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Income Inequality

 
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PostPosted: Wed Oct 22, 2008 12:04 am    Post subject: Income Inequality Reply with quote

Few understand the U.S. economy in the 2000s was a Black Hole attracting imports and capital, from the world, and then attracting the foreigners themselves who own that capital. This was the result of American free market policies and government policies of export-led economies, which were inferior. There were "too many" assets, e.g. houses and autos, and "too many" goods, e.g. electronics and clothing. Low prices and low interest rates, because of abundant goods and capital, induced U.S. demand. This is viewed as a failure by many, because they ignore that the gains of U.S. consumption growth exceeded the losses of U.S. production growth. The net effect was a steeper rise in U.S. living standards. The U.S. maximized the quantity and quality of output (both domestic and foreign) for its masses, which also facilitated massive upward mobility or real household wealth.

Two days after writing the above article, the media reports a major study:

"The United States has the highest inequality and poverty rates in the OECD after Mexico and Turkey, and the gap (in income) has increased rapidly since 2000, the report said. France, meanwhile, has seen inequalities fall in the past 20 years as poorer workers are better paid."

http://biz.yahoo.com/ap/081021/eu_oecd_income_inequality.html

The study completely ignores the U.S. consumption side, which reduces inequality substantially. Also, the absolute rises in U.S. living standards are ignored. Moreover, poverty is a relative term. The U.S. has such a large population of Third World immigrants that it's the only developed country where its fertility rate exceeds it replacement rate. In France, poorer workers are paid more, but there are fewer assets and goods per capita (i.e. a lower standard of living). These studies are to fool people. In France, lower income workers are paid more. However, they also pay more for less (France also has a much higher structural unemployment rate).
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