Tigermike 3,050 Posted February 11, 2006 Share Posted February 11, 2006 Myths of rich and poorFeb 8, 2006 by Thomas Sowell There is a fundamental difference between seeking the truth and scoring points. In politics, the truth is strictly optional and that also seems to be true in parts of the media. Much of what is said about the incomes of Americans is said to score points. For example, it has been repeated endlessly that the average American family's income has not increased significantly for decades and that real wages are actually going down, not up. That is great stuff for scoring points. You can just imagine the words and the music: The economy is stagnating, the American Dream has become a nightmare, our best days are behind us, etc. The fact that the conclusions are totally false has not cramped anyone's style. Best-selling authors reap the profits of doom by writing such stuff. Politicians show how compassionate they are by promising to rescue us from economic disaster. Those who want to show how hip they are by disdaining American society get their jollies by scoring such points. A book titled "Myths of Rich and Poor" by W. Michael Cox and Richard Alm exposes such nonsense for the fraud that it is. Despite the statistics that show real wages going downhill over time, somehow Americans are consuming more than ever and have a larger net worth than ever. As of 1970, for example, only about a third of American homes had both central heating and air conditioning, while more than four-fifths had both in the 1990s. Moreover, the homes themselves were more than one-third larger. Just over one-fourth of American households had a dishwasher in 1970 but more than half did by the 1990s. Only 34 percent of households had color television in 1970 but 98 percent did in the 1990s. How could this be, with lower real wages? Were we just going deeper and deeper into debt? Actually the net worth of Americans more than doubled during those same years. Was there some kind of economic Houdini who could perform such magic? No. Actually a lot of the point-scoring rhetoric involves misleading statistics. Wages are only part of total compensation -- and increasing proportions of that total compensation is taken in the form of fringe benefits. Total compensation has been going up while average real wages have been going down. Even the decline of real wages has to be taken with a grain of salt. Real wages are calculated by taking the money wages and adjusting for changes in the consumer price index. Only an economist can get excited by the consumer price index. Other people's eyes are more likely to glaze over when the term is mentioned. However, an inaccurate consumer price index is part of the reason for the appearance of declining real wages. When the consumer price index says that inflation is 3 percent a year, it may really be more like 2 percent or 1.5 percent. As anyone who has had to pay off a mortgage knows, a difference of a percentage point can add up to real money over a period of decades. Economists' estimates of how much the consumer price index exaggerates inflation range from an estimate of one percentage point by former Federal Reserve chairman Alan Greenspan to an estimate of 1.5 percent by Michael Boskin, former chairman of the Council of Economic Advisers to the President. Even if we take the lower estimate of one percentage point, over a period of 25 years, that under-estimates the real income of the average American by nearly $9,000. In other words, a working couple will have their real income under-estimated by nearly 18 grand, using the consumer price index to correct for inflation. No wonder the income statistics look so bad, even while the standard of living is rising and Americans have a higher net worth than before. Nothing is easier than to turn reality upside down, especially if you are just trying to score points, instead of getting at the truth. My comment on this book has been reprinted on its cover: "Cox and Alm deserve a medal for bringing some sanity to a subject where insanity is the norm." If making a whole society's rising prosperity look like a disastrous decline is not insane, what is? Ed. Note: "Myths of Rich and Poor" by W. Michael Cox and Richard Alm is available from the Townhall Book Service for only $9.95 this week. link Link to comment Share on other sites More sharing options...
Bottomfeeder 244 Posted February 11, 2006 Share Posted February 11, 2006 Real wages are having trouble keeping up with prices After adjusting for inflation, wages have dropped in many of the nation's largest counties. By Les Christie, CNNMoney.com staff writer January 30, 2006: 4:30 PM EST NEW YORK (CNNMoney.com) - Real wages are not exactly going through the roof. For the 24-month period through the second quarter of 2005, the inflation-adjusted wages of an average American grew just 1 percent or so, according to statistics reported by the Bureau of Labor Statistics (BLS). http://money.cnn.com/2006/01/30/pf/real_wa...dex.htm?cnn=yes Link to comment Share on other sites More sharing options...
