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Author: rogermunibond Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 41316  
Subject: The greatest wealth-creating movie of all time? Date: 5/12/2008 6:22 PM
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http://ftalphaville.ft.com/blog/

The FT’s “The Short View” columnist John Authers is blogging for FT Alphaville from Vancouver at the annual gathering of the CFA Institute:

What was the greatest wealth-creating film of all time? Titanic might be a popular guess, but the answer, according to Columbia University’s Nobel laureate economist Robert Mundell, is Taxi Driver.

The 1976 classic, directed by Martin Scorsese with Robert De Niro as the bitterly alienated protagonist, gave the world De Niro’s catchphrase “You talking to me?,” and also introduced a young Jodie Foster. But what does it have to do with the world economy?

John Hinckley, the deranged would-be assassin who attempted to kill Ronald Reagan in 1981, claimed that he was inspired by it. He said that his action was an attempt to impress Foster. (The movie features a scene in which a mohawked De Niro attempts to assassinate a politician.)

According to Mundell, the wave of sympathy for President Reagan that was engendered by the assassination attempt deterred Democrats in Congress from voting against his proposed tax cuts. Due to this accident of history, the US administered a big fiscal stimulus at the same time that Paul Volcker at the Federal Reserve was administering tight money. This, for Professor Mundell, was vital in creating the era of prosperity that followed.

“Taxi Driver is the most important movie ever made from the standpoint of creating GDP,” Mundell told delegates. “It’s the movie that made the Reagan revolution possible. That movie was indirectly responsible for adding between $5 trillion and $15 trillion of output to the US economy.”
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Author: AdvocatusDiaboli Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33099 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 4:13 AM
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“Taxi Driver is the most important movie ever made from the standpoint of creating GDP,” Mundell told delegates. “It’s the movie that made the Reagan revolution possible. That movie was indirectly responsible for adding between $5 trillion and $15 trillion of output to the US economy.”


And approximately 6 trillion dollar in federal debt. The most expensive movie ever made.

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Author: TMFSlydo Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33101 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 8:04 AM
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And approximately 6 trillion dollar in federal debt.

Well, not quite. The federal deficit increased by about $46 billion in the first year following his tax cuts and another $88 billion the following year. By then it would be safe to say that any and all incremental deficit spending that might be attributable to the tax cuts were baked in, meaning they were responsible for a total of $134B or so in added debt each year. Multiply that by 26 years and you get a total of $3.5 trillion. And for that we get a return of $5 trillion to $15 trillion? Not too shabby.

Of course, that assumes that nothing has been done to counteract those deficits one iota in the intervening years.

Paul

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Author: AdvocatusDiaboli Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33102 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 9:24 AM
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Well, not quite. The federal deficit increased by about $46 billion in the first year following his tax cuts and another $88 billion the following year. By then it would be safe to say that any and all incremental deficit spending that might be attributable to the tax cuts were baked in, meaning they were responsible for a total of $134B or so in added debt each year. Multiply that by 26 years and you get a total of $3.5 trillion. And for that we get a return of $5 trillion to $15 trillion? Not too shabby.


It is RUINOUS. The debt burden created by Reagan's toxic ideology (which he himself later repudiated by RAISING taxes) has severely, and permanently, impaired the financial strength of the US government. It comes at a cost of future tax increases, or drastically cut spending. No free lunch here.

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Author: TMFSlydo Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33103 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 10:07 AM
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It is RUINOUS. The debt burden created by Reagan's toxic ideology (which he himself later repudiated by RAISING taxes)

I don't want to turn this into a Political Asylum-worthy thread, but...

Let me make sure I understand what you are saying. Reagan saw the error of his ways after a few years and reversed course on taxes. So I guess that would mean that after that all was well with the world and trying to blame him for $6 trillion in cumulative deficit spending since then is a rather bogus claim.

And I guess that also means that if we can blame his tax cuts for any deficits in the years since, we can also credit his tax increases for any surpluses as well.

Cool.

(Just pointing out it's never as cut-and-dried/black-and-white as we like to spin it).

Paul

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Author: AdvocatusDiaboli Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33105 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 10:37 AM
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And I guess that also means that if we can blame his tax cuts for any deficits in the years since, we can also credit his tax increases for any surpluses as well.


What surplusses? There haven't been any. The narrowing of the deficit under Clinton was the result of the Bush I and Clinton tax hikes.

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Author: lswswein Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33106 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 10:52 AM
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Since everyone is only 6 degrees of seperation away, with this logic anything can be argued if you are going to link people and events for a nations wealth creation / generation.

-h

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Author: jkm929 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33107 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 12:38 PM
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According to Mundell, the wave of sympathy for President Reagan that was engendered by the assassination attempt deterred Democrats in Congress from voting against his proposed tax cuts. Due to this accident of history, the US administered a big fiscal stimulus at the same time that Paul Volcker at the Federal Reserve was administering tight money. This, for Professor Mundell, was vital in creating the era of prosperity that followed.

It used to be that when the government wanted to restrain the economy, it balanced the budget and raised interest rates. When it wanted to stimulate the economy, it ran budget deficits and eased interest rates. The problem was what to do when inflation and unemployment were both high at the same time - stagflation. Professor Mundell's solution was to simultaneously stimulate and restrain: a loose fiscal policy to stimulate and a tight monetary policy to restrain. It worked.

