Tuesday, March 4, 2014
Janet Yellen Nails the Economy's Biggest Problem
http://www.huffingtonpost.com/2014/02/27/janet-yellen-income-inequality_n_4867232.html. DUE 10 March 2014. What does the new Fed Chair say is the economy's biggest problem? What is the history of the problem; when did it start and why? What do YOU believe is the solution to the problem?
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Janet Yellen announced what she believed to be the root of the economy and its biggest problem: income inequality. Although the income gap has always been there, experts say that the gap skyrocketed in the 80s and has not stopped since. Since 1983, a difference between the 1% and bottom 90% has gone from about $30k and $350k to a staggering $31k and $1.02m. The level of income inequality is actually ridiculous. History says that it is a result of income tax cuts to the 1% in the 80s with Reagan and the late 90s. I believe the solution to the problem is rather Democratic. Tax the wealthy and close the income gap. I come from a decently wealthy family but get nearly 30% taxation on our gross income. Although upsetting at times, we recognize that the majority of people need to have government transfers to make ends meet. If we reinvest money that we get from higher taxes on the wealthy, the bottom 90% can reinvest the money they get into the economy. As it stands, in a recession you must spend! The income gap will close--and possibly have the average bottom 90% income rise above its never-ending state of stagnation.
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ReplyDeleteAcording to new Fed Chair Janet Yellen, America's biggest economic problem is income inequality. Back in the 1986, President Reagan cut income tax rates on the wealthy. This allowed the rich to keep even more of the money they made, while the rest of us were still paying the full tax rates on our income. Then in 1997, again were the taxes slashed for the wealthy. Also many household's incomes have either been declining or staying stagnant and are barely making it by. Yet to economically grow, they are expected to spend. I believe the solution to the problem is to raise the tax rates for the wealthy. That way the taxes will be more fairly spread out, and the other 99% might be able to spend more and our economy will grow.
ReplyDeleteDue to the fact the article opened with a beautifully executed zinger, this week’s blog will unfortunately lack my opening signature sarcastic comment. So because I cannot possibly top the article’s opening statement, I will sadly just cut to the chase.
ReplyDeleteLast Thursday, the new Federal Reserve Chairman, Janet Yellen spoke at a Senate Banking Committee hearing where she declared that “income inequality, in this country really date back many decades -- probably to the mid-eighties.”
The chart presented in the article proves Yellen to be one hundred percent correct about when the issues of income inequality really began; nobody denies that the substantial widening of wage gaps occurred during the Reagan administration. However, that is not what we all want to know; we could care less about whose fault it is or when the problem started, all we want to know is how the heck we can fix it.
Yellen has no actual solution to how we are to approach the issue. She, when asked what Congress could do to help, replied that workers and children should receive more education and training. But this is not necessarily true. As discussed in a previous blog, according to a new study by the Economic Policy Institute, low-wage workers are a lot more educated than they were nearly 50 years ago, but they are making much less.
Yellen, just as past Fed Reserve Chair Ben Burnanke, cites the typical stock explanations for the widening inequality: technological change and globalization. She also adds that the Great Recession is too at fault for the widening gap.
In reality though, technological change and globalization didn't just all of a sudden cause such a tremendous spike in inequality in 1987. What is really to be blamed is Reaganomics.
In 1986, President Regan cut income-tax rates on the wealthy, which according to a 1999 Cleveland Fed study was a contributing factor of the mid-80s spike in inequality. However, Reagan did raise tax rates on investment income to help keep inequality in check. But in 1997, Republicans lowered those taxes as well, which once again led to more inequality.
Honestly, I have no solution that I know will definitely work. It seems to me that taxes need to be raised, but this is also unfair to those already in a very high tax bracket. I am not sure what is the best action would be, however, nothing can be worse than ignoring the issue. I guess my solution is for Yellen to acknowledge this is her job and she needs to stop tip-toeing around the issue. Secondly, the Congress needs to grow up and get over their petty “we-hate-Obama-and-want-him-to-fail-so-lets-take-America-down-with-us” issues and do their jobs as well.
