Income inequality

As I talk to people they do not think income inequality is a big deal. We can make it. We can move up. Why is it easier in Brazil to move up to a higher economic class than the US? Most of Europe today is more upward mobile than the US. We have our dream and it is just that. Reality is that we will start life and end life in right about the same income/economic class. Yes our genius, creative people can move up-the Steve Jobs, Mark Zuckerburgs, Larry Paige etc that are exceptional creative people. Our country allows the genius class to move up. What about the middle class? A hard working average intelligence, can that person be a millionaire? Can a poor person, work really hard and be a billionaire that just works hard, but has no special skills. I work 80 hours a week, have a master's degree and think of things to make money and to improve. Where does my hard work get me? One missing paycheck from poverty. When 400 families have more wealth than 155 million people, there is a problem. When the rich are destroying unions, when people have to work off the clock, when people can't get health benefits, this inequality is a problem. We need to bring back the middle class. We need to reduce the gap.

Protect our Jobs

We need regulations from the government to protect our jobs. This means government needs to support workers complaints against companies that cut overtime from paychecks, make people work off the clock, people's hours getting cuts. When Walmart, McDonalds and other companies have their employees on State Health Insurance plans, the companies should be charged the cost. Companies that threaten employees their job if they complain or want to unionize should be fined where it hurts. We need government to support 40 hour work weeks, benefits and worker rights. We need government to support US workers and bring jobs home. We need regulations so companies do not send jobs overseas. Apple products can be made in the US. A great idea is to have every price tag list the price and company cost. We need transparency to see the profit margins of the companies. Workers need support. People need support. We can't go back. We need to have good jobs, good pay and good benefits. I am scared that colllege graduates will only have retail or food jobs.

Spending is income

For every dollar spent in the economy it is income on the other side. If you spend money at Walmart it is income to Walmart. If government spends money for teachers and police this is income to the teacher and police. When a teacher gets income the teacher then spends money at stores and then more people spend money. If government spends $1 the multiplier is 4 depending on peoples propensity to consume. A multiplier of 4 is conservative and there is no crowding effect. Spending creates jobs and can increase income..this is basic economics..many Republicans need to know..

Banks and deregulation

Bank do not create anything. The purpose of a bank is to lend money and make loans. Deposits are liabilities and loans are assets. Before deregulation banks comprised about ten percent of GDP. After deregulation banks comprise Over 35% of GDP. Banks do not create anything. Since 1980 banks have been bailed out two times a cost of $1 trillion. Banks have created no income no asset no credit verication loans. Banks sell loans to make more loans to hide risk and Not be responsible for bad loans. Banks are not looking out for best interest of borrower like in the past they are looking For the loan fee. Fraud by bank occurred throughout the past crisis..fraud with loan documentation about customers Assets and income. Fraud was done so people could qualify and the bank could make the loan. The bad loan Was sold to reduce the risk and make another bad loan. When the banks were bailed out they were given money if people foreclose. Banks do not have the incentive to help People stay in their homes. Banks have begun to use standards again but are not lending to qualified people. Banks need either more regulations, Glass Steigel or more good regulations,or banks need to be public. Why is profit in something like banks? Banks are needed but will function better state run...see Bank of North Dakota or every foreign first world country.

Keynesian Economics

Keyesian economics still works. The formulas, the ideas are still true. Remember that spending to one person is income to another person. For the economy as a whole, spending equals income. GDPis the income of the United States.  Consumer spending is 70% of GDP and people are not spending.  Business are making record profits, but they are not spending due to consumers not spending, or it could be they want more record profits. Net exports have been improving but the country as a whole is importing too much and we are not making anything. So, what do we do?

Government spending is the best way.Government spending is the answer. Now, it is not government by itself. Government gives money to local and state governments, to business, contracts to build roads, fix bridges, create broadband networks, to fix pipelines, to create a high speed rail system. If government contracts business, these are high paying, long term jobs. A school is a long term job. Firefighters, police are long term jobs, just as the military is a long term job. Creating a rail road system will take years to complete across the country. It is not a five year job but 20 and 30 year jobs. If demand is stimulated, income and
jobs will increase. Increased demand will increase sales at retail stores, resturaunts, gas stations. Increased demand will increase other private jobs and increase incomes of people to go shopping. When consumers have no confidence and business is not spending, the government can help. It can work. It has to be large. The New Deal during the Great Depression helped but it was not large enough. World War II was large and did the trick. World War II was a planned econonmy where the government took over and set prices, set wages, created jobs, drafted men and had bonds, propaganda and controlled the entire economy. This piece is not advocating a takeover of the economy but for a large 21st Century New Deal, big, strong and with new jobs to create a better US economy.

