Wealth inequality is not the "natural" result of capitalism

[SimpleDon]

Wealth inequality is not the "natural" result of capitalism, it is the result of fiscal policies of the individual countries. The US has terrible wealth (and income) inequality because our fiscal policies are designed to produce inequality.

A single chart from here demonstrates this.

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The US has the 4th highest average wealth among the 20 capitalist democracies on the chart. And the 19th overall median wealth, half have more, half have less. This difference indicates a high level of wealth inequality in the US compared to all of the other countries.

It means that the wealth inequality isn't a result of structural changes in capitalism, because of globalization, because of increasing application of automation, because of failing schools, because of the increased value of education, etc. It is because we in the US chose to adopt fiscal policies meant to produce inequality. We chose to increase the income and the wealth of the rich at the cost of everyone else.

 

[Harry Bosch]

Wealth inequality is not the "natural" result of capitalism, it is the result of fiscal policies of the individual countries. The US has terrible wealth (and income) inequality because our fiscal policies are designed to produce inequality.

A single chart from here demonstrates this.

View attachment 662​

The US has the 4th highest average wealth among the 20 capitalist democracies on the chart. And the 19th overall median wealth, half have more, half have less. This difference indicates a high level of wealth inequality in the US compared to all of the other countries.

It means that the wealth inequality isn't a result of structural changes in capitalism, because of globalization, because of increasing application of automation, because of failing schools, because of the increased value of education, etc. It is because we in the US chose to adopt fiscal policies meant to produce inequality. We chose to increase the income and the wealth of the rich at the cost of everyone else.

Don: I don't think that is revolutionary! It's no great secret that Americans don't like paying taxes, more so than most countries. There has always been more of a libertarian bent in the US than most countries.

 

[Juma]

Wealth inequality is not the "natural" result of capitalism,.

Wrong. The natural result of unregulated capitalism is huge inequalities.

What you should have said is that it is not a necessary reason for inequalities, there are others... As for example what you mention later:

It means that the wealth inequality [ in US] isn't a result of structural changes in capitalism, because of globalization, because of increasing application of automation, because of failing schools, because of the increased value of education, etc. It is because we in the US chose to adopt fiscal policies meant to produce inequality. We chose to increase the income and the wealth of the rich at the cost of everyone else.

Correct

 

[SimpleDon]

Don: I don't think that is revolutionary! It's no great secret that Americans don't like paying taxes, more so than most countries. There has always been more of a libertarian bent in the US than most countries.

The biggest problem with the libertarians is that they refuse to own the consequences of their philosophy.

Your proposition is that the US is more libertarian than the other countries on the chart. Then why do we hear all of the fabricated reasons for the wealth inequality and the income inequality that produces it? If the country is naturally libertarian where are the libertarians telling us that the inequity that we see in the US is due to economic freedom that we enjoy, that it is the libertarian economic policies that we have put in place are the reasons that we have 25% of the population living in poverty so that the incentives for becoming wealthy are so much greater here than in any other western democracy? That we have to lower taxes on the rich and increase them on everyone else to further individual freedom?

Instead libertarians tell us that the poor are stupid. That the poor are lazy. That the very structure of capitalism has changed to reward the few achievers and to punish everyone else.

These are obvious lies, these other countries don't have such a large percentage of supposed stupid, lazy poor. Their capitalism hasn't fundamentally changed to better reward the rich. If the advantages of libertarian freedoms are so great then why aren't libertarians willing to admit to the costs of those freedoms?

 

[dismal]

Well, that settles it. Capitalism is awesome. Government sucks.

 

[SimpleDon]

Wrong. The natural result of unregulated capitalism is huge inequalities.

What you should have said is that it is not a necessary reason for inequalities, there are others...

I try to stay away from internet blogging conventions like "shock quotes" for the same reason that I don't try to figure out hip-hop lyrics, I just don't get them. I thought that shock quotes are meant to call in to question the term that is quoted. That we can have capitalism without the inequity. So my title should have been that, "Capitalism doesn't need wealth inequality."

