When I studied economics there were two main tracks, macroeconomics which is the study of the national economy and microeconomics which is the study of the individual firm. There is one more study that is not taught but mostly learned by experience, street economics. In America the top 10% earn 30% of total income and the remaining 90% earn the remainder and the bottom 40% earn only a small share. With this in mind, remember that 70% of America’s total income is based on consumption, meaning buy more, bring it in the front door and throw stuff you already have out the back door.
Therefore, in order to make our economy work we need to trick the bottom 40% into spending just like the better off groups even though they don’t have enough income to keep pace. Our entire system is designed to take advantage of this group. A guy running a financial institution said once you have to make your money off poor people because rich people refuse to let you make money off them. A New York bank asked an advisor to help them hold down their credit card losses to low income customers. She advised they were issuing cards to people who had limited means to repay and should refrain from doing so. Their response was how they couldn’t make huge profits if they didn’t make it off this class of people.
This is the part where you get to the road less travelled called “street economics” that they taught in the Cotton Gin community back in the fifties while you were still in diapers but is not in vogue today. An example is that a low income family will spend between 20% and 30% of their income on transportation costs because they always have a car payment. In street economics, a paid for vehicle is just like a savings account that can pay for another 15 years and you treat with loving hands. When someone got a new vehicle out in Cotton Gin back then, people came from miles around to see it, almost like a Martian had landed.
