Broadcasting Live from the People’s Republic of AmericaBy Kim Phelan
Article Date: 09-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.
Oh, the nerve of the ‘rich’ for wanting to curb their spending when they ought to be saving the economy, the masses say.
I was driving to a meeting in north suburban Chicago a couple of weeks ago and tuned in to a news-talk radio program hosted by Mike McConnell. A Philadelphia native, he’s a talk show veteran formerly of WLW-AM 700 fame in Cincinnati – on this particular morning, he was sharing information from an Aug. 1 AP news story that stated a simple fact: When rich people spend money freely, the economy thrives, and when they cut back, the economy sputters. Like it or not, it’s a factual correlation, though not terribly surprising.
In case you’re wondering, the definition of rich in this context (the richest top 5 percent of Americans, to be precise) was anyone who earns $207,000 or more. One caller to the radio program commented that could be a firefighter and a teacher, married with a couple of kids. Such a sum might also approximate the earnings of an equipment dealership executive, who knows. Yup, they’re all in the same category with Warren Buffet, Bill Gates, moviestars and superstar athletes. The disparity was duly noted by McConnell.
I later found that AP article online and was intrigued by its insights. Moody Analytics Chief Economist Mark Zandi was quoted, saying: “[The rich] are the bellweather for the economy. The fact that they turned more cautious is why the recovery is losing momentum. If they panic again, that would be the fodder for a double-dip recession.”
And why did the rich become more cautious this summer? The AP reporter states: “Earlier this year, gains in stock portfolios had boosted household wealth. And the rich responded by spending freely. That raised hopes the recovery would strengthen. No longer. The dizzying plunge on Wall Street in May and June and lingering stock market turbulence have shrunk Americans’ wealth. The Dow fell 10 percent for the April-June quarter. The broader Standard & Poor’s 500 index dropped 11.9 percent. And the rich are once again more cautious about spending, economists say.”
I wouldn’t have thought that this information would spark much in the way of controversy, but radioman
McConnell knew better. Listeners went bananas. I was stunned. Irate callers were put on the air, ranting – I mean it was crazy – and blithering with what I can only describe as socialist outrage that the evil rich just keep getting richer, that they don’t pay any taxes, and how dare they hoard their wealth. McConnell had to mute one extremely disturbed (and may I add, delusional) caller just to get a word in edge-wise. While the caller calmed down, McConnell pointed out that the top 5 percent of wealthy Americans do, in reality, pay 60 percent of the nation’s tax revenue. If there’s inequality, he said, it’s more likely on the rich side of the pendulum.
And guess what – “the most sweeping tax cuts in a generation are due to expire in January,” stated the article, and “… President Barack Obama wants to allow the top rates to increase next year for individuals making more than $200,000 and couples making $250,000. The wealthy may be keeping some money on the sidelines due to uncertainty over whether or not they will soon be facing higher taxes.” You think?
It’s a bit disconcerting to drink in the views of a large demographic within our culture who plainly favor a Robin Hood economy – trouble is, when you take too much from the so-called rich, they can’t afford to take care of the poor and the poor economy.
A very good friend in the equipment distribution business stopped into our office the other day, and while we stood around visiting for a few minutes, he made the kind of memorable remark that made Matt DiIorio so esteemed among AED staffers. Telling a little anecdote about a certain liberal senator who conveniently parks his yacht a few miles across state boundaries so as to save several hundred thousand dollars in dock fees per year, Matt concluded: “He’s a capitalist – he just doesn’t want me to be one.”
Thanks for reading, and don’t forget to vote in November.
(Click here for full AP story and here for Mike McConnell podcast from August 12th.)
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