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A Smart Talk on Wealth Inequality

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One percent of Americans earn about a quarter of the income and own 40% of the wealth. "Twenty-five years ago, the corresponding figures were 12% and 3%," writes Nobel laureate economist Joseph Stiglitz.

I spent last week at the Buttonwood Gathering in New York, hosted by The Economist, where Stiglitz was joined by former President Reagan advisor and Harvard economist Martin Feldstein to debate the issue of inequality.

"One thing most Americans feel strongly about is opportunity," Stiglitz said. Not equality of outcomes, he said, but what is important is equality of opportunity. He notes that the data suggests that the feeling of America as the land of opportunity has become a myth. Among advanced nations, not only is the U.S. the country with the most inequality of income, but it's among the countries with the least amount of opportunity -- by this, I believe Stiglitz is referring to income mobility, or the odds of being born into a low-income group and moving into a higher one, and vice versa.

That has two important messages, Stiglitz says. One, the fact that different countries have different levels of economic opportunity shows that what's going on isn't just a factor of market forces. The decisions that have been made in different countries have led to remarkably different outcomes, he notes. Second, the amount of inequality is such that regardless of moral attitudes of what is a good or fair distribution of income, the level of inequality is bad for the economy, he says. "If you are concerned with how well our economy functions, it [inequality] has reached a level which is destructive."

What's he mean by that? "We aren't using our human resources as well as we should," Stiglitz says. If you're born at the bottom of the income distribution, your likelihood of reaching the top isn't very high, largely because the odds of receiving a good education is tied to your parents' income. And a lot of the largest fortunes have to do with rent-seeking activities -- monopolies and distortions resulting from inequalities in political influence, he said. He cites bankruptcy laws that say credit default swaps are the first in line for payouts, but student loans can't be discharged in bankruptcy, as a good example of "our legal framework [providing] scope for an increase in inequality."

Now it's Martin Feldstein's turn for the other side of the story.

Inequality is really important, Feldstein says. It's substantively important. The issue isn't just about politics, but ethics, he says. But the statistics that get thrown around -- comparisons of the top 10% or top 1% of earners with everyone else -- are not the important aspect of inequality. "To me, the important part is poverty, low income, and low wealth," he says. "Most Americans simply have no wealth at all. They count on Social Security for retirement and unemployment insurance for support if they lose their job, but they have no liquid wealth. That's a serious problem."

Feldstein agrees with Stiglitz that wealth generated from cronyism and special monopoly privileges "is a bad thing." "To the extent that that is a problem, there is some concern," he says. He later says he doesn't see a lot of it happening, however.

A huge issue for Feldstein is poverty among senior citizens. He points out that we spend half a trillion dollars a year on Social Security, yet poverty among seniors is rampant. The other issue is young people. "Our educational system is not preparing people of lesser ability for decent jobs where they can support a family. That's a serious problem," he says.

But we focus on the wrong issues, he says, when the debate demonizes the top rather than focusing on the bottom in poverty. "Do you want Congress focusing on the top 16,000 families, or the bottom half of them?" he asks.

This is especially true when people talk about fixing the inequality with higher taxes. If we do need additional tax revenue to address budget deficits, Feldstein is in favor of structural reforms to the tax code -- eliminating and reducing deductions -- rather than higher rates. "It's not that the world comes to an end if we raise taxes by five percentage points, but every little bit has adverse effects," he said. "What determines growth over the next 10 years will depend on many things, but I think if you ask, 'Will the economy perform better with higher tax rates?' it's not a good idea. Some are already paying nearly 50% of their income in taxes with local and state taxes," he said.

So, what do we do about inequality?

Stiglitz said he's focus on three things. One, a better education system that offers more opportunity is the most important. Second, "our tax system is not as progressive as I think it should be," and it's more distorted than he thinks it should be, which leads to a distorted economy. Third, he'd like to see better regulations that discourage rent-seeking activities that can contribute to poverty.

