First, let’s hear it for Matthew’s post on human evolution just below, which is perhaps the best science post he’s written here. I know it took a lot of work, so do read it; you’ll learn a lot.
Reading the usually soporific Nicholas Kristof in today’s New York Times op-ed section (a column called “America’s stacked deck“), I learned something for once. Actually, two things. The column itself is about how Americans are pissed off (“cheesed off” to you Brits) about inequality of wealth, price-gouging by healthcare and pharmaceutical companies, and so on, and that is a powerful force driving voters this year. Kristof concludes that we must “prescribe the right fixes and achieve them in this political environment.” A BIG YAWN for that feat of intellectual dexterity!
But he did impart two useful pieces of information:
The 20 wealthiest Americans, a group that would fit comfortably inside a luxury private jet bound for a private Caribbean island, are worth more than the poorer half of the American population, according to a recent report from the Institute for Policy Studies. Forbes’s wealthiest 100 are worth as much as all 42 million African-Americans, the report says.
In other words, a person among that richest 100 has, on average, 420,000 times the average wealth of an African-American. This is the kind of inequity that makes America a socially dysfunctional (and therefore a highly religious) society.
And fact #2:
Two business school professors, Michael Norton and Dan Ariely, showed people charts of the distribution of wealth in egalitarian Sweden and in highly unequal America and asked them which kind of society they would prefer to live in, without saying which country each chart represented. Some 92 percent of Americans chose Sweden’s distribution.
So much for the evils of democratic socialism!
I’ve always said this, and I said it again in London last Friday: if I could do two things to make America a less religious society (which would in turn make it more accepting of evolution), it would be to have truly universal healthcare and to drastically reduce income inequality. Doing those would go a long way towards making America a healthier and more just society, and with that would come the diminution of religious power.
End of sermon.
And a great sermon it was sir.
Sub
I think you may be being a tad harsh toward Nick Kristof. I think he has been doing a lot of good in helping girls and young women around the world.
Agreed. I just find him a tad sanctimonious, and often without original thoughts.
Yes, and he seemed to be joined at the hip with Ben Affleck when the latter laid into Sam Harris on Bill Maher’s show.
And he disapproves of Ayaan Hirsi Ali’s books.
“In other words, a person among that wealthiest 100 makes, on average, 420,000 times the average income of an African-American.”
This doesn’t follow, you are confusing wealth and income.
Yeah, a stupid error, which I’ve fixed. Thanks.
One has to be a bit careful about these studies that assert that N people are wealthier than some great number of people.
Essentially, one arrives at a headline-grabbing number because large numbers of people are in debt. Anyone with a mortgage on a house for example. If you count such people as negative, then you can easily find that large numbers of people add up to zero, and thus get the headline.
But is that sensible? Suppose someone borrows to pay for college, qualifies as a lawyer or doctor, starts on a large salary of $100,000 or more, and on the basis of that takes on a large mortgage.
Compare them to someone scavenging a living on a third-world garbage heap, who has literally nothing.
Which is poorer? Obviously its the lawyer on the large salary, because he has negative wealth, and thus is poorer than the person with literally zero wealth!
If one instead invented a more sensible statistic, such as the amount of money a person spends in a year — which is a much better indicator of their standard of living — then you would not get such a big disparity.
I am not in debt merely because I have a mortgage on my house, unless that mortgage is under water – I merely own an encumbered asset. So if my house is worth $1M and I owe $900K, I don’t have a debt of $900K, I have an asset that is worth (in the sense of what I get if I sell it) $100K. AND, in the context of mortgages, at least here in the US, if my mortgage happened to be $1.1M and I simply walked away from the house, I would have no debt (no responsibility to pay the mortgagee the $1.1M) – the mortgagee can only recover from the mortgaged asset and not from me.
It may differ in the US, but here in the UK it’s my understanding (IANAL) that the mortgagor has the right to pursue the mortgagee for any balance of debt not covered by the sale of the property concerned. This may not be very successful, since the mortgagee may well be bankrupt, but it can still happen. Any UK lawyers wish to comment?
Also, if you considered only expenditures, anyone owning a house outright would be “poorer” than a renter, since such a person pays neither mortgage nor rent – either of which around here (Northern California) tend to be a large proportion of people’s incomes.