Yellen keeps yellen about how the income inequality gap is a huge problem (ba dum tis). It is thought and widely supported that this gap started to increase wildly when Reagan cut taxes on the rich allowing them to make more and more money while non 1%ers were making about the same money they were before. I think an appropriate solution would be to tax everyone evenly (percentage wise) and also to pass laws about the rich spending a certain amount of their wealth on consumer goods in order to boost our economy because if taxes are cut on the rich, then their is no benefit to the economy unless they spend the money they just saved from the tax cut. I have no idea wether my idea would work but it certainly is a new idea. I don't like the graph by the way. I don't think averaging the entire bottom 90% is a good indicator of income gap. I think a better indicator would be to split it into sections like the bottom ten percent middle 10% top 10% and also the same but 1% if that makes sense. Alright, I'll stop yellen at you now.
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ReplyDeleteJanet Yellen claims that for the economy, the main issue at hand is the level of income inequality. Yellen, like her predecessor, suggested that part of the problem stems from constant technological changes and globalization. However, it is well known with the experts that the inequality between the rich and poor widened to a considerably damaging gap in the 1980's, when Reagan cut income-tax rates on the wealthy. This caused the inequality to increase by tenfold, resulting in a ever-growing gap that continues to be prevalent today. I believe that the best solution to this problem would be to increase tax on the wealthy. There is no reason why they should pay less while the poorer half of the nation often pays more than they can afford.
ReplyDeleteFed Chair Janet Yellen believes the core of our economies issues is caused by income inequalities. In other words, the gap in income between the wealthy and the poor. This gap is not a new feature in our economy, however, ever since the 1980's, the size of income inequality has increased at an unprecedented rate. This rapid increase began in the 1980's under president Reagan. Reagan cut the income tax rates on the wealthy in 1986, and his measure to counteract this, a tax on investment income, was slashed by Republicans in 1987. Ever since then, income gaps have been rapidly increasing. When the recession hit, it was the less wealthy people that were hurt the most. These gaps hinder economic growth. I think the way to solve this is fairly simple. I think, just like the article says, we should bring back the taxes that Reagan removed. Sadly, I doubt this is possible, considering how much influence the wealthy have on politics.
ReplyDeleteJanet Yellen identifies the growing gap between the rich and the poor as the biggest issue in our economy right now. The video we watched in class featuring Paul Krugman shed some light on the background of the issue. There had always been a history of income inequality in America until the New Deal. The New Deal not only ensured that many Americans would have access to the basic necessities of life, it also shrank the income gap and created the middle class. However, the process began to reverse itself during the Reagan years. The gap started to reappear. 30 years later, the gap is taking a huge toll on the economy. Yellen concurs with Krugman on this point, explaining that Reagan's tax breaks to the wealthy were a driving force in the widening of the income gap.
ReplyDeleteThis issue is a particularly sticky one because it is not identifiable by any of the typical economic indicators. To an economist ignorant of anything besides numbers, the averages and aggregates seem healthy. The issue is that when you have a wealthy half, and a poor half, indicators will suggest that there's a middle-class whole. This makes the issue that much harder to solve.
The beginning of the solution is to increase taxes to wealthy business owners and decrease taxes on the middle class. The last 30 years are evidence that conservative fiscal policy fails, so the best thing to do is to implement the only policy that is proven to work: those akin to the New Deal. It took progressive politics to create a middle class in the first place, and it will take equally progressive politics to ensure it's survival. The government needs to raise taxes on the rich and increase spending on various projects. Such projects would require jobs and therefore raise employment. Another thing that needs to be done is to offer incentives to state and local governments to democratize funding. What I mean by this is that the federal government should make efforts to ensure that smaller bureaucratic arms of the government are not keeping money from the lower-middle class. The best example I can imagine is in education. The government should make sure that teachers are paid fairly and that money doesn't end up staying at the top.
A right-winged congress stopped a new wave of progressive politics from saving the middle class during the Obama administration. Congress will need to see more Democrats in office if there's any chance of stopping the widening of the income gap. People need to realize that cutting spending has only made things worse off for them and lined the pockets of the wealthy.
