Wednesday, March 29, 2006

We all get richer!

A new study finds we hit just below 9 million millionaire households in America. What's impressive about this is that the number has nearly doubled in 3 years. It's also impressive that 4 of the top 10 counties (I live in #8, ya I know, good for me) are in house price crazy California...AND, this $1M net worth bar doesn't include equity in your primary residence. Of course, those who don't believe in, or get, trickle down economics will assume this is all bad news. The "rich get richer" and the "economic gap widens" or the "haves and the have nots"....but they would be dead wrong.

First they're wrong because I can speak from first hand experience that a system (business and tax environment) that promotes business starts and growth (that's small business not just mega corp stuff), and YES can make the business owner/starter (uh, that would be me) rich, but employ 50 doing so! It's a food chain and it works its way down. It goes like this. The business environment encourages large corps, mutual funds, etc. to be limited partners in a venture capital fund. The venture capitalist invests in my startup... I hire all sorts of people from highly experienced engineers with advanced degrees, to degree less office help, to college students as interns. If you keep that environment healthy, and I do a good job running the biz, I grow and give out more equity in the company, etc. If I do an IPO, or I am acquired, potentially more than just a handfull of us become millionaires. Even without that big exit event we pay good salaries and my employees are big consumers. They buy lots of goods and services which employs those in all levels of the economic scale as well as creates other business creation opportunities.

But lets keep it of my employees bought a house (and that's without the exit) and now he's hiring small contractors to put in a new fence, fix up a bathroom, and so on. If the environment has incentives my startup is replicated all over the country. The small, and industrious, contractor can grow his own business (and you need to give him proper incentives and not penalties too) based on his upwardly mobile client base.

The study also found that "emerging affluent" households with a net worth between $100,000 and $500,000, again excluding primary residences, is also growing. And, lest you think that all this good news is at the expense of putting more into would be wrong.

According the US census bureau the percentage of the population below the poverty level is not growing and is around 12%. However this 12% doesn't consider after tax income nor does it include all the various forms of government assistance (of which there is a ton). When you include those, the number living at or below the poverty level is around 5.1% which is as low as it has been since 1960's. I think the movements in all income levels demonstrates trickle down economics working. Now, lets see how this is spun by the party not in power for they can't allow you to believe anything is good during a Republican reign.

1 comment:

Anonymous said...

Good and accurate writeup. No one can really disagree with it. Do they have the stats per capita though? I'm wondering if LA county's high pop has it disproportionately high...