A more nuanced view would consider net assets, and not merely bank balances. If you’ve paid off the mortgage and your house has a value of $100,000, you would be $100,000 richer than the neighbor to the left who just bought the house with $0 down and has yet to make a payment as well as the renter to the right, even if all three of you have the exact same non-mortgage bank balances (savings, checking, credit cards, retirement, whatever). After a year, the new owner to the left will be starting to catch up to you whilst the renter will be just as poor.
The big problem with the recent housing crisis was that so many people were “under water.” They had mortgage balances of, say, $200,000, but the market values of their houses were maybe $150,000. They were truly worth negative $50,000 (in this example), assuming no other assets.
A similar persistent looming crisis is personal debt, especially credit cards. If you carry a $10,000 credit card balance and only have a few hundred dollars in your checking and savings accounts, you’re in serious trouble and again have negative worth.
Also, cars are another big source of problems…drive a new car off the lot and its value instantly plummets, but your debt on it doesn’t. Pretty much everybody with a car made in the past couple years is under water on that particular loan. As opposed to your walk-away-from-the-mortgage example, you’d literally have to pay somebody to take your new car off your hands.
The best financial advice you can offer anybody is to pay off any and all personal debts (including mortgages). When you want something, don’t buy it on credit and pay it off later; save up first (it’ll take less time) and then pay cash. For something necessary but overwhelmingly large (like a mortgage), be as modest in your expense as you can bear and as aggressive in repayment as you can tolerate. Think 15- or 10-year mortgages rather than 30- or 40-year ones, and challenge yourself to pay it off in half the time. Buy a correspondingly modest house to make it possible. In seemingly the blink of an eye, you’ll have more disposable income than you can imagine right now, even if your paycheck doesn’t change.
Business debts are a different matter…there, the basic idea is to ensure that whatever you’re paying interest on is bringing in at least a few times as much income as the debt service is costing. Buy a taxi for $30,000, pay $700 / month to the bank for it, bring in some thousands per month in fares. It’s one of many expenses. But that’s business debt…personal debt is pure expense that doesn’t bring in any income. It just drains money without giving anything back. Better to spend the money outright than to pay the bank for the privilege of spending even more.
Cheers,
b&
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Indeed, Ben – though I’m not sure that buying a taxi is such a great idea in the times of Uber and Lyft.
The excess of things owned over money owed (fair market value of house less mortgage balance, for example), is a reasonable way to consider “wealth”. But even it is skewed, and here are a couple of examples:
(1) if you live in a high housing cost area, you are probably “wealthier” than someone who lives in a low housing cost area – just because the numbers are bigger. But I’m not sure you are better off in any real sense, because the difference in wealth is only accessible by leaving the area. Anyone owning a house in the US would probably be “wealthier” selling that house and moving to, say, Central America, and there are some people who do that, but most don’t want to.
(2) an education costs money, both in opportunity cost and, generally, in student loans (non-dischargeable in bankruptcy). But the right education raises your earnings during your working years, often dramatically, so it can be a significant intangible asset. Yet that education doesn’t generally figure into “wealth”. [And what might be a valuable education in the US – say an MD – could be far less valuable in places like Cuba (I recall a doctor I know who’s been on a trip there telling me about encountering a Cuban neurosurgeon moonlighting as a taxi driver for extra income)].
At the personal level, “wealth” is a bit nebulous; but I’m sure the economists have a way to deal with it at the population level.
Live frugally seems like good advice.
I out everything on my credit card and pay off the balance each month. I do this because I like the points that I use on other things.
Thanks Ben. I’m going to take your advice. I’ll abandon the $3M home on the lake and move into a trailer down by the RR tracks.
In the blink of an eye I’ll have so much spendable income I’ll buy back my home on the lake and pay cash. You should write books.
😉
The idea that you should avoid debt and accrue savings is sound advice to be sure. The problem lies in the fact that when you’re a young college grad, you simply don’t earn enough money to make significant progress towards this goal, and in the United States, kids often start their careers with debt that can, until recent changes in the past couple of years, follow them to their graves.
