Family Incomes Slipped In 1st Part Of Decade ("Rich getting richer" alert)

The Associated Press ^ | Feb 24, 2006 | MARTIN CRUTSINGER

[Sam's Army]

WASHINGTON - After the booming 1990s when incomes and stock prices were soaring, this decade has been less of a thrill ride for most American families.

Average incomes after adjusting for inflation actually fell from 2001 to 2004, and the growth in net worth was the weakest in a decade, the Federal Reserve reported Thursday.

Many families were struggling in the aftermath of the 2001 recession and the bursting of the stock market bubble in 2000, the Fed's latest Survey of Consumer Finances showed. The comprehensive look at household balance sheets comes every three years.

Average family incomes, after adjusting for inflation, fell to $70,700 in 2004, a drop of 2.3 percent when compared with 2001.

That was the weakest showing since a decline of 11.3 percent from 1989 to 1992, a period that also covered a recession.

The average incomes had soared by 17.3 percent in the 1998-2001 period and 12.3 percent from 1995 to 1998 as the country enjoyed the longest economic expansion in history.

The median family income, the point where half the families made more and half made less, rose a tiny 1.6 percent to $43,200 in 2004 compared with 2001.

Economists said the weakness in the most recent period was understandable given the loss of 2.7 million jobs from early 2001 through August 2003, when the country was struggling with sizable layoffs caused by the recession, the terrorist attacks and corporate accounting scandals.

The weak income and the stock market decline in the early part of the decade, which wiped out $7 trillion of paper wealth, had an adverse impact on family balance sheets.

Net worth, the difference between assets and liabilities such as loans, rose by 6.3 percent in the 2001-04 period to an average of $448,200. That gain was far below the huge increases of 25.6 percent from 1995 to 1998 and 28.7 percent from 1998 to 2001, increases that were fueled by soaring stock prices.

The 2001-04 performance was the worst since net worth actually declined by 9.9 percent in the 1989-92 period.

The report showed that the slowdown in the accumulation of net worth would have been even more sizable except for the fact that homeowners have enjoyed big gains in the value of their homes in recent years.

The gap between the very wealthy and other income groups widened during the period.

The top 10 percent of households saw their net worth rise by 6.1 percent to an average of $3.11 million while the bottom 10 percent suffered a decline from a net worth in which their assets equaled their liabilities in 2001 to owing $1,400 more than their total assets in 2004.

"This is the continuing story of the rich getting richer," said David Wyss, chief economist at Standard & Poor's in New York. "Clearly, the gains in wealth are going to the top end."

Democrats used the new report to blast President Bush's economic policies, contending it would be wrong to make permanent his tax cuts, which primarily benefit the wealthy.

"These statistics show why, even though GDP is rising, most people do not feel better off," said Sen. Charles Schumer, D-N.Y.

The Fed survey found that the percentage of Americans who owned stocks, either directly or through a mutual fund, fell by 3.3 percentage points to 48.6 percent in 2004, down from 51.9 percent in 2001.

Analysts said this was an indication that investors burned by plunging stock prices in the decade's early years have been leery about getting back into the market.

The share of Americans' financial assets invested in stocks dipped to 17.6 percent in 2004, down from 21.7 percent in 2001.

Reflecting the housing boom, the share of assets made up by home ownership rose to 50.3 percent in 2004, compared with 46.9 percent in 2001.

The Fed survey found that debts as a percent of total assets rose to 15 percent in 2004, up from 12.1 percent in 2001. Mortgages to finance home purchases were by far the biggest share of total debt at 75.2 percent in 2004, unchanged from the 2001 level.

There was concern that families might start to feel even more squeezed as the cost of financing their debts increases along with rising interest rates.

Although surging home values have supported consumer spending in recent years, analysts worry about the economic impact if, as expected, the home price surge begins to slow this year.

"This report shows a race between factors boosting net worth, such as home ownership, and factors pushing the other way, such as weak wage growth," said Jared Bernstein, senior economist at the liberal Economic Policy Institute, a Washington think tank.

[Mase]

You said: Actually, Karl Marx was an advocate of free trade:

He advocated free trade for just one reason: that it would hasten the social revolution. He was not an advocate of free trade for the same reasons those who favor capitalism are for it.

The line I cited was in the middle of the speech.

Fine. The part where he said he favored of free trade was at the end of the speech. You said Marx advocated for free trade. To make this claim you have to reference the end of his speech.

Being "for it" is the same as "supporting it", even if his reasons are different.

I can think of a hundred reasons to support free trade. Marx could only find one reason to be for it and that was that he thought, wrongly, that it would lead to totalitarianism. Don't you think there's a difference?

