Could this be one of the causes for our bad economy?

Question

Ok I was just wondering if incomes have something to do with the economy.I'm talking about like football player and other athletes and famous people who get paid millions of dollars a year.

thanks .

Answer 1

No, they are not a cause of the poor economy.  Typically, though maybe not in this case, rich people help contribute to a good economy, not a bad one.  For example, Bill Gates is one of the richest men on the planet, but the emergence of his company's technology has helped expand the global economy ten-fold, by creating new jobs, increasing efficiency, etc.  Also, Warren Buffett, the supreme value investor, directs large amounts of capital to their most efficient uses (ie the best company to invest in), which helps the company, helps his company, and helps the overall economy.

High-paid athletes like Kobe Bryant can command a high salary because the NBA and other pro sports generate so much revenue from people like us.  It's simply supply and demand, and it's definitely not hurting our economy, although they're not really adding anything of value to the economy, except entertainment.  Like the people above me said, the dollar is weak, inflation is out of control (mostly due to rising global demand) and government spending is wasteful and out of control.  Also we're once again going through an energy crisis.

Answer 2

It is the median income that matters. It doesn't matter if a few people make lots of money.

But really what is best for your particular economy is how you can maximize your own earning potential. Focus on that, you can't do anything about the entire economy.

Answer 3

No,

It has to do with the crappy value of the dollar, the war on oil in the middle east, George Dubya's tunnel vision on said oil, p**s poor public education system, welfare, Medicaid, privatized health care, worldwide crop production or loss of crops, China, securities, hegemony, etc...

Not what sports pros are making...LOL! (Although it IS rediculous!)

Answer 4

No. The 60% of the money they steal from you in taxes is the cause of the "bad" economy. The other problem is, since Reaganomics, nobody has lived through or realizes what a bad economy really is anymore

Answer 5

High prices for athletes come from people's willingness to pay to see them.

Every time a stadium fills with people for a sporting event, the teams are reassured that they can pay their players ridiculous amounts of money.  Advertising during the games also allows them to pay their players a lot.

This is not causing our bad economy, because this is a free market that is actually being supported by itself.  

If people stopped going to games, then teams would exit the market (quit playing) or teams would start getting lower quality players for lower prices, etc...  

Answer 6

No, individual salaries do not have any bearing on macroeconomics.  Millions of dollars are like pennies compared to resources of the United States as a whole.  In fact, someone getting paid millions of dollars would mean they pay a larger sum of money in income taxes, thereby padding the Federal budget, allowing for more social economic stimulus programs, which in turn would improve the state of the economy.

Answer 7

People who have a lot of wealth can hurt the economy except there have always been the same amount of rich people this is nothing new. It is not a cause of the sudden fall in the economy. It can hurt however, because people with a lot of money do not spend the same percentage of their money as people with less money. This hurts the circulation of the money and economy.

Answer 8

It is not the income of athletes  but   of people  who's income can  be enhanced  by influencing government policy that can harms the economy. If they control enough wealth to pressure on the government to enact policies that favor them at the expense of other people,  they can do a lot of harm.  The lack of growth in many South American countries  is in part due to this, and the current  problems in our financial markets  is a result of the weakening of regulation that was lowering the incomes  of powerful financial interest.

Answer 9

Athletes make a high salary because people like yourself very much appreciate the product they produce. And because of the nature of this product where anyone with a TV can enjoy it, which means the marginal cost of supplying the product is very low and thus the best athletes can easily outcompete worse athletes.

The income these athletes receive, will go to consumption, saving and taxes.

Consumption will put their income back in the economy, for example if they build a huge house all the construction workers and architects will receive an income. Saving will increase the amount of money banks have available to lend out thus decreasing the interest rate you face when you need a loan.