Who prospers when the economy is strong?

Generally, the rich (the people with money). Those who have money tend to make more.

The trickle-down economic theory, which was introduced by the Reagan administration as a rationale for cutting taxes, has proven over and over again to be a sham. It promised that as the economy improved, all social classes would benefit (risking water lifts all boats). But experience over the last 30 years has proven that to be bogus.

A booming economy almost entirely benefits the rich. Not the poor.

Thanks for answering, but everyone prospers when the economy is strong. Jobs are available. People are able to work. People make more. People are taxed less. People have more spending money.

The rich and the clergy.

What jobs,are those??
mind telling?
Trumps tax cuts sure helped people like his son in law that will save something like $14million in taxes, but how much tax saving is the working slob that only makes around $45thousand going to save?
When the economy is doing well sure we all prosper to a degree but the wealthy out prosper the working slob hands down.
You make it sound the other way around.

If it is Trump talking and his lips are moving – - – -he’s lying !
Especially about the non-2% prospering. The 98% will not prosper from his and the GOP.

The killing of ACA by de-funding it; will kill thousands if not millions in the next six years. The GOP is hoping they are all Democrats

The answer to this question is highly dependent on which metrics you’re using do define a “strong economy.” If you’re basing it on GDP or the stock market then generally it’s the 1% that’s getting the lion’s share of the benefit. Wealth inequality has skyrocketed since Reagan. The middle class is struggling. Unemployment may be low, but a huge percent of Americans are struggling to get by because they’re not being paid a living wage and are working multiple part-time jobs. It’s is becoming increasingly more difficult to rise from the bottom to the top when compared to several generations ago. In fact it’s much easier to achieve the American dream in Canada (and Europe) than in the US.

I would define a “strong economy” as one where the middle class are doing well, and the ability to be born into the lowest class and through hard work and dedication you can make it to the top. The middle class is not doing well. 4/10 Americans can’t afford a to cover a $400 emergency expense. The average student debt is now nearly $40k for the 2017 graduating class. Americans have had to turn to 2 incomes from mom and dad to cover basic expenses. This creates a lot of issues: Elizabeth Warren gave a really good lecture on this from before she was a politician.

@Yellowdog “Thanks for answering, but everyone prospers when the economy is strong.”

In other words, you’re not actually looking for an answer to your question. Well too bad, because we’re going to keep answering it anyway.

So who prospers when the economy is strong? That depends on how you define “strong economy.” You say that your sociology professor showed you that everyone prospered under Reagan, but I wonder what your professor counted as “prospering.” It’s true that real income went up for every economic class during the 1980s, but Reagan became president at the end of an economic downturn, meaning it was almost inevitable that indicators were going to start going up again. I’ll give him credit for not sabotaging the recovery, but it’s not like he defied the standard economic cycle and got things moving faster than the historical average.

What was different about Reagan’s time in office is that things got a lot better for the upper class than they did for the lower and middle classes, however. In fact, Reagan presided over a huge widening of the gap between rich and poor (which an IMF study concludes can actually slow down economic growth). And that brings us back to the question of how you define “strong economy.” I would say that an economy that doesn’t lift up those at the very bottom isn’t very strong. While the lower class saw an increase in average wages under Reagan, the minimum wage stagnated even as prices rose. This means that everyone with a minimum wage job (which includes plenty of adults, it’s not just kids working during summer or after school) saw a decrease in their buying power. The average increase of wages is meaningless to the 6.6 million people who fell below the poverty line during Reagan’s time in office.

Now let’s look at our current administration. The Dow Jones industrial average hit 22,000 for the first time ever in 2017, but most Americans aren’t invested in the stock market. So as much as politicians, economists, and journalists like to use that milestone as evidence for an economic revival, the fact is that only a certain class of Americans are affected positively by a stock market boom. All Americans feel the effects of a stock market crash, however, because those who are invested like to shift the costs downward when they start feeling the pinch. This means that the stock market is at best neutral for those at the bottom of the economic ladder, which makes it pretty one-sided as far as economic indicators go.

“We are seeing 4.1 percent economic growth under Trump whereas under Obama it never got much above 2.1 percent.”

