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  #1  
Old 10-12-2012, 03:20 PM
grumble Male grumble is offline
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Default Top Down, or Middle Out

First, I don't want this to be a political question, but in an election year, maybe it can't be avoided. Just remember, this isn't on the bottom threads.

With that out of the way, I have a question about some things I've been hearing lately.

One side of a discussion says the economy should be grown from the middle class out, while the other side says the economy has to grow in order for the middle class to grow.

My question is, how do you grow the middle class? Don't they have to have jobs to do better? Sure, if they have more money to spend, it will help the economy, but how do they get the money?

I hate it when I don't understand what one side of a debate is trying to say.
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  #2  
Old 10-12-2012, 06:38 PM
whitehairedidiot Female whitehairedidiot is offline
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Quote:
My question is, how do you grow the middle class? Don't they have to have jobs to do better? Sure, if they have more money to spend, it will help the economy, but how do they get the money?
Yes, the middle class - and those that want to be middle class - will need jobs.

The phrase "middle class" has always meant people who work, save, do not need assistance for food, clothing or shelter... and sometimes were able to save enough tuition money to send a kid or two to college... with scholarships and grants. They used to save for retirement, too - not really trusting that social security/medicare was going to be enough... for long enough.

I'd like to suggest that the government's (current) idea of the upper limit income of someone considered "middle class", could be as high or higher than the $250K threshold Mr. Obama talks about - depending on location throughout the country. If you're a family of 4 and make less than $40-50K a year, you're going to feel poor, because each month is a struggle... if you live in an urban environment, or in the suburbs of a big city. On a homestead, that much income is "comfortable". You've got a savings... that you can re-invest in the place, because you take care of your basic needs in a self-reliant way.

"Growing the middle class" is something that's out of the government's control. When jobs are plentiful, and people have the skills to work those jobs and want to work those jobs... the middle class grows. Yes, the jobs that offer those wages have to be available, too. For businesses, jobs don't grow on trees... and each employee costs the company a lot more than their gross salary. I figure about 35% of my company's expenses -- are for personnel: salary, taxes, & benefits. This comes from the income stream - before there's any money for me. Those are the people doing the work - they earned that money... and keep things going day in and day out.

When people would rather sit back and collect their benefits, or are going back to school to gain new skills -- and can't manage a family, school and a full-time job... or have retired to try to save their health... whatever the reason they need to rely on assistance to live... the middle class shrinks.

The government doesn't - and the government CAN'T control everything. Despite what some elected officials think. The waters don't part and the sun doesn't shine on command for politicians.
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  #3  
Old 10-12-2012, 07:00 PM
grumble Male grumble is offline
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We had a pretty good discussion a while back about who is in the Middle Class. No point in beating that poor dead horse again.

I've heard the concept of "grow from the middle out" in enough speeches, debates and commercials to realize that it is a major campaign point. I just don't understand what it means.

When you, QHI, create jobs, I can see that as growing the middle. But first, you have to provide the jobs. If the plan is to penalize you for growing a business, how does that help make more jobs? I'm missing some very basic concept here, something that I suppose everyone else understands.
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Old 10-12-2012, 07:20 PM
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HowdyDo HowdyDo is offline
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I FEEL comfortable. Does not having kids and working full time and owning a home outright with no debt constitute "middle class"? I'm certainly not "upper middle class" as my income is just above poverty level.
Perhaps that sounds hokey. I was 9yrs old when Reagan was first elected and remember mom and dad struggling. Vaguely, I can recall those dark political tv ads about how the US was in trouble. (and whatever possessed the American public to vote an actor to be President, I'll never understand... I know, I know--wrong thread)
Society has "evolved" drastically since the term "middle class" was originally coined. The first person who puts a firm definition on it needs to also be the one to determine how a new economy is going to look.
We aint goin' back to the same old thing.
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Old 10-12-2012, 07:41 PM
grumble Male grumble is offline
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Maybe you can help me out with my question then, Howdy. How can you, and many others like you, grow the economy? Can the Government help you do it?
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  #6  
Old 10-12-2012, 08:10 PM
mozarkian mozarkian is offline
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I don't think it is the governments place to "help" -- they need to just get out of the way. There would be a huge growth in new business and expansion of current business if everyone wasn't terrified of regulations, taxes or big brother looming over them all the time.
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Old 10-12-2012, 08:14 PM
grumble Male grumble is offline
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I sure agree, Moz. But apparently, some folks don't, and that's why I'm trying to understand what "from the middle out" means.
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  #8  
Old 10-12-2012, 08:30 PM
mozarkian mozarkian is offline
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I don't understand that phrase either. There has been a business owner (top down?) involved in every job I ever had except for when I started my own. I may be way off target here, but I always defined middle class as anyone who worked and was responsible for themselves without being on assistance-- some lived happily on a few thousand and some lived on a couple hundred thousand. Money doesn't necessarily equal security to me.
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  #9  
Old 10-12-2012, 09:08 PM
whitehairedidiot Female whitehairedidiot is offline
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Quote:
When you, QHI, create jobs, I can see that as growing the middle. But first, you have to provide the jobs. If the plan is to penalize you for growing a business, how does that help make more jobs? I'm missing some very basic concept here, something that I suppose everyone else understands.
Well, you're right. Penalizing my company in the form of payroll, ss, medicare "taxes"... taxes on the computer or tools for my new employee... taxes on income -- when there is some... and plenty of bookkeeper or CPA man-hours complying with all those tax-related reports and regulations... oh - let's not forget healthcare... (that deserves it's own topic)...

doesn't exactly encourage us to hire on many new employees.