Under George W. Bush and Alan Greenspan we had loose fiscal and monetary policies simultaneously. Taking the federal funds rate down to 1%, below the actual and expected inflation rates, took the economy back into the negative real interest rate territory it occupied in the 1970s and produced inflationary bubbles in real estate and commodities. The current 2% federal funds rate is below the expected inflation rate of at least 2.5% derived from the spread between long bond and long TIPS yields. Expect stagflation.

jkm929

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Author: CryingofLot49 Big funky green star, 20000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33109 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 2:35 PM
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The debt burden created by Reagan's toxic ideology has severely, and permanently, impaired the financial strength of the US government.

One of the most ignorant and misguided statements on this board in along time.

Your assertions of 'toxic' and 'permanent impairment' are prima facie absurd.

Not once do you ever refer to the excess spending that Congress embarked on then, now, and every year in between - which is the fault of both parties.

When Reagan took office, the top rate was 70% of income, and even those at the bottom bracket paid a ruinous 14%.

later repudiated by RAISING taxes

The brackets were cut twice on income, not raised. You seem to be misinformed, as per usual. From 70-50-38.5%, and 15-14-11% on the bottom bracket. [www.irs.gov]

You don't even seem to comprehend basic Economics, which tells you that the size of the pie is NOT fixed. A lower tax rate % means more money available for investment, which means more growth, jobs and more tax dollars collected at the end of the day.

The reality is that federal revenues increased significantly between 1980 and 1990:

Total federal revenues doubled from just over $517 billion in 1980 to more than $1 trillion in 1990. In constant inflation-adjusted dollars, this was a 28 percent increase in revenue.

Revenues from individual income taxes climbed from just over $244 billion in 1980 to nearly $467 billion in 1990. In inflation-adjusted dollars, this amounts to a 25 percent increase.**


Which is why Kennedy, Reagan, Clinton, among others all cut taxes.

It comes at a cost of future tax increases, or drastically cut spending.

No, it doesn't. As per usual, your ad hominem attacks and pusillanimous diatribes come fact- and link-free.

Any 5th grader could look at Federal Spending for Fiscal Year 1982 and compare it to today and see that spending has Never, and will never be 'drastically cut.' I will take that bet from you all day any day any amount in size.

President Ronald Reagan's record includes sweeping economic reforms and deep across-the-board tax cuts, market deregulation, and sound monetary policies to contain inflation. His policies resulted in the largest peacetime economic boom in American history and nearly 35 million more jobs. As the Joint Economic Committee reported in April 2000:

' In 1981, newly elected President Ronald Reagan refocused fiscal policy on the long run. He proposed, and Congress passed, sharp cuts in marginal tax rates. The cuts increased incentives to work and stimulated growth. These were fundamental policy changes that provided the foundation for the Great Expansion that began in December 1982.'

As for a more recent example of cutting marginal rates on Cap Gains, like Clinton did recently, this pretty much answers any so-called 'debate' as to the efficacy of lowering marginal rates:

CBO predictions of Tax Revenue in August 2003, post the passing of tax cuts, note the 1-yr lag before things really get going, economy-wise:

In $Billions 2004 2005 2006 2007*

Predicted $1,825 $2,064 $2,276 $2,421

Actual $1,850 $2,153 $2,407 $2,672 Total

Unexpected Surplus $25 $89 $131 $251 $496bn

The 2007 figure is the estimate using 7 months of data.

The CBO was off by almost $500bn in just the past 3 years. And they projected 30% growth to begin with!
http://www.cbo.gov/ftpdocs/44xx/doc4493/08-26-Report.pdf

In the first 3 years of the Tax Cut, growth averaged 4%, and an ALLTIME US RECORD OF 12 quarters of 3%+ GDP growth in a row.


So, in short, pls take your illogical, one-sided, politically motivated diatribes to PA where they belong.

thanks.


** U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2001: Historical Tables

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Author: CryingofLot49 Big funky green star, 20000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33111 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 2:40 PM
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Wolfgang Münchau in the FT recently added an interesting twist, saying that even the TIPS spread has serious weaknesses as a measure of inflation expectations:

" Financial market indicators do not show any strong evidence of a rise in long-term inflationary expectations. These indicators include the yield difference between Treasury inflation-protected securities and ordinary Treasuries and their respective European equivalents. In fact, some of these indicators have actually gone up a little.

But more importantly, they are not really forward-looking. The yield difference tells us more about liquidity conditions in those markets than about future inflation."


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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33112 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 4:21 PM
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According to Mundell, the wave of sympathy for President Reagan that was engendered by the assassination attempt deterred Democrats in Congress from voting against his proposed tax cuts.

This would be a great theory, if it only weren't so laughably silly.

Reagan came into office in 1980 with coattails a mile long. Indeed, the Senate changed hands for the first time in decades; Reagan had a comfortable 53-46 majority to work with in that chamber. In the House, the Democrats still had a "numeric" majority, but the transition of many Southern Democrats to the Republican party had yet to occur, and given the conservatism of the "boll weevil" Democrats, gave Reagan a comfortable working majority in that house as well.

Given that a President, virtually every President has a honeymoon, and one who is so decisively elected might be expected to have an elongated one, it is hardly a surprise that his tax cuts got passed, and the "Democrats", whether they felt bad because of some derangmoi who saw a movie and whipped out a pistol, had very little to do with it except make some ineffectual noise anyway. As loud as they might have wanted to be, they were largely irrelevant.

"According to Me", Mundell should pick up a history book, since he doesn't seem to remember what was going on at the time. But it makes for a cute, if absurd theory.
 


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Author: wishiwaspsychic Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33113 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 5:01 PM
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Diaboli just got pwned!

But seriously, how does anyone think that tax rates at a higher level from present would be a good thing? It seems that some in the US have forgotten that in what is fast becoming a truly global world, both businesses and individuals have an ever growing number of quality choices when it comes to one's domicile. If taxes are increased meaningfully, I expect that we may get to see the ugly side of the much maligned Laffer Curve.

