Money and power in the modern age

[GP_Matt]

I was thinking of just the Presidential election. Obama spend $737 million in 2012 to be elected.
Either way, Coke and Pepsi spend more every year to help us decide what to drink. 6 Billion dollars is ~18$ per citizen every four years for elections. The US is a different animal though with the effective two party system in place right now.

[ranchlandsselling]

Originally Posted by Thor

Really? What normal family who lives paycheck to paycheck is buying stocks in companies??

Curious, do you think that the playing field for business is fair and promotes entrepreneurs vs doing all that is best for corporations to hold their market share and harm anyone who would compete with them....

Because I love the idea of capitalism, the spirit of ideas and entrepreneurial spirit, my family has done nothing but create and run our own businesses.

I sincerely ask you, do you think, that our elected officials work for the middle class of Canada, or for their wealthy donors?

Simple question.

Too many questions but I'll give it a go,

First bolded part:

What normal family? Not many, because they're too busy buying new cars
http://business.financialpost.com/20...nk-auto-loans/

The Moody’s report says the combination of low interest rates and more time to pay off the loans is encouraging consumers to buy more expensive – and often imported – cars. But the longer amortization terms put loans “underwater” because they outpace vehicle depreciation.

http://www.autonews.com/article/2014...-toward-record

"The market has been 'on fire' with this being the sixth month in a row where year-over-year monthly sales records have been set," said consultant Dennis DesRosiers in his report, noting that sales volumes in September shattered many company records for the month.
"There were some eye-popping performances at an individual corporate level with 10 vehicle companies recording double-digit increases during September."
Ford Canada's sales of cars and trucks in September rose 5 percent from a year earlier to 27,161, while Chrysler's rose 20 percent to 23,742. GM Canada's sales rose 34 percent to 24,555, and Toyota Canada's were up 6.2 percent at 18,335 vehicles.
"As we head into the fourth quarter, 2014 is proving to be a very strong year for auto sales - the industry certainly is on track for a record-breaking year," Ford Canada's chief executive, Dianne Craig, said in a release.
Ford said the first three quarters of the year were its best in Canada since 1997. Truck sales rose 10 percent, offsetting a 15 percent decline in car sales.

Not to mention record levels of household debt, credit cards, Line of Credit, and mortgages. Of the credit items the last one I'm not nearly as critical of compared to all the others. Canadian middle class has money, they just generally spend it on consumption items that aren't fiscally responsible. Myself included. . .

Like Matt_GP said, great time for anyone to be investing their money, they just choose not to or pay themselves first, which is the ignorance I'm talking about. It's not the governments problem that everyone wants to keep up with the Jones's.

First underlined section, loaded question, businesses should be protecting themselves from competition as far as it makes good business sense to do so. The playing field as defined by the Canadian system for starting a business in perfectly fair. I don't see any evil corps stopping anyone from starting a business other than natural barriers to entry that plenty of large companies benefit from that are always going to be there.

Final bolded part:

"Our elected officials" ? You're talking about yours, not mine. There's no "ours". I'm not familiar with Iceland, I'm also not able to fairly speak on the average Canadian, but can lend my thoughts and theorize about Albertans. I believe the majority of our politicians are doing the best they can for Canadians as a whole but are unfortunately sidelined by short term thinking and goals because of election cycles. I'm not very politically savvy, so best for me not to wade into the political debates. But as an average lower middle come earner in Calgary and Alberta I think I can speak on my experiences quite well with respect to savings/income/spending and general well being.

[Red Slinger]

The current economic situation reminds me a little bit of North American in the 1920's.

In 2012 it was reported that, in the US, the top 1% own 90% of the wealth. I'm not sure how accurate that is. But even if the top 1% own 40% of the nation's wealth that's a problem both economically and socially. Prior to the economic collapse in 2009 things were also bad but since then they've gotten worse.



Compare that to the situation in 2013:


Granted, this is from the Occupy Movement so it's accuracy may be called into question. What is clear though is that income inequality in the US has swayed significantly in the last 5 years towards the rich, really rich and the super-duper mega rich. There are a bunch more statistics here: http://www.businessinsider.com/chart...y-2013-11?op=1


In 2010 the Supreme Court, along heavily partisan lines, voted on the Citizens United case which, at it's foundation, allowed (maybe even encouraged) more money to flow into the political estate. Maybe it's a coincidence that the rapid financial disparity took place during the same period when the law allowed those with money to influence the policial realm, but generally where there's smoke there's fire. The ultra-rich generally aren't going to 'sponsor' political decisions that make them less rich. Rather, they'll use their influence and deep pockets in order to grow their influence and deepen their pockets. That's precisely what's happened although there are some notable exceptions of amazing philanthropy from some of the ultra-rich (eg. Gates, Buffet).

