Wealth inequality - at what time does it start to get unsustainable ?

[Helix]

9 Out Of 10 Americans Are Completely Wrong About This Mind-Blowing Fact

After watching the video at above's link, i'd appreciate a discussion on what you think is a fair distribution of wealth in a society... or better, in "our" society.

Every opinion is welcome, would be great if we could keep it pollite and respectful, despite whatever differences in opinion might come up.

this chart gives a good indication :



in my opinion, problems begin when most of the wealth is at the top, because then speculation and bubbles get out of control. and when the big players start collapsing, they take down everything else as well.

how to solve it? i'd like to see higher marginal rates (for everyone, not just the rich,) but i think taxing investment income as income above a cap is the key policy change we need to make. also, too big to fail is too big to exist. just like in a neighborhood, if you're building a teetering skyscraper to the stars that would take out the town if it collapsed, we need to zone the largest entities into manageable units. we should learn from our mistakes, and never let any corporation get so big that its failure would necessitate a bailout. this will have a side benefit of promoting competition.

 

[Summerwind]

Here is my question every time these discussions come up its all about how people have been screwed by the system and never about choices people themselves make. Do you think someone working at McDonalds flipping burgers should make $48k a year?

Conversely do think someone with a Master's Degree should be flipping burgers at McDonalds because most of the engineering jobs are being sent oversees or cheap one's brought here, legally, who are willing to do the work requiring a master's at McDonalds wages because comparatively their educations and lives have cost dramatically less than ours?

My friend here, and yes, he's a friend, but I hate that he does this. All his manufacturing is done in China, but he doesn't speak Chinese. Rather than hiring an American who speaks fluent Chinese, he sponsors visa'd visits, 3months I think, for Asian gals, makes them pay for all their room and board when they're here, pay's them minimum wage, and at the end of the 3 months, seems to abandon them. He says because their visas are up he can't keep them employed and he can't make them go back, so he just shows them the door. Adios! He does essentially the same with Indian engineers, though long distance. He gets one to solve some problem they were having, promising that if he does he'll get them over here, then seems to take the idea and find some reason to not continue with that engineer who cost nearly nothing, one guy worked three months or so and only received the program they had to buy him in order for him to do the work they asked.

You only see things from one side, should a McD guy get more than minimum wage, but should the guy with the Master's Degree be forced to either work at McD's or accept minimum wage for Masters quality work?

 

[Paratrooper]

I don't but your talking about something different. A business is going to do what is in it's best interest (it has an obligation to its shareholders to make money) if our policies are making it more beneficial for them to move elsewhere then our government needs to address that, preferably with the "you get more flies with honey than vinegar" approach. We also have to be prepared to adapt. I chose a profession (the military) that our government has decided to downsize. Now there are going to be alot of jobless vets and not necessarily a big market for Infantryman and Field Artillery. They will have to find new skills to adapt to the market.

I full support our government stepping up and making it easier for people to retrain to stay competitive. I don't think people should demand more money for the same level of work though.

Edit: I'll add that under the current system many soldiers are not even qualified to do the job on the civilian side that is the exact equivalent in the military. Drove big rigs in the Army for 20 years? no CDL for you!

 

[VanceMack]

The second my accumulation of wealth prevents you from doing so, come visit.

 

[Summerwind]

I don't but your talking about something different. A business is going to do what is in it's best interest (it has an obligation to its shareholders to make money) if our policies are making it more beneficial for them to move elsewhere then our government needs to address that, preferably with the "you get more flies with honey than vinegar" approach. We also have to be prepared to adapt. I chose a profession (the military) that our government has decided to downsize. Now there are going to be alot of jobless vets and not necessarily a big market for Infantryman and Field Artillery. They will have to find new skills to adapt to the market.

I full support our government stepping up and making it easier for people to retrain to stay competitive. I don't think people should demand more money for the same level of work though.

Edit: I'll add that under the current system many soldiers are not even qualified to do the job on the civilian side that is the exact equivalent in the military. Drove big rigs in the Army for 20 years? no CDL for you!

