Chark said:
To answer that I would suggest an area leading to this situation is the lack of support in our education system. More people than ever before are entering college and a degree has never been as important in the workforce than it is today. Even so, education has been the scapegoat target of governmental spending effectively leading to regressive taxation through the elimination of benefits. Let me explain, the typcial college student is entering a stage in their life when they become self dependant and financially self-reliant. With the reduction of education spending that cost now exists where it previously did not. While one can simply choose not to attend college, the inherent need is built in. Some students have the benefit of parental support to cover tuition but those costs are mearly being transferred over to the middle income families, as the lower income students despite receiving more funding through grants retain the costs in the form of debt, creating a economic group with negative net worth. This creates problems with the loaning system and loans are not within reach to many that are educated and willing to start businesses. Essentially maintaining a tax system that shifts the rich gets richer effect down the economic scale encourages growth, while keeping the bar high leads to stagnation and debt. Providing cheap, affordable, and perhaps free eduction allows for more opportunity for individuals. It is far more important that we fund that with our tax dollars than it is to have them be used as a welfare system that simply lets those we've left behind through mismanagement survive. We can't reduce wealfare if we are keeping everyone in the poor house. |
First off, very good argument! There are points in your response that I did not adress and would like to take the opportunity to do so.
It seems that the key factors your touching on is taxation, the educational system and its waining benefit for the lower and middle class and there are many point where you are spot on in your analysis. I sympathise with the expenses placed on college students. Having been one in the last six years, I know what it means to have a loan in my name that is effectly as large as a mortage on 3/4 of a house which is effectly 25% larger than my salary thanks to rising interest. It's a tough place to be in, when you are sustaining a lifestyle below your actual means because you are having to pay on such a subtantial amount of money.
With that being said, I do question whether the debt is the problem, or if paying skilled workers what they are actually worth is the real problem. As I had noted in my previous reponse, middle class wages have stagnated. It is safe to say that any job a middle class worker holds now, pays about the same amount of money as it would 20 years ago despite there being substantial growth in gains for the wealthy. While I maintain that trickle down economics has been an abject failure in terms of generating prosperity for the middle class, I'm wondering if the lack of taxation on the rich is actually the largest problem we face as middle class and or lower class.
It seems that there are a few different approches to this. The obvious one is to cut taxes for the middle class while the wealthy are given the heaviest extent of the tax burden. This was the same method used to generate a middle class post The Great Depression. According to figures I have observed, during the 1940's, the upper class were paying nearly 90% of their income into the tax burden a year; but, let's face facts, things are nowhere near that bad. While this strategy would certainly free up income for the middle class, given them more disposable income to spend which would help the economy, I don't see this doing anything for growth of wages. What I would fear in this situation, is that wages for the middle class would maintain, while this heavy tax burden would continue to fall back onto the middle class 40 or 50 years down the road, which was the trend I observed in tax rates.
What we need is a middle class that grows proportionally with the size of the economy. If the housing crisis that started this mess is any indication, there was a substantially disparity between the amount of money a middle class person was making, and the size of the loans they were receiving to purchase houses. Add in the sliding scale interest rates on these loans, it really didn't take much for a once booming market to collapse starting this chain reaction. The question is how to rebuild the middle class so this disparity doesn't exist which lowers the risk of this happening again.
First off yes, I think the Federal Tax burden does need to be shifted onto the wealthiest Americans and certainly larger buisnesses while decreasing the percentage of this burden on smaller buisnesses and the middle class worker. This will help put money back into the middle class and as I have established in an earlier response (not this one) my contention is that the middle class are the real job creators. However, there is a secondary problem that needs to be handled which is making sure the middle class grows with the econmy once this process has begun. As I've stated this can be handled by simple supply and demand. Once the middle class has the money to buy services and goods at a more substantial rate, this will start to grow need for jobs, which will put middle and lower class Americans to work as a result of the product demand.
An investment in education is necessary, but I am not sure that the current system is sustainable or really relevant. I subscribe to the idea that the educational systems primariy goal is to train workers and not to teach people to think and think critically. This is perhaps a larger problem than the amount of student debt a student will absorb.
I still think my argument remains that perhaps investments made by large companies and wealthy individuals into stocks and bonds may not have the impact necessary to promote economic growth at this point and the best investment would be in increasing the pay of skilled workers. This would help increase the amount of disposable income for investment into services and goods which would build the economy and would increase the overal gains of the wealthy. With that being said, there should be a point in time where investments should also increase, but that should be something further down the road and not something done today.
Perhaps its a bit idealistic, but I do believe there is a win win. The bottom line: The rich can get richer as long as they are doing so on bolstering the poor and middle class.
-- Nothing is nicer than seeing your PS3 on an HDTV through an HDMI cable for the first time.
