Income Equality

What are the ramifications of everyone making $75,000 a year?

Nobody rich or poor.

Is that something we really want?

What would society be like?

Where would the money come from?

Be careful what you wish for?

Income inequality- statistics often misleading

As I have written, statistics can often be misleading, and be used for what ever political agenda some one likes.

For example, a case can be made that one of the main causes of US income inequality is the great wealth so many American enjoy. In a sense we are "victims" of the  success of so many Americans. Because so many American are so prosperous the numbers can be misleading.

 Consider the following information I came across from a reliable source:

A Danish family can move from the bottom 10th percentile to the top 90th percentile with $45,000 of additional earnings; while an American family would need an additional $93,000 to move from the bottom to the top. As best as I can tell both countries have similar costs of living.

If so, who is better off; a Dane whose income has gone up $45,000, thus moving her into the top from the bottom percentile; or an American whose income went up twice as much as the Dane's ($90,000), but went up from the bottom to only the second highest percentile? Those who deprecate US economic mobility would say the Dane is better off. I don't think that Dane would agree; she'd rather have the increased income the American got, I assume.

From this example, it appears that the US has more income inequality than Denmark.  However, is that misleading since more  Americans seem to be doing better than the Danes,  even though Danes enjoy less inequality ?

However, as I've often said statistics can be misleading , so where did I go wrong here?

Root Cause of Great Recession- Krugman confirms my post

My guy Paul Krugman has been reading my blog again!

So happy to read the first part of his Op Ed about how it wasn't the big banks who Sanders wants to break up that started the financial crisis.

http://www.nytimes.com/2016/04/08/opinion/sanders-over-the-edge.html?smprod=nytcore-iphone&smid=nytcore-iphone-share

I figured it out !

Why don't young people like Hillary, but love Bernie?

She's their parents. He's their grandparents.

He'll give them everything they want.

ACA- Worth it?

When you consider how many are still uninsured and how much the Democratic Party has been hurt, and will continue to be hurt  for quite a while, was the Affordable Care Act worth it?

According to a Huffington Post article in March, while the number of uninsured fell by 11 Million, we still have 37 Million uninsured. Plus most of the newly insured came from the expansion of Medicaid.  Why haven't we done better than that?

It seems that largely due to the passage of the ACA, a GOP tidal wave took place in the 2010 election. And since 2010 was a census year, the GOP controlled and gerrymandered both Congressional and state districts to lock in GOP majorities in the House of Representatives. Those gerrymandered GOP majorities will stay in place at least until 2020.

With all of the havoc which the GOP controlled House has and will reek, was it worth it if more than 3/4 of the pre-ACA uninsured remain uninsured. In addition  many people who had insurance feel their insurance  options are worse today than before ACA.

Will we look back on this as a good beginning , as with social security or Medicare , or a political disaster with not enough positive impact?

Understand, I'm for single payer or Medicare for all. While many provisions of the ACA are beneficial, I just question whether the ACA is accomplishing it's core primary goal of eliminating the uninsured.

Greek Debt Solution

Here's' an idea:

The powers that be in the Eurozone ( Germany and to a degree France) should say now that the Greek people have spoken, they will (1) grant Greece a reasonable degree of  debt relief, both interest rescheduling and principal write downs, and (2) provide assistance for a transition period to keep the Greek economy going, thereby avoiding catastrophe and relieving the immediate humanitarian threat to  the Greek people.

They would do all of this on the single condition that Greece exits the Euro in a responsible and orderly manner.

Greece then would stay in the EU, but  start afresh with the Drachma rather than the Euro as its currency.  While it won't be easy, at least they'll be on their own and have no one else to blame. They need not make any of the reforms demanded by their creditors.

The Eurozone will be all the stronger without Greece.

The EU won't change.

Simple .

Student Debt Relief

Allowing students  to refinance their debt is a great idea, and really is a no-brainer ( except as will be discussed later). We refinance in all other arenas every day.

Reducing the student debt burden by refinancing at today's low rates primarily only helps the middle class;  mostly because the accursed  1% didn't need those loans in the first place and the poor largely got full scholarships. No debt needs to be forgiven, just reduce the rate to the market rate,  like every one else does. No moral hazard problem.

Who could be against it?

While  it may increase the deficit, at this stage of economic cycle, it's not that major. Besides it's certainly worth it, and the economic growth it  may well set off could counteract the short term deficit increase.  Remember Obama has already brought the deficit down dramatically. 

The GOP needs to get over its deficit obsession for this situation  and the Warren  Democrats have to stop talking about raising taxes to pay for it. That's why Warren is only half right on this issue. 

However on a moral level, it's a total government rip off of young people and their families. To paraphrase the Passover Haggadah, "why is this debt different from all other debt? All other debt can be refinanced when rates drop , why not student debt?"

The answer is that the Federal government is making a boat load of money on this debt and the loss of it would reduce revenue and lead to an increase in the deficit. It's pretty obscene when you  think about it-- the government profiting on the backs of middle class students.

 On the other hand, refinancing student debt would be boost to the economy, and housing in particular.  Young people would be better able to buy a house.

Sadly today  the root cause of the failure to allow student debt refinancing is the titanic political fight over reducing the deficit and raising taxes. The Republicans need to recognize this situation for the unfairness that it is, and not worry about the reduction in revenue and ensuing increase in the deficit in the short term.

The Democrats are also at fault because they want to use it as an excuse to permanently raise taxes ( of course they say on the rich) and as such know very well the GOP would not go along.

Meanwhile our young people continue to needlessly be burdened by this trick bag our politicians have put them in.

 I'm sure the general public is not really  aware of this rip off, and I don't know why the media hasn't covered it more extensively.

I wonder what Hillary's position on this issue is. I hope she doesn't fall into the trap of raising taxes on the rich to pay for it . The whole situation is  just wrong, and as such doesn’t need to be paid for by cutting other spending or raising taxes. 

Eric