This is just flatly wrong. Trump promised 4% growth, but he hasn’t gotten us there yet. Maybe he will. I can’t say. But the growth rate for the first quarter of 2018 was 2.3%, and the growth rate for the fourth quarter of 2017 was 2.9%. So far, the highest it has been under Trump is 3.2% in the third quarter of 2017. Meanwhile, the highest it ever went under Obama is 5.2% in the third quarter of 2014. The growth rate also exceeded 3% eight separate times during Obama’s term. But those are quarterly numbers. If we look at annual numbers, Trump’s first year saw a growth rate of 2.3%. That number was higher under Obama in 2010 (2.5% growth), 2014 (2.6% growth), and 2015 (2.9% growth).

This isn’t to deny that the US economy grew slowly under Obama. Average growth was below average, even accounting for the fact that the US was coming out of a severe recession. But unless Trump’s numbers start growing very quickly, it doesn’t look like he’s going to achieve anything too far beyond the historical average himself. And ironically enough, the last time we saw numbers like he promised a Clinton was in charge. But all that raises a further question: how much do presidents really control the economy? It’s clear that they can screw it up. A stray word from a president can send all sorts of economic indicators spiraling downward. But the President of the United States doesn’t have unlimited access to the levers of power in the country, and every free economy is ultimately at the mercy of those making the baseline economic decisions of what and where to spend.

“Who is losing right now?”

These Harley-Davidson workers don’t seem to think they’re doing too well at the moment.

@Yellowdog Logic dictates that we are all better off in a booming economy than in a recession, but that is no longer quite the case. And the economy did pick up under Reagan, but did even better with Clinton at the wheel. But here is something rarely mentioned when devotees start trumpeting the glories of the Reagan years, and it’s prophetic when it comes to the realities of the “new economy” In the midst of the Reagan boom there was the sudden appearance, seemingly out of nowhere of literal armies of homeless people on the public streets. It was a situation in this country not experienced since the Great Depression, and right in the middle of the booming 80s. In a very real sense it was a sort of experiment. People did notice and at first were alarmed. But the population that lived through the depression was quickly dying off, and we of short memory adjusted to walking the gauntlet of beggars, mattresses and shopping carts crowding up our city streets. Did you ever notice how little effort is put into explaining how the legions of dispossesed managed to appear overnight and continue to expand through good times and bad, putting the lie to that old saw of the “rising tide lifting all boats”? What that army actually represents is an in the flesh barometer (one of so very many) on the destruction of the middle class.

The signposts on the torrential shifting of wealth to the upper classes is glaringly obvious and even if thinly veiled are right there if you pay attention. One way of saying the exact same thing is to state that the vital essentials, housing, education, healthcare, are somehow increasingly “unaffordable” for we who consider ourselves solidly middle class. Those of us who are old, with our paid mortgages, Social Security, and Medicare are shielded (somewhat) but God knows it’s a “hard rain that’s gonna fall” on the rest of you!

A good economy will not help those who are trapped in poverty and either can’t work or don’t have any job skills. Skilled labor however becomes a prized commodity so people who can help people with money make more money are in high demand. People who are smart enough to invest do well. A good economy generally strengthens the middle class but will filter individuals with poor financial habits or fleeting job skills when the tide shifts. Those usually get ruined.

The problem with the American economy is the tremendous disparities in wealth it is producing. While GDP is rising at a rate of 2.3% (not 4.1%) the benefits are not evenly distributed as a recent economic paper points out.

“The wealthiest 1 percent of American households own 40 percent of the country’s wealth, according to a new paper by economist Edward N. Wolff. That share is higher than it has been at any point since at least 1962, according to Wolff’s data, which comes from the federal Survey of Consumer Finances.

From 2013, the share of wealth owned by the 1 percent shot up by nearly three percentage points. Wealth owned by the bottom 90 percent, meanwhile, fell over the same period. Today, the top 1 percent of households own more wealth than the bottom 90 percent combined. That gap, between the ultrawealthy and everyone else, has only become wider in the past several decades.”

The present administration is doing nothing to even out these disparities. The recent tax bill benefits those earning $300,000 plus the most while the poorest will see a less than 1% increase in their after tax pay and will see an actual decrease by 2025.

Health care “reform” means the poor and the not so poor will be denied treatment, another very backward step.

The current Education Secretary, Betsy DeVos, doesn’t seem to believe in education at all and would like to wash her hands of the whole idea of it. Once again it is the poor who would be most hurt by this stupidity as without education the poor are doomed to remain perpetually poor.

