The ever widening gap between the rich and poor

[DBT]

He said "the rest of society", not "the underclass". Words used are important.
.

The rest of society includes 'the underclass'' - which, given the ratio of wealth distribution, is the bulk of the world's population.

 

[Metaphor]

Inheritance can dissipate wealth, if two conditions apply - large families need to be typical; and several members of the next generation must typically inherit a sizable fraction of any given estate. The former was true before WWII, but is less true today; the absence of the latter, however, was a defining feature of the aristocracy in England for at least nine centuries. I see no reason to expect that such voluntary dissipation of wealth will ever become the norm; and indeed we observe that it was not normal in the past. Unless the law compels parents to give all offspring equal status in their wills - something that it does not currently do - there is no reason other than pure hope to imagine that wealth concentrations will dissipate naturally over time.

Primogeniture was once the norm for wealthy families, but it is not now the norm. I don't move in those social circles, yet I find it hard to imagine (even in Britain) that billionaire parents are being uneven with the distribution of their estates.

But of course you point out that the real reason wealth isn't going to dissipate is because the extreme high net worth individuals simply have so much, even dividing it among several leaves those several immensely wealthy. The Walton heirs are still all billionaires.

 

[Lumpenproletariat]

Here's how the wealth should be redistributed (if there's a need to redistribute it).

The gap is not only between rich and poor. It is between rich and nearly everyone else.

But it's also between the middle and the poor. And between the upper poor and the bottom poor.

The bottom line is this: most people who are above someone else in the totem pole are there because they are more valuable than the ones lower. No matter where you analyze the totem pole.

The general rule is that those who are higher (than someone else) are there because they earned it by being more productive in one way or another.

And if anything needs to be done to redistribute wealth, it would be to take income away from everyone above the 10% point on the totem pole and send it to poor countries like Haiti and Yemen and Bangladesh etc., since those poor people are arguably more productive than the lower-income people in the developed countries who are being overpaid by comparison, and so all those in the developed countries, including the "poor" in those countries, should stop being so greedy and self-righteous and be willing to sacrifice some of their bounty to the benefit of the truly downtrodden on this planet.

(However, if you can prove that certain individuals are getting rich without really earning it (being productive, etc.), then you might be able to make a case for redistributing income away from them toward those who are being more productive. But so far no one is doing this. Rather, it's all just whining crybaby tantrum-throwing that we keep hearing.)

 

[DBT]

The gap is not only between rich and poor. It is between rich and nearly everyone else.

But it's also between the middle and the poor. And between the upper poor and the bottom poor.

The bottom line is this: most people who are above someone else in the totem pole are there because they are more valuable than the ones lower. No matter where you analyze the totem pole.

The general rule is that those who are higher (than someone else) are there because they earned it by being more productive in one way or another.

And if anything needs to be done to redistribute wealth, it would be to take income away from everyone above the 10% point on the totem pole and send it to poor countries like Haiti and Yemen and Bangladesh etc., since those poor people are arguably more productive than the lower-income people in the developed countries who are being overpaid by comparison, and so all those in the developed countries, including the "poor" in those countries, should stop being so greedy and self-righteous and be willing to sacrifice some of their bounty to the benefit of the truly downtrodden on this planet.

(However, if you can prove that certain individuals are getting rich without really earning it (being productive, etc.), then you might be able to make a case for redistributing income away from them toward those who are being more productive. But so far no one is doing this. Rather, it's all just whining crybaby tantrum-throwing that we keep hearing.)

Does your objection - ''since those poor people are arguably more productive than the lower-income people in the developed countries who are being overpaid by comparison, and so all those in the developed countries, including the "poor" in those countries, should stop being so greedy and self-righteous and be willing to sacrifice some of their bounty to the benefit of the truly downtrodden on this planet'' - apply to the 1% who now have half of the Planets wealth in their hands?

Should this 1% also 'stop being so greedy and self-righteous and be willing to sacrifice some of their bounty to the benefit of the truly downtrodden on this planet'' being by far the wealthiest people on the planet? Or have they achieved their wealth through hard work, so need not 'sacrifice' in a truly meaningful way?

