Luckily, Leibovitz has been able to work out deals with her creditors and her photo collection is no longer at risk. Illness has played a big role in the debt and money problems facing year-old vocalist Toni Braxton. The "Un-break My Heart" singer recently endured another bout with lupus, which landed her back in the hospital in December In , Stephen Baldwin — the youngest sibling of brothers Alec, Billy and Daniel — had his home foreclosed on and filed for bankruptcy. Sadly, the actor's money dilemmas continue. In December , Baldwin was arrested in New York on charges of state income tax evasion.
If convicted, Baldwin, of The Usual Suspects fame, faces four years in prison. He told the New York Post in mid-December that his advisers are trying to work out a deal with state officials.
He has thus far managed to avoid jail. She was played by Erin Moran and from the looks of things, the one-time TV starlet isn't terribly happy these days.
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The Huffington Post and other news outlets reported in that Moran, 51, had fallen on tough economic times. She was kicked out of a trailer park and was said to be "homeless.
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The former actress was said to have been evicted, but is reportedly now living in a hotel. Canseco's professional reputation took a hit when the former slugger admitted in to steroid use while he was a player. Off the field, the year-old has faced domestic violence accusations from both his ex-wives. In July , Canseco filed for bankruptcy. Despite making more than 70 movies in his career, Busey hasn't yet been able to stabilize his personal finances.
The actor's rep told TMZ: "Gary's [bankruptcy] filing is the final chapter in a process that began a few years ago of jettisoning the litter of past unfortunate choices, associations, circumstances and events.
Fortune’s Fools: Why the Rich Go Broke - The New York Times
Mortgage lenders filed foreclosure proceedings on his waterfront compound, Valhalla, in Hobe Sound, Fla. A check of Martin County, Fla. Get tips and resources to protect yourself from fraud and see the latest scam alerts in your state. Exclusive program for members from The Hartford.
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The United States was founded as a middle-class country. Further, economic inequality was lower in the United States than any place else. America had its share of rich people, and of course it had slavery. But even so, the rich were not that much richer than the middle class.
The great mass of our population The wealthy, on the other hand, and those at their ease, know nothing of what the Europeans call luxury. But after World War II, America returned to its roots and built a mass middle class that was the envy of the world, with rapidly rising incomes and decreasing inequality. To be clear, America in this era had rich people and poor people, but the bulk of society formed a prosperous middle class that was in relatively close proximity to both the top and the bottom.
Yet, over the past three to four decades, middle-class America has come undone. The American middle class was already hurting when the Great Recession struck and is now in deep trouble. By most every measure, most Americans are struggling. First, there is the basic level of income earned by the typical American.
Median household income—meaning half make more and half make less—was lower in than it was in This means that middle-class households now earn less than they did two decades ago. Similarly, incomes for poor and even upper-middle-class households have also stagnated. It is true that over an even longer time period, the middle class have seen some income gains.
The miniscule gains that households have made have largely come because women have increasingly entered the workforce—meaning families are working longer hours, as they run faster and faster to stay in place. Indeed, the hourly wage earned by a typical man is less than it was in Even these gloomy figures may be too rosy because they show what is happening to the typical household—but the typical worker is getting older, and older workers generally make more than younger workers.
Income trends are even worse when workers are compared to those of a similar age from a few decades ago. While incomes have been stagnant for most Americans, the cost of middle-class basics like healthcare and gas have risen much faster than inflation, and some basics like housing and college have risen at double the rate of inflation over the past four decades. It costs a lot more to maintain a middle-class lifestyle, but no matter their efforts most families have not been able to earn much more income.
Not surprisingly, debt levels have jumped sharply—the average debt of middle-class families has nearly doubled since In contrast to the middle class and the poor, incomes of the rich, especially the very rich, have grown by astronomical amounts over the past three decades: in , the year the Great Recession started, the top 0. Because of rapidly rising incomes for the rich and stagnating incomes for everyone else, the economic distance between the rich and the middle class has grown by leaps and bounds.
CEO compensation, for example, increased from less than 30 times that of the average worker in to over times what the average worker made in Though incomes for the rich fell during the Great Recession more than they did for the middle class, incomes for the rich have come roaring back, while middle-class incomes have not—so much so that income differences are now back to near the prerecession levels. To picture how big these differences are, think of a strange building housing the middle class on the bottom floor and the very rich on the top story.
Personal bankruptcy is not a rich people problem
In , the penthouse was floors up, meaning the apartment building would need to be more than three times the size of the Empire State Building. Since the Great Recession ended, over 90 percent of the income gains have gone to the top 1 percent of income earners. And wealth differentials are even bigger than income differences. In contrast, the top 1 percent have seen dramatic gains in wealth and now hold 40 percent of total US wealth.
For most Americans, incomes are stagnant, debt levels are high, and they are taking home a smaller share of the pie than they once did and falling further behind the rich. This means, as economists put it, that the opportunities for the poor and middle class are increasingly constrained in comparison to those of the rich. As dramatic as these trends are, by themselves they were not enough to force economists to rethink their ideas about inequality. Rather, there were several developments that really pushed economists to pay serious attention to inequality and study its impact on the economy.
Traditional measures showed that inequality in the United States had become higher than in many other countries, including notoriously unequal ones like the Philippines, Nigeria, and Russia. The improved data not only elucidated these comparisons but also enabled economists to perform more nuanced analysis than they had been able to do before. Well before the Great Recession struck, it was becoming increasingly clear that the American economy grew more rapidly in the middle part of the twentieth century when the middle class was stronger than it did in recent, highly unequal decades.
Further, other rich countries that were more equal were growing at least as fast as the United States—and some actually had higher per capita growth rates. Economists who studied growth, especially in the developing world, began to think that an important reason why countries like South Korea were growing much more rapidly than countries like the Philippines was because they had lower levels of inequality.
This line of international comparative research became bogged down over data and methodological questions—and not every scholar came to similar conclusions—but the research clearly showed that simple assertions about inequality being good for the economy were not accurate and demonstrated that economists needed to think more deeply about exactly how inequality impacts economic growth.
Then the Great Recession struck just as economic inequality in the United States was reaching the same level as had occurred right before the start of the Great Depression in The dramatic economic collapse forced many economists to look at inequality in a new way.
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Though the relationship between economic inequality and financial collapse is not as simple or direct as some have tried to claim, inequality and the weakness of the middle class clearly played a big part in driving the Great Recession. The Great Recession began in the United States and was so severe in large part because our financial regulations were weakened by the political power of Wall Street and because the middle class was heavily indebted. After 30 years of political dominance, it is obvious that supply-side economics has failed in a number of ways and is thus vulnerable to a challenge from middle out.
Supply side helped fuel the Great Recession of — by destabilizing consumer demand and encouraging the deregulation of Wall Street—costing the United States 8. But even excluding the Great Recession and its aftermath, growth was much slower over the past several decades, when trickle-down was ascendant, than it was in prior decades.
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Even within the supply-side period, growth was weaker after President George W. Bush cut taxes for higher earners than it was after President Bill Clinton raised taxes on the rich. And a number of progressive governors and other rising political leaders have started to make similar arguments. These speeches have challenged supply-side economics in a way previous criticism has not. Previous criticism attacked supply-side indirectly—arguing, for example, that tax cuts make it harder to pay for important investments in education—but did not directly challenge the basic premise that the rich are job creators, or provide a comprehensive, alternative theory of economic growth.
But, even in the face of a direct challenge, supply side will not die easily because it is deeply ingrained in the thinking of both political parties.