For anyone who wants to see attractive tax rates increasing the pie in recent years, take a look at Ireland's growth over the last decade.

Now if we could just get a modicum of fiscal restraint from our friends on the hill...(democrats should love at least one part of GW, as his social spending would make any true democrat proud)

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Author: alan81 Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33114 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 5:24 PM
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Perhaps you can straighten me out on this, but I just don't see it that way.
Just because there is a correlation between tax cuts and GDP growth does not indicate that "all" the GDP growth is due to the tax cuts.

In terms of language, I would say "deficit increase" rather than tax cuts. It is clear that increasing the federeal deficit is going to spur the economy... no argument there. The problem is that when things are turning down and folks start talking tax cuts, they are usually accompanied by other measures, like rate cuts. There is also the "natural" economic cycle confounding the data.

I see this tax cut stimulus mantra as the equivalent of me borrowing on my credit cards. I spend some of the money on stuff and my family is very happy, but concerned. I tell them not to worry, that I am borrowing more than we are spending and investing some in the stock market... which is going to make up for the interest on the debt.

While tax cuts create a short term sense of well being, I believe the long term effects are negative, not positive. IF you want to cut taxes, cut spending along with it.
--Alan

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Author: CryingofLot49 Big funky green star, 20000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33115 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 5:33 PM
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Now if we could just get a modicum of fiscal restraint from our friends on the hill...

...and if I could just meet a nice, down-to-earth, educated, VS' model, who happens to be heiress to a distillery fortune, and whose father has a bad heart, and loves golf, and NFL, and brings her co-workers over for pillow fights...

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Author: stockmuncher100 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33116 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 5:39 PM
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roger,

this is an interesting post, because what it really makes me think about is the "butterfly effect" or "black swan" idea.

If the theory is true, then what it means is a pretty much completely random, fundamentally unpredictable event ended up having huge consequences.

Isn't this really a sort of "black swan"?

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Author: wishiwaspsychic Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33117 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/13/2008 6:03 PM
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...and isn't already married...

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Author: AdvocatusDiaboli Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33120 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 7:48 AM
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Not once do you ever refer to the excess spending that Congress embarked on then, now, and every year in between - which is the fault of both parties.


That obviously nonsense. When there was a Democratic president and a Democratic Congress, spending was lowered and fiscal discipline reigned. Ditto with a Democratic president and a Republican Congress. When there was a Republican president and a Republican Congress, insanity ensued.


The brackets were cut twice on income, not raised. You seem to be misinformed, as per usual. From 70-50-38.5%, and 15-14-11% on the bottom bracket. [www.irs.gov]

Reagan raised a bunch of other taxes such as the gasoline tax in 1983, and he also increased payroll taxes. I understand, of course, that in the minds of the GOPsters regressive taxes that hit primarily the middle and lower class are not noteworthy. Only the income tax is, because it is progressive.

http://hnn.us/comments/7985.html

You don't even seem to comprehend basic Economics, which tells you that the size of the pie is NOT fixed.

Oh it isn't? Really? Who would have thought??

A lower tax rate % means more money available for investment, which means more growth, jobs and more tax dollars collected at the end of the day.

A lower tax rate does NOT necessarily mean more growth, at least not in the long term. If you run a spectacular deficit or if you cut investment in things like research, infrastructure and education (which is what the Republicans ever since Reagan have loved to do) you're going to end up with long-term growth that is lower. Of course, in the short term, everyone has more money and it takes many years for bridges to crumble completely and for the burden of interest payments to become really onerous. That's why the approach is so appealing to the gullible.


So, in short, pls take your illogical, one-sided, politically motivated diatribes to PA where they belong.


Irony is dead, I guess.

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Author: TMFSlydo Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33121 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 10:10 AM
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[Not once do you ever refer to the excess spending that Congress embarked on then, now, and every year in between - which is the fault of both parties.

That obviously nonsense. When there was a Democratic president and a Democratic Congress, spending was lowered and fiscal discipline reigned
]

Keeping in mind that the president proposes, Congress disposes, here are YOY changes in federal spending under every Congress since Dems took over in 1955. Average increase under Dems: 8.3 percent, under Reps: 7.5 percent. Both are way too high (details below). I'm not sure where the fiscal discipline comes into play.

If you run a spectacular deficit or if you cut investment in things like research, infrastructure and education (which is what the Republicans ever since Reagan have loved to do)

Here are the average increases in education spending (Dept of Education appropriations) under various scenarios since 1980:

Democratic Congress: 5.6%
Republican Congress: 7.4%

Reagan/Bush 41: 6.1%
Clinton: 5.1%
Bush 43: 7.1% (actually fell in first year with Dem Congress)


So, even though I think federal spending on education is largely a waste of money, the argument that education withers on the vine under Republicans doesn't hold water.

[You don't even seem to comprehend basic Economics, which tells you that the size of the pie is NOT fixed.

Oh it isn't? Really? Who would have thought??
]

As for the size of the pie, per capita income has grown in constant dollars for every income group since 1980. Overall, it's up nearly 45 percent. That's the pie getting bigger. In more practcal terms, did you own a cell phone in 1980? Have cable TV? A personal computer, pda, GPS system, internet access, titanium golf clubs, DVD player, DVR, HDTV? Were statin drugs or biologics that fight autoimmune disorders available? How about robotic surgery or MRIs? Did your car have anti-lock brakes or airbags? Not everyone has all these things, but nearly everyone has at least some. The pie grows and all benefit. Yes, some far more than others, but I'll never begrudge success to those who earn it. And the ones who generally benefit the most are the ones who find ways to bring us cell phones, computers, DVRs, well, you get the idea (at least I would hope so, but then again...).