Actually you get the most flies with poop if you want to be accurate. So there's go that little bit of bull. I hate that saying, it is such a lie, not to mention who the f wants to attract flies anyway. Though I'll give you credit, with low regulations, low wages, low community responsiblity, flies are about the quality of corps we attract.
That said, you didn't at all address what I brought up, though it's an interesting sidebar.

 

[LowDown]

9 Out Of 10 Americans Are Completely Wrong About This Mind-Blowing Fact

After watching the video at above's link, i'd appreciate a discussion on what you think is a fair distribution of wealth in a society... or better, in "our" society.

Every opinion is welcome, would be great if we could keep it pollite and respectful, despite whatever differences in opinion might come up.

Why is a big gap between rich an poor even a problem? If the poor get the food, shelter and clothing they need, the basic necessities of life, and if there is reasonable social and economic mobility, then there is no problem in my opinion.

 

[VanceMack]

Why is a big gap between rich an poor even a problem? If the poor get the food, shelter and clothing they need, the basic necessities of life, and if there is reasonable social and economic mobility, then there is no problem in my opinion.

Its not a 'problem', its just not 'fair'. People will whine about how unfair it is that the rich earn all that money and they have little if any. The presumptive reasoning being the rich are stealing it from the poor and keeping them from succeeding. That of course ignores reality...but hey...its ALWAYS better to blame someone else for your own dismal failures.

 

[NeoVsMatrix]

Why is a big gap between rich an poor even a problem? If the poor get the food, shelter and clothing they need, the basic necessities of life, and if there is reasonable social and economic mobility, then there is no problem in my opinion.

Fair enough. The problem that i see with it lies in the lack of sustainability of this development. If a growing portion of available wealth is consolidated more and more with less and less people at the top, then there is at some point no more broad base to support the economy. 10 % of the population will not buy 100 % of the available goods. This can be circumvented for a while by expanding to international markets, but those will be dried out from a supporting base at some point then as well.
So in this case, as i see it, welfare to support the poor becomes an obligation, and the potential of growth for the top earners diminishes at the same time. And since noone - conservatives and liberals alike - "want" welfare as the key to government, i personally think that it is better and more sustainable to flatten that curve of wealth inequality again to a more sustainable level. Increase the lowest wages to a level that an individual can at least support oneself with 1, or even 1.5 full time jobs, without the need of being dependent on additional support, food stamps and such. And, shift the collection of taxes somewhat towards the high earners / fortunes, and if only by closing loopholes and eliminating subsidies for corporations. i don't blame the corporations for avoiding taxes within the given legal limits, i blame the system providing those opportunities for corporations.
That's pretty much it.

 

[thinkforyoursel]

everybody have a personal wish-list...when they cast a ballot. The list of things they most want their candidates to do.

For me ...all my life ...my top priority was always stop the corporations from stacking-the F$KING deck against against the people.

The banks with their fees...the banks with their credit rating scams...the F$CKING OIL rape we've experienced non-stop.

When I apply for a Credit card and assume more debt ...I get why it negatively affects my credit rating ....but when I pay off the FKING CARD to close the account ...why ...why the F$CK does it still negatively affect my rating!!


I get irate every time I hear that STATE FARM add about...."ACCIDENT FORGIVENESS"...!!! If you don't see the irony in that argument ..you're part of the problem!!

We used to build stuff in this nation .....the money now is made from people's misery and misfortune ...that's why America is stuck!

 

[LowDown]

Fair enough. The problem that i see with it lies in the lack of sustainability of this development. If a growing portion of available wealth is consolidated more and more with less and less people at the top, then there is at some point no more broad base to support the economy. 10 % of the population will not buy 100 % of the available goods. This can be circumvented for a while by expanding to international markets, but those will be dried out from a supporting base at some point then as well.

Reductio ad absurdum, eh? When the rich people have all the money there's no one to buy stuff?

That totally ignores the reality of what rich people do with their money. They invest it in capital operations, companies, corporations, and so on, which puts all that money back into the economy, which puts it into the hands of employees, customers, workers, and the government. They didn't get rich in the first place by letting their money remain idle. The result is that more wealth is created and the pie expands. There's no such thing as Scrooge McDuck sitting on a big pile of gold coins in the vault in his mansion.