Feldstein also says education is highest on the list. But he clarifies that education means trying to educate and train people for market-oriented jobs -- not necessarily a bachelor's degree, in other words. Second, he'd focus on poverty, particularly in old age. Third, we should encourage liquid savings for lower-income people, providing a personal safety net that reduces reliance on others.

What would you do?

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Read/Post Comments (36) | Recommend This Article (32)

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  • Report this Comment On October 28, 2012, at 6:18 PM, superbinvesting wrote:

    The bigger issue here is the tax system and the loopholes that allow wealthy Americans to dodge taxes through offshore bank accounts and international incorporation. I’m all for capitalism, but inequality will continue as long as there are loopholes for the wealthy to take advantage of. The US government is not oblivious to these lapses in the tax system, and they could easily amend those areas if they chose to do so.

  • Report this Comment On October 28, 2012, at 6:43 PM, kthor wrote:

    I think as long as Americans have cable TV, Football, Welfare, jobless checks coming in, they'll vote the same 2 parties in America and no changes will come in DC ... and why would those two parties want changes when they are reaping the benefits from that?... the laws are made not for the rich but to those that are below them ...

  • Report this Comment On October 29, 2012, at 2:55 AM, GETRICHSLOW2 wrote:

    Geez.... I have a headache just thinking about where to begin a response to this nonsense!

  • Report this Comment On October 29, 2012, at 10:31 AM, mdk0611 wrote:

    They both agree on education being a top priority. But the system, at least K-12, is not starved for money in comparison to the US historical norm nor foreign systems that produce better outcomes. Reform. not funding, is the key here.

  • Report this Comment On October 29, 2012, at 11:07 AM, CrankyTexan wrote:

    You call this a "smart" talk on wealth inequality?

    First of all, only leftists use the term wealth inequality. It's really pathetic.

    Second, life is unfair, Morgan. Get used to it. I suppose if you want everyone to be equal, then communism might be for you.

    Third, all Americans are rich compared to people in other countries. "Poor" Americans have cell phones, flat screen televisions, and are obese.

    Discussing "wealth inequality" on a stock investing website is like discussing atheism on a Christian website.

  • Report this Comment On October 29, 2012, at 11:20 AM, Costanzawallet wrote:

    "Third, we should encourage liquid savings for lower-income people, providing a personal safety net that reduces reliance on others."

    We keep hearing the "reliance on others" comment, but those with high incomes take as much from the system and in many cases more than those on the lower end of the economic ladder. People had liquid savings, many the recommended 6 months worth, but cleaned them out when speculators and the mortgage crisis hit. it takes awhile to put another 6 months of savings back into the bank when you can't find a job.

  • Report this Comment On October 29, 2012, at 11:33 AM, CrankyTexan wrote:

    By the way, readers, Joseph Stiglitz is the commission chairman of "Socialist International." He also mentored members of Obama's economic team.

  • Report this Comment On October 29, 2012, at 12:28 PM, ryanalexanderson wrote:

    >You call this a "smart" talk on wealth inequality?

    >First of all, only leftists use the term wealth inequality. It's really pathetic.

    Yep, nothing like invoking partisan cliches and shouting out 'communism' to raise the intelligence level of the conversation, eh?

  • Report this Comment On October 29, 2012, at 12:35 PM, CrankyTexan wrote:

    ryanalexanderson, this whole article is partisan. Joseph Stiglitz is an official socialist . That is not an assumption. I can provide more proof if you wish.

  • Report this Comment On October 29, 2012, at 12:37 PM, CrankyTexan wrote:

    And "wealth inequality" is a partisan cliche.

  • Report this Comment On October 29, 2012, at 5:00 PM, cfravel wrote:

    I agree with the point about lack of opportunity. Regulation has become an additional barrier of entry, which vested interests actually want passed to restrict competition. Also, entrepreneurship in the U.S. has been declining for 12 years, yet the population is rising. It's unlikely that fewer people are hoping to succeed in their own businesses today than 12 years ago, so this must be attributed to decline in opportunity and access to capital. While there is more capital now, it is in fewer hands and earns returns in ways that do not encourage human productivity.