Paul (who, with this, is outta here)


Annual budget outlay by year 1955-2006

Year Outlays Pct Ruling
Change Party
--------------------------------------
1955 68,444
1956 70,640 3.2% Dem
1957 76,578 8.4% Dem
1958 82,405 7.6% Dem
1959 92,098 11.8% Dem
1960 92,191 0.1% Dem
1961 97,723 6.0% Dem
1962 106,821 9.3% Dem
1963 111,316 4.2% Dem
1964 118,528 6.5% Dem
1965 118,228 -0.3% Dem
1966 134,532 13.8% Dem
1967 157,464 17.0% Dem
1968 178,134 13.1% Dem
1969 183,640 3.1% Dem
1970 195,649 6.5% Dem
1971 210,172 7.4% Dem
1972 230,681 9.8% Dem
1973 245,707 6.5% Dem
1974 269,359 9.6% Dem
1975 332,332 23.4% Dem
1976 371,792 11.9% Dem
1977 409,218 10.1% Dem
1978 458,746 12.1% Dem
1979 504,028 9.9% Dem
1980 590,941 17.2% Dem
1981 678,241 14.8% Dem
1982 745,743 10.0% Dem
1983 808,364 8.4% Dem
1984 851,853 5.4% Dem
1985 946,396 11.1% Dem
1986 990,441 4.7% Dem
1987 1,004,083 1.4% Dem
1988 1,064,481 6.0% Dem
1989 1,143,813 7.5% Dem
1990 1,253,116 9.6% Dem
1991 1,324,310 5.7% Dem
1992 1,381,614 4.3% Dem
1993 1,409,487 2.0% Dem
1994 1,461,855 3.7% Dem
1995 1,515,821 3.7% Rep
1996 1,560,535 2.9% Rep
1997 1,601,227 2.6% Rep
1998 1,652,598 3.2% Rep
1999 1,701,913 3.0% Rep
2000 1,789,067 5.1% Rep
2001 1,863,033 4.1% Rep
2002 2,010,972 7.9% Rep
2003 2,159,917 7.4% Rep
2004 2,292,215 6.1% Rep
2005 2,472,000 7.8% Rep
2006 2,655,000 7.4% Rep

8.3% Dem Average
5.1% Rep Average
7.5% Grand Average


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Author: NewEchota Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33122 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 10:15 AM
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President Ronald Reagan's record includes sweeping economic reforms and deep across-the-board tax cuts, market deregulation, and sound monetary policies to contain inflation. His policies resulted in the largest peacetime economic boom in American history and nearly 35 million more jobs.

Well, some folks might suggest that the precipitous fall in the price of oil throughout the 1980s-- from over $100 per barrel in April of 1980 to $20 per barrel throughout most of the latter half of the decade -- had a little something to do with the boom times.

35 million jobs? The BLS data says otherwise. In January 1981, there were 91,031,000 total nonfarm payroll jobs. In January 1989, there were 107,133,000 -- an increase of a little more than 16.1 million jobs. Toss in farm jobs and the number jumps to about 17 million.

And according to the National Bureau of Economic Research, the longest period of peacetime economic growth in U.S. history occurred between March 1991 and March 2001. (http://www.nber.org/cycles/cyclesmain.html)

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Author: JoeChristmas Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33123 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 3:03 PM
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The pie grows and all benefit.

The poor have lost ground in the past 30 years. The middle class are better off. The uber rich are fantastically better off. But all have not benefited, and certainly CEO's have benefited much, much more than anyone else.

Of course, if a small clique of close friends set my salary, and later I helped set their salaries, my take home pay would have risen 5000%, as well, over the past 20 years. Should anyone complain, I'd just accuse them of hating capitalism. Sean Hannity, hero of the working classes, would get by back.

So, even though I think federal spending on education is largely a waste of money, the argument that education withers on the vine under Republicans doesn't hold water.

So if I understand your logic, federal spending on education is a waste, but Republican presidents waste more. Ergo, education does not suffer under Republican presidents. Is that it?

You have to admire their audacity. Republicans want to spend more on education. The Iraq was is going swimmingly. Bush is a fiscal conservative. Mission Accomplished.....

Good luck with that in November.

--JC

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Author: TMFBreakerBrian Big red star, 1000 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33124 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 4:57 PM
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President Ronald Reagan's record includes sweeping economic reforms and deep across-the-board tax cuts

Anyone calling the Reagan tax cuts "deep" is a bit off the mark. They really weren't as big as they may seem to non economists.

The average effective federal tax rate dropped a whopping 4% from 1981 to 1989. Even though some marginal income tax rates were slashed, so too were the tax avoidance schemes that were possible back then also cut.

From the CBO:

In 1981 the average total effective federal tax rate (including social insurance) was 22.4% and in 1989 it was 21.5% which represents a 4% (0.9 percentage point) decline in federal tax rates. Whoop dee doo.

Total effective tax rates for the top 20% of earners in the US dropped 6.3% in that time frame to 25.2% from the 26.9% that they started at in 1981. The tax rates for the bottom 20% of earners dropped by 4.8% so the tax cuts were relatively evenly distributed on the top and bottom of wage earners.

http://www.cbo.gov/ftpdocs/61xx/doc6133/03-01-EffectiveTaxRates.pdf

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Author: HelicalZz Big gold star, 5000 posts Old School Fool Coverage Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33125 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 5:11 PM
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The greatest wealth-creating movie of all time.