Income inequality is our economy's biggest problem. The problems of income inequality date back to many decades.We began to see a very substantial widening of wage gaps between more-skilled and less-skilled workers in the eighties. And this is a trend that unfortunately has continued almost unabated for the last 30 years. President Ronald Reagan cut income-tax rates on the wealthy in 1986, directly contributing to the mid-80s spike in inequality, according to a 1999 Cleveland Fed study. Reagan also raised tax rates on investment income, which helped keep some of the inequality boom in check. But Republicans in 1997 slashed those taxes, too, leading to another boost in inequality. More education and training for workers and kids would help our economy. Those could help with the issues of technological change and globalization.
ReplyDeleteAccording to the new fed chair, Janet Yellen, the biggest problem concerning the economy is the income inequality gap. This problem started all the way back in the 1980s when Ronald Reagan cut the amount of taxes the rich had to pay, which then had a huge impact on the income inequality in the coming years. I believe that to solve this problem, everyone, no matter their income or wealth should be equally taxed so that it is fair for everyone. It is ok for some people to have a lot more money than others but it isn't alright if they are being treated more fairly
ReplyDeleteThe new fed chair, Janet Yellen says that the economy's biggest problem is the massive income inequality.The problem started when people began to become more skilled in the 1800s. Not everyone had the same set of skills, so higher skilled workers were paid more than lesser skilled ones. Also because Ronald Reagan cut income taxes on the wealthy in 1986 correlating with the mid-80s spike in inequality. He also raised taxes on investment income which were slashed by republicans which lead to more inequality. An option to solve this problem is to not let the wealthy off easy with less taxation. Equal taxation should be instated, so that everyone pays the same fair amount of tax and the classes will not be as separated and unequal.
ReplyDeleteThe new fed chair, Janet Yellen, suggests that vast income inequality in America is the biggest problem our economy faces. The apparent history of the problem is an increase in globalization and technological advancements however these were aggravated in the 80s when tax cuts for the wealth appeared. These tax cuts coupled with the Great Recession caused the wealthy to become weather and caused low income families to become hammered by the economic storm. Solutions to this problem might involve steeping on some rich toes by increasing taxes on the wealthy. Though taxes alone probably won't suddenly solve the issue but we can't just take away people's wealth since we aren't damn, dirty Reds. Another solution could be to help out the less fortunate and get them spendin'.
ReplyDeleteJanet Yellen, the brand new fed chair, has come to the conclusion that the biggest problem facing our already problematic economy is... wait for it... the income inequality. (GASP!) It all started way back when during the era of the Robber Barons, where the working man didn't even come close to getting the same income as his employer. This trend continued on into the future, especially when Reagan cut taxes for the wealthy in the 80s, attempting to initiate a "trickle-down effect." Along with the "Great Recession," the tax cuts allowed for the rich to roll in their money while the poor pave the streets for pennies and dimes, and the middle class to live a much less luxurious lifestyle. It's not an easy problem to fix, but it certainly isn't impossible. It would probably be better to tax the wealthy a tad bit more (with a billion dollars to give to the person who predicts the March Madness brackets, I'm sure they have a little money to spare) and give a little more the middle class, and hope that they start spending rather than saving.
ReplyDeleteJanet Yellen claims that for the economy, the main issue is the level of income inequality. Essentially the gap in income between the wealthy and the poor is what the main issue entails. Yellen says that the gap became noticeable in the 1980's and has increased dramatically. The increase erupted from President Reagan cutting income tax rates on the wealthy. This set the stage for the rich to keep even more of the money they made, while the rest of us were still paying the full tax rates on our income. This caused the inequality to increase exponentially, resulting in an ever-growing gap that is still evident today. I feel that the best solution to this problem would be to increase tax on the wealthy.