 

[arkirk]

The gap is not only between rich and poor. It is between rich and nearly everyone else.

But it's also between the middle and the poor. And between the upper poor and the bottom poor.

The bottom line is this: most people who are above someone else in the totem pole are there because they are more valuable than the ones lower. No matter where you analyze the totem pole.

The general rule is that those who are higher (than someone else) are there because they earned it by being more productive in one way or another.

And if anything needs to be done to redistribute wealth, it would be to take income away from everyone above the 10% point on the totem pole and send it to poor countries like Haiti and Yemen and Bangladesh etc., since those poor people are arguably more productive than the lower-income people in the developed countries who are being overpaid by comparison, and so all those in the developed countries, including the "poor" in those countries, should stop being so greedy and self-righteous and be willing to sacrifice some of their bounty to the benefit of the truly downtrodden on this planet.

(However, if you can prove that certain individuals are getting rich without really earning it (being productive, etc.), then you might be able to make a case for redistributing income away from them toward those who are being more productive. But so far no one is doing this. Rather, it's all just whining crybaby tantrum-throwing that we keep hearing.)

I see we have another person who treats human beings like they were robots and has some sort of valuation scheme for humans that roughly parallels the value of their holding. MORE PRODUCTIVE is not gambling. More productive is not lying to stay in business. More productive is not cornering the market. More productive is not even quantifiable except in terms of what you value personally. Your plaver about the upper and lower poor is nothing more than a diversion from the fact that certain operations with massive wealth behind them can control markets and squash their competition completely. There is navy blue and there is indigo. So what?

Loren is right. There is a tendency for wealth to accumulate...the system is geared for that to happen. That is the fatal flaw in the notion that the marketplace solves all problems. When someone ends up deprived by a system in which they no chance, folks like Loren, and yourself and Axulus start your wolves howl that it is because these deprived and disadvantaged persons are undeserving, lazy, unskilled, etc. In short that things aren't broken and those of us who are well served see no need to fix anything. Your "Let them eat cake" attitude has not changed one bit. The distribution of wealth is extremely out of balance for a free and democratic society...of course you may not care for a free and democratic society... Ayn Rand didn't either...till she accepted welfare in her failing years. Some lessons only come to some people the hard way.

 

[Lumpenproletariat]

At whose expense should "income inequality" be corrected?

The general rule is that those who are higher (than someone else) are there because they earned it by being more productive in one way or another.

And if anything needs to be done to redistribute wealth, it would be to take income away from everyone above the 10% point on the totem pole and send it to poor countries like Haiti and Yemen and Bangladesh etc., since those poor people are arguably more productive than the lower-income people in the developed countries who are being overpaid by comparison, . . .

Does your objection - ''since those poor people are arguably more productive than the lower-income people in the developed countries who are being overpaid by comparison, and so all those in the developed countries, including the "poor" in those countries, should stop being so greedy and self-righteous and be willing to sacrifice some of their bounty to the benefit of the truly downtrodden on this planet'' - apply to the 1% who now have half of the Planets wealth in their hands?

Should this 1% also "stop being so greedy and self-righteous and be willing to sacrifice some of their bounty to the benefit of the truly downtrodden on this planet'' being by far the wealthiest people on the planet?

Basically yes. Take maybe 2-3% away from everyone above the 10% level, throughout the world (mainly from developed countries like the U.S.) and give it to the poor in Somalia and Pakistan etc. Meaning 90% or 95% of Americans would have to give up 2-3% of what they earn (or receive in public assistance or SS etc.), to be transferred to the truly needy worldwide. Meaning all the rich and middle class and most of the "poor" in the U.S. would have to make this sacrifice

When the complainers about income inequality show the integrity to propose a remedy like this, then we should start taking them seriously. (As long as the premise is that those "higher" up must sacrifice

​

something to benefit those "lower" down.)

Or have they achieved their wealth through hard work, so need not 'sacrifice' in a truly meaningful way?