Okay, so what? The rich are getting (much) richer, there are fewer people in the middle class and the lower classes are growing. Does it matter? We have a pretty good standard of life in North America.



The 1920's was a time of unprecedented growth and wealth in North America. However, that wealth was not distributed among all citizens. Similar to the current economic situation, the vast majority of wealth was controlled by the vast minority of the population. This economic disparity was one of the leading factors of the Great Depression which, temporarily, shook up the social structure and economic distribution in NA. There are a lot more controls in place now than there were in the 20's to prevent a full scale economic depression, but decisions like Citizens United was a step backwards from those controls. The most prosperous period in US history was in the 1960's when those figures were reversed and there was much more income equality. Also, I don't think it's a coincidence that this also coincided with the period in US history where there was a great deal of positive social upheval.

So, yeah, being middle-class in Canada is fine. We have the opportunity to work, save, invest and eventually retire (as long as the Baby Boomers don't bankrupt the social safety net). But there are obviously some very troubling trends. I don't know that revolution will ever come to pass but there's a good chance that a very large shake-up of the system will take place, like a revolution, economic depression or something new.

I'm not sure what the solution is but I think putting in some safety measures wouldn't hurt. For instance:

• a more aggresive progressive tax system with fewer loopholes
• placing limits on the size of corporations (to avoid a "too big to fail" scenario)
• taking money out of politics, as much as possible
• establishing firm term limits for all levels of government
• publically funding elections with no private money (Canada already does this to some extent)
• mandatory voting, similar to Australia
• placing limits on executive bonuses and salaries for publically traded companies
• stronger penalties and more dilligent enforcement for insider trading and corruption

TLDR; income inequality leads to bad stuff happening, balance in income equality leads to a more prosperous society with positive social change.

[ranchlandsselling]

^ some interesting info.

I think what's important (for a place like Canada) is protecting the poor, too often these complaints about wealth distribution appear, at least to me, are about the middle class "not being rich".

[Red Slinger]

Originally Posted by ranchlandsselling

^ some interesting info.

I think what's important (for a place like Canada) is protecting the poor, too often these complaints about wealth distribution appear, at least to me, are about the middle class "not being rich".

I agree, although I wouldn't necessarily say "protecting the poor" is important but rather having a system in place where the poor don't need to stay poor. One of the results of this massive income inequality is the lack of mobility. For instance, it becomes harder for the rich to become mega-rich, even harder for the middle-class to become rich and almost impossible for the poor to become rich. I can't find them at the moment but I recall reading that in the 1960's it was quite common for people to work their way out of poverty and into the middle-class. Nowadays, that is becoming very difficult and studies have shown that the biggest factor determining your lifelong economic situation is the economic class that you were born into.

With greater income equality it allows for fewer poor, fewer rich and a much larger middle-class. This has a positive influence on social issues and makes for a more robust and flexible economy.

[ExiledFlamesFan]

Over the past 25 years, there has been no better place in the world to create wealth for the average person than Alberta. Wages and salaries are so high for jobs across the board.

Living in Alberta most of my life I thought it was just commonplace. After moving to the Okanagan, you see that young people have to move away to Alberta to get quality well paying jobs.

Sometimes we forget how good we have it in Alberta.

[1stLand]

Originally Posted by Thor

You cannot seriously be older than 20 to say that. You have any real world experience, you know that luck is a massive factor, who you know, and where you start from are major reasons to your success.

If intelligence was "the" factor to success, we would have very rich professors in our universities, and scientists would be rolling around with fancy race cars...

Oh, but that is how Canada works right?

I am 30.
I have held a variety of different jobs (had my first job when I was 14).
I paid my way through university without debt and got 2 degrees.
My education isn't the reason I am making a lot of money.
When I referred to 'smarts' I am referring to street smarts, common sense, good financial management skills, having self control and restraint.
Luck does play a small role.
I also concede that the Province of Alberta plays a pretty big role as well, as the economy is great.

I just grow tired of people making excuses. I know a lot of friends and relatives that are just stupid in their life choices such as:
- what they choose to take in university or post secondary
- Dumb management skills of their time and money
- lazy, and too focused on having fun
- an attitude that "the world owes them a living" due to their upbringing of being spoiled

I don't deserve to be in the top 1%, even though I work really hard and I am relatively smart.
I am not a "Visionary" and I am not particularly inventive or creative. I am also very "Risk Adverse" and don't like to gamble or take a lot of chances.
If you look at a lot of entrepreneurs and owners of these oil companies, internet companies - that is just their genetic make up.

In Alberta, you can be in the Upper Middle Class very easily if you employ many of the attributes I referred to earlier on in my post.