There would be a need for transfer payments if poor people were destitute, starving, and homeless. As a matter of fact we currently have quite a lot in the way of a transfer economy. More now than in a long time.

 

[Born Free]

If an average employee is hundred times dumber than the CEO, the company will not last long.

No they are worker B's doing as they are told with nothing more to offer.

 

[Starbuck]

After watching the video at above's link, i'd appreciate a discussion on what you think is a fair distribution of wealth in a society... or better, in "our" society.

The video was accurate, using widely available information. The graphics were straight forward, but it came off kind of cold. Have you seen Robert Reich's movie Inequality for All? It came out a few weeks ago and addresses this topic quite extensively, one of the better documentaries that I've ever seen.

Every opinion is welcome, would be great if we could keep it pollite and respectful, despite whatever differences in opinion might come up.

Currently I believe that the distribution of wealth in the United States is unsustainable, especially over the long term. When private corporations can essentially purchase Presidential elections we've gone too far down the rabbit hole.

Personally, I think that any rational capitalist would like curve of wealth in this country restored to how it once was (think 50's), where we actually had a robust middle class that helped propel the United States to its status as the global economic leader. This doesn't necessarily mean that I think we need to tax the rich into mediocrity or assist the poor into prosperity though.

The ideal is for individuals to see the value in paying their employees a living wage prior to the government having to get involved at all. Maybe this sounds ridiculous, but it can happen. In a capitalist country, change is best when it comes from the people and their industry. Investing in workers isn't only logical, but financially prudent.

Don't take my word for it though, ask In-N-Out how it's going for them:

In-N-Out pay
McDonalds pay

​

I don't think that there is anyone on the face of the Earth that would argue In-N-Out as being anything other than incredibly successful in every respect. Oddly they were able to achieve this while simultaneously compensating their employees beyond the industry standard. Some might even argue that this is precisely the reason for their success.

The same story can be found for Costco and Sam's Club. Costco compensates above industry average and is successful because of the people that work there. Funny how that works.

 

[Starbuck]

Reductio ad absurdum, eh? When the rich people have all the money there's no one to buy stuff?

That totally ignores the reality of what rich people do with their money. They invest it in capital operations, companies, corporations, and so on, which puts all that money back into the economy, which puts it into the hands of employees, customers, workers, and the government.

That totally ignores that the United States (or any capitalist nation really) runs on a consumer based economy. If capital investing was located squarely at the center of the United States economic universe you'd be dead right, however you are totally misreading how our economy actually works.

Sergey Brin, as cool as he might be, only sleeps on one bed at a time and likely only uses one toothbrush in a day. That is exactly why Wal-Mart employes millions of people (second only to the US government) while Neiman Marcus employes only a fraction of that number.

 

[NeoVsMatrix]

Well, that's pretty much what i said all along throughout the thread... just way less eloquent than you. What can i say, i'm not a native speaker. Thanks for the post, covers my position head to toe.

The video was accurate, using widely available information. The graphics were straight forward, but it came off kind of cold. Have you seen Robert Reich's movie Inequality for All? It came out a few weeks ago and addresses this topic quite extensively, one of the better documentaries that I've ever seen.

No , i haven't seen it yet, but heard a lot of good about it. It's on my "have-to" list. Missed the small window it was playing in theaters.

 

[Starbuck]

I full support our government stepping up and making it easier for people to retrain to stay competitive. I don't think people should demand more money for the same level of work though.

That is exactly what most of the other highly successful capitalist nations are doing (i.e. Japan, Germany, South Korea). Investing in the workforce is always better than simply giving them crumbs.

Edit: I'll add that under the current system many soldiers are not even qualified to do the job on the civilian side that is the exact equivalent in the military. Drove big rigs in the Army for 20 years? no CDL for you!

I'd say this is true, were it not for the fact that the Military is making great strides in making these qualifications available to its members. The GI Bill has become much more user friendly and many people now are able to use this to translate their military experience into quantifiable credentials.

Although, many of the smarter companies are recruiting straight from the military and allowing the skills to straight transfer.