ReplyDeleteIf there is one thing that I've learned all year through current events, its the negative impact that the gap in income equality has on our economic growth. Janet Yellen is preaching to the choir by identifying the widening gap between the wealthy and lower working classes as the cause for our major economic problems. (By choir, I mean everyone responding in these blogs. If you haven't caught on by now, you might want to reread some these articles.) Yellen dates back 30 years ago, to when she believes the 'beginning of the end began.' Wage gaps based on experience of works, cuts in income tax rates and the great recession really caused the wedge to grow. Yellen also attributes this wedge to technological advances and globalization.
ReplyDeleteI feel like we are going in circles, I appreciate Yellen's acknowledgement of our economic problems as well as everyone else, but when will we address this issue? Yes, she identifies the problem, she even identifies the cause. But she is yet to offer a solution. I think the first step in recovering our economy is to begin to start taking action, any action. We could sit here all day discussing how we got here, but we should really focus on moving forward. Based on what I learned so far, the best solution is to get the working classes to start spending more. In order to spend more, people need to feel comfortable, knowing that they have health insurance or that if they lose their job, their children can still get an education. From there, it's as simple as spreading our country's wealth and closing the gap between income equality. People will begin to spend more money in the market and in turn cause economic growth.
In the article, Janet Yellen says that America's worst economic problem is the widening income gap between the wealthy and the poor. Yellen says that the gap became noticeable in the 1980's and has exponentially increased. "I think the issues of income inequality, of rising income inequality, in this country really date back many decades -- probably to the mid-eighties, when we began to see a very substantial widening of wage gaps between more-skilled and less-skilled workers," said Yellen on Thursday. It really began to increase rapidly after the Reagan Administration. The article states that, "The rich really started leaving the rest of us in the dirt during the Reagan administration." Reagan cut taxes on the top 1%. The article states that, "Yellen offered a couple of the usual stock explanations for widening inequality: technological change and globalization. " However, the article states that, "...those two trends didn't just abruptly get much worse in 1987, leading to the sudden spike in inequality that is plain to see on the chart above."
ReplyDeleteI believe the solution to the problem is to increase taxes on the wealthy. It is not fair for the lower 90% to be taxed an "appropriate" amount and have the top 1% be under-taxed. Everyone needs to pay their fair share. It is ok for the rich to be wealthy, but it becomes an outrage when they are getting the "better end" of the stick.
We desperately need to assist the bottom 99 percent. It is crucial that we do so. The bottom 99 percents income levels have been declining rapidly over the last few years. The article explains that, "... the Great Recession came along and hammered low-income Americans much harder than high-income Americans, driving an even bigger wedge between the haves and the have-nots."
This must be stopped as soon as possible if we do not want to rich to obtain extreme power of the rest of the population.
Anita Pizzirani (Pizza)
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Janet Yellen stated that she believes the issues of income inequality, of rising income inequality, in this country really date back many decades. Probably to the mid-eighties, when we began to see a very substantial widening of wage gaps between more-skilled and less-skilled workers. The history of the income inequality issue began in the 1980’s when President Reagan cut the wealthy’s taxes. The notion enabled the rich to keep most of their money while the those apart of the middle class and below were still paying full tax their income. In 1997, Republicans lowered taxes yet again, which led to more income inequality. My solution to the income inequality issue would to be to simply increase tax on the wealthy. Plain and simple. The wealthy has the money to pay so why not take from them which is plentiful and give people that are less well off a break?
ReplyDeleteJanet Yellen says that she believes the issues of income inequality, of rising income inequality, in this country really date back many decadesLast Thursday, the new Federal Reserve Chairman, Janet Yellen spoke at a Senate Banking Committee hearing where she declared that “income inequality, in this country really date back many decades -- probably to the mid-eighties.”
ReplyDeleteThis issue is a particularly sticky one because it is not identifiable by any of the typical economic indicators. To an economist ignorant of anything besides numbers, the averages and aggregates seem healthy. The issue is that when you have a wealthy half, and a poor half, indicators will suggest that there's a middle-class whole. This makes the issue that much harder to solve.