I also disagree that all personal debt is necessarily a net loss in the long run. Here on Long Island, I’m currently 1/3 of the way through a 30 year mortgage. Being that I was unfortunate enough to buy right before the crash, funds for maintenance and repairs (it’s a 65 year old house) plus some minor upgrades have had to be obtained through unsecured debt, rather than home equity. It’s low interest and I obtained a fixed rate mortgage with a payments reasonable enough to still comfortably pay the extra debt I had to take on.
My assets and liabilities are both high (with the house yet to recover it’s value my net worth may even be slightly negative), yet if everything went to hell tomorrow I could survive for at least two or three years with the assets I have. So, to Coel’s original point, this isn’t necessarily a good measure, nor is amount spent necessarily the right measure. I think you’re right, assets say a lot more about standard of living, as someone with very low assets and no debt is quite likely living less comfortably than someone with high assets and high liabilities. All this said, there’s a huge number of people in America with zero or negative net worth who simply don’t have more than a paycheck’s worth of assets at their disposal. I doubt the numbers would be much less eye-popping if the analysis compared assets rather than net worth.
The choice you’re making is to pay more in debt service to maintain your standard of living in your Long Island home than you would by selling your home and buying something more modest, either elsewhere in the New York area or somewhere else entirely.
It sounds like it’s worth it to you to pay more for the luxury of living in a nice Long Island home — and I might well come to a similar conclusion. But it’s the same sort of calculation as choosing to dine out at a lovely restaurant and spending lots of money as opposed to doing a bit of grocery shopping and cooking and eating much the same food at home. You can’t really make a financial argument for the restaurant, but you sure can make a luxury argument for it.
A similar case exists today for colleges. Save in very rare corner cases, the graduate of a public university who started at a community college and worked the whole time and thus took a few extra years to get the degree is going to have the same career trajectory as the debut-burdened four-year graduate of a private college. Indeed, the one who went the public route is going to graduate with a number of years of work experience already on the resume and thus be more desirable for many employers than the smartass snob who’s never worked a day in his life.
Of course, it’s an entirely different story for the wealthy scion of the parasite class going to the school where his father is a board member…but he’s paying cash for the few dollars not already covered by honorary scholarships, so it’s an entirely moot point anyway.
Cheers,
b&
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“They had mortgage balances of, say, $200,000, but the market values of their houses were maybe $150,000. They were truly worth negative $50,000 (in this example), assuming no other assets.”
So the only rational course for the mortgagor was either (a) sell them into slavery or (b) insure them for $50,000 and shoot them. I think there’s a snag somewhere but I can’t quite put my finger on it…
cr
It’s not always true that paying down a mortgage quickly is the best financial decision. If interest rates are low and appear to be staying low it may be best to split extra payments between the mortgage and investing long term.
This may be more important if the mortgage payer doesn’t have sufficient cash flow to put funds into long term investments for retirement.
It may be more advantageous to put extra down on the mortgage until the principal is being paid down. Then if interest rates are low split the extra payments between paying down the principal and putting it in long term investments.
This can add 7 to 15 years of compounding to an investment, which can double or quadruple an investment at a return of 7 percent.
This assumes the person already has an emergency fund. If they don’t creating one should be the priority. Putting extra funds on the mortgage locks those in and if the mortgage can’t be paid all those extra payments may be lost along with the house, depending on the circumstances.
An emergency fund should be in liquid, guaranteed investments, or a savings account.
That’s bumper sticker common wisdom whose math doesn’t pass the “sniff” test.
First, when mortgage rates are low, so, too, are investment rates. Right now is the perfect example. Mortgages are roughly 5%, give or take a few points. But the highest-paying long-term CDs you can get at your bank are a tiny fraction of a percent, and even aggressive market funds are doing well at 10%. 52-week T-bills are 0.5% as of this writing.
But let’s handwave that away and assume a best-case scenario, of a mortgage about 5% and a “safe” investment at 10%. Keep your mortgage, and you’re effectively earning 5% but you still owe the debt. Forgo the investment and pay down the mortgage and not only are you not paying (and thus effectively earning) that same 5%, but now you’re reducing debit and building equity.
