First I will start that I once was very hesitant about the increase to the minimum wage. A year ago I would have given you the same answer the Right has and will continue to say. Higher minimum wages result in raise in goods cost and has potential to lower jobs counts. This is a frightening prospect and seems like we will never get ahead if those things were to happen. Though after further thought and investigation I have come to a whole different conclusion.
To have a better understanding of where I got to, I point to the basic understanding of the economy. That word we hear thrown about, especially the Right wing as they claim we are “in decline” because of Obama (lies by the way)… A good definition follows.
To have a better understanding of where I got to, I point to the basic understanding of the economy. That word we hear thrown about, especially the Right wing as they claim we are “in decline” because of Obama (lies by the way)… A good definition follows.
ECONOMY: the process or system by which goods and services are produced, sold, and bought in a country or region (Merriam-Webster.com)
So from this we see it is a broad term to think about all of the selling and buying of items in our country. You might also use this knowledge to logically think the key to economy is an exchange of money from hands to other hands in an ever loop. Let’s also just think our economy to have a set amount of money at any one given time in the country, obviously this is a very complex system but for our purposes we will think of the amount of wealth as a set number for the United Sates. With the assumption of a set amount of money in the country we would see how the constant change of money and wealth would work. For example, I maybe get $100 from my employer, who spends that $100, then I spend $80 on some products from another company, and then that company spends $40 on a vender, then the vender may buy from my original employer. That all very logical. There is a set amount of money being spread among all of the citizens that can get some of that money.
With the assumption of a set number of wealth within the country it is obvious to see why we have the struggles we do for the middle and lower class. In the graph below we see the drop of wealth for the bottom 90% of people go from as high as owning 36.4% of wealth in the 80’s to being at 22.8% in 2012. On the graph you will also see that the top 0.1% of people went from 7.1% to 22.0%. Where did they get all of that growth? They took it from the bottom 90%. This is what a “free-market” does. We the people have advanced our economy and allow the top 0.1% to exploit the system through systematic changes within Government, obtained by purchasing our politicians. They have allowed such atrocities of have the Gas and Oil companies get subsidies. They GET tax payer money, even as the most profitable companies in the world. They have monopolized our world to be able to drive any competitors out of the market and wring the middle class people dry. They have been able to pay low wages even though this graph clearly shows the top corporations are doing VERY well.
With the assumption of a set number of wealth within the country it is obvious to see why we have the struggles we do for the middle and lower class. In the graph below we see the drop of wealth for the bottom 90% of people go from as high as owning 36.4% of wealth in the 80’s to being at 22.8% in 2012. On the graph you will also see that the top 0.1% of people went from 7.1% to 22.0%. Where did they get all of that growth? They took it from the bottom 90%. This is what a “free-market” does. We the people have advanced our economy and allow the top 0.1% to exploit the system through systematic changes within Government, obtained by purchasing our politicians. They have allowed such atrocities of have the Gas and Oil companies get subsidies. They GET tax payer money, even as the most profitable companies in the world. They have monopolized our world to be able to drive any competitors out of the market and wring the middle class people dry. They have been able to pay low wages even though this graph clearly shows the top corporations are doing VERY well.
Now with all of this accepted we realize that the rich have gotten richer and the middle class has become poorer. We have all seen and felt these issues. This is the root to why we feel the economy has been failing. The numbers show us that even though we are feeling these issues that the actual wealth and Real GDP is actually, and has Continually, going up. Below is a representation of the growth our country has had over the last few years. I hope this shows the real problem in this country when it comes to financial issues. In the end the Rich are greedy and have taken more money from the rest of us.
The argument used by the Right-Wing Republicans is that when wealthy people get more money, they then spend that money and we get a “trickle-down effect.” Their argument takes that assumption that the richest people in the country will spend extra income and that will help boost other jobs from the goods, and expansion those rich people will do. Tax breaks for the rich have been used to try this effect. They have been given refunds and other stimulus packages that was “thought” to bring more money to the lower classes. If on a high level we accept that rich people would reinvest their extra money, then yes I suppose this idea would work. The problem has been that we do not see this actually happen.
Now why do we not see this result? First to get it right out there and in front, GREED. People who are in the top 0.1% have no feeling of obligation to the rest of the country. Yes some do, and have given a great amount of money to charity. Many have proven that they will take the money, and use expensive accountants to extract as much tax breaks as can possibly be found. Second let’s look at the idea of them spending all their extra wealth given to them. Even if they gave a decent chunk of it, if they decided to keep any of it then we are at a let loss right away. Then you realize that rich people already have all the luxuries and goods they could possibly need, and in some cases more than they want. Most of these people may spend a little more but take the vast majority and hide it in offshore accounts. Some accounts put over 1 Trillion dollars in assets kept in offshore accounts. Evading tax policies and kept safe for a “rainy day”, or to give to their offspring. This is the fundamental flaw in “trickle-down” economics. The rich have no incentive or reason to spend extra wealth they gain. They NEED NOTHING. They keep the wealth and that robs it from the rest of the country.
Now to the idea of raising the minimum wage. The vast majority of employees in the country making minimum wage work for those large corporations. They work for the top 0.1% of people. They give 40 hours a week to still live below the poverty line. They get their wages held at the lowest amount imaginable to the rich can take the extra wealth. Raising the minimum wage will force those top 0.1% to take out of their profits and put back into the working class. Now how does that stimulate the economy as a whole? Again, the idea behind a booming economy is a place that has a vast amount of wealth and goods exchanging. It means that people need to be buying stuff. Let’s say we take the money we gave the rich and instead have it be paid to individuals who make low wages. What do they do with that extra money? THEY SPEND IT!!! Of course they do. These people barely afford to have the necessities. They will spend this extra money because they need to spend it to live. That booms the economy. The difference of the rich taking the money and saving most of it, to giving it to the people who have so little so they can start to buy things should seem obvious. People are not buying homes, or cars or many items because there is not enough money to do so.
Think about you, who is reading this, and think of what you might do with an extra $5 thousand dollars next year. I imagine if you make less than $50,000 you would spend almost every dime of it on new stuff. It would go to a house, a car, new toys, eating out, and any other goods you may not have allowed yourself to buy previously. You WILL spend all or damn near all of it during the year. That helps the actual economy. You will spend money on clothes, and food. You may go to local shops and spend this extra income on local businesses to help combat the giant corporations. The money will start being spend helping everyone, except the super-rich. Yes they will make less. They will not be gaining at the level they once were. It is a redistribution of wealth. Because if they go unchecked and make record breaking profits and hoard it, then that takes the money out of circulation for the rest of us.
The critiques will argue my earlier points that it will raise unemployment because jobs will be expensive. That may be the case if it shot up all in one year. Progressive change will help counter that. Because think about what actually causes new jobs to be made. “Trickle-down effect?” Nope. They don’t need to create jobs because people can’t buy more goods because they already own all of the wealth. What causes job growth is the NEED for more jobs. That is stemmed from the idea of people spending their money on goods. Then when goods are being bought and as demands rise then the job growth will need to follow. People need to spend money for jobs to be created and the question becomes who you think will actually spend money if given extra money. The top 0.1%, or is it the lower class people who don’t have ANY exposable income?
The fact people may think the “trickle-down effect” may actually work is sad. Real people need money. People who will spend their money and just try to continue their lives in peace and in good health need and will spend that money. The rich already control our lives, they control the government. Let’s show them that we want money to be available for people who work hard and will then reinvest that money into our economy.