Right. What's new is that the prospects for leaving the situation are getting worse at an accelerating rate. It's a small issue if there's frictionless class mobility, and people can succeed out of the risky times, it's a large problem for *everyone* if there's one way mobility down. That's the current trend. It turns out a rising tide doesn't lift all boats, it's lets most people tread water and raises my boat a lot. It was offset for a while with the housing bubble, this problem of income stagnation. Wages stayed flat, but people built 5% equity in their homes every year, so it wasn't so important.
I think you're confusing statistically flat wages across a population percentile, to individually flat wages. One says "How much does the third quintile of the population make today in adjusted dollars relative to what they made 15 years ago". The other says "how much more money does the average individual person earn today compared to what that same individual earned 15 years ago". Those are two very very very different things.
Wage mobility has much more to do with the latter, but you're measuring it by looking at the former. Wage mobility means that *I* may increase my wages over my lifetime (or decrease them, or both!). And that is definitely the case today and has been for some time.
What happens now? The myth of the magical beneficent "small business owner" who's going to create more jobs when he gets a tax break is wearing thin.
Frankly, I've never agreed with that argument. I've said many times that helping small business owners helps the small business owner. The percentage of employees working for small business who are rich or even marginally above minimum wage is pretty horrific compared to employees working for big businesses. If we want everyone in the country to work for minimum wage at mom and pop stores, then by all means, help the small businesses. But it's the big businesses who promise the jobs that people move away from the small ones to take.
We can't all be chiefs, right? Someone has to be the boss/owner, and for every one of him, there's going to be a whole lot of people working for him. The small business owner becomes successful if the small business succeed. Very few of the workers he hires do though. And most of those will succeed because at some point they parley the experience they got into a job at a big business where advancement and wage mobility is possible.
It's been demonstrated that capital investment isn't causally tied to tax rates for high income earners. What's the endgame?
I already addressed this earlier. It depends on other conditions. Lowering tax rates on the rich when there's 4.5% unemployment and 6% GDP growth isn't going to increase economic growth (of any sort) much. But raising taxes when you've got 9% unemployment and a .5% GDP growth rate absolutely will hurt economic growth (and job creation). Just because something doesn't have an effect in all conditions, doesn't mean it never has that effect.
The argument being used is akin to looking at someone standing over a camp fire that has been burning all night but is now mostly burned out, and arguing that blowing on the embers wont help to relight the fire because no amount of blowing on the fire last night helped make the flames grow. Other factors matter.
And again, it's less about the actual taxes as the fact that someone investing can't know what those tax rates will change to that has the greatest effect. We'd could double the tax rates and still get a positive effect if in the process we promised to not touch taxes again for the next decade. But we'd get the same positive effect if we just made that promise without raising taxes. The point is that by arguing to raise taxes or raising taxes, you make investors uncertain about when the next change will come and what form it will take. So raising taxes, even if you did make that promise would not likely be believed. If you fought for and prevented a raise in taxes, and then had enough control over government to prevent them from raising for at least a few years, investors will be much more sure of what will happen. Yes, I just plugged for why the GOP needs to win sufficient control of the government for our economy to recover. What did you expect?
I suppose. It's subjective, of course. Being homeless in America is pretty great compared to being in a Turkish prison. Being "middle class" in America is being incredibly wealthy in Burma. The question really comes down to how much utility is actually derived from wealth stratification. Obviously some, there's no incentive if everyone's guaranteed equal income and wealth. Obviously none at the other end, there's no incentive in abject slavery, either. Finding the balance where aspirational productivity is at it's highest is the whole point, isn't it?
Again, I think that the bigger issue isn't statistical wealth stratification (the whole "gap between rich and poor" bit), but the ease or difficulty for individuals within society to change their wealth situation (hopefully for the better). If it's relatively easy to get ahead in life, then no one should care that people who are "ahead" are better off than they used to be. Heck. It's a good thing, right?
I also think we worry far too much about the top versus the bottom. Most people aren't going to be in either spot, so why obsess about it? I'm more interested in the middle half. How hard is it to go from the 25th percentile of earners to the 75th percentile in a lifetime? At the end of the day, isn't that more representative of the American Dream than how much the guy at the top 1% has relative to the guy at the bottom?
Where we are isn't it, and the problem isn't that we take too much from those with the most wealth.
I think sometimes it's more important to figure out the right question to ask first though. And right now, the question most people are asking and the "facts" that most people make a big deal about are not the things that really matter the most. Until we realign our thinking to see what matters, we can't make good decisions about what to do.