Moz is partly right, too. Getting gov't out of the way would help too. But gov't can't mandate or require other businesses to order my product - which is where the hiring process REALLY starts...

even if they are doing this with healthcare...
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  #10  
Old 11-10-2012, 07:22 AM
mountain man Male mountain man is offline
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Not sure what middle out means. Maybe it means letting the people earning an average wage keep more of their money by not giving tax breaks to the wealthy(top down) and hoping it will trickle down. We tried this and it trickled down to China then India. The top down system is driven by greed which forces jobs to the cheapest labor source. The current focus seems to be that education is the answer. This is BS. Every job that is outsourced, and there have been millions, had someone qualified and in place doing the job but someone in China or India was willing to do it for less. These people were not under educated, they were tossed away by the system. Educating more people for jobs that continue to be outsourced will not solve the problem. As a country with a high cost of living we need to train our people and make the best products in the world using our people. Germany has a good model that has extensive training, focuses on building the best products and labor has a say in the boardroom. Owners of corporations have to return to caring about their communities, states and the country by providing jobs for our citizens. Without this patriotism. capitalism will not work for the middle class.
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  #11  
Old 11-10-2012, 08:12 AM
ScrubbieLady ScrubbieLady is offline
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Part of our problem is education, part is welfare. Some people but not all on welfare do not want to work and have figured out how to work the system so they don't have to do a low paying job.

And apologies to union people but I think in some cases unions are a problem also. After they get past actual working problems (dangers, etc.) and get to just wanting more for nothing more then they are a problem.

Unless you describe the middle class as including business owners(including "rich, wealthy business owners"), you cannot grow the economy from the middle class out IMO. There is too much uncertainty in the tax laws, regulations and so-call healthcare reforms. As long as the government wants to go after people's money because they think everyone should have the same thing (take from the "rich" and give to the "poor"), there is a disincentive to improve things which is what we need to grow our economy.

The government needs to get out of the way.
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  #12  
Old 11-10-2012, 12:27 PM
whitehairedidiot Female whitehairedidiot is offline
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Quote:
Unless you describe the middle class as including business owners(including "rich, wealthy business owners"), you cannot grow the economy from the middle class out IMO.
Right - and couples who are making $250,000 are simply not "millionaires and billionaires", either. When there is talk of "corporate tax cuts" -- it only applies to companies that are C-Corps: the GEs, Apple, Automakers, etc type of companies. GE has so much cash flow -- they're able to hire armies of lawyers to find every single loophole in the tax code. My little company paid more in taxes last year, than GE did. Warren Buffett can take that little fact and stick it where the sun doesn't shine.

The bulk of "corporations" in the US, are S-Corps. I can't remember the exact percentage, but it's something like 75-80% of all corporations in the country are S-Corps or LLCs or Partnerships. Income derived from S-Corps is taxable to the owners of the company. In my case, two owners. Income - our tax bill - isn't based on the amount we receive from the company in wages or dividends. It's the amount of "net income" that the company books in a year.

It can be the case - when attempting to grow an S-Corp - that there will not be enough cash available to pay taxes and still leave enough cash to operate the business... much less replace/upgrade equipment or hire new people for new positions. Especially when one starts figuring in the costs of Obamacare, new regulations -- which require CPAs and Lawyers fees (and these aren't cheap expenses and typically not an in-house employee) to help a company comply with those complex, undecipherable regulations. This is a situation that can cause even a successful business to fail -- because a business needs to make a profit, to be able to pay the taxes.

The idea and line about "top down or middle out" is simply election-year, empty but sounds good, BS. It has no basis in reality whatsoever. And THAT'S why business people feel they're under siege... and for many, they will look at the situation and decide that it's simply not worth the agony to even be in business, under these conditions.
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Old 11-11-2012, 02:05 AM
Selena Selena is offline
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While govt does not "grow" jobs, we have a faction of govt who thinks it is okay to make it profitable to ship jobs overseas. Go back and read up on what has happened to the middle class since 1980 (anti-union, tax breaks for outsourcing to name the two major middle class killers). And the working class needs to stop being suckered by "US has the highest business tax rate". First, it isn't true. Second, no company pays that rate. Third, too many C corporations pay little, if any, taxes.