…or in an home equity line of credit. This is truly the best of all worlds. Put all your liquid assets to the principal of your mortgage. Open and HELOC with a similar balance but don’t actually touch it; this is your rainy day fund. Worst case, you have to dip into it and you’ve effectively got a mortgage again. But if you can avoid touching it, you’re living debt-free and all that money you had been spending on debt service you can now put to good use for yourself.
Cheers,
b&
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” Anyone with a mortgage on a house for example. If you count such people as negative,”
Your liability (mortgage) is equal to your asset (house), so they cancel. Typically, the value of the asset is greater than the liability.
If you go to the bureau of labor statistics and pull up the historical tables of income data by quintiles, you will see what happened since 1981, which Reagan came to office:
1. All the increase in wealth went to the top 20% of income earners
2. The vast majority of that went to the top 5% of income earners (and we don;t even need to talk about the top 1%, do we?)
3. Everyone else got, in net effect, nothing, from all the productivity gains of 35 years.
4. The 2nd and 3rd from top quintiles got nothing (flat line)
5. The bottom two quintiles went downhill: They are worse off today thatn they were in 1981.
http://www.nytimes.com/imagepages/2011/09/04/opinion/04reich-graphic.html?ref=sunday
http://www.nytimes.com/2011/09/04/opinion/sunday/jobs-will-follow-a-strengthening-of-the-middle-class.html?_r=3&scp=1&sq=middle%20class&st=cse
I’ve tabulated and graphed the above data. I will try to upload the graphics to the internets and link to them.
My initial comment was that this was a result of Reagan’s Tax Reform Act.
Here are some enlightening graphs:
(For all of these: Pink shading indicates Republican administrations, blue shading indicates Democrat administrations)
Income quintiles over time (corrected to current dollars using CPI):
http://www.berettaconsulting.com/barbarossa/M/stuff/inc/Quintiles.jpg
Only the top 20% shared in the economic growth for the last 35 years.
Unemployment vs. top marginal income tax rate:
http://www.berettaconsulting.com/barbarossa/M/stuff/inc/Unempl-Rates.jpg
There is no relationship between top marginal income tax rates and employment. (If anything, it’s a negative relationship.) So much for giving the money to the “job creators”.
Federal deficit vs. top marginal income tax rates:
http://www.berettaconsulting.com/barbarossa/M/stuff/inc/deficit.jpg
The big cuts in top tax rates correlate to the ballooning Federal deficits. Surprised? Not me …
All these data are publicly available (US BLS).
Good charts. The last one especially.
I show the last one to people who want elect a Republican to “get rid of the deficit”.
Ha!
Giving Tax Breaks to the already enormously wealthy , does not increase Employment, it just increases the amount of money in Offshore Bank Accounts.
So telling! Thanks, jblilie!
I need to update these through 2014. Just one more project to work on!
I can’t be the first to suggest that “trickle down” should reall be called “trickle up”.
You all can put this “y” where it goes.
😀 Indeed.
As some comic once said, “a rising tide lifts all boats. Now, for those of you who don’t have boats…”
These definitely paint a grim picture. I’d also like to see data on whether people in the workforce over most or all of that period remain in the same quintiles; i.e, how much upward mobility is there? It’s possible that a significant chunk of the problem may lie with the issue that many kids can’t land jobs with incomes sufficient to support themselves. I have seen data indicating that this is a huge problem for people under 30, but this data may indicate that a generation from now the wealth gap could be much worse.
There is clearly upward mobility. People do move from quintile to quintile (both ways).
I feel incredibly fortunate to be in the top quintile (my wife and I are probably just below the top 5% line)*.
How do you get to move between quintiles? Almost exclusively through education. And what has happened to education in the years since Reagan took office? The tuition has sky rocketed and assistance has dried up. And this has not been an accident. It has happened mainly through the Republicanization of state legislatures.
And now, with “vouchers”, No Public School Left Standing (NCLB), etc., the GOP is doing their damnedest to destroy K-12 public education (the most successful social program ever devised and the greatest investment a society can make).
As is shown in every area of human life: Education, gaining useful skills, is the way to improve one’s economic lot.
The GOP is bent on making sure as much of the wealth stays with the people “who deserve it” (remember Romney’s moment of honesty about the “47%”), you know, the ones that already have it.
The fact that they have fooled the working class into supporting this scheme continues to boggle my mind. Their strategy: The 4 “Gs”: God, guns, gays, and blacks (and now browns, or any other sort of furner).