Hate to go on topic but I'm partial to 'The Solid Gold Cadillac' (1956).

http://www.imdb.com/title/tt0049777/plotsummary

Zz

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Author: TMFSlydo Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33126 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 5:14 PM
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So if I understand your logic, federal spending on education is a waste, but Republican presidents waste more. Ergo, education does not suffer under Republican presidents. Is that it?

Already breaking my vow to let this thread go...

Yes. Federal spending on education is largely a waste, certainly as it applies public primary education - they provide about one to two percent of local funding. And yes, the Republicans are at least as profligate in their spending as Democrats - probably in order to deflect criticism (such as has been made in this thread) that they're opposed to education. Alas, politics is rarely a basis for sound policy.

Education suffers in this country because we focus on the schools. Education won't be fixed until we focus on the home. When kids show up for kindergarten unable to identify colors (as was the case when my wife taught in a poor rural district), when parents refuse to show up for conferences, or when they do show up, argue it's the teachers' responsibility, not theirs to make sure their kids are learning, then there will always - ALWAYS - be a gap in school performance. And with ours turning into a knowledge-based, rather than labor-based, economy, that gap will translate into economic disparity.

The poor have lost ground in the past 30 years.

A couple of interesting stats - the effective tax rate for the bottom quintile of households (by income) was 0% in 1979. That had dropped to -6% (that's minus six percent) by 2002. For the top quintile, it had increased from 21.8% to 23.8 percent (following the Bush tax cuts). Effective tax rates take into account all income, payroll and excise taxes, plus tax credits borne or received by individuals.

Meanwhile, after-tax household income for the bottom quintile increased slightly over that same period, from $13,200 to $13,800 - a far smaller gain than the upper income groups. But, it did increase - that's not losing ground, except in a relative sense. But there's one major caveat - this is household income. Since single-parent households increased nearly 20% during this period, and single-parent households are disproprtionately in the bottom quintile, a significant portion of the income stagnation can be attributed to the lack of a second wage-earner in poorer homes. That's a cultural, not policy-driven outcome. On a per capita rather than household basis, the lower quintile performance is somewhat better.

Truth is, there will always be a bottom quintile. Without addressing root causes of their plight (see the education comments above), they'll remain anchored like a nail in the base of a tree trunk - the tree can grow to great heights, but the nail will remain fixed forever just off the ground. Chopping the tree to the ground does nothing to improve the nail's status.

The best tool for improving one's station in life is one's own actions. Placing blame elsewhere (tax policy, schools, the wealthy) also shifts responsibility elsewhere (like the parents who see education as solely the teacher's responsibility, not theirs). We do no favors when we enable such attitudes.

The Iraq was is going swimmingly. Bush is a fiscal conservative. Mission Accomplished.....

Can't argue with you there. The war's been stupid, the Republicans have spent like drunken sailors (or happy Democrats) and no one is better off for any of it.

Paul (this time I'm serious, I'm done with this - maybe)

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Author: JoeChristmas Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33127 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 5:56 PM
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The best tool for improving one's station in life is one's own actions. Placing blame elsewhere (tax policy, schools, the wealthy) also shifts responsibility elsewhere (like the parents who see education as solely the teacher's responsibility, not theirs). We do no favors when we enable such attitudes.

You don't think tax policy and schools are important? I would say they are critical.

Sure, personal responsibility is key, too. So is a stable home environment. Good health care helps, too. How can one of the richest nations in the world have such a screwed up health care system? I know of poor families that just cannot afford when their kids are sick. That's just obscene. And of course education. The US educational system is horrible, one of the worst in the developed world. It's funny how so many Americans believe their system is the best, and refuse to even learn lessons from other countries.

Tax policy is a huge part of the problem. The rich need to pay more to support better minimum standards for the poor (education and health care, especially). The pendulum has swung too far, and there needs to be a correction. This is the way it has always happened in America. My guess is we'll see some significant changes after the 2008 elections.

--JC

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Author: rharmelink Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33128 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 6:57 PM
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...and certainly CEO's have benefited much, much more than anyone else.

I think professional sports players have benefited more...at least on a percentage increase basis. Possibly movie stars as well. Maybe it's more of a situation where the "top few" have benefited the most over the past few decades, regardless of context. If I recall correctly, it was "scandalous" when Ted Danson wanted $250,000 per episode of "Cheers". Today, that would almost be pocket change for the star of such a successful show.

The top of the pyramid gets higher the larger the base becomes...

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Author: macedonia384 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33129 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 8:02 PM
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But there's one major caveat - this is household income. Since single-parent households increased nearly 20% during this period, and single-parent households are disproportionately in the bottom quintile, a significant portion of the income stagnation can be attributed to the lack of a second wage-earner in poorer homes. That's a cultural, not policy-driven outcome.

I'm not so sure about that...

From WSJ today: http://online.wsj.com/article/SB121063787788786833.html

End the Welfare Marriage Penalty
By SAM BROWNBACK and DAVID BLANKENHORN
May 13, 2008; Page A15

What if the federal government forced couples to pay 20% of their annual income just to get or stay married? And suppose a couple could avoid this tax if they either got a divorce or never got married in the first place?

Does it sound like good public policy to force a couple earning, say, $60,000 a year to pay $12,000 just for being married?

That's more or less what we demand of millions of low-income Americans who receive government welfare benefits. For most couples on welfare, getting married is among the more expensive decisions they will face as newlyweds, because saying "I do" will reduce the benefits they receive, on average, by 10% to 20% of their total income.

