What makes America - specifically Silicon Valley - the tech capital of the world?
The American Dream couldn't be more alive but there are those promoting class warfare who are certainly trying to kill it off. The derogatory articles and reports about the wealth of the top 1% or the enormous gap between the wealthy and the poor, seem endless. It's called "wealth inequality" as if everyone should have the same or close to an equal amount of wealth. I'm not denying the wealth gap exists. My contention is that these reports suggest there is something inherently wrong with this, that the top 1% are not paying their "fair share" or that they are somehow responsible for keeping the poor, poor and for shrinking the middle class. Nothing could be further from the truth and these reports promote socialism at best and, in the worst of cases, promote jealousy, resentment and hate.
Let's take some examples of the top 1% and determine what's to "hate" about them. Let's take the founders of Microsoft, Apple, Google and Facebook, arguably some of the most "egregious" of the one percenters, obviously all living the American Dream. They dared to not only dream of the technology but actually created the technologies that improved the lives of people all around the world. Their technologies help us all to be more productive and efficient. The companies they've built directly or indirectly employ millions here and around the world. Those millions of employees use their incomes to provide for themselves and their families and most, if not all, are living their own American Dream. It looks like the founders of these companies, and others like them, are adding to the middle class of this country, not responsible for the shrinking of it. But they are still the top 1%. I'm just not understanding what there is to "resent" or "hate" about them, yet.
So maybe it's that they don't pay their "fair share" of income taxes, as the reports suggest, that we can resent or hate about them. Well, let's see. Based on the latest data reported in the Wall Street Journal for the 2014 tax year, 83.9% of all federal income taxes collected were paid by the top 20% of earners. The next 20%, assumable the upper middle class, paid 13.4% of all federal income taxes collected. That leaves 2.7% that was paid by the other 60% of working Americans. This is because we have a progressive income tax system in the United States which taxes those who earn more at higher rates. This eases the tax burden on those earning less than $79,500 and shifts it to those earning more but taxes those earning over $134,300 the most, forcing them to shoulder 83.9% of all the federal income taxes paid. It seems more than "fair" to me, so I don't see how we can resent them for paying the bulk of the taxes that the government uses to provide the myriad of services most of us take for granted.
Now let's take a look at what this 1% group does with all their money aside from living a deservingly affluent lifestyle. They give enormous amounts to charity. They build wings on hospitals. They fund research that finds cures for diseases or new technologies that help make all our lives better. Taken right from the Gates Foundation web page: "Guided by the belief that every life has equal value, the Bill & Melinda Gates Foundation works to help all people lead healthy, productive lives. In developing countries, it focuses on improving people's health and giving them the chance to lift themselves out of hunger and extreme poverty. In the United States, it seeks to ensure that all people-especially those with the fewest resources-have access to the opportunities they need to succeed in school and life." Hmmm! I still can't find a reason to resent or hate these folks.
Just to make sure there is no misunderstanding. I'm not suggesting that there aren't those with ill-begotten wealth. And they should certainly be vilified, but the vast majority of those "high earners" are actually "high achievers" and deserving of the wealth they've acquired and there is simply no reason for resenting or hating them for their accomplishments. That's just Un-American.
So the next time we want to malign those "one percenters," let's instead be grateful for the creativity and vision these people had and their ability to compile the resources and brain power to create some of the most dynamic companies in the world. Let's use them as an example to each and every one of us, showing us that even coming from modest means, as most of them did, we can reach for the American Dream and acquire it for ourselves like they did for themselves and millions of others.
Doug Obey has over 30 years experience helping people as a financial planner and investment advisor and is the author of Money and the Human Condition. Obey is also a self-made, successful entrepreneur and business owner who has acted as CFO and advisor to many other business owners. Learn more about Obey at http://www.dougobey.com/
IMF: Variants Can Still Hurt Manufacturing Recovery
After a year of on-and-off manufacturing in the US, UK, and the eurozone, demand for goods surged early last week. Factories set growth records in April and May, suppliers started to recover, and US crude hit its highest price point since pre-COVID. As vaccination efforts immunise much of the US and UK populations, manufacturers are now able to fully ramp up their supply chains. In fact, GDP growth could approach double-digits by 2022.
Now, the ISM productivity measure has surpassed the 50-point mark that separates industry expansion from contraction. Since U.S. president Biden passed his US$1.9tn stimulus package and the UK purchasing managers index (PMI) increased to 65.6, both sides of the Atlantic are facing a much-welcomed manufacturing recovery.
Lingering Concerns Over COVID
Even as Spain, France, Italy, and Germany race to catch up, and mining companies pushed the FTSE 100 index of list shares to a monthly high of 7,129, some say that UK and US markets still suffer from a lack of confidence in raw material supplies. Yes, the Dow Jones has made up its 19,173-point crash of March 2020, and MSCI’s global stock index is at an all-time high.
Yet manufacturers around the world realise that these wins will be short-lived until pandemic supply chain bottlenecks are solved. If we keep the status quo, consumers will pay the price. In April, inflation in Germany reached 2.4%, and across the EU’s 19 member countries, overall prices have increased at an unusual pace. Some ask: Is this true recovery?
IMF: Current Boom Could Falter
Even as Elon Musk tweeted about chip shortages forcing Tesla to raise its prices, UK mining demand skyrocketed; housing markets lifted; and the pound sterling gained value. The International Monetary Fund (IMF), however, cautioned that manufacturing recovery won’t last long if COVID mutates into forms our vaccinations can’t touch. Kristalina Georgieva, Washington’s IMF director, noted that fewer than 1% of African citizens have been vaccinated: “Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery”.
Across the globe, manufacturing companies are keeping a watchful eye on new developments in the spread of COVID. Though US FDA officials don’t think we’ll have to “start at square one” with new vaccines, the March 2021 World Economic Outlook states that “high uncertainty” surrounds the projected 6% global growth. Continued manufacturing success will in large part depend on “the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions”.
Mathias Cormann, secretary-general of the Organisation for Economic Co-Operation and Development (OECD) concurred—without global immunisation, the estimated economic boom expected by 2025 could go kaput. “We need to...pursue an all-out effort to reach the entire world population”, Australia’s finance minister added. US$50bn to end COVID across the world, they imply, is a small investment to restart our economies.