(*Now we did work hard and got educations; I’ve been working since I turned 16 and my wife since she was 12. But I know, in my case at least, I stood on the shoulders of a white, middle class, both college educated Mom & Dad family that didn’t have to worry about: Food, housing, cars, etc., and where college was simply a given. So, yeah, I had plenty of advantages. My wife has a much better case for pulling herself up by her bootstraps — she left home for college with about $100 and good wishes, that was it. She is an extraordinary person; first person in her extensive family to attend college — all the way up to EBD on a PhD. She claims to have been switched at birth! 🙂 )
“How do you get to move between quintiles? Almost exclusively through education.”
It used to be a union job would also allow for moving between quintiles. The destruction of unions and labour laws, and the institution of so called ‘right to work’ laws were also a point of attack by Reagan and his ilk.
Fifty years ago just over 30 percent of Americans were union. It is now less than 11 percent.
http://www.npr.org/sections/money/2015/02/23/385843576/50-years-of-shrinking-union-membership-in-one-map
If you advocate taxing the rich or bring it up, you are just using the politics of envy. We mustn’t insult the job creators.
Why do we tear down unions? Those people make too much.
An outstanding example of compartmentalizing two views.
I’m probably in the same area as you percentile wise, but as I alluded to in another post, I also live in a very high cost area. Nevertheless, I too feel very fortunate because many people here live on a lot less. What’s even more terrifying is that early on in your career, you can be in the top quintile and yet still sit one job loss away from poverty. It takes time to build a sufficient cushion, even when you’re making well above average.
I can relate to your wife though; I was only the second person in my family to make it through college. I worked 35 hours per week while I went to school; I switched majors and schools half way through, which forced me to take 167 credits to finish a Bachelors, rather than the usual 120. In what can only be viewed as yet another way schools look for every dime they can, a number of my credits didn’t count when I transferred because the course numbers were different. Why were they different? I was in the Honors Program at my first school so instead of something like HIS1000, I took HIS1900! So for taking what is presumably a more difficult course (it was the same state numbering system at both schools), I got zero credit. My wife just finished her Masters a several years ago, which also cost an arm an a leg; I was absolutely stunned how much costs had increased in just a decade. It definitely is a system out of control. As long we don’t cap costs and keep handing students out loans for whatever price the colleges want to charge, there’s no end in sight.
This is the sort of thing documented by Piketty’s “Capital in the Twenty-First Century” that was all the rage a couple of years ago. I think the general trend started in the 70s and it’s world-wide, although worse in the US.
And Reagan’s and GW Bush’s tax cuts have put the burden of the national debts interest payments onto the upper middle, middle and lower class.
The refusal of Republicans to even discuss tax increases has meant it’s almost impossible to fix the problem. Most economists believe the deficit can’t be fixed with cuts alone. At least not without causing a major recession or depression.
It’s the same mentality as that which says that you can starve yourself to good health. People aren’t obese because they’re eating too much. They’re obese because they’re eating unhealthily and not matching their activity to their diet (or vice-versa). Top olympic athletes are the very definition of perfect health, and they eat at least a few, if not several, times as much as the dietary guidelines suggest.
If we want an healthy economy, we’ve got to spend lots of money. We’ve just got to spend it wisely, on things like investing in infrastructure and education and healthcare and generally building a better, stronger society. Instead, we’re spending money on the military-industrial complex killing dark-skinned people abroad and making life hell for dark-skinned people at home in the prison-industrial complex. And we’re giving all the profits from increased productivity from robotic automation not to those whose jobs are thus eliminated but to the parasite class who had nothing to do with the innovation. We’re sitting in front of the boob tube playing violent video games and gorging on Fritos and ice cream. Is it any wonder our economy sucks?
b&
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And for an extra kick in the teeth, American taxpayers are paying for some of the research that is creating the robots and machines that are putting them out of work.
Just as American taxpayers pay for drug research, then have to pay the highest prescription drug prices in the world even though they helped fund the creation of those wonder drugs.
Costs are offloaded on the public taxpayer while the profits are privatized.