Everyone doing OK has to sacrifice, from rich to moderate poor. I'm sure Sen. Boxer or someone will offer such a bill so this need will finally be addressed.

 

[Lumpenproletariat]

Who are the "more productive"? Should they get richer? and the less productive get poorer?

The general rule is that those who are higher (than someone else) are there because they earned it by being more productive in one way or another.

And if anything needs to be done to redistribute wealth, it would be to take income away from everyone above the 10% point on the totem pole and send it to poor countries like Haiti and Yemen and Bangladesh etc., since those poor people are arguably more productive than the lower-income people in the developed countries who are being overpaid by comparison, and so all those in the developed countries, including the "poor" in those countries, should stop being so greedy and self-righteous and be willing to sacrifice some of their bounty to the benefit of the truly downtrodden on this planet.

(However, if you can prove that certain individuals are getting rich without really earning it (being productive, etc.), then you might be able to make a case for redistributing income away from them toward those who are being more productive. But so far no one is doing this. Rather, it's all just whining crybaby tantrum-throwing that we keep hearing.)

MORE PRODUCTIVE is not gambling.

Investing is productive, and when it's not, it's mainly the investor who loses. We'd all be worse off if the investors did not take risks.

More productive is not lying to stay in business.

There's lots of "lying" to stay in business. Like unnecessary laws that force companies to lie. Also, many consumers want companies to "lie" to them. Virtually every successful organization has to do some lying to survive, including non-profit organizations, political organizations, hospitals, charities. Also the poor have to lie in order to get hired, and employees have to lie to keep their jobs. Virtually everyone who succeeds had to do some lying. And this fact of life holds true even in the least capitalist economies.

More productive is not cornering the market.

Generally it is. The more productive are able to capture more of the market because of their better service to consumers, i.e., being more competitive, so they win more of the market as their reward for better performance.

More productive is not even quantifiable except in terms of what you value personally.

Difficult to measure accurately, but it means serving consumers better, which the market rewards. Maybe we could "tweak" the market to make it do better at rewarding merit, but flattening incomes with a steamroller to make everyone more equal won't make the market perform any better. Or whining that some are getting richer and others poorer.

Your plaver about the upper and lower poor is nothing more than a diversion from the fact that certain operations with massive wealth behind them can control markets and squash their competition completely.

Yes, those operations which earned more wealth by competing better and serving consumers better do have an advantage, by winning more market share and outperforming the less competitive. Bashing them with a hammer to punish them for their superior performance won't do anything to stop the poor from getting poorer.

Loren is right. There is a tendency for wealth to accumulate...the system is geared for that to happen.

You're right. More of that wealth should be diverted toward infrastructure. But the snag is that as soon as the Dems propose infrastructure, they start blabbering about "jobs" instead of the need for better roads and bridges etc. And Repubs denounce the program for not creating enough "jobs" -- and the debate deteriorates into the "jobs jobs jobs" babble. That's one reason why the wealth just accumulates instead of going where it's needed -- It's the "jobs" babblers who are to blame for that.

That is the fatal flaw in the notion that the marketplace solves all problems. When someone ends up deprived by a system in which they have no chance, folks like Loren, and yourself and Axulus start your wolves howl that it is because these deprived and disadvantaged persons are undeserving, lazy, unskilled, etc.

No, it's because they produce so little value. They earn what they are worth, which is becoming less and less. The less competitive or less productive are "deprived" because the market pays them only what they're worth, or what they produce is worth. The market rewards merit, which it should, but that means those who produce less receive less. And the gap between the more and less productive keeps widening.

In short that things aren't broken and those of us who are well served see no need to fix anything.

Some fixing is needed, but not a "fix" which simply pays more to those who are less productive and thus defeats the market mechanism to reward merit.

Your "Let them eat cake" attitude has not changed one bit.

No, I'm saying distribute the wealth of those who have more, like most Americans, including the middle and lower middle-class, to the truly poor in Haiti and Somalia etc., if you really want to fix this by making those who have more sacrifice for the benefit of the poor.

