Entries Tagged 'Economics and Investing' ↓

Review of Robert Reich’s 2013 Documentary “Inequality for All” – part 4 of 4

“You load sixteen tons, what do you get
Another day older and deeper in debt” (Merle Travis’ song, 1946)

During the last part of his 2013 documentary film, “Inequality for All,” Robert Reich asserts that a big lie was spread in this century. This lie says there exists a form of ‘class warfare’ against the very wealthy.

Those who disagree with higher taxes on the rich say that’s an attack on the ‘1 percent’. Supposedly these attacks come from the ‘99%’ and spring from envy.

Reich replies that this is the opposite of the truth. The middle class are the real “job creators,” not the rich. (See how Reich comes to this conclusion).

Another big lie promulgated in this century is that government is “bad” and financial markets are “good”.

In reality, governments, Reich says, are needed to create the rules by which financial markets function. This is necessary in order to construct and maintain our free market system.

Then Reich steps outside the usual realm of modern economics and harkens back to an earlier era of this field when it was called “political economy”. Reich makes a fourth assertion about income inequality:

High income inequality correlates directly with political polarization

Continue reading →

“These jobs are goin’ boys and they ain’t comin’ back” Bruce Springsteen “My Hometown”

Review of Robert Reich’s 2013 Documentary “Inequality for All” – part 3 of 4

Two economists, Piketty and Saez have studied US income tax rates over the past one hundred years. Their graph of income inequality looks similar to the iconic Golden Gate Bridge with its two peaks occurring in 1928 and 2007, right before the biggest economic crises in the US.

From this study, Robert Reich can conclude that:

Income inequality correlates directly with lower taxes on the rich and higher taxes on the middle class

Yes, history shows that the lower the tax rates for the wealthy, the higher income inequality in the US becomes. The higher the tax rates on the wealthy, the lower income inequality becomes. Continue reading →

Review of Robert Reich’s 2013 Documentary “Inequality for All” – part 2 of 4

‘There comes a point where money has no real utility” (Warren Buffett, September 2016)

In his 2013 film, economist Robert Reich says: Income inequality appears to be a harbinger of oncoming economic depression

Reich bases this hypothesis on research by two other economists about US income tax rates over the 100 year period from 1913 to 2013. In particular, a graph that takes the same shape as the iconic Golden Gate bridge.

Reich points out the two peaks of highest US income inequality between the rich and middle class on the graph occurred in 1928 and 2007, the year before the Great Depressions of 1929 and 2008.

Robert Reich’s answer to why income inequality ‘correlates’ (is associated) with economic depressions in the United States is: because the wealthiest Americans do not spend enough money.

The rich save money instead, by putting it in funds of funds, i.e. hedge funds. Consumer spending makes up 70% of US national income. This is why Reich thinks we need a middle class.

Reich points out that this spending makes the middle class the TRUE JOB CREATORS. Continue reading →