Not that I am defending this inequality – but wasn’t it always thus, or even worse, in former times? Wouldn’t there also be some problems applying the Swedish model, where you have a small and relatively homogenous population, to the US?
NZ has less income inequality than Sweden, and a more diverse population than the US.
Granted, we’re very small, and that’s always going to be an argument.
It also depends what you mean by earlier times. Currently, it’s the worst it’s been for a decades. I can’t remember the data off the top of my head, but while the poor used to be poorer, so did the rich, and the gap wasn’t as great. Last time income inequality got really bad was when the Great Depression hit.
It got much better after that for a while, and it the 50s, it was pretty good (though poverty was never abolished unfortunately). It’s slowly been getting worse, and the speed with which it’s getting worse is accelerating.
The only thing that’s stopping something like the Great Depression happening currently is the fact that we have things like Social Security these days, so the poor are still spending.
Finland (?I think – might be wrong – might be Norway or Iceland) is contemplating a universal minimum wage where every citizen is given a certain amount each month that isn’t means tested. All other social security benefits are abolished (also getting rid of the cost of administering them, and the social stigma). There are lots of benefits to a system like this.
I remember as a child in NZ in the 50s and 60s that it was a very egalitarian society, with great wealth accumulation prevented by high marginal tax rates (though not as high as in the UK of the time). But even 20-30 years ago, my mother (who lived there still) was commenting on the rise in both poverty and petty crime, the latter of which she attributed to the former.
Family benefit (a payment to mothers for the benefit of their children) was not means-tested as I recall. Maybe not so any more, maybe no such benefit any more.
And it is Finland that is contemplating some form of “Universal Basic Income” – a non-means-tested benefit.
Yeah. NZ is still very egalitarian socially, but there is increasing wealth inequality – though nowhere near as much as the US. Family Benefit doesn’t exist anymore, those there is a similar payment. Not having kids I don’t know much about it, except that it is means tested.
Petty crime is going down these days, but there seems to be more violent crime. However, that’s still less than most countries too. It might be too that there is a big effort to get people to report things like family violence and rape, so it may just seem that things are worse.
I think Finland too.
Seems NZ and Scandinavia are pretty cool places!
We’re very lucky I think! 🙂
I thought I read that was Switzerland that was going to do that.
They could be as well – it’s the sort of thing I can imagine the Swiss doing. I suspect in the future more and more countries will contemplate it. The importance of low levels of poverty and income inequality are becoming increasingly recognized as vital to the health of both the economy and society.
To be more precise, I heard they were going to have an election/referendum to decide if the country wanted to do it. I don’t know what happened. A quick search showed that they voted in early 2014 on a $25 minimum wage which was overwhelmingly rejected. Not sure if that was the minimum income or not vote.
The snark when I first read it of course was that lazy “takers” wouldn’t do anything now.
There will always be people who say that, and, of course, people who take advantage of the situation. However, most people won’t. It’s a bit like the idea that everyone will be immoral if they realize they don’t have free choice, or if they think there’s no god. Most people don’t want to be thought of as lazy users, and most prefer to work.
If they don’t care about that perhaps the workforce is better off without them anyway. And if they’ve got money, they’re at least less likely to be committing crime.
I like that last ?Finnish plan.
It instantly solves the “poverty trap” that many welfare systems create..cool
For the U.S., it depends on how far back you go, but inequality now is worse than post-WWII. But regardless, having greater wealth equality is a worthy goal, it’s better for the economy and for the general quality of life.
Yes, everyone points to the post-WWII time as “the good old days”. And, in fact, it was the greatest movement of people up those quintiles probably in US history (and the GOP seems bent on reversing that).
What drove it?
– The US was pretty much the only economy left standing
– Cheap fuel
– The GI Bill
– The laws promoting home ownership in the US. Every city and town has developments of 1940s and 1950s small “American Dream” houses.
I think comparing to post-WWII era is a correct one. That’s the world we live in. The pre-WWII world is too different.
And another problem is: Before 1950, far fewer records were gathered. The data just aren’t there to make apples-apples comparisons, unless you want to do a economics PhD project out of it.
No, the inequality was vastly lower in the 1950s. The all-time high was in the 20s, but supposedly, we’re about there again.