The tax breaks for the rich (but includes everyone) are being paid for by reducing the benefits to:

Planned Parenthood (wellness clinic and drugs for STD’s)

Threats of reducing Social Security (which is a savings account paid into by the retirees)

EPA (clean air and water)

ACA Healthcare (when people will opt out a major illness will push them into bankruptcy)

In the long run the people making more than $150,000 a year will benefit most and that is the top 5%income earners, the other 95% don’t benefit as much.

People who make money with money (and you have to have it in order to do this) get richer. Those who work with their bodies and minds to receive a paycheck are not getting richer. The best they can hope for is to maintain their status. Other than some minor tax breaks that do not amount to enough to actually do anything worthwhile with in the way of investment, I do not see much in the way of benefits for the working class in the US.

A lot of it is in how you define a “strong” economy. Many, especially those at the top who control industry, those in power these days, define a strong economy as one which has fewer regulations that protect consumers or the environment, skyrocketing shareholder profits, lax labor laws, fewer corporate taxes and the like. Others consider a strong economy as one which narrows the gap between rich and poor and provides goods and services to as many as possible, particularly those in the poorer, marginalized groups, protect the consumer from unethical business practices, protect the environment, and subsequently the general population, from those who are more likely to cut corners in order to maximize profits. Often these two views are at odds with each other so when we cannot agree on what the definition of a strong economy is, it makes it difficult to agree on whether what is happening is actually good.

As a separate issue, the ACA was not about health care but about bailing out the insurance industry while continuing to allow the Pharma/Medical complex to continue to rake in profits.

“As a separate issue, the ACA was not about health care but about bailing out the insurance industry while continuing to allow the Pharma/Medical complex to continue to rake in profits”
Agreed,
I still don’t get why people have a hard time with this. The ACA was not really a step in the right directon but more of a side step. Pharma seems to be raping consumers without apology and without bound more than ever now. I get that healthcare is more affordable for people because of the ACA but I would not expect that to last long in an environment like we have. Even now It’s still too expensive and still in the wrong hands.

@ARE_you_kidding_me health care is not really more affordable, prices did not realistically reduce, what happened was that we, as a group, subsidized those who cannot afford to pay what they are asking here in the US. And when you consider it, we are not really giving people who cannot afford health care anything. They immediately pass it on to those who are responsible for the high costs to begin with. They are just middle men who don’t get a cut, but, I guess they do get something out of it, life.

I disagree with both the Republican “every man for himself and let those who can’t afford it be damned” method but nor do I agree with the Democratic approach of paying out what are exorbitant price gouging subsidies to the pharma/medical/insurance giants.

The rich get richer. This article has a graph that makes this very visible. Mean income has been rising steadily, with a tiny dip during the recession. Mean income has been flat. The mean income rise is due almost entirely to those at the top, while those in the middle and lower income brackets are not benefiting at all.

@ARE you kidding me You are exactly right about the ACA, but of course there is no way in hell that anyone involved in the theft (including the legislators bribed in the process) will ever facilitate the proliferation of the truth. The act is in the main designed by the insurance industry to head off universal healthcare and allow both they and the drug racketeers to hoover up money til the scheme collapses.

I’m not sure if everything that goes into qualifying as a booming economy, but it seems to me theoretically everyone should benefit, if there are safeguards in place to protect workers wages. Back in the 80’s there were still strong labor unions protecting workers. Sometimes unions went too far, but overall there needs to be some sort of protection, either organized labor or government regulations or a lot of large employers paying well to create enough competetition that wages are boosted. The latter rarely happens for the lowest levels workers.

Ten years ago when the economy fell down, the average person and the media, were all telling people with jobs that they were lucky to be employed. This gave employers power to overwork employees and pay them less. This has continued for years now, the lower wages, even though business is picking up.

I can tell you during the bank mess and the time of TARP, lower level employees has crap wages, they basically always had bad wages, but upper management, although their wages were frozen they were getting retention bonuses and merit bonuses.

Reagan grew the national deficit, which really bothered me. Clinton showed you can charge taxes on the top income earners and still increase the economy. Clinton raised taxes in the top brackets, but not to the levels pre Reagan. For some reason Americans are always fighting about extremes, but it doesn’t have to be extreme. There can be moderate changes that help the economy, help all levels of employees, and keep the country stable. No matter what there are economic cycles as technologies change, trade changes, and other countries change.