AURaptor 1,126 Posted February 11, 2006 Share Posted February 11, 2006 Real wages are having trouble keeping up with pricesAfter adjusting for inflation, wages have dropped in many of the nation's largest counties. By Les Christie, CNNMoney.com staff writer January 30, 2006: 4:30 PM EST NEW YORK (CNNMoney.com) - Real wages are not exactly going through the roof. For the 24-month period through the second quarter of 2005, the inflation-adjusted wages of an average American grew just 1 percent or so, according to statistics reported by the Bureau of Labor Statistics (BLS). http://money.cnn.com/2006/01/30/pf/real_wa...dex.htm?cnn=yes 219528[/snapback] So? Exactly how is this the concern of the administration? Please, elaborate. Don't tell me why it's bad, but rather tell me how it's the result of what this administration has done. If you can show some connection, then please do so. Link to comment Share on other sites More sharing options...
TrueBlue72 0 Posted February 13, 2006 Share Posted February 13, 2006 That article is SO true! Fifty years ago, as I started to school, I lived in a little 4 room house. My dad had what was considered a very good job working in the steel mill here in Gadsden, but by today's standards we were POOR. Of course we weren't poor by the standards of 1956, we were solid middle class. Fourty years ago, in high school, I rode the bus to school every day just as did almost every one else. The handful of students who had cars drove older models. Look at the average high school today; a significant number of the kids drive their own cars and some of them drive expensive new cars! If I look back at what I have today through the eyes of that kid starting school or that high school junior, I have almost unimaginable wealth in terms of possessions and income even though I am not wealthy by todays standards. It's NOT just about income; it's also about the cost of the things we buy. The little $600 laptop computer I'm writing this from couldn't be bought at ANY price 20 years ago. My first PC, bought in the mid-80's cost over $5000. Electronics are a prime example, but many of the things that make us "wealthy" are bought today at prices that, when adjusted for inflation, are very cheap compared to a few years ago. There is a name for those folks who try and downplay the economic gains made by the average American.......... they're called Democrats. Link to comment Share on other sites More sharing options...
DKW 86 7,439 Posted February 13, 2006 Share Posted February 13, 2006 I sincerely question the mental faculties of anyone that is not flat overwhelmed by the profound wealth of those in the US. Ask yourself these questions... How many cars in your household? How many color tvs in your household? How many cell phones in your household? Do you own a washer and drier? Do you have access to a dishwasher? How many running water toilets? How many bedrooms in your household? When you realize that the vast majority of the world answers these questions: 0,0,0,0,0,0,0, 1 Thank God you live in this country. Even the poorest of the poor in the US are near kings in Africa and Asia. Sometime I am just sickened by the incredible over abundance of wealth here. We toss our kids into day care so we can drive a BMW, a Cadillac, or some huge SUV we really dont NEED. I took a long look at my myself a short while ago and I was shocked at what I was not thankful for. I am getting much more radical in my Christianity thanks to "The Purpose Driven Life." Link to comment Share on other sites More sharing options...
japantiger 4,051 Posted February 13, 2006 Share Posted February 13, 2006 Amen DKW, Just before Christmas, I was in Cambodia building houses. The ten of us built 4 houses in a weekend. 3 were one room homes; each with a single family that was to live in them; by family I mean husband, wife, grown children and their children. We then built a 4 room house; occupied by five different families (Mom/Dad, their grown children with their families). We also paid for their smallest children to attend school for a year (bought books, pack, etc.); and the kids needed clothes; they were naked. I spent what you spend on a weekend of football in Auburn. For anyone to complain about the US economy is ridiculous. We are blessed beyond belief.... Link to comment Share on other sites More sharing options...
