exist Virginia) is the result.

I'm 57 and I got a similar message but the times they have changed. I would like to think that the financial values you and I were raised with could come back to roost but that would require us to reject, as a society, the god-like scripture of monetarism and consumerism.

 

I qualify the "rich getting richer" because I don't know if I can buy into the accuracy of much of the data. For example on any given day the US stock market could lose a trillion in market value or gain a trillion-how do they account for that.

How much is a company like Face Book worth and therefore how much is Zuckerburg worth?

http://online.wsj.com/article/SB10001424052702304584404576442950773361780.html

The housing bubble hit the high-end real-estate market pretty hard, how do they value the real-estate holdings of people with millions/billions invested in real-estate?

Person A could get a $100,000 education for free, while person B has to use savings - how do they adjust for things like that?

On and on, so I question the data, even the chart you show. But, for the sake of argument, I will stipulate that the rich actual do get richer.
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I don't agree.

 

He only owns 24% and is currently worth 17.5Bn. We'll know for sure after the IPO expected next year. His personal wealth is not tied entirely to Facebook, though.

Are you seriously saying that it is impossible to determine anybody's net worth? I do get the concept that values change, but still!

 

Impossible is not a word I would use. But, I think you miss my point. One day Enron had a market cap of about $60 billion, less than a year later it was $0. When people thought Enron was worth $60 billion, it clearly was not. If Donald Trump buys and spends $50 million on a yacht with his personal customizations, what is it actually worth? $50 million? No one knows until he tries to sell it and if the buyer is named Smith and doesn't want gold plated T's on everything, all of Trump's customizations could be worthless. But, the market value could be $100 million in a sellers market, it could be $10 million in a buyers market. And so it goes...

Calculate anyone's net worth, and at best it is an estimate. At this time who knows what their house is worth given the number of foreclosures and distressed properties driving the price artificially low unless they put it on the market and find a buyer. What is the value of a small business? What is the value with the owner's knowledge and experience - what is it excluding the owner's knowledge and experience? Even on a small scale there are uncertainties. On a big scale a business person like Warren Buffet could see the value of his company drop materially after he is gone - so how do you value his company today? Or take a guy like T Boone Pickens who holds a lot of wealth in a natural resource like natural gas - I recall once a few years ago he saw his holdings drop almost 20% in a very short period of time. How do you value today, natural resources in the ground or undeveloped? All you can do is make estimates and plug in assumptions to calculate a value - a value that may not even come close to what really happens.

 

Nevertheless, I think it is still possible, and valid, to point out that one group has 225 times the wealth of another, and that the trend is upwards - and not in a way that supports a view that the growing divide is due to left-wing policy. .

 

I look at the chart and see the trend since the 60's and correlate it to the "war on poverty". My conclusion is the war was lost. The social programs to end poverty contributed to the 225x difference we see today. You see that and what do you think?

 

Almost the exact opposite.

 

I'd forgotten this .. which doesn't really support your theory either, Ace.

 

The "war on poverty" initiative involved more than getting Freddy Mac and Fannie Mae to guarantee mortgage loans to the poor, Ace, if that's what you are measuring in terms of it's failure. If it has failed, it's probably due more to a lack of ongoing commitment to the education and opportunity aspects of the initiative.

 

I stand corrected. It's a statistic that's thrown around, obviously quite liberally, and I've picked it up in many different spots along the way. I should have done my own research, as I usually do.
Bullshit was a good call.

Bullshit aside, I still see a problem with 80% holding a mere 7% of the wealth.

And I still look forward to seeing figures more current than the end of 2007 (considering all that has transpired)

 

Hopefully, we were cross-posting, Lindy and you didn't see my mea culpa. I have no data to back it up. Only liberal rhetoric.

Can we move on from my acknowledged presumption now?

From what I can find, there isn't much in the way of current data (the bean counters are still banging their heads against their spreadsheets)

Conservatives may take this it for what it's worth (Mother Jones)
www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph

Of course, we await the data.

 

I often look at statistical data and then try to relate it anecdotal to what I observe in the world. In the 'for what it's worth" category consider what is below, to me it helps me put much of the statistical data in its proper perspective.

I know two gentlemen both about 70 years old. One is always on the hunt for the next deal that will turn a small investment into his next million. He doesn't need the money, he is simply motivated by making deals and making money is his way of keeping score. The other is retired, travels, takes yoga classes, spends time and money on his grandchildren, works on Homes for Humanity and is celebrating every day. No doubt in my mind that 10 years from now the wealth gap between these two men will grow bigger and bigger. But, both are content.

When I lived in California I had two near-by neighbors. One worked 60/80 hours a week, traveled for his job, did a long commute, but never spent much time with his family. The other worked close to home, making less money, coached for some of his kids sports teams, was involved in our neighborhood council. With the first guy, after about a year we saw his family in more expensive clothing, jewelry for his wife, more expensive cars/SUV's and shortly thereafter they moved into a bigger more expensive house in a more up-scale neighborhood. Again mo doubt in my mind that the wealth gap between the two will get bigger and bigger over time. But again, both are making choices.

One of the reasons I left California was because of the related stresses from the need to chase more and more money just to stay even, yet alone try to get ahead, So I moved to a state that is more business friendly with a significant lower cost of living. All other things being equal I can make less money but the quality of my life will be better because of the move. the income gap between Me in California v. me in North Carolina would need to be big to enjoy California the way I enjoy North Carolina.

The statistical data presented by those waging class warfare do not take these kinds of things into consideration.
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Debt is adverse to wealth accumulation.