I think I'm with you on the rest though. I appreciate the reliance on facts and figures as opposed to an utter lack there of.
Mac

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33130 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 9:27 PM
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Bush 43: 7.1% (actually fell in first year with Dem Congress)

Uh, which Congress was it that Bush had in his first year that was "Democratic"? I'm remember that the Republicans controlled the House by a fair margin, and that the Democrats had control by, uh, zero votes with VP Cheney casting the tie breaker, at least until Jeffords moved from Independent to Democrat, which gave the Democrats a nominal, if not usable majority in appropriations voting.
 


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Author: Cashemco Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33131 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/14/2008 9:40 PM
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Read this about the New Zealand school system. At one time the Republicans wanted to do away with the Federal Board of Education, which I thought was a great move. Instead they almost increased it three fold.

http://boards.fool.com/Message.asp?mid=20757828&sort=whole&t...

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Author: MDCigan Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33135 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 4:47 AM
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So is a stable home environment.

Probably a politically incorrect statement here, but the fact of the matter is there a bunch of people having a bunch of kids who have no business being parents, and for some inexplicable reason it seems the lower the parental income the more kids. My sister worked as a social worker before going back to school to become a physical therapist. She had numerous stories about parents who were basically just trash. Lazy, irresponsible, no concern for the welfare or development of their children. Just a bunch of big-time losers.

I think the unfortunate reality is many of these kids basically start the race of life with 100 lb of weight strapped to their back, and there really isn't much government policy can do to improve/fix the situation when the home environment is basically a debacle.

If I were the son of John Bogle or Bob Rubin or Bill Clinton, I'd probably be running a $50 million+ hedge fund instead of trying to scrape together AUM to make a decent living managing investments. Life isn't fair, and you play with the cards you were dealt.

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Author: TMFSlydo Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33137 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 7:22 AM
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Uh, which Congress was it that Bush had in his first year that was "Democratic"?


Goofy,

Last year was his first year with a Democratic Congress, and the appropriation fell.

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Author: downisland Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33138 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 8:16 AM
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That was a good movie but I think it was Reagan's press Secretary Jim Brady who got all the sympathy back then. Reaganomics was helped by an oil glut in the 80s which we are not likely to see again today even if the high price of oil causes demand to weaken somewhat. However, we must give Reagan credit for ending the Cold War by outspending the Russians on defense. After that expensive arms race was over both the US and Russia had extra money to spend on Domestic issues.
In terms of the future, socialized medicine, free college, free health care, high taxes, just look to Europe and its BIG Governements to see the future for the US under the Democrats. I am a life long Democrat but my Dad always told me that the older you get the more you move toward Republican sentiments, sentiments like Hey, if I am careful and don't borrow too much money, how come I don't get to walk away from my mortgage? If I buy health insurance for myself how come I have to pay, through my taxes and my health insurance costs, for other people who choose not to buy it? How come some people always have their hand out and some wouldn't consider ever getting welfare? Is it laziness, lack of education, opportunity? Which of the Parties offers the most hope for an economy with sustainable job production? We are entering a new energy age, perhaps this can be a time of economic growth for the US if we lead the World with developing new energy technologies. We need a National leader to inspire us and to encourage the creation of new business. And we need a well educated populace. I believe that today monetary policies are well understood by both parties. Taxes is something that must be paid somehow and it is easy to argue both sides of every tax question. I think it boils down to something more. Reagan had that crazy glint in his eye. You knew he just might just pull the trigger and the Russians ultimately backed down. Who has the right stuff this time to lead us out of this slagging economy? I for one am undecided.

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33139 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 10:21 AM
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Effective tax rates take into account all income, payroll and excise taxes, plus tax credits borne or received by individuals.

But not sales taxes, gas taxes, car taxes, phone taxes, property taxes, or all the other taxes that people actually pay, and which land disproportionately on lower income people.

That, of course, would significantly change the calculation of "effective" tax rates, but somehow people never want to do that - because complaining about the "income tax" is so much more fun if you pretend all those other taxes (which somehow require "income" to pay) don't exist.

How about an honest "effective" assessment, rather than the obviously shaded one? This is pretty simple: what percentage of "income" does the lower income person pay in toto? What percentage of "income" does the middle income person pay in toto? What percentage of "income" does the upper income person pay in toto?

Now you have a true assessment, which I suspect will not support the charge.
 


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Author: CryingofLot49 Big funky green star, 20000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33141 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 11:32 AM
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The pie grows and all benefit.

The poor have lost ground in the past 30 year


This is absurdly wrong, actually an outright falsehood, as much proven by the obvious point that your silly PA diatribe is link and fact-free.

As I [and other educated people who read and understand economics] have noted previously, the key to measuring these kinds of stats is to use a longitudinal study of the US population. That means you are making an apples-to-apples comparison over time.

Otherwise, if 13mm immigrants come to the US as they have in the past years, starting mostly at the bottom, you've got a significantly lower-earning population added to the average/median, even if all existing workers got a nice raise.

Or if you take a simple average and the top 5% falls dramatically and bottom 95% goes up [as happened recently and noted by the NYTimes] you get bad and misleading data.

To wit--
Avg Annual % growth in Real Hourly Earnings from 1978-2004:

Total Population, [non-incarcerated] -
Ages 22 to 25: +6.5%
26-30: +4.0%
31-35: +3.6%
36-40: +2.5%

As you can see, the inflation-adjusted wage gains are quite positive for every category.

However, what if we simply look at college graduates...are they doing better or worse - isn't that the latest fear, that white-collar jobs are going away and paying worse and longer hours and etc?

