Inequality and wealth redistribution

[bilby]

What's so special about the tenth of January?

You realize what country both Emily and I are in? And how we write dates?

Your country chooses to ignore international conventions; I choose to mock you for it. 95% of the world does it our way; are we all out of step except you?

How is the $193,000,000 Mars Climate Orbiter mission coming along? Got any return on that investment yet?

 

[DBT]

Maybe a fair means of wealth redistribution would be to cap executive incomes. Perhaps to no more than five times the National average income. Raising minimum wage to no less than 80% of the National average income. Offhand, I think something like this is already done in some of the Scandinavian countries.

 

[dx713]

That would help, but ultimately, we would still stumble in the "scarcity of work" or "end of growth" problem.
We need a mean to share wealth without tying that redistribution to work.

 

[DBT]

That would help, but ultimately, we would still stumble in the "scarcity of work" or "end of growth" problem.
We need a mean to share wealth without tying that redistribution to work.

I think we need to end the 'end to growth' bogey man. We live in a finite space, so in both practical and logical terms cannot have perpetual growth. At some point we need to go back to a steady state economy.

 

[arkirk]

That would help, but ultimately, we would still stumble in the "scarcity of work" or "end of growth" problem.
We need a mean to share wealth without tying that redistribution to work.

I think we need to end the 'end to growth' bogey man. We live in a finite space, so in both practical and logical terms cannot have perpetual growth. At some point we need to go back to a steady state economy.

We had better stop the growth at some point. Human societies will always be changing. The way people conceptualize how "life ought to be" changes over time. The one thing we don't know or even have a clue about is what life will be like in the future. Social policies can change and when they do change so does the scope and meaning of citizenship.


Wealth will be redistributed...has been redistributed upward to a limited few in our society and the poor are cursed as lazy for not working without resources. Some manage to do surprisingly well without huge incomes. For our society to survive we have to learn how to share. This is a must condition when we finally stop growing. We need to be able to adjust our social policies in keeping with the interests of the vast majority of society or plot to kill them. Our current system dehumanizes human activity and converts it into a mechanical calculation of what is good for investors. The work required by the people for them to live well is not being done because the investor class in America has divorced itself from human terms. It buys elections. It propagandizes and cheats in matters of apportionment and in every way distorts the will of the majority into a pre planned economical model that maintains the wealth of the investors at all costs.

We need to see leadership that actively queries the opinions of the public and finds a way to democratize the formulation of policy. That involves a lot of organization. I think this will be happening...perhaps not in my lifetime, but at sometime in the future all of our social policies will be modified to suit the time and temper of society as a whole. At that time, I suspect this whole crazy
Wall Street phenomenon will disappear from the earth.

At that point, this period we are currently living in will probably be considered as a period of tribulation due to faulty economic concepts. That may apply to all of the governance theories we have seen thusfar. Pressing issues that do not involve warfare will prevail and mankind will either learn how to share or vanish along with Wall Street.

 

[Emily Lake]

I've thought about redistribution on several occasions. My personal view is that too little wealth inequality is inhibits innovation, but that too much stresses the economy and hampers growth. Thus it's a bit of a Goldilocks game; we need to find the optimum level of wealth inequality and stay within that "sweet spot".

I don't know what the optimum level is; that's a task for people with a different skill set than I have. Here, however, is my suggestion for how to stay within that zone.

1) Dramatically simplify the tax code

• Eliminate almost all of the loopholes, including a substantial number of deductions. I know that this would initially seem very regressive, but in tandem with this you reduce the tax rate on the lower brackets, and increase the standard deductions.
• Remove any variance in tax rates for different types of income. Capital gains are income, just like any other income. The same is true for monetary inheritances (but not for inherited assets or goods). Thus, they fall into the exact same bracketing as used for all other incomes. This will help to equalize the burden on wealthy people, and prevent those situations where a wealthy person is paying a lower effective tax rate than a middle-income person, just because of where their money is coming from.