[Nowhere Man]

The problem is going to reach it's head within a generation or so. Outsourcing is not going to be the only problem. Automation, robotics are going to basically make those with an IQ of 100 and below superfluous. I think McDonalds will probably stop having human workers except for a manager in the stores by 2020.

That reminds me of one episode, "The Brain Center at Whipple's," (first aired May 15th, 1964) from the old Twilight Zone where a factory owner decided to replace his workers with static robots being controlled by a central computer and a few technicians. The workers, having been laid off gets very upset, one tries to blow up the computer but fails, but most just resign in dispair. Later on, the owner, Mr. Whipple, is replaced by a robot and he feels the same sting as his workers did. It was written by Rod Serling himself and Richard Deacon did a good job playing the owner.

There will be a large idle class of people. It will grow. I seriously doubt that there will be any way to avoid it. There will not by jobs that people without any specialized irreplacable skills can hold.

Well, it seems to be headed that way, unless, dipping again into the realm of science fiction, we do the same things the people in Battlestar Galactica, at least in the book based on the TV series, (I'm more in tune with the original 1978 series) did prior to the Cylons wiping out their homeworlds is to enact laws prohibiting the use of robots for labor thus keeping most, if not all jobs, requiring human employees. I know something similar happened in 1803 in France when the mechanized loom was invented, weavers soon destoryed it by tossing their shoes into the machine, breaking it. The French word for shoe is "sabot" and the world "sabotage" comes from that incident.

We will get socialism, and you won't be able to blame people if things don't change. If you tell most people that there is no work for them, and they have the power to vote the money away from the technology, multinational haves, it will be in their short term economic interest to massively redistribute it. We are marching towards our doom, and just don't know it.

The only way such a society can work is if we over-capitalize enough ala, like in "Star Trek, the Next Generation" where we can create or make almost all our wants and needs from replicators converting almost pure energy into mass and then into what you want such as a car, a tape deck, a Playstation, a guitar, you name it. However, we are so far away from it and probably not make it the way we are going. Nature abhores a vacuum and if there are no jobs out there for the majority or even many people, you have to find a way to fill their needs and it will have to be a redistribution of wealth to do it. I'm being realistic here, whether you think that is good, bad or indifferent idea, it will happen and it will be the only "remedy" left. Yeah, a safety net is a good thing but when you have too many to draw on it, which we will have, then you will see some sort of collapse. Myself, I'd rather see people working and living even if it means putting the free traders in their place. otherwise, welcome to the world of "Mad Max" or "The Road Warrior" where the only retribution to get what you need is to get yourself a posse of dudes with anything that shoots and pack them into anything that has four wheels and runs, well you get the idea.

I was listening to Lynn Cullen here in Pittsburgh today and although she is very lefty in her politics, I have to agree with her on a few things like we are seeing the death of the nation-state and the birth of a corporate dominated world, I get pictures in my mind that reminds me of the movies "Rollerball," "Soylent Green"or "Blade Runner."

I know I use science fiction a lot but as David Gerrold (who wrote the Tribble episode for Star Trek) says basically that science fiction is often used to tell a contemporary story to get a point across without being too tied to the world we live in or perhaps getting too preachy.

Pinged ya, Havoc, since you are into "Battlestar Galactica." B-)

[Havoc]

Thanks for the ping. This is one of the bigger problems I see - that "unskilled" work is being offshored to other countries leaving no opportunity for unskilled workers in a society where not everyone can afford college much less a degree. This would seem to be a case os social engineering at work. And I agree both with your Battlestar allusion and your summation of the French tack. Both are proper forms of retaliation IMHO. What's good for the goose as it were..

If they're going to create the world of shadowrun for us to live in, they should well expect the war that comes with it.

[Petronski]

Your paranoid fantasies must bring incredible richness to your life.

[Havoc]

Well, well, if it isn't the inferiority complex trying to shop his worth yet again.

[Toddsterpatriot]

This is one of the bigger problems I see - that "unskilled" work is being offshored to other countries leaving no opportunity for unskilled workers

It's always about you, isn't it?

[Havoc]

Apparently with your arrival, it must be inferiority complex night on the thread. Are we to assume the rest of the usual suspects aren't far behind.

[Toddsterpatriot]

So, how's the job?

[Petronski]

Well, well, if it isn't the inferiority complex trying to shop his worth yet again.

Spare me the autobiographies, putz.

[sittnick]

sittnick said:
Actually, Karl Marx was an advocate of free trade:

Mase said:
He advocated free trade for just one reason: that it would hasten the social revolution. He was not an advocate of free trade for the same reasons those who favor capitalism are for it.

Again, I never said he did. I simply was pointing out to nopardons that free trade was not an "object of scorn." I never claimed that Marx supported free trade for the same reason that (some) capitalists did. We do conservatism no service by saying things that aren't true. Saying that free trade is an "object of scorn" (#324) for Marx simply isn't true.

sittnick said:
The line I cited was in the middle of the speech.