    Opportunity is choked by government interference. No one knows in what way government will interfere next, so people are even less likely to take risks.

    Is Obamacare going to make employees more costly? Who knows? If Obama is reelected, what other costly laws might be initiated? How long before the costs of these new laws are truly integrated into the system? Will the new laws make American companies less competitive with foreign competition?

    Business leaders and individual investors alike are gathering cash, commodities, and other value stores to weather this storm of uncertainty. That is why you see this giant spike of wealth holding. Also, inflation is a vicious cycle which iteratively diminishes the value of income, and disproportionately favors those with the means to shift cash into appreciating assets. People with lower incomes MUST spend most of their income just for necessities, while wealthier people can shift excess capital to investments which appreciate. Inflation exacerbates this cycle.

    When the government interferes in market pricing, it takes years for pricing to settle. No one knows where pricing -- on anything -- will end up, but with yet another variable in the mix, it only makes people even more risk averse.

    If the last 20 years have shown us anything, it's that a few bad events and fear will wreak havoc with pricing, and no one wants to be left holding the asset class, whose bubble gets burst: real estate, tech stocks, gold, whatever.

    And if the last 2000 years have shown us anything, it's that market fixing has never improved wealth distribution. It invariably favors the people in the loop, doing the market fixing.

  • Report this Comment On October 29, 2012, at 5:12 PM, Seanickson wrote:

    I believe the best path is to provide a better net for those wanting to start a business. The first thing to do would be to have a different health care system, I believe the system of employer provided health care is a big issue because it prevents people from creating their own companies because of high health care costs for themselves and/or their families. Secondly, we should seek to lower regulations, which serve to create high barriers to entry. We should also keep business taxes as low as possible for the first $50k dollars or so to help small businesses survive and eventually grow.

  • Report this Comment On October 29, 2012, at 5:46 PM, WyattJunker wrote:

    Stiglitz is almost as moronic as Krugman. They are built from the same ideological cloth.

    Education is not the answer. I ascribe more to Peter Theil's challenge of NOT going to school. Or, more preferable, paying people not to and instead do something radical and innovative instead of herd seeking mediocrity.

    The best way to achieve growth is to 1) Lower govt. spending by reforming existing entitelments 2) Welfare reform aka what Newt's boys did in 1994 3) Tie UI paid benefits to jobs programs like road crews or infrastructure(not just a check in the mail) 4) Repeal Obamacare and replace with a free market approach to attack the cost problem(which his never did and 5) reform the tax code by widening the base and lowering both the cap gains & dividends to essentially zero and the corporate rate from today's ridiculous rate to something more reasonable like 20%.

    And while this is done, sunset a gazillion laws and regulations that literally remove any and all incentives for businesses to expand their operations in the United States.

    I'm an employer and every time another bill is signed I cringe and want to just shut it all down and startup in another freer country, like Iran.

  • Report this Comment On October 29, 2012, at 6:03 PM, xetn wrote:

    I think the article overlooks another important factor: government handouts. A large number of citizens receive government checks for various reasons: food, unemployment, SS, etc. This tends to reduce the incentive to work and invest.

    The minimum wage guarantees a certain level of unemployment (those without experience or a certain level of education).

    The article also overlooks the factor of taxes (that 1% pays a disproportional amount of the taxes while the tax consumers pay nothing. This includes all government employees that are paid out the tax collections. It is a fraud that states that government employees pay their share of taxes; their taxes are just a reduction from their tax consumption.

    Regulations and licensing preclude a certain level of people the ability to start business due to costs of licenses and costs of compliance.

  • Report this Comment On October 29, 2012, at 7:13 PM, newageinvestor wrote:

    I love these people who throw out epithets at 2 Nobel laureates - guess who the one is who looks stupid? (hint, not them).