2) Increase the tax rate in higher brackets substantially

• Pretty self explanatory, tax the incomes above say, $100K or so, at a significantly higher rate, enough that it is something that people want to avoid

3) Introduce a matched tax-rate reduction for specific types of donations

• For each dollar donated to a qualified cause, one dollar of remaining income is dropped to the next lower tax bracket. So if someone donates $100,000 to a qualifying cause, then $100,000 of their income is dropped to the next lowest bracket.
• Qualifying donations would include
  • Bonafide charities with operating margins below a specified percentage, so that a substantial portion of the collected monies are going directly to the cause and not to the running of the charity
  • Support of local safety nets and similar structures like food banks, soup kitchens, housing, etc.
  • Scholarship or Grant foundations for education
  • Bonafide research grants with no strings attached, so that there's no requirement that discoveries belong to a specified company or are shared with the grant giver for profit
  • Bonafide medical research ceded to the public sector with no patent
  • Endowments to museums and to the arts with no ownership interests

The idea is that the wealthy would receive the greatest benefit to themselves by giving back in ways that directly benefit the public through research and innovation... but without the strings of their own future profit attached. It puts them back in the role of "patrons" instead of "profiteers". Scale the tax brackets in such a fashion that it's clearly in their best interests to donate 50% of their higher incomes.

So for example, perhaps the scale runs like so (for a single person):

• 0% - Under $15,000
• 5% - $15,000 to $30,000
• 10% - $30,000 to $50,000
• 15% - $50,000 to $100,000
• 30% - $100,000 to $150,000
• 60% - $150,000 to $500,000
• 90% - $500,000 and Above

Of course, the brackets and tax amounts might need to be tinkered with, as there are still government needs and costs to be met.

My hypothesis is that as soon as they're barred from having an ownership and profit interest in what they're donating in, but there's still a clear financial benefit to giving away their incomes, then we will see an increase in a lot of charities and endeavors aimed at poverty from a less policy-drive angle. It will get a lot more money back into the community, it will seed innovation and discovery. It will also help introduce compassion and empathy back into our culture as something that can exist hand-in-hand with wealth.

It may not work, and of course, it may never make it past the daydream phase. But I hope it makes for an interesting idea to seed approaches more novel than just increasing taxes.

 

[arkirk]

I've thought about redistribution on several occasions. My personal view is that too little wealth inequality is inhibits innovation, but that too much stresses the economy and hampers growth. Thus it's a bit of a Goldilocks game; we need to find the optimum level of wealth inequality and stay within that "sweet spot".

I don't know what the optimum level is; that's a task for people with a different skill set than I have. Here, however, is my suggestion for how to stay within that zone.

1) Dramatically simplify the tax code

• Eliminate almost all of the loopholes, including a substantial number of deductions. I know that this would initially seem very regressive, but in tandem with this you reduce the tax rate on the lower brackets, and increase the standard deductions.
• Remove any variance in tax rates for different types of income. Capital gains are income, just like any other income. The same is true for monetary inheritances (but not for inherited assets or goods). Thus, they fall into the exact same bracketing as used for all other incomes. This will help to equalize the burden on wealthy people, and prevent those situations where a wealthy person is paying a lower effective tax rate than a middle-income person, just because of where their money is coming from.

2) Increase the tax rate in higher brackets substantially

• Pretty self explanatory, tax the incomes above say, $100K or so, at a significantly higher rate, enough that it is something that people want to avoid

3) Introduce a matched tax-rate reduction for specific types of donations

• For each dollar donated to a qualified cause, one dollar of remaining income is dropped to the next lower tax bracket. So if someone donates $100,000 to a qualifying cause, then $100,000 of their income is dropped to the next lowest bracket.
• Qualifying donations would include
  • Bonafide charities with operating margins below a specified percentage, so that a substantial portion of the collected monies are going directly to the cause and not to the running of the charity
  • Support of local safety nets and similar structures like food banks, soup kitchens, housing, etc.
  • Scholarship or Grant foundations for education
  • Bonafide research grants with no strings attached, so that there's no requirement that discoveries belong to a specified company or are shared with the grant giver for profit
  • Bonafide medical research ceded to the public sector with no patent
  • Endowments to museums and to the arts with no ownership interests

The idea is that the wealthy would receive the greatest benefit to themselves by giving back in ways that directly benefit the public through research and innovation... but without the strings of their own future profit attached. It puts them back in the role of "patrons" instead of "profiteers". Scale the tax brackets in such a fashion that it's clearly in their best interests to donate 50% of their higher incomes.

So for example, perhaps the scale runs like so (for a single person):

• 0% - Under $15,000
• 5% - $15,000 to $30,000
• 10% - $30,000 to $50,000
• 15% - $50,000 to $100,000
• 30% - $100,000 to $150,000
• 60% - $150,000 to $500,000
• 90% - $500,000 and Above

Of course, the brackets and tax amounts might need to be tinkered with, as there are still government needs and costs to be met.