LegalEagle 22 Posted February 13, 2006 Share Posted February 13, 2006 I sincerely question the mental faculties of anyone that is not flat overwhelmed by the profound wealth of those in the US. Ask yourself these questions... How many cars in your household? How many color tvs in your household? How many cell phones in your household? Do you own a washer and drier? Do you have access to a dishwasher? How many running water toilets? How many bedrooms in your household? When you realize that the vast majority of the world answers these questions: 0,0,0,0,0,0,0, 1 Thank God you live in this country. Even the poorest of the poor in the US are near kings in Africa and Asia. Sometime I am just sickened by the incredible over abundance of wealth here. We toss our kids into day care so we can drive a BMW, a Cadillac, or some huge SUV we really dont NEED. I took a long look at my myself a short while ago and I was shocked at what I was not thankful for. I am getting much more radical in my Christianity thanks to "The Purpose Driven Life." 219801[/snapback] Did you forget to include the average credit card debt of an American family? Did you forget to mention the family's share of the national debt? Did you compare our average income with those of other modernized nations? Are we number 1? Why not? Pull out your MasterCard, charge another color TV and impress us with your wealth. Link to comment Share on other sites More sharing options...
LegalEagle 22 Posted February 13, 2006 Share Posted February 13, 2006 http://moneycentral.msn.com/content/SavingandDebt/P70581.asp It's hard not to be worried when confronted with numbers such as these: About 43% of American families spend more than they earn each year. Average households carry some $8,000 in credit card debt. Personal bankruptcies have doubled in the past decade. It's not clear exactly where the debt trend will take U.S. consumers or the U.S. economy. But it is clear that both are sailing in uncharted waters.Don't let retirement sneak up on you. Create a perfect plan. Consumers owe nearly $2 trillion American consumers owed a grand total of $1.9773 trillion in October 2003, according to the latest statistics on consumer credit from the Federal Reserve. That’s about $18,654 per household, a figure that doesn’t include mortgage debt. The number is up more than 41% from the $1.3999 trillion consumers owed in 1998. http://www.brillig.com/debt_clock/ The estimated population of the United States is 298,514,238 so each citizen's share of this debt is $27,516.22. How big is your family? What is left (cars, tennis shoes, etc.) when you have paid off your debts and your portion of the national debt? Link to comment Share on other sites More sharing options...
Tigermike 3,050 Posted February 13, 2006 Author Share Posted February 13, 2006 I sincerely question the mental faculties of anyone that is not flat overwhelmed by the profound wealth of those in the US. Ask yourself these questions... How many cars in your household? How many color tvs in your household? How many cell phones in your household? Do you own a washer and drier? Do you have access to a dishwasher? How many running water toilets? How many bedrooms in your household? When you realize that the vast majority of the world answers these questions: 0,0,0,0,0,0,0, 1 Thank God you live in this country. Even the poorest of the poor in the US are near kings in Africa and Asia. Sometime I am just sickened by the incredible over abundance of wealth here. We toss our kids into day care so we can drive a BMW, a Cadillac, or some huge SUV we really dont NEED. I took a long look at my myself a short while ago and I was shocked at what I was not thankful for. I am getting much more radical in my Christianity thanks to "The Purpose Driven Life." 219801[/snapback] Did you forget to include the average credit card debt of an American family? Did you forget to mention the family's share of the national debt? Did you compare our average income with those of other modernized nations? Are we number 1? Why not? Pull out your MasterCard, charge another color TV and impress us with your wealth. 219821[/snapback] So the dems have a plan to eliminate credit card debt? As for me, I have a simple credit card policy: I don't charge any amount that cannot be paid off in in ONE month. I keep a 0 balance and pay off all bills when they arrive (sometimes sooner). I also have a debit card which I use more often than the CC's. And a simple debt policy: I don't new cars off the dealers lot. I pay cash for whatever vehicle I drive and then make payments to myself, interest included. That way there is always an account growing to pay for vehicles. Most of the time I buy low and then sell higher. Which is accomplished by help from a friend who is an auto wholesaler. The only thing I finance is real estate. TV's, stereo's, computers, PAY CASH! It is a simple policy to live by. It takes time, much effort and dedication to live debt free. But I am happy with the choice and it is a choice. When my wife and I first married (while still in college), like many we started off with very little. We used lay-a-way to buy appliances and furniture. But many stores today have eliminated lay-a-way. It's amazing what you can do if you set your mind on 6 months to a year down the road rather than today and this week. Link to comment Share on other sites More sharing options...