I understand you live in Iceland Thor. I have never been there and perhaps there isn't a lot of opportunities for people to get ahead if they do in fact employ a lot of said attributes.

Well why don't you move?

My grandparents immigrated to Canada in the 50's because no matter how hard they worked, there were no jobs or opportunities.

The world is a relatively Mobile place now, with many people changing cities, provinces and countries for a better life.

[CaptainYooh]

Was that your poem?

[AcGold]

^Your quote from William Blake demonstrates the problem with the issue at hand. It's not a simple issue that can be reduced to a few paragraphs. I've studied in depth, both at University and on my own time, the history of banking and it's so much more complex than the average person has a grasp on. My dad, a chartered accountant for 30 years, has no idea really how it works and his job is dealing with money every day.

Yes there is plenty of opportunity for many people in Canada but Canada is almost an exception to the rule. Most of the people in the world will never get the chances we do here so generalizing our circumstances here to the rest of the world is a mistake.

[CaptainYooh]

Originally Posted by AcGold

...My dad, a chartered accountant for 30 years, has no idea really how it works and his job is dealing with money every day...

Yes. And so do most of the people. It's way too complicated. Even those who are privileged enough to know at least some of it, often don't even pretend to know and understand it well.

One thing that I DO know for sure: history has taught us that it is better to have wealthy people in power than poor. When poor and uneducated take over politics, they quickly get corrupted by power and, almost universally, make the general population poorer and worse than they have been prior to the takeover. There are no good historic examples to the contrary. Norway is the last bastion of good socialism and even Norway has lots of its own issues with it.

The all-encompassing world power of the uber-rich 1% is tough to accept, comprehend and justify but it's there. Nothing we should or can do about it, really.

[blankall]

Those 1% own X amount stats are always skewed by the fact that a large portion of the nation is in debt. You include them into any statistic and they actually contribute negative wealth to the bottom group.

That being said, the problem IMO is with the cost of labour and capital. It's just gotten to expensive to start your own business. It can be done. But opening up a retail store, for example is far more challenging now than it was 20 years ago. Owning a commercial building is out of the question, and the cost of rent is way up.

The cost of labour is a more complicated issue. Basically, the population can't both be well of and have access to low cost labour. Low cost labour requires you to be paying someone a meager wage. The US has dealt with this issue by using illegal Mexican labour.

IMO a lot of the current issues have to do with the ridiculous cost of real estate in Canada. CEOs working their way up to the top of a corporation and making 2 million a year aren't really the issue. Our government needs to do something about foreign investors, who make money from slave labour and non-existent environmental laws, from dumping money into our real estate market and driving the prices out of the range of the average individual.

For a household making $80k a year or so, consumer goods really aren't that out of range for them. The issue for them is being unable to afford even a descent house.

[normtwofinger]

Originally Posted by blankall

for a household making $80k a year or so, consumer goods really aren't that out of range for them. The issue for them is being unable to afford even a descent house.

+1

[Simon96Taco]

Originally Posted by Mr.Coffee

such as........go on....

PE in full effect.

[jammies]

Originally Posted by ranchlandsselling

It's not the governments problem that everyone wants to keep up with the Jones's.

Problem? You want to see problems, imagine if everyone started saving their money and investing instead of buying things. Buying things is what our economy is based upon, if the vast majority of people were thrifty, budget-conscious and more likely to invest than spend, we'd be in an eternal depression. The Jones keep the economy solvent.

As far as Thor's original question goes, as long as engineers and scientists keep coming up with new toys we can play with, most of us won't care that we have very little political power and are economically no better off now than 20 years ago. As long as we can "like" ending world hunger on Facebook, what other power to effect change could you possibly want? As long as Telus is willing to give you the newest, shiniest phone for $0, what do you need money for?

[CaptainYooh]

Originally Posted by jammies

Problem? You want to see problems, imagine if everyone started saving their money and investing instead of buying things. Buying things is what our economy is based upon, if the vast majority of people were thrifty, budget-conscious and more likely to invest than spend, we'd be in an eternal depression. The Jones keep the economy solvent....

Switzerland says hello. Its citizens, on average, don't spend much, do invest a lot, own their real estate and have smaller consumer debt as compared to other developed countries. Plus, their taxes are amongst the lowest in developed countries. And their economy is in great shape.

[jammies]

Originally Posted by CaptainYooh

Switzerland says hello. Its citizens, on average, don't spend much, do invest a lot, own their real estate and have smaller consumer debt as compared to other developed countries. Plus, their taxes are amongst the lowest in developed countries. And their economy is in great shape.

So we'll all just lend money to each other and make watches and cough drops? You can definitely take a tiny economy like Switzerland's and just scale that up to fit any situation. Just like socialism must work because it does in Norway.