    The other end of this is that our economy suffers when the middle class is so strapped and so lacks opportunity that it can't buy the stuff that manufacturers buy - think washing machines and durable goods, as well as other things like restaurant meals.

    People wanting to politicize from the right this are really in denial about the state of the middle class and what drives economic growth in this country. If we become as unequal as Latin America we'll be subject to the same wild economic oscillations and chronic lack of demand.

    You want to make money on the stock market? People have to be able to buy what companies are making for that to happen.

  • Report this Comment On October 29, 2012, at 7:30 PM, CrankyTexan wrote:

    "I love these people who throw out epithets at 2 Nobel laureates - guess who the one is who looks stupid? (hint, not them)."

    The leftist Nobel Prize committee is a joke. They gave a peace prize to Obama for crying out loud. Obama has ordered the death of thousands of insurgents and continues to do so.

    "People wanting to politicize from the right this are really in denial about the state of the middle class and what drives economic growth in this country."

    Politicize? This article praises an official socialist. That is politicizing.

  • Report this Comment On October 29, 2012, at 9:57 PM, kyleleeh wrote:

    <<Second, life is unfair, Morgan. Get used to it. I suppose if you want everyone to be equal, then communism might be for you.>>

    I'm sure Qadaffi, Luis the 14th, and the Romanov family probably felt that way a few years prior to their executions. But personly I think it would be good idea to talk about these things before we reach that point. Life not being fair can also mean an angry mob takes everything you own and leaves you in the street. Try reading about what happened to Ayn Rand's family in Russia before talking about "life not being fair" that door swings both ways.

  • Report this Comment On October 29, 2012, at 10:11 PM, CrankyTexan wrote:

    Now kyle is comparing rich Americans to Qadafi.

    Kyle, you own more money than 95% of the people in this world. Feel free to give away your money until they have the same net worth as you, hypocrite.

  • Report this Comment On October 29, 2012, at 11:34 PM, ficklevoter wrote:

    <When the government interferes in market pricing, it takes years for pricing to settle.>

    During my long life (old Fool), the only Prez to fix prices was Nixon, a Republican.

    During my long life, the first Prez to nationalize a bank was Reagan, a Republican.

    If Prez Reagan had not kicked the Savings and Loan can down the road, it would have cost taxpayers a few billion $ less to fix the problem. But then Neil, son of Prez Bush, a Republican, and brother of Prez Bush, a Republican, would not have had the opportunity to cost taxpayers $1.2B in the Silverado S&L scandal. Neil paid a hefty price though. He was banned from banking and told to play fair. He hasn't.

  • Report this Comment On October 30, 2012, at 1:41 AM, enginear wrote:

    Wealth inequality is a valid topic even to me, and I am definitely conservative, cranky. I wish you could raise the level of your argument a notch or two so that when I do declare myself a conservative people don't assume I'm like you. Out of 19 comments, 6 are yours, and generally right on the edge of a personal attack.

    Lighten up, and argue with relevent facts... please.

    Bangladesh and Africa have very high cell phone penetration... are they 'rich'? Life being unfair is not wonderful, and we shouldn't just 'accept it' without an attempt to equalize opportunity.

    I'd like to see better schools (not necessarily more expensive - reform is good) in the K-12 arena, and I'd prefer a lot less student loan emphasis, with more emphasis on keeping tuition at a point where less than 4 years (beginning) wages will get you through a degree. Even state schools are too expensive now. This affects our whole society... employee quality, etc. (Dare I say quality of debate?)

    As a society we need to provide incentives for our kids (this is not a school problem, but a parent, and general societal attitude problem) to get educated, to invest in their knowledge base, and their thought processes.

    I'm opposed to all corporate taxation, but more taxation of the income they pay out to employees(which should include stock options by the way), and strict scrutiny of so called expenses (income in wolf's clothing). Also, the mortgage interest deduction could be reduced to some relatively low ($15,000 a year? - plus or minus some... not sure what) amount, and only on primary residences. (Really, I like a flat tax with a housing and food allowance at the bottom ($12K -$18K ?), below which you pay nothing, and above which we all pay an equal tax on every (!) dollar.