Bachelor's Degree and Higher --
22-25: +11.6%
26-30: +6.4%
31-35: +4.7%
36-40: +3.0%

As you can see, the Real wage growth for college grads is 20-80% higher in every category, an advantage that lasts for decades.

But wait! The advantage is even higher than that. Why?

Because the BLS does NOT include workers who earn > $100/hr! They automatically exclude high-earning workers from this survey.

Every doctor, lawyer, consultant, money mgr I know charges/earns more than that. Starting lawyers bill $300 or so these days in big cities.

So when you make a fair apples-to-apples comparison of real wage growth, it is positive for all groups and all ages.
But you don't need to take my word for it. Check out bls.gov for more details.

On top of that, median income needs to be measured on a Real, DPI, per capita basis.

You cannot compare quintiles per household because different quintiles have different numbers of people in them - the lowest quintile has the fewest number of people -- on average 1.95 people, the second lowest 2.5, then 2.95 and then 3 and so on.

The median number of workers in the two highest quintiles is TWO workers, according to the 2006 Survey of US Census Bureau. They start at $55k and $88k respectively, or $27k and $44k per median worker. Rich!!

The median number of workers in the middle and second lowest quintile is ONE worker. The second lowest quintile earns ~$18k per median worker.

The lowest quintile has a median # of workers of ZERO.
60% of them are single-person households, unlike the 90% of top quintile households that contain multiple people, 89% of whom are married families.

According to bea.gov, per capita income has increased every year for the past 10 years, with an average of 5.2% for the past 4.

They even address the issue of low-wage immigration and its effect on income trends.
'The failure of net migration into Nevada and Arizona to decline sufficiently as employment prospects deteriorated is readily apparent in their relatively low per capita income growth rates. Because their populations are growing at nearly three times the national rate, their personal income must grow at least 2.0 percentage points faster than the national average just for their per capita incomes to keep pace with the rest of the country. Such strong personal income growth did not occur in 2007; employment gains in these states were small.'

UST Income Mobility Study:
"This study examines income mobility of individuals [96,000+] over the past decade (1996 through 2005) using information reported on individual income tax returns."

http://www.treas.gov/press/releases/reports/incomemobilityst......

'• There was considerable income mobility of individuals in the U.S. economy during the 1996 through 2005 period with roughly half of taxpayers who began in the bottom quintile moving up to a higher income group within 10 years.

• About 55 percent of taxpayers moved to a different income quintile within 10 years.
• Among those with the very highest incomes in 1996 – the top 1/100 of 1 percent – only 25 percent remained in this group in 2005. Moreover, the median real income of these taxpayers declined over this period. [over 10 years!]
• The degree of mobility among income groups is unchanged from the prior decade (1987 through 1996).

• Economic growth resulted in rising incomes for most taxpayers over the period from 1996 to 2005. Median incomes of all taxpayers increased by 24 percent after adjusting for inflation.

The real incomes of two-thirds of all taxpayers increased over this period. In addition, the median incomes of those initially in the lower income groups increased more than the median incomes of those initially in the higher income groups.

The degree of mobility in the overall population and movement out of the bottom quintile in this study are similar to the findings of prior research on income mobility.'

In fact, only 44% and 47% moved up from lowest bracket in the 1967 and 1977 study versus 58% by one measure in the latest study.

Median income of the top 5% dropped by 7%.
The top 1% dropped by 26%.

The lowest bracket of income gained 91%!







* DPI is personal income less personal current taxes; Real DPI is DPI divided by the implicit price deflator for personal consumption expenditures. For the sources of the prices used for this deflator, see "Updated Summary of NIPA Methodologies", SURVEY 82 (October 2002): 34–35.

http://www.bea.gov/national/nipaweb/TableView.asp#Mid

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Author: CryingofLot49 Big funky green star, 20000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33144 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 11:48 AM
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Kennedy had that crazy glint in his eye. You knew he threatened to just pull the trigger and launch every missile we had and the Russians ultimately backed down

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Author: downisland Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33146 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 12:39 PM
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Yes Kennedy did have that je ne sais quoi, leadership quality thing here. Here is a youtube piece of Barack Obama playing basketball.
http://www.youtube.com/watch?v=mimaNFEbg6U
Maybe if Obama lifted weights and bulked up a little bit more he could develop that look of strength that a leader needs. But then again there was Winston Churchill and crippled FDR so I guess leadership qualities are mostly internal things.

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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33148 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 1:06 PM
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and for some inexplicable reason it seems the lower the parental income the more kids.

Just FYI, that's nothing new. Circa 110 years ago an economist named David Ricardo pointed this out to his close friend and fellow economist (and investment-management client) Thomas Malthus, as the reason why Malthus' treatise "An Essay on the Principle of Population" was wrong (as applied to humans).

Today Ricardo is recognized by economists as ground-breaking, one of the historical greats of the field. Malthus would be forgotten were he not so popular among environmentalists - economists have little use for him.

Prosperity has proven to be the best contraceptive known to man. Even in an era when there were no chemical or mechanical contraceptives to speak of, rich people had fewer children on average than poor people, and the poor in rich nations (who would be, on a global scale, only moderately poor) had fewer children than the poor in poor nations (more seriously poor on the global scale).

Now, boosted by modern medical technology, quite a few rich nations are finding that prosperity is such an effective contraceptive that they are facing the prospect of a demographic upheaval due to low birth rates. Japan's workforce is declining - in absolute numbers, there are fewer working-age people each year. If western Europe were closed to immigration, the same would be true there in very short order; their immigrants mostly come from the Islamic world and so far they haven't found a way to successfully blend the cultures (partly because both sides have a significant share of extremists who don't want to blend). In the US, it would take about 40-50 years of no immigration; fortunately our immigrants come from more different places and we're more accustomed to blending cultures (to the point that some blends, such as Jews eating Chinese food, have become stereotypes).