 

[coloradoatheist]

Wrong. The natural result of unregulated capitalism is huge inequalities.

What you should have said is that it is not a necessary reason for inequalities, there are others...

I try to stay away from internet blogging conventions like "shock quotes" for the same reason that I don't try to figure out hip-hop lyrics, I just don't get them. I thought that shock quotes are meant to call in to question the term that is quoted. That we can have capitalism without the inequity. So my title should have been that, "Capitalism doesn't need wealth inequality."

Wealth inequality has been pretty much the standard for all humans throughout time. So the question becomes, is the wealth inequality a result of somebody providing a service/product that others freely choose to enter or one that is forced upon them.

 

[Bronzeage]

The problem with a statement such as:

Wealth inequality is not the "natural" result of capitalism, it is the result of fiscal policies of the individual countries.

is that all results of capitalism is the result of the fiscal policies of the government and there is nothing natural about any possible result.

 

[SimpleDon]

The problem with a statement such as:

Wealth inequality is not the "natural" result of capitalism, it is the result of fiscal policies of the individual countries.

is that all results of capitalism is the result of the fiscal policies of the government and there is nothing natural about any possible result.

That was the intent of my title, as I said, I shouldn't have used the scare quotes.

 

[SimpleDon]

I try to stay away from internet blogging conventions like "shock quotes" for the same reason that I don't try to figure out hip-hop lyrics, I just don't get them. I thought that shock quotes are meant to call in to question the term that is quoted. That we can have capitalism without the inequity. So my title should have been that, "Capitalism doesn't need wealth inequality."

Wealth inequality has been pretty much the standard for all humans throughout time. So the question becomes, is the wealth inequality a result of somebody providing a service/product that others freely choose to enter or one that is forced upon them.

Do you believe that the other capitalist democracies in this chart provide better wealth and income equity by forcing consumers to buy a product or service that they don't want? I would appreciate it if you provide some examples to support this contention of yours.

And explain to us how every other country in the list has avoided the ages long curse of wealth inequity. Why does the US have to bend to it when every other country in the chart has avoided it? And what have we gained as a result of tolerating this high inequity, if anything?

 

[coloradoatheist]

Wealth inequality has been pretty much the standard for all humans throughout time. So the question becomes, is the wealth inequality a result of somebody providing a service/product that others freely choose to enter or one that is forced upon them.

Do you believe that the other capitalist democracies in this chart provide better wealth and income equity by forcing consumers to buy a product or service that they don't want? I would appreciate it if you provide some examples to support this contention of yours.

And explain to us how every other country in the list has avoided the ages long curse of wealth inequity. Why does the US have to bend to it when every other country in the chart has avoided it? And what have we gained as a result of tolerating this high inequity, if anything?

I'm arguing with your contention that these countries don't have wealth inequality. You are making an arbitrary decision on what is and isn't wealth inequality. Unless there is a system where everybody has the same income and same good, there will be wealth inequality.

 

[SimpleDon]

Well, that settles it. Capitalism is awesome. Government sucks.

Yes, thank you for supplying us with another example of a libertarian lie. Capitalism isn't awesome. It is without a doubt the best economic system that we have come up with, but it is a flawed system. Its simple mechanism of operating, channeling greed into a profit motive, is suitable for supplying the simpler needs of society. But the very term "channeling greed" immediately infers that there must be an authority outside of the economy doing the channeling, deciding the limits of greed allowed. This is the role left up to government. It is the role that has always been left up to government, dating from when the first tribal chief was asked to vouch for one of the members of his tribe to fulfill an obligation, a debt.

And capitalism can't solve the more complex problems of society. These problems have to be handled by the government, education, the common infrastructure, economic externalities such as preserving the environment, adjudication of disputes, .

Capitalism's simple mechanism of the profit motive is short sighted. It can't handle long term planning. It is a feedback mechanism, there has to be a deviation from the desired result before it can react. Consumers have to be dying from pollution before it effects profits.