    These don't make life 'fair', but they seem (to me) as if they might be viewed with approval by many who are now unhappy, and they seem to make sense financially

  • Report this Comment On October 30, 2012, at 1:45 AM, CrankyTexan wrote:

    enginear, you're not conservative. You may be fooling yourself, but you're not fooling me.

  • Report this Comment On October 30, 2012, at 1:47 AM, CrankyTexan wrote:

    enginear, are you voting for Obama or Romney?

  • Report this Comment On October 30, 2012, at 11:35 AM, fowlermike wrote:

    Interesting article, but can't say that I agree with either 100%....I think you have to look in history (particularly from World War I forward) to understand what is happening in the world and in particular the United States. After World War I and II pretty much all of the industrial world's infrastructure and manufacturing capability was destroyed, with the exception of the United States. We converted our wartime manufacturing into one that basically supplied the rest of the world with products and materials to rebuild their nations. We could manufacture pretty much anything and the rest of the world was happy to get it. As these destroyed nations rebuilt and retooled (at our gain and loss later), they took many of our products and improved on them at a much lesser cost initially. The more nations that we have helped develop by moving our intellectual assests and manufacturing base overseas, the more competitive they have become. I grew up working in the 5&10 (dimestore) era (my dad worked for a southern chain)in the 50s and 60s and remember all the little toys and things that are now Made in China were made in Japan - junk soon turned into Nissans, Toyotas and Hondas. In many of the labor intensive industries the cost advantage of overseas goods simply made it impossible to manufacture those goods in the states. Much like the fireman who held on as trains moved from wood and coal to deisel and electricity, many unions (not all) have stymied the efficiency and productivity of our core industries through inefficient and costly work rules and detrimental pay and benefits. Costs continued to rise and quality decreased - as much management's fault as unions - they both assumed that the American consumer would continue to buy their products regardless of the price and quality. In some cases, union bosses have held up corporations to the point that rather than negotiate, companies simply made the decision to close shop and move elsewhere or overseas.

    American is still a great and innovative country and I still believe we have tremendous opportunity for companies and indivuduals, but it will take a lot of give and take from everyone - management, unions, government. Many of the problems stem from corporate boards that are filled with cronies of other companies with similar ideas and few are ever held accountable. Most boards know that stockholders are simply feckless and ineffective in forcing their hands on most issues of import to average stockholders. The only hope most of us have is for renegade takeover companies/individuals to come in and force them to do the right thing. I also believe corporate pay for CEOs is way out of line in many cases...I prefer this area to be controlled by Corporate boards, but I do not think this is likely to happen anytime soon for reasons noted above. CEOs should also be measured by realistic productivity criteria and pay limited to some multiple of the average pay of others in the company. I think stock options are fine but must be earned over years not each year - think long-term instead of short-term. I think these criteria should also be limited to "Publicly Held Companies". Most small businesses and privately held businesses know that they don't survive without them making the right decisions day in and day out...they have no one but themselves to bail them out.

    So many things that need corrected, but none insurmountable with cooler heads

    We also have an education system that is ineffective in many ways. They continue to teach classes/majors that are useless to the average student and the system tends to promote traditional 4-year colleges and universities when most graduate with degrees no one needs or wants. I have known so many individuals who have become very successful with only a high school degree or a technical education - many have received higher degrees later in life or additional training through their employers (who know what skills are necessary)