 

[Starbuck]

Why is a big gap between rich an poor even a problem? If the poor get the food, shelter and clothing they need, the basic necessities of life, and if there is reasonable social and economic mobility, then there is no problem in my opinion.

I don't know maybe you should ask Louis XVI how that worked out for him. He didn't think there was much of a problem either, well until they lopped of his head anyway.

Thing is, I like capitalism. I like having stuff and also the ability to work for something more, to this end I dread very much the day when millions of Proles start lopping off the heads of anyone with more than them. If we continue down this path, I'm quite sure this is something in store for us.

Pray tell me how the Koch brothers are any different than any member of the aristocracy that lead Louis XVI to where he wound up?

 

[Starbuck]

Well, that's pretty much what i said all along throughout the thread... just way less eloquent than you. What can i say, i'm not a native speaker. Thanks for the post, covers my position head to toe.

Thanks, it's definitely one of those topics that has resonated with me lately. I tried to follow most of the thread before posting and you made some really good points, I wish more people would actually start thinking about stuff like this.

There are some really forward thinking people out there running successful companies with an agenda of investing in their employees. I think this is great, and were more to follow suit, I think it would go a long way to improving our nations prospects. However, I don't think there are enough In-N-Out's, Trader Joe's or Costco's out there to shift the tide.

No , i haven't seen it yet, but heard a lot of good about it. It's on my "have-to" list. Missed the small window it was playing in theaters.

It was outstanding, definitely worth the watch.

Hopefully it is out on Netflix soon.

 

[Grim17]

this chart gives a good indication :

View attachment 67155436

I think it has to do with cosmic rays... As this chart shows, in both 1933 and 2007, the number of sunspots was low, meaning the amount of cosmic rays penetrating into our atmosphere was peaking...



I hope you all enjoyed the comic relief.

 

[NeoVsMatrix]

That totally ignores the reality of what rich people do with their money. They invest it in capital operations, companies, corporations, and so on, which puts all that money back into the economy, which puts it into the hands of employees, customers, workers, and the government. They didn't get rich in the first place by letting their money remain idle. The result is that more wealth is created and the pie expands. There's no such thing as Scrooge McDuck sitting on a big pile of gold coins in the vault in his mansion.

What your describing in the ideal world scenario, but not the reality. Yes, a certain amount of their money is re-invested, absolutely. And it increases the overall pie, also agreed. but the additional wealth is kept within the 10 %, and does not benefit overall society, and thereby only increases the inequality of wealth distribution. And that, if continuously ongoing, will result in poor people starving and being homeless, that's exactly the point.

And it is a fact that the economy suffers from this, already. We subsidies farmers by paying them to not crop their field, to artificially keep the price for crops (and thereby bread) at a certain level. At the same time, a growing portion of the population relies on food stamps to buy that bread (more subsidies). And the wealthy people, no matter how cheap or expensive bread is, they do not buy all the bread supply available, because they don't NEED it. Same goes for TV's, computers, cars etc., etc.
Look at Detroit, there is current live proof that the supply chain is already starting to deteriorate, taking the population with them. And imagine that on a larger scale. That's the concern i am describing.
If your broad base cannot participate in the free market anymore, let that be basics for survival or certain luxury items, it hurts the economy, and it hurts the rich in the end as well.

 

[Mithrae]

To whom does the land belong, I wonder? To whom do the mineral resources belong? To whom does the atmosphere belong?

If one person acquires a greater share of wealth than others by the use of those resources, would you say that they are 'stealing' from the common wealth of the country or species?

Perhaps not - but then how could it be 'stealing' for a government to reserve or tax a portion of that wealth for the country in general?




Few people could reasonably object to wealth which a person acquires by their own hard work and ingenuity. And it's hard to imagine than any CEOs work a hundred times harder than their average employees.

But wealth which derives from things which the person has no clear right to? The term 'stealing' would be applied more accurately to them than to a government which taxes them, methinks.

Land owners and wealthy people have been taxed on everything they have made. They pay property taxes every year on their property. Are you saying they should be taxed again on what is left over after they have already paid the other taxes?