Janet Yellen says that she believes the economies biggest problem is that the issues of income inequality, of rising inequality, dates backs many years when the gap between the rich and poor starts to grow.It dates back to the mid-eighties and the gap has been growing for the last 30 years. All because the gap between hard workers and less workers became to large. How I would solve the problem is by taxing more to the wealthy to close the gap. The rich deserve their money but they shouldn't get the better end the plan and the poor gets take an "fair" amount.
ReplyDeleteJanet Yellen, the new Federal Reserve Chair, pins income inequality as our economy’s major problem. It was until the mid-eighties where the gap between the rich and poor noticeably began to widen. The mid-eighties was the Reagan administration took office and where Reaganomics was first introduced. At the time Reagan took office, inflation was on the rise in the United States. To aid the issue, he urged to lower government spending, reduce taxes on the wealthy, and tighten the money supply. Reducing the taxes on the wealthy was where severe income inequality was first seen, and again in 1997 when Republicans lowered taxes again. The only solution I can think of would be to raise taxes on the wealthy by a reasonable amount. If 85 people hold a majority of the nation’s wealth, they can afford to pay a little more in taxes. This money needs to be put back into the economy, especially to the middle class.
ReplyDeleteJanet Yellen announced what she believed to be the root of the economy and its biggest problem: income inequality.the gap in income between the wealthy and the poor. This gap is not a new feature in our economy, however, ever since the 1980's, when Ronald Reagan cut the amount of taxes the rich had to pay, the size of income inequality has increased at an unprecedented rate. One of the best solution to this problem would be to increase tax on the wealthy.
ReplyDeleteJanet Yellen claims that the economy’s biggest issue is the increasing inequality gap amongst the upper one percent and the rest of the citizens in America. She thinks it began decades ago, around the mid-eighties during the Reagan administration. That was when the country began to see a huge widening of wage gaps among more skilled and less skilled workers. This trend has continued unchecked for over thirty years now. President Reagan cut income taxes on the rick in 1986. This was a factor that directly contributed to the inequality increase. Another boost came in 1997 when Republicans slashed those taxes too. After that the Great Recession hit and when low income Americans were effected more than the higher wage earners, the gap dramatically increased some more. Yellen gave stock explanations for the problem including globalization and technology changes. For solutions, she gave more stock explanations too like more education and training for workers and kids. The first step to finding a solution is to undo the damage that started the issue. Tax breaks for wealthy businessmen should stop. In fact, taxes should be raised for them back up. The Republican theory of cutting taxes for the trickle down effect doesn’t seem to be working. They only have so much money they can actually spend, and any extra money they make just seems to be lining their pockets, not helping businesses and providing jobs. The next step would be providing tax breaks to the middle class so they can grow and the income inequality is eased by a little bit at least. The government should also increase spending to stimulate the economy and increase jobs.
ReplyDeleteJanet Yellen, who is the new fed chair, said that the biggest problem is that there are major gaps in income inequality in the United States. This is basically saying that the top 1% makes a lot more money than the middle class workers and lower classes, and it’s a massive difference. This problem first began in 1983; the difference between the income inequalities has increased gradually to the point where it is absolutely ridiculous. Some of the people believe that it is the Reagan did with the income tax cuts on the 1% in the 80s. I believe that we should begin to start tax the upper classes more heavily because some of the people in the United States are not even making ends meet and they need the government’s assistance. Even if we tax the upper 1% more, we can still hope that the other 99% can invest back into the economy by purchasing goods. In the end, the main problem in the United States is that we don’t spend enough, and if we did it would lessen the gap between the classes.
ReplyDeleteNew Federal Reserve Chair Janet Yellen believes that the main problem our economy is the level of income inequality. Much like former chair Ben Bernanke, Yellen stated that technological innovation and an increasingly globalized world are aiding the enlargement of the problem. Despite these claims, experts assertain that the inequality between the rich and poor widened to a considerably damaging gap in the 1980's, when Reagan cut income-tax rates on the wealthy. Doing so resulted in a tenfold growth, that continues to grow exponentially today. The best solution to this problem would be to increase tax on the wealthy. They can afford it, and it just may turn our economy around.
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