    The final problem we have in this country is an antiquated and unfair tax system, not from a progressivity standpoint, but simply from a complexity standpoint. There are so many loopholes, twists and turns that even the experts do not understand it. We need to flatten out the code (Fairtax, flat tax, etc.), reduce many of the unfair and unnecessary deductions and in some cases lower our base rates. Our corporate tax rate is one of the highest in the industrialized world which makes us less competitive. Someone needs to look at every opportunity to cut unnecessary spending, eliminate deductions and increase fees where they make sense. One example of fees that do make sense has to do with National Parks. I recently secured a LIFETIME pass to all national parks for the whopping sum of $10. This fee allows me to pack as many friends and family into a car without paying any additional charge for any of them. I believe our parks are a national treasure, but I (and assume many other seniors) would be more than happy to $25, $50 or even a $100 for a lifetime pass. With 10,000 baby boomers retiring every week for the next good many years, these additional funds would go a long way in supporting our National Parks. I am sure there are thousands of other ways the average American could point out ways to save money or raise additional fees.

    Our government has become so invasive in our everyday lives that they don't beleive we can survive without them holding our hands all the way from cradle to grave. After decades of wasteful and ineffective spending, what do we have to show for it. Teacher unions and government have dumbed down our education system, welfare payments has created a permanent underclass and 46+million Americans are on food stamps.

  • Report this Comment On October 30, 2012, at 11:59 AM, AvianFlu wrote:

    We have been following the dictates of the utopian statists since the 1930s. We have adopted virtually all of the platform planks of the 1930s socialist party platform. Yet, income mobility is way worse than before the mastermind's experiments. Is it possible that a large ever-growing government does not result in the betterment of society?

  • Report this Comment On October 30, 2012, at 12:14 PM, AvianFlu wrote:

    "Greece has formulated a very carefully balanced balance between social cohesion and economic reestructuring."

    - Joseph Stiglitz, yet another Nobel Prize-winning Keynesian

    Oct 2, 2010

    As we can see, Stiglitz is brilliant (not)

  • Report this Comment On October 30, 2012, at 12:20 PM, TMFMorgan wrote:

    ^ Do you have a link for that? I couldn't find it.

  • Report this Comment On October 30, 2012, at 12:20 PM, TMFMorgan wrote:

    Nevermind. Google flaw.

  • Report this Comment On October 30, 2012, at 1:45 PM, jmorris22x wrote:

    I found myself agreeing with Stiglitz on the problem of rent-seeking. Beer-drinking backyard laureates agree that government intervention has left us with the ghost of capitalism. I agree with Friedman that corporations collect taxes, they do not pay them, so let's end that fiction. At the same time end all government subsidies and tax deductions. Allow the government to spend only what it actually took in in taxes two years ago.

    It seems like no one is paying attention to the fact of Fed enforced 0% interest rates on seniors. Many of them have been forced to liquidate their capital rather that live off the interest that was providing income. Extremely low interest rates also make saving unattractive, thereby decreasing wealth.

    Isn't the ability to manipulate the currency the ultimate rent-seeking activity?

  • Report this Comment On October 31, 2012, at 11:31 AM, Draftin2 wrote:

    Can someone enlighten me on taxes. Every election cycle tax class warfare is interjected. It appears to me that all taxes are ultimately paid by the consumer of the service or product consumed. Taxes are paid (collected) by the supplier of the service or product and passed on to the consumer. The wealthy corporation, lawyer, doctor pass the tax on just like any other cost. When will the drivers of a Ford or Chevy realize they are paying increased corporation taxes? Another unrelated society problem which may or may not contribute to our national financial woes seems to be the new American attitude of "I want what's mine, I want it now, and the hell with the rest of you!" which permeates America from Wall Street Bankers down to welfare recipients.

  • Report this Comment On October 31, 2012, at 4:57 PM, CrankyTexan wrote:

    This is all you need to know about "wealth inequality"......

  • Report this Comment On October 31, 2012, at 10:01 PM, 48ozhalfgallons wrote:

    The intellectual "class" is mostly Keynesian and "progressive". That class has proven itself incapable of solving anything.

