Wealth inequality

[BigFatCoward]

i've said it before and i'll say it again, inheritance tax should be 100%. let the super rich have statues of themselves made out of gold and diamond shoes. as long as when they die they put something back.

if its good enough for warren buffet i don't think anyone on here is in any position to argue that it isn't a sound financial policy.

[Datepalm]

this is the problem rather than the solution

oh, he's quite right, DP. i would use the revolution from a desire to do good, but through me, it would wield a power too great and terrible to imagine.

eh, i dont know that i trust you either. you display occassionaly disturbing internalizations of cappy personal morality.

[Lyanna Stark]

I don't know how my income stacks up in inflation adjusted numbers to a corresponder earner from 50 years ago, but even if my share of inflation adjusted GDP were the same (and I'm willing to concede it's likely lower) as said earner, I'm still way better off today. Not sure if you consider Progressive a title that applies to yourself, but technologically, and as a consequence economically, we sure have made a lot of it. I'd rather have (numbers strictly pulled out of my ass) .01% of the buying power of the super rich but have internet, MRIs, HDTV, and organ transplants than have .02% of the buying power of the super rich and have none of those things. Which also ought to put to rest the idea that economic growth is zero sum, btw.

I think this is weird reasoning. You get technical gadgets which are a compensation for getting a nice place to live, health care and education for your kids? Also, can you really get organ transplants without having a really expensive insurance? How does that work?

In comparison to the US, the Scandinavian countries are the most equal in wealth distribution and the economies there are booming big time, and people are generally happier and poverty is lower. Obviously they are doing something right.

oh, he's quite right, DP. i would use the revolution from a desire to do good, but through me, it would wield a power too great and terrible to imagine.

I'm ok with this, even if the power is unimaginable. How do we go about installing soggy as global dictator extraordinaire? :D

[MinDonner]

I almost wish I could co-opt the "you're just jealous!" argument for use in other CLASS WARFARE threads. Those teachers with their long luxurious summer holidays? Jealous. Those welfare sponges who use hardworking taxpayers' money to raise all their illegitimate children? You just wish you had the same chance to get free money.

But that would be ridiculous.

[Lyanna Stark]

I almost wish I could co-opt the "you're just jealous!" argument for use in other CLASS WARFARE threads. Those teachers with their long luxurious summer holidays? Jealous. Those welfare sponges who use hardworking taxpayers' money to raise all their illegitimate children? You just wish you had the same chance to get free money.

But that would be ridiculous.

I know, it's utterly bizarre, isn't it?

Coming from a country where it's seen as a good thing to have a relatively small wealth distribution and there is an outspoken goal that everyone should have access to the same education, health care and social mobility (of course, it's not 100% but the goal is there and is worked on) it's like entering bizarro land when you see people claim that this sort of thinking is based on jealousy.

Especially when there is nothing showing that huge wealth inequality makes anything better for the population as a whole. It has a whole host of negative connotations and very few positives (unless you are a super rich, of course).

[Artas]

Coming from a country where it's seen as a good thing to have a relatively small wealth distribution and there is an outspoken goal that everyone should have access to the same education, health care and social mobility (of course, it's not 100% but the goal is there and is worked on) it's like entering bizarro land when you see people claim that this sort of thinking is based on jealousy.

Same here. I've been reading this thread with bemused fascination.

[MinDonner]

Maybe we can expand it still further. Those gay people who want to get married are just jealous of the straight folks. The Egyptian protesters are just jealous of Mubarak. Atheists are just jealous that Christians can get into heaven and they can't. All other empires are jealous of the Ottoman hills.

[Kosciuszko]

Capitalists are just jealous of Stalin's mo' and Castro's beard.

[Seli]

Same here. I've been reading this thread with bemused fascination.

I have the same feeling, but at the same time there is some uncomfortable recognition. If you look at it sideways the VVD and PVV ganging up on PvdA, D66 and GL (and CU) could be seen as the rich kicking down the middleclass, the poor pulling down, and the middle class looking around bemused "we are only doing this to make life better for everyone". Luckily so far only a slight parallel of what is happening in the US with a way stronger egalitarian tendency.

[Artas]

Seli: A good reason to go vote today! (Against the coalition, of course.)