And most poor nations of the world are becoming more prosperous, so there are serious predictions that the entire human population of the planet will soon be in the same situation. But we don't have many immigrants to the planet.

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Author: Windchasers Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33153 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 5:29 PM
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But not sales taxes, gas taxes, car taxes, phone taxes, property taxes, or all the other taxes that people actually pay, and which land disproportionately on lower income people.

How about an honest "effective" assessment, rather than the obviously shaded one?


How about one? I see a lot of other facts being provided in this thread, and you usually tend to donate data readily when talking about the benefits of taxation for roads, firefighting services, etc. So why not go dig up the facts yourself and present them, rather than asking someone else to?

~w

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Author: TMFSlydo Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33154 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 5:32 PM
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After that expensive arms race was over both the US and Russia had extra money to spend on Domestic issues.

That would be a reference to the Peace Dividend that was so ballyhooed at the end of the Cold War. Many thought the savings in defense spending would go to improving schools, paying for health care, etc. Instead, the real Peace Dividend came in the form of human and intellectual capital that no longer went into producing military hardware and instead went into creating and producing goods and services of benefit to the general population.

Of course, all those goods and services helped grow the pie.

I also believe that it's the war in Iraq that explains why we've had a relatively strong economy from an employment standpoint, but not one that makes us feel much wealthier - lots of financial and human capital once again devoted to the military, which doesn't directly improve our lives.

Paul

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Author: JoeChristmas Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33156 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 6:58 PM
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The poor have lost ground in the past 30 year

CryingaLot49: This is absurdly wrong, actually an outright falsehood, as much proven by the obvious point that your silly PA diatribe is link and fact-free.

Eh? Only someone who doesn't spend much time with the poor can think the poor have done better.

http://www.j-bradford-delong.net/Economists/favorite_krugman...

Here's a rough ( and reasonably certain) picture of what has happened: the standard of living of the poorest 10 percent of American families is significantly lower today than it was a generation ago. families in the middle are , at best, slightly better off. Only the wealthiest 20 percent of Americans have achieved income growth anything like the rates nearly everyone experience between the 40's and early 70's. Meanwhile the income of families high in the distribution has risen dramatically with something like a doubling of real incomes of the top 1%.

Krugman hasn't, yet, won a Nobel Prize in economics, but the odds are good he still might.

As to your income mobility:

This means, Armey asserts, that someone in the lowest quintile would be more likely to move to the highest than stay in place. Put kindly, it's a silly argument. For subjects of the study who moved from the bottom to the top, the typical age in 1979 was only 22. "This isn't your classic income mobility," Kevin Murphy of the University of Chicago remarked at the time. "This is the guy who works in the college bookstore and has a real job by the time he is in his early thirties."

In reality, moves from the bottom to the top quintile are extremely rare; a typical estimate is that only about 3 percent of families who are in the bottom 20 percent in one year will be in the top 20 percent a decade later. About half will still be in the bottom quintile. And even those 3 percent that move aren't necessarily Horatio Alger stories. The top quintile includes everyone from a $60,000 a year regional manager to Warren Buffett.


--JC

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Author: TMFSlydo Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33157 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/15/2008 8:29 PM
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This thread is starting to remind me of two headlines that ran on the same day a few years ago in USA Today and the Cincinnati Enquirer (both Gannett newspapers). They were regarding the same report. One headline read, "Income Gap Widens Between Blacks and Whites". The other read, "Black Incomes Rising Faster Than Whites.

Both were accurate - black incomes had a greater percentage increase (thus rose faster), but since they were starting of a lower base, the increase wasn't as large as whites (thus the gap grew wider).

Same data, different spin.

We can cite stats all day long, but in the end, personal choices are the single greatest determinant of one's trajectory in life. As an example, I'll share this newspaper piece I wrote several years ago about two people who once worked for me. Their stories are instructive as to why some people move up and some do not.

http://tinyurl.com/jca3f

Paul

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Author: rharmelink Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33162 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/16/2008 1:54 AM
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in the end, personal choices are the single greatest determinant of one's trajectory in life.

So true. I "retired" several years ago at the age of 49, after working part-time for the previous 13 years. A lot of my co-workers, who were working 40+ hours per week versus my 20 hours per week, were earning double what I was and having troubles making ends meet.

But I knew when I was 18 that I didn't want kids. I just didn't want the responsibility. And I always hated driving, so I got rid of my car in 1984. Those are some major expenses I avoided, for several decades...

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Author: MercMrdr Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33163 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/16/2008 2:32 AM
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Interesting debate. Thanks to all participants. Some data from the tax foundation on effective tax rates (most recent year 2004.) The first charts summarizing the findings appear an about page 20 or 21.

http://www.taxfoundation.org/files/wp1.pdf

Bob

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Author: downisland Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33166 of 41316
Subject: Re: The greatest wealth-creating movie of all ti Date: 5/16/2008 9:19 AM
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MercMrdr, what your chart doesn't show is the most important thing that the poor do contribute to the success of our society and to Capitalism in general and that is their labor. Capitalism allows one person to make profits off the labor of some other person.
Thirty years ago I was living in the same place where I am living now. 30 years ago I knew several single mothers on welfare. Back then they got rent subsidies, subsidized daycare, free medical, and food stamps. Such a person back then could just barely eek by. Today, I think there are many more programs and opportunites out there both governmental and private which offer help of all kinds for a poor person to get unpoor.

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