LegalEagle 22 Posted February 13, 2006 Share Posted February 13, 2006 That's great TM. Too bad our government doesn't do what you do. Link to comment Share on other sites More sharing options...
Tigermike 3,050 Posted February 13, 2006 Author Share Posted February 13, 2006 That's great TM. Too bad our government doesn't do what you do. 219851[/snapback] I agree, but they hardly ever have. Now there are conservatives spending like liberal democrats. And liberal trying to portray themselves as fiscal conservatives. Link to comment Share on other sites More sharing options...
LegalEagle 22 Posted February 13, 2006 Share Posted February 13, 2006 That's great TM. Too bad our government doesn't do what you do. 219851[/snapback] I agree, but they hardly ever have. Now there are conservatives spending like liberal democrats. And liberal trying to portray themselves as fiscal conservatives. 219853[/snapback] I do not consider it conservative to spend like drunken sailors. We have to put our collective feet down and let the administration and congress know that we expect them NOT to raise the national debt limit again! If we have to cut out their pensions and post-service health care, so be it. Link to comment Share on other sites More sharing options...
Tigermike 3,050 Posted February 13, 2006 Author Share Posted February 13, 2006 That's great TM. Too bad our government doesn't do what you do. 219851[/snapback] I agree, but they hardly ever have. Now there are conservatives spending like liberal democrats. And liberal trying to portray themselves as fiscal conservatives. 219853[/snapback] I do not consider it conservative to spend like drunken sailors. We have to put our collective feet down and let the administration and congress know that we expect them NOT to raise the national debt limit again! If we have to cut out their pensions and post-service health care, so be it. 219861[/snapback] I don't consider it conservative to "make a move to the center" as dems are want to do. I don't consider it conservative to add pork for Los Angeles or Boston or Atlanta or Dallas for disaster aid for hurricane ravaged Gulf Coast areas. Maxine Waters Democratic Representative (CA-35) and Nancy Pelosi Democratic Representative (CA-8) come to mind. But to be fair I am sure they are not alone. Link to comment Share on other sites More sharing options...
DKW 86 7,439 Posted February 13, 2006 Share Posted February 13, 2006 I actually owe not that much for an American Dad. Home, 1 card, and a car that I had to take over payments for for a friend. probably needed a new car anyway for the daughter to go to college. I do not appreciate the National Debt. I will pay what I owe. If you cannot pay your bills there are two answers. 1) You can try to make more money...Can you really blame thw govt or someone else for a lifetime of decisions you made? 2) You can spend less than you make....Dave Ramsey is making a fortune pointing out what I just said. Doing without that 5th TV, dvd player, or settling for that paid for used car is a choice YOU make. No one has ever held a gun to someone's head and said: "Finance or die..." Link to comment Share on other sites More sharing options...
LegalEagle 22 Posted February 13, 2006 Share Posted February 13, 2006 I actually owe not that much for an American Dad. Home, 1 card, and a car that I had to take over payments for for a friend. probably needed a new car anyway for the daughter to go to college.I do not appreciate the National Debt. I will pay what I owe. If you cannot pay your bills there are two answers. 1) You can try to make more money...Can you really blame thw govt or someone else for a lifetime of decisions you made? 2) You can spend less than you make....Dave Ramsey is making a fortune pointing out what I just said. Doing without that 5th TV, dvd player, or settling for that paid for used car is a choice YOU make. No one has ever held a gun to someone's head and said: "Finance or die..." 219951[/snapback] Hey, it's the radical right that said we aren't poor based on the number of color TVs, cell phones and cars we have. I just pointed out that if the bank owns it more than you do, it really shouldn't count as a sign of your "richness." Link to comment Share on other sites More sharing options...
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