The overheads of capitalism are huge. You have to have a financial sector for example. There is a tremendous amount of duplication of effort required to provide competition, you have to have many different companies providing the same product. Different companies each independently working on the same product means superior results over time, capitalism perfects simple products. But the system isn't suitable for more complex problems like health care or education, where the duplication of effort and competition doesn't result in a better product.

Governments are human endeavors dealing with society's most complex and intractable problems. Of course, it fails. But it doesn't mean that these problems can better be solved by a system whose only answer to everything is always the answer to the same question; what provides the most short term profit?

 

[SimpleDon]

Do you believe that the other capitalist democracies in this chart provide better wealth and income equity by forcing consumers to buy a product or service that they don't want? I would appreciate it if you provide some examples to support this contention of yours.

And explain to us how every other country in the list has avoided the ages long curse of wealth inequity. Why does the US have to bend to it when every other country in the chart has avoided it? And what have we gained as a result of tolerating this high inequity, if anything?

I'm arguing with your contention that these countries don't have wealth inequality. You are making an arbitrary decision on what is and isn't wealth inequality. Unless there is a system where everybody has the same income and same good, there will be wealth inequality.

I am not claiming that these countries don't have any wealth inequity. I am arguing that they have robust capitalistic economies without the huge amount of wealth inequity that we have in the US. That the only reason that we hear for the large amount of wealth inequity in the US that we hear are lies.

I will go even further That it takes not much cynicism to jump to the conclusion that the people who proposed these policies did so solely to enrich the already rich. That it was never the goal to create jobs by increasing investment. That the people who supported these policies were the already rich. Or people who were gullible enough to believe the lies.

 

[Bronzeage]

The problem with a statement such as:



is that all results of capitalism is the result of the fiscal policies of the government and there is nothing natural about any possible result.

That was the intent of my title, as I said, I shouldn't have used the scare quotes.

In our time, corporations are so ubiquitous in our economy, many people see them something like a coral reef, a natural structure which grows according to it's own needs. Once this analogy is accepted, it's a short leap to give the living corporation a human personality and from then full rights of citizenship.

A corporation is a reflection of the laws which define it. The accumulation of wealth into fewer hands may not have been the intention of the law, but results always trump intention.

 

[T.G.G. Moogly]

Not to derail but wealth inequality is different from wealth insecurity. When the latter becomes the issue is when things start to change, and I can see that change coming in the U.S. People just aren't desperate enough - yet. But like I said, that day is coming.

The problem is that the prosperity genie is out of the bottle, IOW the old adage that man does not live by bread alone has been experienced and that is not a memory that is easily erased. It's why FDR was ever elected.

 

[SimpleDon]

A comment from one of my economics blogs responding to an article on why we have persistently high unemployment and who benefits from the high unemployment and from the lower wages that result from workers' reduced bargaining position because of the high unemployment.

One reasonable response to that is that starting about 35 years ago the American people made a series of deals with the so-called job creators: The “job creators” would get lower tax rates, especially on capital income, elimination of prudential regulation of financial services, changing the culture of regulatory agencies to treat law breakers like “customers,” less costly welfare programs, disempowering labor unions, massive formal and informal guest worker programs, virtual elimination of restrictions on corporate consolidations and monopoly power, more and more “free trade agreements” that allow big multinationals to operate in a space free of effective regulation by any nation on earth, privatization of traditional functions of government, etc. and in return they would create the jobs to make all Americans prosperous. That’s why they called themselves “job creators,” but they did not keep their end of the bargain. (Whether they made these deals in bad faith and never intended to deliver the consideration or just failed is beside the point.) Therefore, we should rescind all those bargains with the “job creators” and implement the Baker-Bernstein plan for broadly-shared prosperity.

Here is the Baker-Bernstein plan for a broadly based shared prosperity. The quote above was in a comment to this article.

Baker is Dean Baker, one of the few economists who not only foretold the Great Financial Crisis of 2008, he explained when it was going to happen and why it was going to happen.