And so is your answer to these poorest of the world, "Let them eat cake"? Or do you agree that this redistribution should begin by most Americans and most of those in the developed countries sacrificing their incomes to help the world's poor?

The distribution of wealth is extremely out of balance for a free and democratic society.

For the whole world it's "out of balance," and if redistributing wealth from those higher to those lower is what is needed, then let's begin with the greatest inequality, that of the developed countries to the poor countries, and make the top 90% or so take care of the bottom 10% worldwide. So the middle- and lower-middle-income brackets should join the "rich" in sacrificing 2-3% of their incomes to raise up the lower 10%, who are mostly in those poorest countries. That's where the real "poor" people are.

 

[lpetrich]

I might join this income inequality fight, but I want nothing to do with the class warfare mindset.

It's only class warfare when it's warfare against the upper classes.

I don't buy the idea that the "economic elite" are like a hive mind. If you think they sit around all day plotting how to screw over the common man for the sake of moving up the Forbes list, you probably need to be on medication.

They don't have to be. All they have to do is pursue self-interested policies, and the rest of us lose. Policies that I'm sure that you'd loudly object to if pursued by anyone else.

Why Do the Super-Rich Keep Comparing Obama to Hitler? - The Atlantic Consider billionaire Steven Schwarzman claiming that closing the carried-interest tax loophole is like "Hitler invading Poland".

Loren Pechtel, why don't you do the research? Yes, research. Show everybody that you are MUCH smarter than Thomas Piketty. You should have no trouble proving that the  Great Compression had never happened.

I'm not saying it didn't happen. I'm saying we don't know one way or the other as the data from the time in question is bogus.

That's no substitute for research.

I am referring to what is variously called "supply side economics' or "neoliberal economics" or "Reaganomics." I suggest that you Google those if you are not familiar with them.

Fair enough.

The short answer is that business believes in the fantasy of Say's law and supply side economics when it produces policies that lower wages and increase profits, but when they look at the real economy to decide whether to invest they become hard headed Keynesians.

Like forgetting about Austrian economics and Say's law when doing advertising. Seems like J-B Say might say "If this is Say's law, then I am not a Sayian".

The stock market and other Wall Street casinos are largely secondary markets that don't provide the capital investment that goes into real capital investment that increases production, that increases productivity or provides innovation. That is what the term secondary markets means. When you profit from an increase in a stock price your profit comes from the person who buys the stock from you, not from the company whose stock it is. Every dollar of profit for one person is a dollar of loss for someone else. Hence, zero sum. But as long as new money is coming in the obvious doesn't have to be faced.

The funds that neoliberal economics or supply side economics or Reaganomics provides to the secondary markets is generated by lowering the share of the economy that goes to wages. Which lowers demand and ultimately lowers capital investment, real investment that builds the economy. Instead the money diverted from wages flood the secondary markets building asset bubbles in stocks, commodities and real estate, bubbles that destabilize the secondary financial markets with the result that we saw in 2008.

This has been mitigated somewhat by the great increase in consumer debt and lenient bankruptcy laws.

Also, chasing asset bubbles suggests that much of the economic elite has a *lot* of capital with nowhere to go. Unless they start competing to see how much they can give away to the lower and middle classes. But  potlatch does not seem to be very popular among them.

 

[Axulus]

Inheritance can dissipate wealth, if two conditions apply - large families need to be typical; and several members of the next generation must typically inherit a sizable fraction of any given estate. The former was true before WWII, but is less true today; the absence of the latter, however, was a defining feature of the aristocracy in England for at least nine centuries. I see no reason to expect that such voluntary dissipation of wealth will ever become the norm; and indeed we observe that it was not normal in the past. Unless the law compels parents to give all offspring equal status in their wills - something that it does not currently do - there is no reason other than pure hope to imagine that wealth concentrations will dissipate naturally over time.