I'm not allowed to, since I'm living abroad.

/threadjack

[Lummel]

Leaving aside any potential issues of social justice, unfairness or what have you, what I think is interesting about wealth inequality is that unchecked it will lead to the economy becoming smaller and reducing the standard of living overall. The weaker the economy the more vulnerable it will be to shocks - like the 1929 crash, and that has the potential to create long periods of economic depression for everybody in the economy.

http://rwer.wordpress.com/2011/01/27/graph-of-the-week-u-s-productivity-and-median-hourly-compensation-growth-1995-2007/

Here's a nice graph. Wages aren't keep track with increasing productivity. The value of hourly work is increasing but it is only among the most wealthy that incomes are increasing. If your wages are flat lining your ability to consume is also flat lining. If consumption is flat lining how are we going to get any economic growth?

So there is a problem with consumption. Firstly can a decreasing number of super-hyper rich consume enough to offset the loss of consumption of an increasing number of people lower down in the wealth hierarchy. Secondly even if they can what is the impact of their consumption on the economy.

Even if we assume that the super wealthy can consume enough to offset all the people who either can not consume enough or are excluded from consumption - what about their pattern of consumption? The lower down you are in the wealth hierarchy the more localised your spending will tend to be. What you earn will be more likely spent in the local or national economy. As you get wealthier the opposite applies, your money can go all round the world: foreign education for your children, shopping sprees abroad, multiple houses in different countries, investments in trust funds in the caymen islands etc. Yes there is a trickle down effect, with extra wealth you can afford to purchase extra services but there are limits to the number of chauffeurs, nannys, cooks, pool assistants, dog walkers and ego strokers that you will employ. It's called trickle down economics for a reason - it's not flow down, wash down or flood down economics after all.

The excess (ie what they can't spend) wealth of the super rich may be available in banks for investment, but what is the point of borrowing money to increase production if there aren't consumers to buy goods? The super rich hardly want industrial mass produced products anyway - they demand exclusive artisan production.

That's not a problem, provided there are enough consumers throughout the economy to maintain increasing demand to keep the economy growing. But only the big changes we are seeing is the growth of structural uncertainty in the workforce - a shift to part time, temporary and agency working rather than being directly employed on an indefinite basis. If you are comfortable that you are going to be employed on a long term basis you can save, or borrow against future earnings and spend. You are a consumer and return the money you earn into the economy. Once you lose security your ability to consume decreases. The value of your labour is the same but the economic outcome is different.

A feature of economic growth in the 19th and 20th centuries was mass consumption of mass produced products. An economy with a decreasing number of consumers is going to be different and almost certainly smaller and poorer overall.

Less spending = less production = less employment = less spending. Without intervention it's a downward spiral into poverty - rather like playing Monopoly.

[DrownedCrow]

Really? The Estate Tax is the perfect example.

It's been stigmatized heavily by the American Right Wing (DEATH TAX!!!! Probably administered by Panels. Of Death!) Why do you think so many people who have no reason to even think about it, hate it? Where do you think they even heard about it?

Even the general randian philosophy that underpins alot of it's opposition comes from decades of promotion by groups using money to get their ideas and message out.

And it has all, in one sense, culminated in something like Fox News, a completely closed information loop. Very rich people spent alot of money creating that.

I don't think that Fox News, or similar sources like Rush Limbaugh, created right wing ideology on taxation or any other issue. These attitudes existed before Fox came about and no doubt will exist long after Fox is gone. Fox makes money by telling people what they want to hear over and over again, essentially preaching to the choir. It's not like many people who have not made up their mind on these issues aren't aware that there are other news sources out there.

Of course, there's probably no way to know for sure which of these ideas is more likely.

[Tormund Ukrainesbane]

It makes me laugh to see you people complain about wealth inequality when you were the ones who asked for it in the first place.

I seem to remember hanging around here about 3 years ago and everyone was saying that we MUST hand over money from the poor to the rich IMMEDIATELY. There was NO TIME for debate because ARMAGEDDON was nigh and you were SCARED. Now, you're mad because your scheme worked. You gave money from the poor to the rich. Congratulations, you voted for this.

[Arataniello]

[mod] Generally these discussions are best served by presenting relevant facts, or debating the same.