(Yes, Boneyard Bill, Ron Paul too told us that a housing bubble was being built and that it was going to eventually pop. But his accomplishment is somewhat tarnished. It was the same thing that he had been predicting, incorrectly, for nearly twenty years and because he got the reason for the bubble completely wrong.)

 

[Loren Pechtel]

Wealth inequality is not the "natural" result of capitalism, it is the result of fiscal policies of the individual countries. The US has terrible wealth (and income) inequality because our fiscal policies are designed to produce inequality.

A single chart from here demonstrates this.

View attachment 662​

The US has the 4th highest average wealth among the 20 capitalist democracies on the chart. And the 19th overall median wealth, half have more, half have less. This difference indicates a high level of wealth inequality in the US compared to all of the other countries.

It means that the wealth inequality isn't a result of structural changes in capitalism, because of globalization, because of increasing application of automation, because of failing schools, because of the increased value of education, etc. It is because we in the US chose to adopt fiscal policies meant to produce inequality. We chose to increase the income and the wealth of the rich at the cost of everyone else.

You have not proven your case. Just because there are differences doesn't prove that they are caused by government policies that cause them. You could equally be looking at the difference between natural and government policies meant to tear down the rich.

And the data is bogus anyway--note Switzerland in the #1 position. Really now? That's foreign money!

And what about Sweden--nearly the same pattern as the US.

 

[Loren Pechtel]

The problem with a statement such as:

Wealth inequality is not the "natural" result of capitalism, it is the result of fiscal policies of the individual countries.

is that all results of capitalism is the result of the fiscal policies of the government and there is nothing natural about any possible result.

It's the natural result of people having differing approaches to money.

Over time the savers will well outpace the spenders. That's not government policy.

And consider Israel--it started with near equality. Now less than three generations later we see the same sort of distribution as everywhere else.

 

[SimpleDon]

Not to derail but wealth inequality is different from wealth insecurity. When the latter becomes the issue is when things start to change, and I can see that change coming in the U.S. People just aren't desperate enough - yet. But like I said, that day is coming.

The problem is that the prosperity genie is out of the bottle, IOW the old adage that man does not live by bread alone has been experienced and that is not a memory that is easily erased. It's why FDR was ever elected.

And still people continue to freely cast their ballots in favor of lowering their own wages, in order to vote with God against all of the freeloaders and the sodomites and the druggies and the brown and black people and the illegal aliens and the people who want to take away all of the guns.

 

[SimpleDon]

Wealth inequality is not the "natural" result of capitalism, it is the result of fiscal policies of the individual countries. The US has terrible wealth (and income) inequality because our fiscal policies are designed to produce inequality.

A single chart from here demonstrates this.

View attachment 662​

The US has the 4th highest average wealth among the 20 capitalist democracies on the chart. And the 19th overall median wealth, half have more, half have less. This difference indicates a high level of wealth inequality in the US compared to all of the other countries.

It means that the wealth inequality isn't a result of structural changes in capitalism, because of globalization, because of increasing application of automation, because of failing schools, because of the increased value of education, etc. It is because we in the US chose to adopt fiscal policies meant to produce inequality. We chose to increase the income and the wealth of the rich at the cost of everyone else.

You have not proven your case. Just because there are differences doesn't prove that they are caused by government policies that cause them. You could equally be looking at the difference between natural and government policies meant to tear down the rich.

And the data is bogus anyway--note Switzerland in the #1 position. Really now? That's foreign money!

And what about Sweden--nearly the same pattern as the US.

Why do you think that there are differences in the relative amounts of wealth inequity? You don't believe that the fact that thirty years ago we instituted economic fiscal policies to intentionally increase the incomes of the wealthy to supposedly increase investment resulted in the increase in the incomes of the wealthy? That supply side economic policies failed to increase the incomes of the wealthy but some other mysterious and unknown economic factor did cause the incomes of the wealthy to increase?