Who was Responsible for the Recession

[bobover3 (imported)]

I won't even call it greed. It was hope.

When I was a kid, most people lived with limited means, and their lives were poor and harsh by today's standards. But most people lived the same way, so there was no shame in it. People accepted it.

What changed is that, starting in the 60s, people started making more money. Not everyone, but a lot of people. That snowballed, and more and more people were making more and more money. That did two things to us: ordinary people had hopes or expectations of prosperity that they'd never had before; it was no longer acceptable to live a modest, simple life. Making and spending lots of money became a social necessity. If you didn't, it meant there was something wrong with you. So the carrot was hope of betterment, the stick was fear of failure. Neither hope nor fear had ever defined a society in this way.

People got more and more clever at making money, until money became divorced from value. Getting money any way you could was good, even if you produced little or nothing of value. I don't think I'm exaggerating to say that money became the supreme good of our society, more important than any of the traditional virtues, which came to seem quaint. Citizens became "consumers" - what a strange way to describe people. Human relations once thought permanent became short-term transactions: family, marriage, work, community were now all matters of temporary convenience which could be changed at will, if you had enough money.

Now we're in a rough spot. The money is going away, but millions of people have nothing else left to believe in or to order their lives around.

I can't blame people for wanting a better life for themselves. But society must create and enforce ethics. Ours has failed to do so. I'm not talking about criminal law or government regulation. By the time they're needed, it's too late. I mean the values and expectations of those with whom we interact every day, and don't want to disappoint. It seems money is the solvent which dissolved our social ties.

[butterflyjack (imported)]

I'll just call it greed...dragonfly

[Riverwind (imported)]

You are right dragonfly, the answer is greed.

River

[moi621 (imported)]

Greed AND a social system as allows the excessive concentration of wealth.

Moi

[A-1 (imported)]

Greed AND a social system as allows the excessive concentration of wealth.

Moi

...which is why the top tax brackets under the Eisenhower administration were at 91%. (Republican)

...Damned Democrats started it with cutting taxes for the rich to stimulate the economy... (JFK)

[bobover3 (imported)]

Here are the facts -

First, US median income for people 15 and older in constant 1997 dollars. (Source: US Census Bureau. See http://www.census.gov/prod/3/98pubs/p60-203.pdf Data is available from 1947 to 1997.) Second, top marginal tax rate. (Source: Tax Policy Center. See http://www.taxpolicycenter.org/taxfacts ... ?Docid=213).

In 1947, median income was $11,852. Top marginal tax rate in 1947 was 86.45%. In 1957, median income was $12,872, while the top tax rate was 91%. In 1967, median income was $15,223, and top tax was 70%. In 1977, median income was $16,327, and top tax was 70%. In 1987, median income was $17,100, and top tax was 38.5%. In 1997, median income was $18,756, and top tax was 39.6%. For intermediate years, see the Tables.

When I enter this data in a spreadsheet and calculate the correlation coefficient between median income and top marginal tax rate for these years, the result is -0.914. This is statistically significant. It tells us that a declining top marginal tax rate is strongly correlated with an increasing median income. Note that this is median income, not average, so that rich people will not have a disproportional impact on results.

These numbers suggest that declining tax rates played a role in increasing prosperity for ordinary people.

This may run counter to emotion and expectation, but there it is.

[Riverwind (imported)]

Bull Shit

River

[bobover3 (imported)]

Well, we know how you feel. That's nice. But this isn't about feelings.

[Losethem (imported)]

Here are the facts -

First, US median income for people 15 and older in constant 1997 dollars. (Source: US Census Bureau. See http://www.census.gov/prod/3/98pubs/p60-203.pdf Data is available from 1947 to 1997.) Second, top marginal tax rate. (Source: Tax Policy Center. See http://www.taxpolicycenter.org/taxfacts ... ?Docid=213).

In 1947, median income was $11,852. Top marginal tax rate in 1947 was 86.45%. In 1957, median income was $12,872, while the top tax rate was 91%. In 1967, median income was $15,223, and top tax was 70%. In 1977, median income was $16,327, and top tax was 70%. In 1987, median income was $17,100, and top tax was 38.5%. In 1997, median income was $18,756, and top tax was 39.6%. For intermediate years, see the Tables.

When I enter this data in a spreadsheet and calculate the correlation coefficient between median income and top marginal tax rate for these years, the result is -0.914. This is statistically significant. It tells us that a declining top marginal tax rate is strongly correlated with an increasing median income. Note that this is median income, not average, so that rich people will not have a disproportional impact on results.

These numbers suggest that declining tax rates played a role in increasing prosperity for ordinary people.

This may run counter to emotion and expectation, but there it is.

Something seems off with these numbers, I'm not sure if it's the time period you're correlating with the income levels or something else, but a median income in 1997 of $18,000 doesn't sound correct.

Did you mean 1947 dollars or 1997 dollars at the top of the post? There's something structurally wrong with your presentation. I'm not passing judgment on the right or wrong of it at this point, I'm just having trouble figuring out the baseline so I can read your rationale correctly.

I might be able to believe 1947 dollars though it seems a bit high in 1947, but this is way off if you're saying they were 1997 dollars.

As for the premise that lower nominal tax rates = higher median income... I can refute that for the middle class using the same sources you've cited above. At least as far as I can tell looking at the slides in the first and applying the tax rates in the last link.

If you look at one of those charts you'll notice that income for men was higher than that of their father's at the same age and hit it's high in 1977, and by 1987 you had the first generation of men that were making less than their father did at the same age.

Strangely, this happened at the same time that the top nominal tax rate dropped 50% under Ronald Regan.

I'm sure we could have these arguments all day long, with one side quoting how it helped incomes and the other quoting how it hurt incomes, so there's really no point in arguing about it.

--LT

[BossTamsin (imported)]

As well, it should be mentioned that correlation does not imply causation.