Mase said:
Fine. The part where he said he favored of free trade was at the end of the speech. You said Marx advocated for free trade. To make this claim you have to reference the end of his speech.

The line I cited from the middle of the speech does the job very nicely, which is why I cited it. (part of the quotation from the MIDDLE:" And, generally speaking, all those who advocate Free Trade do so in the interests of the working class.")

Mase said:
I can think of a hundred reasons to support free trade. Marx could only find one reason to be for it and that was that he thought, wrongly, that it would lead to totalitarianism. Don't you think there's a difference?

My original purpose, simply to correct nopardons, who was probably just mistaken in good faith (after all his point about religion was completely correct), has nothing to do with "what I support", but with what Marx supported.

If you must ask, I have no problem with free trade with countries that do not outlaw Catholicism or Christianity (Red China, North Korea), restrict family size by government fiat with forced abortion as part of the system (Red China, possibly the Netherlands soon), use slave labor (Burma, Red China), or in cases where doing so would eliminate the industrial and agricultural base in a country so that national security is controlled by those outside (Japan may restrict rice imports so they are not TOTALLY dependent on others for their food. Red China should not make out military gear for us, beause then we lose the capability of maintaining our own army in time of war . . . and possibly with that same Red China.)

In general, I would rather have tariffs on Red Chinese goods used for revenue than taxes on the labor of Americans. When it costs Red China manufacturers less to access the American market than it costs American manufacturers (and I am NOT just talking about labor costs), something is wrong. I suspect we would both like to repeal some of the environmentalist, OSHA, tax and special interest regs. As long as we can still get cheap crap from Red China, the problem is hidden from view that much longer, and our national security is put more at risk.

[A. Pole]

[Toddsterpatriot to Havoc] It's always about you, isn't it?

You project your narcissism on other. Believe me, people can care about the issues which do no affect them personally.

There is such thing as common good, sense or justice or empathy.

[LowCountryJoe]

Ready for this? The Science Fiction writers of the 60s throughout today were [and are] almost always pink on the inside or were overtly red on the outside. Pay close attention to the social messages in every episode of The Twilight Zone and they are far, far left. I've seen some episodes that took their obligatory swipes at totalitarianism and tyranny but, in general, they always took swipes at the American-style capitalism and our way of doing things and always portrayed the Left's message as Utopian.

[redgolum]

I am currently reading a book ("Citizen") on the French Revolution. A big source of discontent by the urban population was free trade. By pulling down the barriers for things like cloth, the local guilds and artisans rapidly went broke.

While there were a lot of causes, the sudden economic turbulence caused in France by the complete restructuring of the economic system. Starving people don't care much about economic theory.

[freedumb2003]

This is one of the bigger problems I see - that "unskilled" work is being offshored to other countries leaving no opportunity for unskilled workers in a society where not everyone can afford college much less a degree.

You should be fine. You can't outsource serving up a slurpee (yet). But it is nice to see you finaly admit you are unskilled.

As an FYI: The unemployment level in the USA is hovering at the 5% level. If everyone is being outsourced, how is this possible?

[A. Pole]

The unemployment level in the USA is hovering at the 5% level. If everyone is being outsourced, how is this possible?

How? Very simply - the unemployment is defined and measured in a very imperfect way.

[Toddsterpatriot]

You project your narcissism on other.

LOL! There is no need to project narcissism on Havoc, he has a Masters degree in that skill. If only it helped in his career.

The freemarketeers are economic men,greedy, rational and controlled by the invisible hand of market

And you would prefer they were controlled by the iron fist of Communism.

[A. Pole]

"The freemarketeers are economic men,greedy, rational and controlled by the invisible hand of market"

And you would prefer they were controlled by the iron fist of Communism.

It would serve them right, wouldn't it? :)

[freedumb2003]

How? Very simply - the unemployment is defined and measured in a very imperfect way.

It is good enough for most.

[1rudeboy]

Ever wonder why it is, exactly, that my desire to advance in world, maybe to even make my mark in it, by pursuing my financial security, and hopefully that of my family if I ever have one, is "greed?"

And did you catch the reference to the Invisible Hand? Another one of those "creative" interpretations, I suppose. I suppose also that A. Pole has no idea what the term actually means.

For all you newbies out there that grew up behind the Iron Curtain, the term refers to the idea that individuals acting in their own rational self-interest create outcomes that are beneficial to society as a whole.

[Toddsterpatriot]

Ever wonder why it is, exactly, that my desire to advance in world, maybe to even make my mark in it, by pursuing my financial security, and hopefully that of my family if I ever have one, is "greed?"

Because Marx said so. And A.Pole agrees.