  • Report this Comment On November 01, 2012, at 8:38 PM, lynn002 wrote:

    I believe much of the problem is the anti union attitude of many corporations and government in this country. If you look at Germany they work with their unions and have a much higher rate of workers belonging to a union. I believe the rate in the private sector in this country is less than 8% now. Germany is a manufacturing power house with high wages and benefits for their employees. Japan seems to be another. I recently read where TV assembly workers in Japan made about $85000.00 a year. How many manufacturing jobs do we have in this country that pay that much. We need balance between labor and management in this country which we currently don't have.Connect the dots

  • Report this Comment On November 02, 2012, at 12:39 PM, agwisreal wrote:

    Getting the poor to see the advantages of a savings cushion is a tough job. People who have little income but who play the few cards they have well often manage so well that they slip out of the ranks of the poor. Even if they're "poor", by the government's definition, they generally lack for nothing and can ride out a shock such as a layoff, let alone the routine shocks of life such as the need to buy a new muffler or a new set of tires.

    But put another way, less skill at the game of "looking ahead" is a contributing factor to how low income translates into constant financial difficulty and real deprivation.

    People just starting up the learning curve need quick rewards and reinforcement. Perhaps a somewhat realistic "savings game" cell phone ap or something could let them speed through the cycle and see how the "frugal" path tends to work out best. That way, the long run can be compressed into a matter of minutes.

    A few minutes of one guy brainstorming isn't going to cut it, though. Real effort will have to be put into the project.

  • Report this Comment On November 02, 2012, at 2:44 PM, RavenManiac1968 wrote:

    How can you say the poor "lack for nothing"? Have you walked in their shoes? Have you tried to raise two children on a combined household income of $60,000? Oh, wait, a combined household income, BEFORE taxes mind you, is MIDDLE INCOME.

    The 2012 poverty line for the continental US for a 4 person household is a whopping $23,050. That is before taxes folks! And these people do have payroll taxes withheld just like everyone else along with insurance if they are lucky to have it.

    Do any of you "poor lack for nothing" folks know the poverty line for just a single person living alone? It is $11,170. This is per year.

    How can anyone can live on $11,170 per year?

    Yeah tell the 50 yr old checkout lady in the grocery, she needs to smarten up and start saving money. She probably makes less than $10/hour --- $20,080 per year. If she has two kids, she is $1,000 above the poverty line. I'd love for just one of you high brow snob right-wing jokers just try to live in that woman's shoes for just one week. You people make me sick.

  • Report this Comment On November 02, 2012, at 11:27 PM, ChrisBern wrote:

    Sure there's still equality of opportunity. Both my wife and I grew up in lower-middle class families, she in a foreign country and I in the U.S. We are both doing great now because we worked our butts off, paid 100% of our own college by working and through student loans (no parental handouts), got advanced degrees, and are extraordinarily frugal with our money.

    There was nothing special about our upbringing, but there will be for our children. In fact the very reason my wife came to this country in the first place was because she did not have the ability to get a college degree (much less student loans) because her native country didn't afford her (or most citizens, especially females) that kind of educational opportunity. America's the same as it always was, there just aren't as many $45/hour assembly line jobs, so admittedly it's really hard for more blue collar workers to get ahead in this environment. That part may never change so those workers will have to adapt to the new normal.

  • Report this Comment On November 04, 2012, at 7:38 PM, Handworn wrote:

    I agree that education has to come first in any solution, but my solution would make it financial education. It would emphasize that wealth is a matter of the cumulative effect of managing your relationships. In particular, it's managing them in such a way that the ones that cost you money are minimized and those that bring you money are maximized. These two speakers, like most would-be poverty-solvers, dwell on jobs, and there's nothing wrong with that per se. I especially approve of Feldstein's focus on practical education. But it's like investing in a company whose earnings rely on a single product. Bad stuff could happen.

    Teach them to invest. Not stock picking. Index funds which can't be borrowed against and whose principal funds take six months to withdraw (to reduce panic and impulse selling) with dividends tied to a billpaying service to smooth out those month-to-month financial bumps. I firmly believe a feeling of hopelessness about learning how money works is responsible for a lot of misery.

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