My hypothesis is that as soon as they're barred from having an ownership and profit interest in what they're donating in, but there's still a clear financial benefit to giving away their incomes, then we will see an increase in a lot of charities and endeavors aimed at poverty from a less policy-drive angle. It will get a lot more money back into the community, it will seed innovation and discovery. It will also help introduce compassion and empathy back into our culture as something that can exist hand-in-hand with wealth.

It may not work, and of course, it may never make it past the daydream phase. But I hope it makes for an interesting idea to seed approaches more novel than just increasing taxes.

Your approach to the problem is to make patronage more attractive to the rich. I noted in many of the suggestions for donations the magic words...no ownership interests. I have no idea of just how the specifics would work out. Taking money from the rich is like pulling teeth. I feel that donated money is money that has the arbitrary interest of the donor clearly the controlling factor in the amount and frequency of the donations. This puts the charities and social services at the whim of the rich and destabilizes operations of such charities. Fear of withdrawal of donations begins to affect the policies of the charities. You started out talking about closing the loopholes, then found a big one to include....charities...that can be invented by the rich to serve their purposes.

I think you need to rethink this aspect of your idea as there is a problem as soon as you get "special people" setting the policies of all the people for them. We need to abandon the idea of patronage. These so-called patron would and indeed now do subvert the democratic process with their allocation powers. Their interests clearly are not those of the common man or woman and this system of patronage is already in place anyway.

We have held off on taking needed actions on behalf of the funders of government for far too many years and will find ourselves playing catch up with cascading environmental crisis in the not too distant future. We do not need the Koch Bros. deciding for all of us, who gets what from which charity. Your suggestion leaves that arbitrariness in place. The answer is to CLOSE THE LOOPHOLES and all avenues of avoidance of democracy.

 

[Emily Lake]

I think you need to rethink this aspect of your idea as there is a problem as soon as you get "special people" setting the policies of all the people for them. We need to abandon the idea of patronage. These so-called patron would and indeed now do subvert the democratic process with their allocation powers. Their interests clearly are not those of the common man or woman and this system of patronage is already in place anyway.

We have held off on taking needed actions on behalf of the funders of government for far too many years and will find ourselves playing catch up with cascading environmental crisis in the not too distant future. We do not need the Koch Bros. deciding for all of us, who gets what from which charity. Your suggestion leaves that arbitrariness in place. The answer is to CLOSE THE LOOPHOLES and all avenues of avoidance of democracy.

akirk, you are welcome to think what you wish. It is clear that you and I have different thought processes .

That said, it is my belief that allocating all monies to the government will lose innovation. The government is not particularly good at taking chances on unproven ideas, and they're not very good at innovating unless it has to do with the military . The government doesn't invest in risky ventures, and strange ideas. Individual people with excess liquidity do.

The government would probably invest in welfare systems, sure. But they probably wouldn't invest in truly groundbreaking and innovative medical or scientific research. The government is very, very slow to try new things; they're bound up in bureaucracy.

Most of the "patrons" out there today who are "subverting democracy" as you put it, are also invested in the outcomes - they get a piece of the returns. And innovation isn't about democracy, it's not about what the majority think should be researched. It's about a very few people with new ideas. If we left it to democracy to decide what got researched and what was invested in as new technologies and innovation, I don't think we would ever have had the industrial revolution in the first place - that was largely the result of wealthy patrons interested in providing the means for extraordinarily intelligent scientists to further knowledge. A significant amount of the research and developments pioneered by Newton, Leibniz, Hooke, Halley, and others of that period were only possible because of the largesse of wealthy patrons.

Is it foolproof? Of course not; nothing ever is. But I do think that it holds the best likelihood of balancing the need for redistribution (through significantly more progressive taxation) as well as the need for innovation (by allowing for wealth inequality to exist and encouraging the funding of new ideas and research).

 

[Loren Pechtel]

You realize what country both Emily and I are in? And how we write dates?

Your country chooses to ignore international conventions; I choose to mock you for it. 95% of the world does it our way; are we all out of step except you?

How is the $193,000,000 Mars Climate Orbiter mission coming along? Got any return on that investment yet?

If you (general, not specific) hadn't stuffed meter/seconds down our scientists' throats it would be orbiting Mars now.

 

[EricK]

Your country chooses to ignore international conventions; I choose to mock you for it. 95% of the world does it our way; are we all out of step except you?

How is the $193,000,000 Mars Climate Orbiter mission coming along? Got any return on that investment yet?

If you (general, not specific) hadn't stuffed meter/seconds down our scientists' throats it would be orbiting Mars now.

A miss is as good as 1.609344 kilometres

 

[bilby]

If you (general, not specific) hadn't stuffed meter/seconds down our scientists' throats it would be orbiting Mars now.