Primogeniture was once the norm for wealthy families, but it is not now the norm. I don't move in those social circles, yet I find it hard to imagine (even in Britain) that billionaire parents are being uneven with the distribution of their estates.

But of course you point out that the real reason wealth isn't going to dissipate is because the extreme high net worth individuals simply have so much, even dividing it among several leaves those several immensely wealthy. The Walton heirs are still all billionaires.

Look at the Forbes 400 list. Almost everyone on there either earned the wealth themselves through business and investment or they are first generation inheritors of the estate created by their parents successful business and investment. In other words, it's pretty much all new wealth, not old wealth.

 

[Axulus]

He said "the rest of society", not "the underclass". Words used are important.
.

The rest of society includes 'the underclass'' - which, given the ratio of wealth distribution, is the bulk of the world's population.

And now we are including people in third world countries? I thought we were mainly focusing on first world countries and the wealth distribution therein. What does Bill Gates and other mega rich have to do with extreme poverty in the Democratic Republic of Congo, for example? How would taking away their wealth and thereby reducing the wealth gap in any way help those in the DRC? Given his philanthropic efforts, it is more likely to harm them than anything else.

 

[Jayjay]

For the whole world it's "out of balance," and if redistributing wealth from those higher to those lower is what is needed, then let's begin with the greatest inequality, that of the developed countries to the poor countries, and make the top 90% or so take care of the bottom 10% worldwide. So the middle- and lower-middle-income brackets should join the "rich" in sacrificing 2-3% of their incomes to raise up the lower 10%, who are mostly in those poorest countries. That's where the real "poor" people are.

You seem to be out of touch with the level of global income inequality, if you think only the bottom 10% are the real poor. It's closer to bottom 50% being the poor, and top 1% being extremely rich. Your idea of enacting global redistribution isn't a bad one but even then it should be progressive rather than a flat tax.

 

[Axulus]

For the whole world it's "out of balance," and if redistributing wealth from those higher to those lower is what is needed, then let's begin with the greatest inequality, that of the developed countries to the poor countries, and make the top 90% or so take care of the bottom 10% worldwide. So the middle- and lower-middle-income brackets should join the "rich" in sacrificing 2-3% of their incomes to raise up the lower 10%, who are mostly in those poorest countries. That's where the real "poor" people are.

You seem to be out of touch with the level of global income inequality, if you think only the bottom 10% are the real poor. It's closer to bottom 50% being the poor, and top 1% being extremely rich. Your idea of enacting global redistribution isn't a bad one but even then it should be progressive rather than a flat tax.

And yet just 30 or 40 years ago, the bottom 75% was poor. Doesn't sound like the increase in global income/wealth inequality has come at the expense of the poor as is often asserted.

 

[Togo]

Inheritance can dissipate wealth, if two conditions apply - large families need to be typical; and several members of the next generation must typically inherit a sizable fraction of any given estate. The former was true before WWII, but is less true today; the absence of the latter, however, was a defining feature of the aristocracy in England for at least nine centuries. I see no reason to expect that such voluntary dissipation of wealth will ever become the norm; and indeed we observe that it was not normal in the past. Unless the law compels parents to give all offspring equal status in their wills - something that it does not currently do - there is no reason other than pure hope to imagine that wealth concentrations will dissipate naturally over time.

Primogeniture was once the norm for wealthy families, but it is not now the norm. I don't move in those social circles, yet I find it hard to imagine (even in Britain) that billionaire parents are being uneven with the distribution of their estates.

Depends on the nature of the wealth. If it's cash or liquid investments, then no, it tends to get split evenly. If it's a company, or a house and estate, or some other wealth that's hard to divide and comes with responsbilities, then distribution tends to be uneven, often dramatically so. It's worse with aristocrats, since there's generally a title, and a house and land and priviledges associated with the title, and that can't easily be divided without liquidating an estate that may have been in the family for anything up to 1000 years.

 

[ksen]

How is it bogus?

(In case you still haven't figured it out, simply declaring something to be so doesn't make it so)

I've already explained.

