Something weird is happening at The Guardian

In the comments on Robert Reich’s latest:

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TimWorstall
TimWorstall
1 hour ago
Guardian Pick

2

Oh seriously, doesn’t anyone ever bother to check these assertions?

“Seventy per cent of the US economy depends on consumer spending. But wealthy people, who now own more of the economy than at any time since the 1920s, spend only a small percentage of their incomes. Lower-income people, who were in trouble even before the pandemic, spend whatever they have – which has become very little.

In a very practical sense, then, the US economy depends on the spending of most Americans who don’t have much to spend. That spells trouble ahead.”

Here’s consumer spending (personal consumption expenditure, which is the correct term for what Reich is talking about) as a percentage of GDP:

https://fred.stlouisfed.org/series/DPCERE1Q156NBEA

Back in those glory days of strong union power, equitable and shared growth and all that guff consumer spending was only 60% of GDP. Now it’s nearer 70%. So, it appears that the increasing wealth concentration being complained about actually increases consumer spending as a percentage of GDP.

Look, it’s fine to have different visions of how the world should be and all that but might we just start with an agreement that our analyses have to conform to reality?

Err, one of my comments being a Guardian Pick? Who has been spiking their water cooler?

12 thoughts on “Something weird is happening at The Guardian”

  1. Yeah, people being rich* is BAD, and anything which can be marshalled to support that position can be used without checking or indeed any regard for reality.

    * defined as ‘having more than me’.

  2. “Err, one of my comments being a Guardian Pick? Who has been spiking their water cooler?”

    You can’t expect every unpaid intern to know who you are, or understand what you are saying.

  3. Tim… Could be the Guardian subtly reminding their readership who the Enemy is… 😉

    A win either way..

  4. Not for long Tim, this is up now. Clearly you’re under review, and the comments editor is being disciplined….

    comments (…)
    Commenting has been disabled at this time but you can still sign in or create your Guardian account to join the discussion when it’s back

  5. Brilliant by Tom. Sold the G a dummy, done a swivel, now to swerve the full-back and gallop to the corner flag for a 4-pointer.

  6. “wealthy people, who now own more of the economy than at any time since the 1920s …”

    I dare say, but how does the Fed know people’s wealth? In any country without a wealth tax how would the government know?

    (In any country with a wealth tax the government would know but it would know wrong.)

  7. dearieme
    I dare say, but how does the Fed know people’s wealth? In any country without a wealth tax how would the government know?

    Well they could have an admittedly inaccurate stab at it. Most wealth is in property and investments.
    So, % of home ownership % with mortgage % owned outright.
    Investments largely in quoted stocks, so % with collective savings vehicules, % directly owned by individuals, spread of pension funds..
    Harder to quantify value of family businesses. By dividends? Cash at hand? Profit margin?
    Then you have yachts, overseas property…
    Yes, come to think of it you’re right, the figure would be wildly imprecise.
    Which leads to suspicion that the estimates of total national wealth are also baloney.

  8. cooment stiil up from clogland..

    And given that our host rarely comments on his own posts.. a golden opportunity to see him in action in the Wild.. 😉

  9. @Philip

    And an awful lot of wealth is in companies which the wealthy own and run. Jeff Bezos owns a big chunk of Amazon. So he’s wealthy. But how would they tax that? By getting him to sell some of his shares every year? On a smaller scale, a factory owner might, by reason of owning the factory, be seen as wealthy but the business itself might be so so in terms of profitability. It might even be loss making. What’s he expected to do? re-mortgage his factory every year to meet his wealth tax bill? It’s why wealth taxes are so problematic. They’d be beset by valuation disputes and the Tribunals would be clogged up with cases.

    Wealth taxes are seen as some sort of panacea by the left but they’re pretty unworkable in practice. Which is why in the real world they don’t work.

  10. ‘They’d be beset by valuation disputes and the Tribunals would be clogged up with cases’

    Feature, not bug

  11. I had to laugh at the reply with nothing of value to add-

    “Oh seriously, don’t you have any empathy for the poor?”

  12. @ Andrew C
    Of course they work: they force any businessman/landowner with a low cashflow:capital employed ratio to run down cash balances and/or sell assets every year gradually impoverishing him and/or ruining the business.
    Isn’t that what they are for?
    Who told you that they were to raise money?

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