Bernie’s Economic Babbling: Trotsky Style!

Bernie Sanders, Brooklynite-In-Exile in Vermont, has a long series of errors on his campaign website, mostly related to economics.

And you can start thanking Bernie now by voting in 2016!

And you can start thanking Bernie now by voting in 2016!

It’s unclear as to whether or not anyone in Bernie’s camp has had the time to point out the stupidity of these errors, so as a service to the aging comrade, I’ll do that work for him.  Because he seems almost purposefully incapable of understanding the errors himself.

Where to begin?  Oh, inequality, of course, because if big government was created to do one thing, it’s to assure the right to life, liberty….oh, wait.   It’s to make everything equal for everybody.  Got it.  To wit:

  1.  Today, we live in the richest country in the history of the world, but that reality means little because much of that wealth is controlled
Bernie charts: We tell almost half the story!

Bernie charts: We tell almost half the story!

by a tiny handful of individuals.

The issue of wealth and income inequality is the great moral issue of our time, it is the great economic issue of our time, and it is the great political issue of our time.

Well, actually, we’re not the richest country in the history of the world, depending on how you measure it.  In fact, by GDP on a per-person basis, the US ranges from 10th to 14th in several versions of this metric.  Since Bernie loves to separate the classes by income, he’s already missing the point, and making a mistake – we’re not the richest country in the world by standard comparative metrics.  If one family makes $200,000 per year with 5 people in the house ($40K/person), and a second family makes $100,000 per year with 2 people in the house ($50K/person), the first family is “richer” in aggregate, but on a per-person basis they’re poorer. And they likely have much larger expenses than the 2-person family.

Having the biggest pile of money in your house (or your country) doesn’t mean you’re rich.  Especially if you consider that unfunded liabilities like Social Security and Medicare are over $100 trillion dollars.

2.  The reality is that since the mid-1980s there has been an enormous transfer of wealth from the middle class and the poor to the wealthiest people in this country. That is the Robin Hood principle in reverse. That is unacceptable and that has got to change.

Thieves! Well, not really.

Thieves! Well, not really.

 

Here Bernie seems to miss the point entirely about wealth creation, and that the wealth “pie” is not a finite box of dollars, and the wealthy have somehow been sneaking in at night to take money out of the middle-class’s wallets without their knowing about it.  The dollars aren’t “transferring” from the middle-class to the 1%.  The economy has grown larger, and with it, incomes.  In fact, middle-incomes have grown in that same timeline, but so have incomes at the upper levels, just at a faster rate.

But massive and historically unprecedented increases in federal entitlement spending haven’t increased incomes.  In fact, incomes dropped,

Hmm - the govt spends more, yet people earn less? That's un-possible!

Hmm – the govt spends more, yet people earn less? That’s un-possible!

even prior to the federal spending expansion.  Why?  Because when you encourage people not to work, by providing enough support through entitlements so you don’t have to work, you will see a massive reduction in the workforce.

In this scenario, if the government is providing enough income to live without working, then whatever capital is owned and invested, risked in the marketplace, will inevitably grow larger as a larger share of a growing economy.  So those who work and invest will inevitably have more than those who choose not to.  Is it “fair” that I work two jobs at 60 hours per week to earn more income, only to have those additional hours be taxed at a higher rate because I then make too much money, as deemed by a politician who gets paid off the sweat of my labor?

So people leave the workforce and incomes drop? Shocking.

So people leave the workforce and incomes drop? Shocking.

The other piece Bernie seems to so easily forget is that money invested is money risked, which is something he never asks his followers to do – risk their own time, their own money, and their own futures, on investing in an idea, a stock, a project, that might pay dividends somewhere down the line.  Instead, he wants to take earnings from those who will willing to take risks, and be successful through hard work, and give it to those who risk nothing other than a mild hand-cramp when automatically pulling voting levers for people like Bernie who have sold them a bill of class warfare goods, and want to be paid for it, in votes, every few years.

There is something profoundly wrong when the top one-tenth of one percent owns almost as much wealth as the bottom 90 percent.

What’s wrong?  If you’re poor, and extremely poor, then obviously you’re not going to own a lot of assets.  It’s very likely that you own much less than zero assets, and are receiving entitlements of one kind or another, which would make you a net negative wealth “owner”.

In case Bernie missed it – half the country pays no net income taxes.  That’s the bottom of the bottom 90%.  Secondly, the top 50% of income earners pay 97% of all income taxes collected.  That means the biggest earners carried the biggest burden of wealth transferred since the history of these efforts has been kept.  We live in record-setting times, in that wealth is being transferred from the productive sector to the non-productive sector at larger and larger rates, every year.

There is something profoundly wrong when 58 percent of all new income since the Wall Street crash has gone to the top one percent.  

You can't win if you don't play.

You can’t win if you don’t play.