Sweeping generalizations about "everyone saying" something "about three years ago" tend to be of limited use. So please don't. [/mod]

[Lyanna Stark]

:: high five ::

I love being an independent.

I love being a Eurocommie even more :P

[Tormund Ukrainesbane]

I love being a Eurocommie even more :P

http://www.businessweek.com/globalbiz/content/apr2009/gb20090410_254738.htm

European Bank Bailout Total: $4 Trillion

EU countries may have moved more slowly to rescue banks, but their total commitments have now reached a staggering sum, Brussels reports

[Hereward]

It makes me laugh to see you people complain about wealth inequality when you were the ones who asked for it in the first place.

I seem to remember hanging around here about 3 years ago and everyone was saying that we MUST hand over money from the poor to the rich IMMEDIATELY. There was NO TIME for debate because ARMAGEDDON was nigh and you were SCARED. Now, you're mad because your scheme worked. You gave money from the poor to the rich. Congratulations, you voted for this.

There's a difference between providing emergency funds to avert an impending catastrophe, which can and should then be clawed back, while a new more regulated system is put in place to prevent a repeat, and being for a whole series of policies, such as less regulation, the end of redistributive taxation, the end of state-supported education, etc, which would make the disparity even, and progressively, worse.

[Lyanna Stark]

There's a difference between providing emergency funds to avert an impending catastrophe, which can and should then be clawed back, while a new more regulated system is put in place to prevent a repeat, and being for a whole series of policies, such as less regulation, the end of redistributive taxation, the end of state-supported education, etc, which would make the disparity even, and progressively, worse.

Yes, what he said. :)

Plus I might add that my part of Europe is holding up quite well with no banks needing bail outs. I may also have Views on the Conservative Government in the UK, but I actually think that they are mostly doing the right things. They don't really have a huge amount of choice. It seems to me that the US is the only 1st world country that still seems immune to discussions about wealth distribution).

Hell, even the Conservatives in the UK are out there sounding like first class social democrats on a lot of issues. I'm not going to antagonise mormont and say that they are, but they sure use a lot of the same rethoric, so it's hardly the pariah it seems to be in the US.

[Tormund Ukrainesbane]

Yes, what he said. :)

Plus I might add that my part of Europe is holding up quite well with no banks needing bail outs. I may also have Views on the Conservative Government in the UK, but I actually think that they are mostly doing the right things. They don't really have a huge amount of choice. It seems to me that the US is the only 1st world country that still seems immune to discussions about wealth distribution).

Hell, even the Conservatives in the UK are out there sounding like first class social democrats on a lot of issues. I'm not going to antagonise mormont and say that they are, but they sure use a lot of the same rethoric, so it's hardly the pariah it seems to be in the US.

http://www.independent.co.uk/news/uk/politics/163850bn-official-cost-of-the-bank-bailout-1833830.html

Government support for Britain's banks has reached a staggering £850bn and the eventual cost to taxpayers will not be known for years, the public spending watchdog says today.

[Lyanna Stark]

http://www.independent.co.uk/news/uk/politics/163850bn-official-cost-of-the-bank-bailout-1833830.html

Government support for Britain's banks has reached a staggering £850bn and the eventual cost to taxpayers will not be known for years, the public spending watchdog says today.

Yes and? What else can they do? Failure to support the banks will surely mean worse news to the average UK tax payer.

For comparison, the Swedish Government is now selling bank stocks it bought during the downturn and they're making a lot of money on it, so with some good timing the UK Government may be able to do something similar. A bank bailout is not in itself damning evidence for the Government. It depends on how it's managed both now and over time.

EDIT: Look I understand you don't like the bank bailouts from an ideological and moral stand point, that's fine with me.

However in my experience, having lived through this before (check Sweden's nationalising of banks and devaluation of currency during the 90s recession and how that panned out) it sucks, but it's not the end of the world. It took Sweden at least 7-8 years to get back on its feet thanks to some decisive politicking and the decision to nationalise the banks. You may of course argue that the UK Government is gonna cock it up, and they might. I do however know that they are in frequent contact with their Swedish counterparts, probably figuring out how the Swedes made it work, and trying to at least use some of the same methods to get UK Plc up and running again too.