Back here in North America, we've built a machine that runs on debt, and lots of it. The rich are those that supply the debt, and take their cut of the debt, and come up with schemes to make companies of X value be worth X*Y in debt, and leverage debt to take on more debt to buy something of value that someone else goes into even more debt to buy and artificially inflate that something's value.

Enough debt is around that, incidentally, good ideas get funded and some companies actually make products. Then upper management figures out how to sell out to a bigger company (that takes on more debt to do so) and cash in their stock options, which are, incidentally, more or less another kind of debt.The products, of course, need to be sold to someone in order to preserve at least the appearance of a sustainable economy, and so consumer debt is made available to make sure that happens.

Nowhere in there is there room to stop creating and disseminating debt in favour of prudence and thrift. You might as well dream of a return to living off the land.

[CaptainYooh]

Originally Posted by jammies

So we'll all just lend money to each other and make watches and cough drops? You can definitely take a tiny economy like Switzerland's and just scale that up to fit any situation. ....

Switzerland economy is not tiny. $660B vs. our $1.8T. But their GDP per capita is almost double ours ($56K vs $37K); so, they are way more efficient and productive than we are.

My argument was about ever-increasing consumption being the primary economic driver, as you've suggested. Yes, I agree, it is so in North America and many other capitalist economies. But it doesn't have to be or need to be as demonstrated by a well-developed capitalist economy, such as Switzerland.

[Harry Lime]

Originally Posted by GP_Matt

I don't think money in politics is the problem. I see apathy as a far bigger problem.
In 2011 the Conservatives spent about $21 million on the election campaign. That is a tiny amount of money for a country of 35 million people. If people actually cared, it would take 10% of Canadian adults contributing 8$ each to match the Conservative financing. The US isn't that different.
The reality is that as long as most people aren't willing to put in the bare minimum of effort nothing is going to change.

First of all, not all revolutions are violent. Even in Iceland, you can take a look at what happened after the banking caused recession of a few years ago. Whereas the States gave money to the banks to stabilize the status quo, Iceland held the banks and bankers accountable. This might in the hindsight of history be seen as the first shots in what may become a bloodless revolution. That it wasn't sustained, and now has caused a grassroots movement against the government seems to back up Thor's claims of corruption and bias toward the wealthy.

In terms of apathy in politics, I think that the lack of participation is in a lot of ways an indication of a sick system rather than a lack of caring. In most Western democracies, our own included, the difference between candidates and parties is so slight that it doesn't really matter to anyone in the lower middle class, or working class, who is in power. A lack of participation is more closely related to no alternative that speaks to the issues of the less wealthy or affluent constituents.

There is also a bureaucratic system in place that makes it difficult to enter politics, let alone start a new national party. There is a reason why it is extremely rare to see a working class candidate at any level, beyond simply not having the monetary means to mount a campaign.

Originally Posted by 1stLand

Smart people get ahead.
Dumb people don't.
At least that's how canada works.

I used to be what is called middle class, made a couple of bad calls, and now am finding out how difficult it is to crawl back there. I sometimes run into people that I know that turn out to be on CP, and if it turns out that I know you 1stland, you owe me a drink, buddy.

[SeeGeeWhy]

I think that looking at it on a per country basis isn't useful because capital flows very freely. I believe that capitalism has been more effective than ever before in the sense that billions of people have been lifted out of abject poverty in countries like China over the last few decades as a result of labour jobs flowing to countries with the lowest base cost. I think this is a better use of resources instead of wealth staying concentrated in already priveledged countries for the marginal benefit of middle class wage growth.

Wealth inequality definitely impacts the stability of a country, though. Wealthy feel entitled to retain and grow the wealth they have while the next class below feels entitled to a fair crack at what they don't have. Well it's not that easy to grow wealth even if you have it; and even if you took all the wealth away from the richest people in your respective counties and put it toward the public budget it would barely scratch the deficit - so I think the effects are psychological and overblown.

[blankall]

Originally Posted by CaptainYooh

Switzerland says hello. Its citizens, on average, don't spend much, do invest a lot, own their real estate and have smaller consumer debt as compared to other developed countries. Plus, their taxes are amongst the lowest in developed countries. And their economy is in great shape.

Switzerland is a really awful example. They have major disparity of wealth. The country is run by a large banking elite. They have virtually no immigration. Many minorities that are let into the country are let in as temporary workers and work for a fraction of what the citizens work for. About 20% of the country are non-citizen residents.

They also have the lowest home ownership rates in the western world. In Canada the home ownership rate is around 69%. In Switzerland it's 43.9%:

http://en.wikipedia.org/wiki/List_of...ownership_rate