Actually, it makes complete sense that new income goes to those who risk their own money in the markets.  Would Bernie expect people to risk their money in order to earn less money?  Take a look at the labor force participation rate, Bernie – it’s gone down, dramatically, as people have shifted to consuming available entitlements.  Then Bernie complains that those who shifted to getting something from the government don’t earn as much as people who work for a living?  Really?  That’s like complaining about dinner without paying for the ingredients, and not making dinner.  See how that flies at the dinner table in your own home.

 

How’s re-distribution working out, historically?  Not so well.

People make less when the government takes in more tax dollars? Gasp! I repeat: Gasp!

People make less when the government takes in more tax dollars? Gasp! I repeat: Gasp!

In fact, the more money the government spends, the lower median incomes are.

Hm.  I wonder why?  The facts seem to fly in the fact of Bernie’s claim that the more government spends, the better off its citizens are.  The facts show that the opposite is true.  If taxes increase, and federal income goes up, how would those dollars translate, even on a one for one basis, to people earning the median incomes?  They’re working, so they don’t receive direct federal assistance.  In fact, you can make the claim that raising taxes, even on the wealthy alone (which won’t, in fact, be enough to cover annual federal expenditures), would have the opposite effect of increasing incomes – because you will have placed an increased tax burden on those earning the incomes in the first place.

As has been demonstrated, you would have to start raising the federal tax rate on middle-class earners in order to support any additional federal spending.  There just isn’t enough income lying around the country to feed the yawning chasm that is the federal maw, one that Bernie wants to continue to feed in order to keep his cushy lifestyle telling workers how much of their money he needs to re-distribute to buy votes.

Finally, Bernie tries conflating two things, on two different timelines, and tries to call that an argument:

Despite huge advancements in technology and productivity, millions of Americans are working longer hours for lower wages. The real median income of male workers is $783 less than it was 42 years ago; while the real median income of female workers is over $1,300 less than it was in 2007. That is unacceptable and that has got to change.

First, median household income, even inflation adjusted, has increased by $5,000 from 1976 to 2012.  This includes a massive increase in the labor force by women that began in the 1970’s and is still increasing today.  So no, median incomes aren’t decreasing, they are increasing.

Secondly, for female workers, Bernie chooses 2007 as a comparison, which was the highest female rate of earnings, ever.  He doesn’t go

Hey look! Women earn less now than their peak in 2007 - but more than they did in 2000! Now explain to me how that's bad, again?

Hey look! Women earn less now than their peak in 2007 – but more than they did in 2000! Now explain to me how that’s bad, again?

back 42 years for this metric, does he?  No, because he wants it to look worse than it is – but it’s going to look bad, regardless, due to the recession.  Incomes generally don’t go up much during recessions, but both male and female earnings did, after the bottoming-out of the recession trough.

Male earners followed the exact same pattern – their earnings dropped in the same fashion.  Why?  Because recession.

Did the increase in federal spending (as shown above) increase incomes?  No, because people who work for a living are rarely in line waiting for a handout.  So that wealth transfer has only a negative impact on them, via tax increases.

Finally, how would raising taxes, on the wealthy, on corporations, or anybody, increase incomes?  History has shown that incomes have actually decreased while federal spending increased, so why would even the simplest of dullards double down on a demonstrably losing bet?

Answer:  Because Bernie is not in it for incomes.  He’s in it for power, and for filling the empty spot where his soul used to be, before he sold it

This is Bernie's idealized world.

This is Bernie’s idealized world.

to a class warfare paradigm in order to live a life he could never have earned on his own dime.  He can only enjoy his lifestyle off the earnings, the work, of others.  A lifestyle, as Bernie should know, is what caused the Russian revolution in the first place, and put its 20th-century

heroes into power – and caused the deaths of 100 million people in the 20th century.

But hey – let’s raise taxes!

 

 

 

 

 

 

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2 thoughts on “Bernie’s Economic Babbling: Trotsky Style!

  1. Another great article. Regarding #2, many people forget that when comparing the top income earngers that the people in this category are not necessarily the same. Zuckerberg was not in the top 1% in 1980 but now he is, and there are probably some people who dropped out. But when you create Facebook you have basically added something of huge value to the economy and get rewarded for your work and the risks.

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    • There are lots of studies out there regarding income mobility, and what’s been found (granted, I’m paraphasing massively here) is that there’s a lot of turnover in the upper income brackets, not just the 1%. Mostly due to investments, when those pay out, losses, etc – you name it. It’s not a static group of Thurston Howells.

      Same with lower and middle class. There’s churn up and down, but for the lower and middle class, the trend is decidedly up. More people move up in incomes than move down, for a lot of reasons, including demographics, education, etc, but essentially you are not locked into whatever % you’re in right now. Nobody is, or ever has been. It’s what you do and the choices you make that determine the difference.

      Like

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