Thread: Fed chief warns of widening income gap

Fed chief warns of widening income gap
The Miami Herald

February 26, 2007 - 12:34AM


Fed Chairman Ben Bernanke’s recent warning about the pernicious effects of income inequality should strike a chord with every resident of South Florida, where the rich/poor gap becomes more evident by the day. While soaring new skyscrapers with million-dollar condos dramatically transform the skyline, workers struggle to find a decent place to live. No housing, no workers. No workers ... you get the picture.

The growth in income inequality, Bernanke said, is a political problem because it undermines the functioning of the economy. He is right, as the housing deficit in South Florida illustrates. But it also is an obstacle to achieving other desireable goals. Thus, it requires a political solution. Unfortunately, neither President Bush nor the Democratic-controlled Congress seems to have a plan to combat income inequality.

Bernanke’s figures offer a stark portrait of wealth distribution. In 1979, the wealthiest fifth of American households received 42 percent of after-tax income. In 2004, that figure rose to 50 percent, while the share of the bottom fifth dropped to 5 percent. By 2004, the top 1 percent of households received 14 percent of the nation’s after-tax income.
As this continues, “the public might become less willing to accept the dynamism that is so essential to economic progress,” Bernanke added.

What that means in practical terms is that the kinds of policies the U.S. economy needs in order to compete in a global marketplace will find dwindling support unless the benefits are shared on a more-equal basis. This is no surprise. Workers who find it harder than ever to make ends meet are hardly likely to support free-trade policies that they blame for lost jobs in the United States.

In similar fashion, some of the rising anger over immigration can be attributed to workers who blame immigrants for keeping wages low and for taking their jobs. In fact, the immigrant work force keeps the economy going, but it isn’t fair to ask workers who feel the American Dream is no longer within their reach to extend a friendly welcome to potential job competitors.
Beyond these issues, income equality is a problem in a larger sense. The well-being of our democracy is inextricably linked to the vitality of the middle class. As society becomes divided into opposing camps of haves and have-nots, the political system inevitably becomes more rancorous and inflexible.

Bernanke outlined a number of suggested improvements. They include more investment in education and a strengthening of health and pension benefits for those who “slip too far down the economic ladder.”

We agree. Congress, are you listening?
— The Miami Herald

http://www.themonitor.com/onset?db=moni ... ticle.html

Sounds like a call for Socialism. Also sounds like Bernanke's elite bosses don't like the competition from the riff raff nouveau riche. It's hard to maintain godlike status if some of those pesky commoners start figuring out ways to earn enough money to actually become a threat to your omnipotence.

Also, these figures are pure bunk. Remember that they're referring to after-tax income. Look at the weighted tax codes back in 1979 compared with 2004. Hell yeah there's gonna be a little more income after taxes at the top, given that in 1979 there was still a massive progressive tax penalty that stifled economic growth and nearly send us into another Depression. Remember the economic malaise of that period? I sure as Hell do! Reagan's tax cuts turned the economy around, just as the Bush tax cuts saved us from drowing under the weight of the Clinton administration's masked inflation that took down the stock markets.

Bernanke outlined a number of suggested improvements. They include more investment in education and a strengthening of health and pension benefits for those who “slip too far down the economic ladder.”

What a SHREWD statement.

BI-National healthcare {mex} and a homogonized, bilingual education anyone?

See kennedy's 103 pg. ammendment they attempted to paste onto the minimum wage bill

Will this get plastered onto the COMPREHENSIVE AMNESTY S9?

The growth in income inequality, Bernanke said, is a political problem because it undermines the functioning of the economy. He is right, as the housing deficit in South Florida illustrates. But it also is an obstacle to achieving other desireable goals. Thus, it requires a political solution. Unfortunately, neither President Bush nor the Democratic-controlled Congress seems to have a plan to combat income inequality.

The first step would be to secure our border with Mexico. Secondly, let's start enforcing our immigration laws! Enforcing our laws to the fullest extend possible will, no doubt, force many of the criminal aliens living in poverty in the U.S. to reverse their migration. My suggestions aren't the only cure, but it would be a good place to start. Moreover, it would certainly help balance the books (lower the number of the have nots)!

What a moron, this is the same guy who says we need many millions of "immigrant" workers! Well what do those "immigrant" workers do? Drive down wages and steal benefits from Americans, thus widening the income gap!!

It also seems that Bernanke is confirming what Tancredo said, that Miami is like a third world country. Third world countries have a small upper class, small middle class, and giant poor class. That is exactly what Miami has!

In 2000, the Dept of Statistics had Miami Fla down with the widest gap between wages earned and the cost of living out of any major metropolitan are of the US. This is probably still the case. I spent most of my life in S FLA and I know first hand what Bernanke is talking about. As for anything else he's talking about, I'll leave that up to you guys.

Everybodys answer is more money into education, which I don't have a problem with, we all know how important education is, but why not fix the system first, Our schools are bulging at the seams with illegals that we as American tax payers should not be educating, free breakfast, lunch, bilingual education, and so on.

This morning they were talking on c-span about over crowded prisons and the cost to taxpayers and its mostly because of drug problems, we need more drug rehibiltaion, give me a break, it will not solve anything if they do not close our borders and cut off the supply of drugs. start at the base of the problem and work up.
We are also arresting the same people over and over who get deported.
CLOSE THE DAMN BORDER!! I will be a start to solving alot of the problems in this country.