Ten shares, no comments? Where's the thoughtful web?
· A statement like "taxes on entrepreneurs and investors are already historically low" is too fuzzy to fact-check. Anyone who advertises housecleaning online is an entrepreneuer. Anyone with a 401(k) is an investor.
· The infographic states that "Between 1997 and 2008 ... All [income] growth went to the richest 10%." Was anyone here making more in 2008 than 1997, and yet not in the richest 10%? One example would disprove this absurd claim. The caption is less confident and less clear, claiming merely that "almost all of the income gains have gone to the richest Americans."
· The more disturbing claim in the infographic is that "Between 1997 and 2008 ... Income for the bottom 90% declined." This is apparently illustrated by the thin blue stripe at the bottom of the chart, which actually looks pretty flat during the named range.
The citation gives the source for the data, a spreadsheet with 54 sheets. The eighth sheet, labeled Table A4, appears to contain the data about the bottom 90%.
It looks like that the bottom 90% of household income (adjusted for inflation) has indeed been pretty flat since the early '70s. The value in 1997 was $31,056, and in 2008 it was $30,981, a change of -0.24%, validating the infographic claim. How concerned should we be?
Some thoughts to consider:
1) The people in the bottom 90% in 1997 are not all the same people in the bottom 90% in 2008. Some in the top 10% dropped out, some in the bottom 90% moved up.
2) The population is growing. Kids and immigrants tend to have lower incomes than older, established residents. Even if not a single person's income drops with the arrival of a new worker, the average can drop. It is (mathematically) possible that everyone's income is rising, but the average stays the same because of growth in the low-end population.
3) Divorce rates have increased since the fastest growth of average income before the mid-60s. If one household separates into two, the average household income can drop even if everyone's individual income increases.
The big idea of the article is fatally flawed as well. Consumer spending drives the economy, fine. But the rich guy isn't doing his fair share to stimulate because he only bought three cars and a plane? What we need is an institution to take his money and distribute it to 9,000 families so they can buy 3,000 cars instead of just three.
Mr. Blodget, I have good news for you. We already have that institution, and it is called a bank.
No, that's no good. The problem with the bank is that the millions in wealth "either sits and earns interest or gets invested in companies" ... am I reading this correctly? We want customers to buy cars. Most of them do so on credit, with money from a bank. The bank requires depositors, right? If we want to stimulate consumer activity, putting those millions in the bank seems like a pretty good technique. Or investing in companies. That doesn't count as supporting the creation of jobs because ... ?