I'm saying - contrary to the opinions a few folk have expressed - that taxation (or other forms of wealth distribution regulation, such as minimum wages) is not 'stealing' or 'slavery.' Wealth derived from things that folk do not clearly have an exclusive right to - such as land, minerals, fisheries, atmosphere etc - should require some reimbursement to the rest of us for that privilege and protection of those rights. IE, first come first served would be trumped by might makes right; preventing or resolving such conflicts and protecting the rights of land- or mine-owners and the like is a role of government.

So are we (the people or governments) acquiring enough for granting those privileges/rights? I don't know about property taxes, but in the case of mining I'd be inclined to suspect not. That would be a case-by-case question, really. My main objection was to the absurdly over-the-top rhetoric being used by some conservatives.

On this point that a CEO doesn't work harder than the average employee and therefore they are not entitled to make more money, do you think the President works more or less than the average worker in the country or even his own government?

Should the President be paid more than the average salary of any government worker?

How many average workers have had as many days off or as many vacations as the President has had? Does he deserve his pay?

Possibly not, though you'd have to consider things like possible risks to personal safety, disruption and intrusion into family life, 'on call' time and so on. I'm inclined to favour lower pay for politicians generally. Obviously a head of state and heads of government departments are more special cases.

It does say quite a lot when corporate CEOs can receive far greater remuneration than the leader of the global superpower, to my mind. I didn't say that they are not entitled to receive that money, mind you. I don't know much about all this stuff, but while I suspect there is probably room for improvement in the current economic and business systems, basically executives are always gonna get paid whatever the company (the executives and/or the shareholders) figure they should be paid.

But the question then is whether or not they have an inalienable right to every last cent or dime of that money? Virtually everyone would agree they do not, because it was earned in an economic system comprising millions of other people, overseen and protected by their government. For example, all other factors aside, the workers of a company might get paid $20 an hour for their efforts, the company gets $40 profit for each worker-hour, and so with thousands of employees the CEO (let's say he's new and didn't do anything to help build this company) gets $500 an hour for an effort equal to or less than many of his workers. I'm not necessarily saying that is bad or wrong: But does he have some inalienable right to any particular percentage of that money, such that higher rates of taxation are 'stealing' from him?



I'm very interested in these kinds of questions, and wanting to learn more by challenging my ideas was the reason I joined the forum (distracted briefly by some global warming discussion :lol: ). But my gut feeling is that beyond a certain point, the wealth of the ultra-rich is extremely disproportional to their efforts and talents (as compared with average folk), and as such do not necessarily have some inassailable right that democratic governments might not legitimately overturn.

 

[LowDown]

That totally ignores that the United States (or any capitalist nation really) runs on a consumer based economy. If capital investing was located squarely at the center of the United States economic universe you'd be dead right, however you are totally misreading how our economy actually works.

Sergey Brin, as cool as he might be, only sleeps on one bed at a time and likely only uses one toothbrush in a day. That is exactly why Wal-Mart employes millions of people (second only to the US government) while Neiman Marcus employes only a fraction of that number.

So you think that the only way the wealthy people contribute to the economy is to buy stuff?

 

[LowDown]

I don't know maybe you should ask Louis XVI how that worked out for him. He didn't think there was much of a problem either, well until they lopped of his head anyway.

Thing is, I like capitalism. I like having stuff and also the ability to work for something more, to this end I dread very much the day when millions of Proles start lopping off the heads of anyone with more than them. If we continue down this path, I'm quite sure this is something in store for us.

Pray tell me how the Koch brothers are any different than any member of the aristocracy that lead Louis XVI to where he wound up?

Why should "the proles" turn violent if they have what they need to live a comfortable life? Just out of sheer envy? I don't think many people are like that.

 

[Starbuck]

So you think that the only way the wealthy people contribute to the economy is to buy stuff?

If we are going to keep up with the "work for pay" and "forty hours per week" paradigms, then yes that is the primary way that wealthy people contribute to the economy.

Money sitting in a capital investment account will only benefit society & the economy if it is used to buy direct services, goods or equipment.