A miss is as good as 1.609344 kilometres

As anyone with 28.349g of sense could tell you.

 

[arkirk]

I think you need to rethink this aspect of your idea as there is a problem as soon as you get "special people" setting the policies of all the people for them. We need to abandon the idea of patronage. These so-called patron would and indeed now do subvert the democratic process with their allocation powers. Their interests clearly are not those of the common man or woman and this system of patronage is already in place anyway.

We have held off on taking needed actions on behalf of the funders of government for far too many years and will find ourselves playing catch up with cascading environmental crisis in the not too distant future. We do not need the Koch Bros. deciding for all of us, who gets what from which charity. Your suggestion leaves that arbitrariness in place. The answer is to CLOSE THE LOOPHOLES and all avenues of avoidance of democracy.

akirk, you are welcome to think what you wish. It is clear that you and I have different thought processes .

That said, it is my belief that allocating all monies to the government will lose innovation. The government is not particularly good at taking chances on unproven ideas, and they're not very good at innovating unless it has to do with the military . The government doesn't invest in risky ventures, and strange ideas. Individual people with excess liquidity do.

The government would probably invest in welfare systems, sure. But they probably wouldn't invest in truly groundbreaking and innovative medical or scientific research. The government is very, very slow to try new things; they're bound up in bureaucracy.

Most of the "patrons" out there today who are "subverting democracy" as you put it, are also invested in the outcomes - they get a piece of the returns. And innovation isn't about democracy, it's not about what the majority think should be researched. It's about a very few people with new ideas. If we left it to democracy to decide what got researched and what was invested in as new technologies and innovation, I don't think we would ever have had the industrial revolution in the first place - that was largely the result of wealthy patrons interested in providing the means for extraordinarily intelligent scientists to further knowledge. A significant amount of the research and developments pioneered by Newton, Leibniz, Hooke, Halley, and others of that period were only possible because of the largesse of wealthy patrons.

Is it foolproof? Of course not; nothing ever is. But I do think that it holds the best likelihood of balancing the need for redistribution (through significantly more progressive taxation) as well as the need for innovation (by allowing for wealth inequality to exist and encouraging the funding of new ideas and research).

I think you are missing the boat regarding what I am trying to tell you. I have not once suggested that government should control everything, own everything, and dictate everything to the people. I have mostly said, the people need to be involved in policy setting and it has to be truly democratic. Now it is you who assumes that "truly democratic" means more powerfully controlling everything, a dictatorship. But it just means our society needs a system that is democratic enough and flexible enough to change when change is needed. Currently in the U.S., national policies are way out of line with the policies preferred by a vast majority of Americans. Things like the Patriot Act do not reflect the policy choices of over 77% of the American people. That is NOT DEMOCRACY.

If you assume that with real democracy the country would go to hell and be forced in a lot of impractical policies, perhaps resulting in a dull form of primitive socialism, that is yours to believe.
I am not advocating in a positive way our government would have to be bigger and more dictatorial. It would simply have to perform different functions than it currently does, dropping some functions that have not panned out, (like threatening the world with a huge overblown military, and instead attacking problems that must be addressed.

When one's emotions are stirred up and one's existential fears come to the surface there is one hell of a tendency to assume all is lost. The idea of our government transforming into a servant of the people depends on democracy that is thorough and informed. These changes can happen and America for all its past changes never really landed in the toilet and still has a chance to rejoin the rest of the world far more peaceably. We have a labor force in this country that is being wasted, not educated, and abandoned by bad policy. It is really just about that simple. We need to stop wasting lives here and overseas.

It appears to me that the financial and oil sectors of our economy have captured all their regulators and are the cause of this great divide in the wealth of our citizens. They buy politicians. They control media. This is NOT DEMOCRACY. What I am saying is that we need to focus on democratic solutions to our problems. You may think of this as socialism, but I do not feel we actually know what we can do till we try. It will become what it will become. If the will of a vast majority of the population agree with the policies of government and support them, these policies will not be in trouble.

 

[whichphilosophy]

If you favor wealth redistribution in the US would you favor a global wealth redistribution? Seems morally logical to me.

I understand that wealth is not GDP, but lets use GDP as a starting point.

World GDP $71.83 trillion / World Population 7.125 billion

If we are going to be fair lets do radical redistribution -- everyone gets the same amount.

Are you gong to be better off or worse off when you are left with $100?

(Yeah, yeah, yeah I spelled redistribution wrong in the title. I have dyslexia, sorry.)