We manufacture very little in the US. We'd lose WWII if we had to fight it today.
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  #14  
Old 11-11-2012, 09:16 AM
grumble Male grumble is offline
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You're absolutely right about WWII. Lucky for us, we already won it.

As for the rest, you're pretty good at reciting the talking points! Not true, but they sure sound good.
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  #15  
Old 11-11-2012, 09:44 AM
ScrubbieLady ScrubbieLady is offline
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Quote:
Originally Posted by Selena View Post
While govt does not "grow" jobs, we have a faction of govt who thinks it is okay to make it profitable to ship jobs overseas. Go back and read up on what has happened to the middle class since 1980 (anti-union, tax breaks for outsourcing to name the two major middle class killers). And the working class needs to stop being suckered by "US has the highest business tax rate". First, it isn't true. Second, no company pays that rate. Third, too many C corporations pay little, if any, taxes.

We manufacture very little in the US. We'd lose WWII if we had to fight it today.
Companies have to do what is best for their business. They CANNOT hire more people in an area where the cost keeps going up and going up for no good reason. They don't need tax breaks for outsourcing, outsourcing helps them to bring(or keep) their bottom line in the black.

As far as anti-union. The unions needs to start taking responsibility for their part of the problem rather than wanting benefits for things like preventing a company from moving manufacturing to a location where they can keep their costs down. Or for things like having three guys sitting on their brain because the union rules say they cannot turn a wrench. Or making a company keep a bum on the payroll because he/she is a union member.

How about the union where the people get paid for 8 hours if they get their word done in 7 (and get off after 7) but if they work 9 hours the next day, they get paid time and a half for that hour.

I have friends that are union or have been and brag about sitting down all day, working maybe a total of 2 hours and getting paid for 12 at a high rate. When they got laid off from a job, they got unemployment benefits because they couldn't be forced to take a non-union job.

One of the reasons we won WWII is because people did what needed to be done. There are still people that work hard but in the current political climate, they are the ones looked down upon and complained about and have their hard earned money taken away so someone else can sit around and complain.

As for C Corporations not paying that rate, how about the approx. 50% who don't pay any or pay negative (refund more than paid in)income taxes but complain that the rich don't pay their fair share while many rich pay twice. First when the money is earned and again when they sell something they bought with the money and have to pay on any gains (not profits, gains).
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Old 11-11-2012, 11:28 AM
mountain man Male mountain man is offline
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At the heart of the problem is "does patriotism still exist in the world today or are we a world of corporations".

Does a patriot offer thousands of jobs to countries that we have had to fight in the past generation in order to make an additional 20% and keep all of the profits for themselves. CEO's make up to 120 million a year now while cities, states, and the country no longer gets revenue and millions are left with no jobs and their children with no hopes to follow in their footsteps.

We have all bought into the globalization of our jobs by buying cheap goods that for a short tiime will raise our standard of living. In the long term this strategy will leave us a broken has been country. This transition will be painful for everyone as we have not yet learned how to downsize government and our own expectations of ourselves and our children.
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Old 11-11-2012, 11:38 AM
grumble Male grumble is offline
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Mt Man: "...we have not yet learned how to downsize government and our own expectations of ourselves and our children."

You got that right. The rest of your post, not so much.

I understand the frustration of jobs going elsewhere, but we priced ourselves into it. Stop imports, and the price of everything goes up, which forces wages to go up, which forces prices to go up. Either the US is competitive on the world market, or we spend ourselves into oblivion. Or, as things are happening now, both.
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  #18  
Old 11-11-2012, 12:32 PM
mountain man Male mountain man is offline
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Please explain the Apple model to me. 90% of their employees are off shore and are so miserable that they commit suicide on company grounds on a regular basis. They have gone from a very small niche company to the largest market cap company in the country. Their CEO makes 120 million a year. There product is the most expensive in their market space. Is there no room in a company like this for American workers?

Take Starbucks, another wildly successful company, that has chosen to make their coffee cups in America. Does this choice not help Americans and local, state and Federal government. There are choices to be made here.
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Old 11-11-2012, 12:33 PM
whitehairedidiot Female whitehairedidiot is offline
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Quote:
... 50% who don't pay any or pay negative (refund more than paid in)income taxes but complain that the rich don't pay their fair share while many rich pay twice. First when the money is earned and again when they sell something they bought with the money and have to pay on any gains (not profits, gains).
I believe this akin to biting the hand that feeds you, isn't it?
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  #20  
Old 11-11-2012, 12:46 PM
grumble Male grumble is offline
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Mt Man, I really don't want to get into some sort of heated dispute, but please think about what you just said.

Apple is the most expensive brand name; they outsource to China for cheaper SKILLED labor; workers there are overworked and suicide. Why can't we do this in America, you ask. Um, unions, maybe? Gov't interference? Do we really want that here, or just to triple the cost of items that are already the most expensive on the market?

Sure, let's take those high skill, high tech workers, and put them to making cups for starbucks, a low skill, low pay job.
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