That’s my take on it anyway. It’s complicated, and there is some lag to the actions taken by the government and from growing industries so when you analyze the economy you have to account for that.

I had a little website making business back before the great recession. Shit imploded fast. There was actually still a ton of work but what I could charge dropped way down. So you have that meeting where you go “Is everyone cool with your paycheck being 30% less next month and into the future?”

This wasn’t a big thing for me since I didn’t have kids or a car. But other people had those things and they were fucked.

So some takeaways. People (most) will spend all they make no matter how much they make. Always gotta have a better car or bigger TV.

You are fucked if you ask them to take 30% cut so you can at least pay them something. Moral goes to shit and quality declines and it spirals into bankruptcy.

So never raise wages unless it is absolutely necessary to hire talent.

Unfortunately, the economy can not be simplified into a couple of measures that allow us to analyze what works and what doesn’t. After World War II, the entire world was destroyed. From Asia to Europe little was left to help rebuild. The US was the only country left untouched with the capacity to rebuild. During the 50s the US generated fully half of the world’s GDP. Hell Daffy Duck could have been president and we would have had a booming economy. During the 90s the Internet Revolution created massive new industries and revolutionizes the way we did business. Again, Daffy duck.

How do you compare those decades and what worked then with what may work now? I fear you must look much deeper. When you see the words Tax Cut, you must realize that those paying taxes will see more benefit than those that don’t. In an environment where half the country isn’t paying income tax, a reduction of income tax will benefit the top half more than the lower half. At the same time if you want growth, jobs, higher wages, you must free up capital for investment. Not surprisingly, that’s what tax cuts do.

We’ve just been through a decade since the recession, with abnormally slow grow. It hasn’t been a year yet since the tax cuts were passed. It may be a bit premature to declare them a failure or to blame them for the decline of the Middle Class. The 80’s under Reagan are still a good example. Reagan didn’t have the Internet Boom or the rebuilding of the world to help boost our economy. In fact during the 80s women began to flood back into the workforce which created a need for even more jobs. We were able to do it but it took more than a few months to see the improvement. Maybe if we give Trump a little time success or failure will be easier to determine.

NAW, that would be crazy.

Everyone who wants to. Those who want to sit on the sofa all day may not.

@Yellowdog Here’s another one for you: Forget about broad-based pay hikes, executives say. It’s not surprising, and you can’t really blame companies for not hiring more workers than they need. But it’s another case of people not getting the results the administration promised them.

@Jaxk “When you see the words Tax Cut, you must realize that those paying taxes will see more benefit than those that don’t.”

Sure, this is dead obvious. The funny thing is that it was a Democratic talking point back when the tax cuts were being sold on the claim that they would be good for everyone (and better for those at the bottom than for those at the top). But now that the tax cuts have passed and the promises aren’t coming true, it has suddenly become a Republican talking point.

“At the same time if you want growth, jobs, higher wages, you must free up capital for investment. Not surprisingly, that’s what tax cuts do.”

Except we have executives whose capital has been freed up literally saying they aren’t going to do that. And let’s not pretend that tax cuts are the only way to free up capital. Here’s another way: a company can use its profits to reinvest in itself (which is what all businesses that don’t benefit from government subsidies have to do at their beginning, and what businesses used to keep doing back when being a good corporate citizen was something people cared about). But instead, we have the capital freed up by tax cuts being funneled into more profits (and executive bonuses).

“It may be a bit premature to declare them a failure or to blame them for the decline of the Middle Class.”

I agree that policies can only be declared successes or failures in the fullness of time. But the historians who will be best positioned to make that call probably haven’t even been born yet, and we will be dead by the time they can make a fully informed judgment. In the meantime, however, we all have to make due with the evidence we have when deciding what policies to support and who to vote for.

@Irukandji – “we all have to make due with the evidence we have when deciding what policies to support and who to vote for.”

I would think the latest financial numbers would make everyone pretty optimistic about the economy. GDP estimated to be 3.5–4.7% for the second qtr. unemployment at 3.8% , job growth, incomes rising, workforce participation increasing, Hell you’ve really got to look hard to find something to complain about (I know you will). I guess you could still hope for a precipitous decline sometime later this year or maybe a glitch in the NOKO talks, because right now it looks like history will judge Trump pretty favorably.