Wednesday, March 27, 2013

Rich dads and poor dads under President Obama

The original phrase "Rich dad, poor dad" was the title of a best-selling book.  It showed why some families were rich and why others weren't.  The difference was that rich dads taught very different money-management skills to their children than the poor dads, assuming that poor children have a father who lives with them.  Many poor children have a mother but no father in the house at all, which adds to their poverty.

This situation has changed dramatically under President Obama.  An article dated November 22, 2012, that was posted on a blog called "Zero Hedge" makes the point that a family of four whose parents work at two minimum-wage jobs, but who, due to their low income, receive a lot of financial- and other assistance from the U.S. Government, has more disposable income than a family of four that has an income of $60,000 per year.

Even if this statement is true, it is a "snapshot" analysis.  It is a statement of what is happening at this moment in time, but it does not take into account two facts:
  • A family headed by a person who has a $60,000 income may increase the family income substantially between now and five years from now, especially if the USA doesn't have a socialist President.  This can happen because:
    • the head of the family is working more hours,
    • he (or she) received a promotion in his (or her) job,
    • he (or she) is now working for a wealthier company, or
    • he (or she) received monetary bonuses from his (or her) employer for specific acts of outstanding job performance.

  • A family headed by a person who has two minimum-wage jobs (or a family headed by two people who each have one minimum-wage job) will only have a substantially higher income in five years if one of the two adults in the family stops asking for government aid and gets a better job.  The family's choice may be strongly encouraged by the 2016 election of a non-socialist President.

In other words, five years from now, the two families could easily return to the traditional capitalist economic model, which states (this is very much oversimplified) that "the harder you work, the more money you make".

For more information on this subject, please read any or all of the following essays:

Taxes, the wealthy, and the freedom to flee

Prepare yourself for 2013
Taxes and national income

President Obama works to bring down gas prices (This is a photo-essay, showing him playing one of his hundred rounds of golf.)

Redistribution of wealth

To insure domestic tranquility, encourage income mobility