The problem is that in that time period there were huge loopholes in the tax code. Most of them took the form of keeping things from being income in the first place--thus we don't know what their income really was.

Oh, so it was in fact even worse than what the chart shows.

 

[untermensche]

A sickness inflicts apes that have great wealth.

They live in terror some other ape will come and take it all.

They live to keep the other apes from their great wealth.

And every understanding of their unworthiness to have so much when so many have so little makes them more and more afraid.

 

[Loren Pechtel]

I've already explained.

The problem is that in that time period there were huge loopholes in the tax code. Most of them took the form of keeping things from being income in the first place--thus we don't know what their income really was.

Oh, so it was in fact even worse than what the chart shows.

No. I'm saying the real line is probably a lot flatter than that graph shows.

 

[DBT]

The rest of society includes 'the underclass'' - which, given the ratio of wealth distribution, is the bulk of the world's population.

And now we are including people in third world countries? I thought we were mainly focusing on first world countries and the wealth distribution therein. What does Bill Gates and other mega rich have to do with extreme poverty in the Democratic Republic of Congo, for example?

My remarks were related to the recent report, which I've quoted, that nearly 50% of the worlds wealth is in the hands of the top 1% - therefore it necessarily includes the upper middle, middle, lower middle and those living in poverty. Everyone below the top 1% is included in that figure.

How would taking away their wealth and thereby reducing the wealth gap in any way help those in the DRC? Given his philanthropic efforts, it is more likely to harm them than anything else.

I didn't say anything about talking away anyone's wealth. The situation is grossly inequitable, so my suggestion was that we should be working toward a fairer wealth distribution system. How that is structured is up for debate.

 

[arkirk]

And now we are including people in third world countries? I thought we were mainly focusing on first world countries and the wealth distribution therein. What does Bill Gates and other mega rich have to do with extreme poverty in the Democratic Republic of Congo, for example?

My remarks were related to the recent report, which I've quoted, that nearly 50% of the worlds wealth is in the hands of the top 1% - therefore it necessarily includes the upper middle, middle, lower middle and those living in poverty. Everyone below the top 1% is included in that figure.

How would taking away their wealth and thereby reducing the wealth gap in any way help those in the DRC? Given his philanthropic efforts, it is more likely to harm them than anything else.

I didn't say anything about talking away anyone's wealth. The situation is grossly inequitable, so my suggestion was that we should be working toward a fairer wealth distribution system. How that is structured is up for debate.

I have made the same kind of remark many times and I am always attacked as a heretic. If these right wingers want their overall system to survive, it is going to have to become fairer than it presently is. The charge these guys use is..."how will taking a rich man's wealth away make things any better for the poor?" Unaugmented wealth at any time becomes only a temporary situation...even according to Loren. We are not talking about MAKING A WEALTHY MAN POOR AND HOMELESS AND HUNGRY BY SEIZING ALL HIS ASSETS. I have long advocated that it merely be a change in how business is done going forward, placing upper limits on rents and unearned profits. Simply adjust the rules and place some upper limits on FUTURE WEALTH ACCUMULATION BY THOSE WITH SUPERNUMARY WEALTH. If the money that is taken from transactions is used to sponsor public projects then there will be an improvement on the side of social responsibility, which has gone begging to no avail for the last forty years. I am not advocating eliminating the presence of wealthy people...only making it a fairer place and exchange, one that promotes circulation of money in the economy and disallowing rampant inflation. How this is accomplished is open to debate, but I am hearing from some capitalist utopians that we are already living in the best possible world and I don't buy that for a second.

 

[DBT]

Much the same lines that I've been considering. It can be argued that these mega rich individuals remove wealth from the greater economy through hoarding of assets, etc, therefore provide a negative impact upon the economy.

 

[Axulus]

Much the same lines that I've been considering. It can be argued that these mega rich individuals remove wealth from the greater economy through hoarding of assets, etc, therefore provide a negative impact upon the economy.

How does the "hording of assets", when those assets are made available for the rest of society to use (via loans and capital investment), have a negative impact upon the economy and society at large?