Wealth distribution only works as long as there is enough of other people's money to give away.

 

[bilby]

If you favor wealth redistribution in the US would you favor a global wealth redistribution? Seems morally logical to me.

I understand that wealth is not GDP, but lets use GDP as a starting point.

World GDP $71.83 trillion / World Population 7.125 billion

If we are going to be fair lets do radical redistribution -- everyone gets the same amount.

Are you gong to be better off or worse off when you are left with $100?

(Yeah, yeah, yeah I spelled redistribution wrong in the title. I have dyslexia, sorry.)

Wealth distribution only works as long as there is enough of other people's money to give away.

...or enough poor people to whom to give it.

 

[Loren Pechtel]

If you favor wealth redistribution in the US would you favor a global wealth redistribution? Seems morally logical to me.

I understand that wealth is not GDP, but lets use GDP as a starting point.

World GDP $71.83 trillion / World Population 7.125 billion

If we are going to be fair lets do radical redistribution -- everyone gets the same amount.

Are you gong to be better off or worse off when you are left with $100?

(Yeah, yeah, yeah I spelled redistribution wrong in the title. I have dyslexia, sorry.)

Wealth distribution only works as long as there is enough of other people's money to give away.

Nailed it. The advocates are always those who think they would be the recipients, not the donors.

The philanthropic-minded wealthy give it to causes they consider worthy, they don't support redistribution.

 

[doubtingt]

Worldwide redistribution only follows if the sole argument for within country redistribution is that all humans should have the same wealth level.
That is not at all the argument, so it does not follow.

I exist as a member of a formal "society" with a social contract under a specific shared and legal and political system with only a subset of human beings (those who are citizens of the US or legal residents in the US). Via mutually agreed upon rules we have created a social, political, educational, and physical infrastructure and use of the "commons" and natural resources that supports and gives rise to an economy and transforms natural resources and labor into goods, services, and currency that we agree to recognize as a kind of place holder for future goods and services. The redistribution of wealth within that system is partially a correction for the inherent unfairness and greedy unethical abuses that occur when people are allowed to use that infrastructure and resources and negotiate exchanges with other parties in that society with minimal regulation or direct oversight. It is also a means to increase mutually beneficial long term stability of the system and ensure that the system benefits all those within it, whose democratic support of it is vital to its continued existence and justification.

As you can see, the entire argument revolves around what is fair and mutually beneficial regarding the wealth that acquired by members of a formal society defined by social, political, educational, and physical infrastructure and shared ownership of resources that are what enable the creation of wealth and mutually beneficial economic growth. Thus, the argument does not apply in the same way toward people not formally within that system.

 

[whichphilosophy]

Wealth distribution only works as long as there is enough of other people's money to give away.

...or enough poor people to whom to give it.

For sure there's more than enough poor people and it only takes a few generous people to give them other people's wealth by way of taxation and aid.

 

[arkirk]

Wealth distribution only works as long as there is enough of other people's money to give away.

Nailed it. The advocates are always those who think they would be the recipients, not the donors.

The philanthropic-minded wealthy give it to causes they consider worthy, they don't support redistribution.

Wealth distribution is so much more than counting other people's money. It is about the health of an entire society. You guys sound like a mix of Silas Marner and Ebenezer Scrooge. As long as your system of wealth violates the human rights of the majority, it is at risk. A country and a society that is run like a giant casino is not any good for anybody including the rich. That's what we have...the rich take risks with the fates of the poor. When the rich loose or make grave mistakes, the poor get to pay with their jobs, their homes, and in the case of war, their lives. You can't turn your back on justice and you can't ignore suffering you have had a part in creating...well you actually can. That is the problem real human need is ignored in favor of the idols of the marketplace and dreams of carefree effortless existence.

Cynics are a dime a dozen. Don't cheapen yourself by becoming one.

 

[arkirk]

There's always this fine point I have not seen considered here. What we have now, with oligarchs and people who buy the government.....we have a system of wealth redistribution into the hands of the wealthy and it is still hard at work. We are looking at a different kind of wealth redistribution and treating it as some kind of default condition society must comply with and never adjust.

 

[arkirk]

...or enough poor people to whom to give it.

For sure there's more than enough poor people and it only takes a few generous people to give them other people's wealth by way of taxation and aid.

This is based on the assumption of course, that ownership of wealth can be based on the turn of a card in a game where most of the population of do not play and cannot play because they have no chips and the odds are against them even if they have a few. Our current system is a game of big boys and the cyphers just get to watch.