Why should "the proles" turn violent if they have what they need to live a comfortable life? Just out of sheer envy? I don't think many people are like that.

Currently the Proles have their circuses (football, reality tv and Facebook). Sans those the life of the proles in the US is becoming less "comfortable" each passing year. Something about working two jobs (50+ hours of week) just to pay the bills seems to strike a chord.

 

[Beaudreaux]

thanks... but those amounts are the "exemptions" that someone does get if exposed to the AMT, not the treshold of income when the AMT starts to apply.

The AMT applies to significantly more people since 2012 than before, due to the expiration of a temporary tax legislation enacted back in 2000. The group hit worst by this, is the income range between 200-500 K right now (it does apply to lower and higher incomes as well, in certain cases, but between 200-500k, most people have to pay it.).

Who pays the AMT?

The exemption is the level to which AMT does not apply. That's why they exist. Above the exemption level is where, dependent upon multiple and potentially confusing factors, is where AMT does in fact kick in.

I've paid AMT every year for the last few years. It kicked in for me at the levels I mentioned in my previous post.

Your link, although mentioning 200K to 500K specifically, also gave the same info I did in its charts:

AMT was originally enacted to counteract the losses to government revenue by the hundreds of loopholes. But, when it was first enacted, the average income numbers were much lower than they are today, and since the increases to income level in the tax code were linked to CPI and other indices that do not and have not reflected the actual increase in income levels for middle and upper class income levels, the point at which AMT kicks in has spiraled down to income levels that are lower middle class incomes.

Just another of many reason why we need immediate and dramatic tax code reform.

 

[VanceMack]

Ok, here it is.

Ideologically, i would prefer the common sense approach, in which those with extraordinary amounts of wealth, which include those who "run" the economy / supply chain, would be willing to pay fair salaries across the board, including low level workers at the fast food counter or grocery shelf. I am not educated in economics to define what "fair" would be, imo it would be at least at the level of making a salary which is slightly above the poverty level.
A company owner, who rakes in 3 Mio $ personal profit / year, but does pay his employees below minimum wage or only the bare necessary minimum, would be well off with a personal profit of 2.5 Mio$ only as well, allowing his employees (who did majorly contribute to his profit) to participate in the economy.
That consciousness would, ideally, also prevent investors / sharks from taking advantage of market developments that they directly manipulate to their advantage, or to use other people's money for their speculation.

Now, since i am rational enough to understand that this is not going to happen: if society does not sustain itself just based on good-will and a common understanding, government would have to step in. A reasonable minimum wage, and a different tax distribution, potentially with net revenue increase, would be the necessary measures then. Close all loopholes, except for very small incomes, across the board, no more subsidies for corporations ( why is it socialism to redistribute wealth to those in need, but totally acceptable to provide incentives and extra money - from taxes - to corporations who can easily survive without those subsidies ?) This is not socialism, but a needed effort to take in the money that is required to pay for our obligations... including to provide for those who cannot support themselves. A society does not stop at the poverty level. Details of such measures, enforcing able-bodied to work / provide social services in return for government welfare, are possible and fair as well, imo. And it is factual to me that even then there would be some who fall through the net, of course, as there are some that still maintain an extraordinary advantage. I don't have an absolute solution for it, i just think to flatten the curve a little would be good for the mid- and long-term development.
There's never a perfect solution, and without a majority agreeing on what a "perfect" scenario would be, it is nearly impossible to even think of practical solutions.

Here is the beauty of the current system in which we live. You and all those that embrace wealth distribution are ABSOLUTELY FREE to create a business, build it to viability, expand, grow, become successful, and then pay your employees what you deem a 'fair' salary. All you have to do is actually DO IT. But...there seems to be a problem. There are a whole lot of people big on the unfair labor, wealth redistribution side of the fence that are long on rhetoric, but short on action. IF what you espouse as 'the way' were doable, it stands to reason that with approx half of the population being liberal and democrat, that we should see more than a few of these utopian business success stories in place.Yet..for some reason...we dont. Now...please dont think thats because conservative republicans have all the wealth...we know that is simply not the case. SO...why hasnt it already happened, and when can we expect to see you putting your words into action?