The Economist's Cookbook

Recipes For A More Free Society

  • "The curious task of economics is to demonstrate to men how little they know about what they imagine they can design."

    - F.A. Hayek

On Poverty and Wealth

Posted by The_Chef On 4:04 PM 0 comments

The things the politicians won't tell you:

1.) The number and percentage of Americans without health insurance actually declined slightly in 2007 compared to 2006. The share without insurance in 2007, 15.3 percent, is actually lower than it was a decade ago.
So this whole "OMGWTFBBQ" response about insurance is a fabrication. Hell I'm part of that percentage right now.
2.) Median household income is not falling: “Between 2006 and 2007, real median household income rose 1.3 percent, from $49,568 to $50,233—a level not statistically different from the 1999 pre-recession income peak.”
Oh look more money for people. And it's not just the rich moving that ration up because:
3.) The share of households earning a middle-class income of between $35,000 and $100,000 in real 2007 dollars has indeed shrunk slightly compared to a decade ago, but so too has the share earning less than $35,000 a year, while the share earning more than $100,000 continues to rise. The middle class is not shrinking; it is moving up.
Hot damn ... the middle class is getting richer, but you wouldn't know it from listening to either of the political candidates.

So, what does this mean? BUCK UP. The Mortgage crisis ain't good, but it's not Armageddon. (of course the mortgage crises was largely created by government anyway ... but they don't want to talk about that.)

It means that we're getting wealthier while really cool things (like the iPhone) are getting cheaper! So the extra cash these people are making is going farther for luxury goods. Of course the problem is that the price of everyday goods is rising, especially food.

The problem is that rising food prices have been driven up by three key things:
1.) Ethanol Subsidies - Farms that once produced grains or cattle feed now are taking gov't handouts to produce ethanol (which is a very very shitty alternative to gas).

2.) Inflation - Give the Federal reserve a big ol' hug for driving down the value of your dollars.

3.) Rises in the cost of fuel - which is linked not to oil company collusion or "speculators". But to Supply/Demand and the rising oil consumption of international up and comers (India and China), and various other things which have marginal effects on the price of fuel, including ... inflation.
So, the news isn't all bad, and the world isn't ending and capitalism keeps doing what it does best, create wealth.

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