National Debt

National Debt:
The national debt is over $14Trillion. It is large and most of the money is owed to US citizens, US pension funds, US mutual funds, cities, counties and other US entities. Now, some debt is owed to China, Japan and Saudi Arabia. The debt is large but as a percent of GDP it is low compared to when we WON World War II and other times in history. It is not unmanageable as our payments of $300B are about 3% of GDP. Now, I can think of a lot of things to do with $300 B. The argument against the debt is that it is approaching our income and we can't afford it. Well, think of your mortgage of $200,000 and your income is $50,000.
Can you afford the mortgage? Yes you can afford it if your payment is under 28% of your income. You can afford the mortgage even though the outstanding balance is more than your income. It is the payments that you have to be able to pay and maybe pay extra to pay off your debts. The Debt issue is something Democrats used when George Bush was President and Republicans ignored. Republicans are using it to hurt President Obama and make sure he is one term President. The National Debt does not affect your life. Interest rates have not risen. Prices have not risen and if some have it is not due to debt of the Federal Government. You are not getting loans due to the debt of US government. It is really a non issue at this time. Or, it is the Republicans way to make sure President OBama does not succeed. Republicans are putting their interest before the interest of the country or the people.

The Economy and Sports

Bill Maher one time on Real Time gave a talk about the economy and talking about NFL and Baseball. I am an economics teacher and for about 5 years have been working on explaining the economy to my students using sports. I use baseball and football.

Free Market Capitalism does not exist even in Adam Smith's (the founder of capitalism) world. The government would break up monopolies to create competition. From most of my conservative friends, their idea of capitalism is having no rules. Let the markets work and have no labeling, no EPA, no taxes etc.

Have you ever played a game with a child? They change the rules all of the time. They cheat, or switch rules or tatics. Have you ever played any game with out rules? Can you image football without a referee? Rules to agree upon? In the least, there have to be rules in capitalism. There have to be rules for fairness, for small companies to be able to compete and people can be protected. The government is the umpire, the referee. The government can set the rules and the boundaries.

Baseball can be a form of capitalism. There are rules in baseball with umpires, commissioner etc. The money goes to the big market teams like the Yankess, Phillies and Red Sox. Now, money does not buy championships like many fear, these big market teams have the stars, get the best players, get the television contracts and make the most money. There is no revenue sharing, there are no maximum payrolls or even the important minimum payroll. This past year, small market teams did much better, like Arizona, Milwaukee and Pittsburgh. In general, in most years, most small market teams have lost all hope in July. Most teams do not have a chance to win the World Series, like Washington (formerly Montreal), Pittsburgh, and others.

Football is socialism. Parity is the word. Many of the teams end up being 7-9, 8-8 and 9-7. At the end of the year, many, many teams are fighting for a play off spot. Every team, every year can make a turn around and make the playoffs. The worst team gets the first pick in the draft. Every team has a team maximum salary and minimum salary to pay the players. The teams split the revenues earned by the league. While there are teams that are at the top for a long time like the 49ers of the 1980's, they are replaced by other teams. Successful teams are rewarded with championships and winning. Sharing makes the sport better. There is more competition as more teams can improve and have a chance to win. This year, the Detroit Lions are having a great year. A few years ago, the Arizona Cardinals went to the Super Bowl. Managment, coaches, owners do make a difference. There is no guarantee you will win. There are no easy wins. There have been bad teams for years. The league tries to protect the quarterbacks and make rules in the game. Sometimes the rules are too much-over-regulation and sometimes they change the rules to help the offense and sometimes to help the defense. Rules are changing but everyone knows the rules and there are rules.

While baseball is exciting to me and we have exiting pennant races and the playoffs are great. Baseball is losing fans and has lots its national prominence.  I would take baseball over no rules or a child's game. I want rules and fairness. In general most people in the US love football and find that it is their favorite sport.  For our economy the NFL is a great example of success. It makes money for all teams and the sport in general. The players make money, the coaches, the office people make money. Football is a success in all ways.

I would love to see this type of success in our economy. One where the owners(business), the players (us) and all participants are working and making money. With rules, with fairness, with everyone working together, we can achieve this sucess. Regulations are not the enemy. They help everyone know how to play, what to do and how to succeed.