“In other words, a person among that wealthiest 100 makes, on average, 420,000 times the average income of an African-American.” The report is about wealth, not income. Much of the wealth comes from inheritance. The rest comes from luck; being in the right place at the right time. I think that makes the gross inequality even more obscene. The super-rich can’t even say they earned their wealth.
See above; I’ve fixed the error.
That doesn’t stop them from saying it, however.
As bad as that 420,000x statistic is, it’s peanuts compared to the first one.
The US population is 320 million. Half of that is 160 million. A mere twenty people are worth as much as those 160 million people. Or, each of those twenty people is worth as much as eight million people. One of them is worth three Chicago-sized cities.
b&
The Guardian reported last October that 1% of the population own 99% of the world’s wealth, citing a report from Credit Suisse, http://www.theguardian.com/money/2015/oct/13/half-world-wealth-in-hands-population-inequality-report.
And they also reported, mid-January 2016, an Oxfam report saying that 62 people had a combined wealth as great as that of the poorer half of the world’s population, http://policy-practice.oxfam.org.uk/publications/an-economy-for-the-1-how-privilege-and-power-in-the-economy-drive-extreme-inequ-592643.
And one thing those 62 people have in common- they don’t think they have enough.
You mean 1% own 50% …
“Half of world’s wealth now in hands of 1% of population – report”
Still insane.
Those 20 people had better be pretty fucking active on the charity circuit.
It’s completely absurd that people like that complain about taxes. As if there’s any amount that could inconvenience them.
“charity” from robber barons makes me think of the old phonetic joke
Getting on
Getting Honour
Getting Honest
‘worth’ ?
I think you mean ‘owns’.
If you took one of those people (other than for ransom) and decided to sell them for what they are worth, how much would you get? I suppose the best you could do financially would be to sell their organs on the black market. I doubt any of them would be ‘worth’ significantly more than average Joe. 😉
(Sorry, just indulging a nitpick of mine that refuses to equate ‘worth’ with ‘bank balance’)
cr
I agree. I’m no supporter of great wealth inequality but the tenor of the ‘1% are worth…’ articles are that the 1% are sitting on huge piles of money (probably in a sports stadium) cackling and drooling, and therefore not worthy.
In actual fact the 1% have mostly put their ownership to work earning more wealth by providing factories and mines and other businesses that other people work in. The 1% ownership is not *exclusive* ownership.
Back in the real olden days the (Norman) King of England actually owned everything. His Nobles rented their lands from him – mostly for service. Strangely even though the non-King population owned nothing they managed to live.
Hmmm, that’s not quite what I meant either.
To me, ‘Tom is worth 10 times as much as Dick’ implies that Tom has personal qualities that make him 10 times a good or useful as Dick – for whatever purpose we are discussing. Quite unrelated to their bank balances.
It’s true that some of the 1% have created jobs and benefited the community. Others of equal bank balances may have made their money by asset stripping, destroying jobs and other people’s lives. Their bank balances may be equal but their worth is not.
I said ‘owns’ but that’s not the right word either. There are too many men in Auckland who are technically bankrupt, having headed financial corporations that went down the gurgler, taking thousands of peoples’ life savings with them. They legally ‘own’ nothing the receivers can touch, though they’re living in a multi-million-dollar mansion and driving a Maserati, both of which, what a surprise, belong to their wives.
cr
First, this is nonsense. Nearly all the so-called “wealth” of the 1% is in financial instruments of one form or another, legal fictions so far removed from actual forklifts and tugboats it’s laughable.
But, even were it the case…what on Earth makes you think that the parasite class is even hypothetically qualified to direct the construction or operation of industry? What does Warren Buffet know about UV lithography, or Bill Gates about fractional distillation?
And why should they be deserving of a sizable fraction of the profits from the labors of so many millions whom they’ll never even know exist?
b&
>
I said that they put their ownership to work you inferred that this means hands on direction of effort – which I didn’t mean to imply.
The very wealth own shares and bonds and funds, all of which are managed for them.
… shares and bonds which, if the ultra-wealthy had their wealth (forcibly?) redistributed, would be owned by millions of middle-class folks.
Meanwhile the ultra-wealthy, along with big corporations, use their wealth as a weapon to control politicians and even threaten governments.
cr
Your nitpick is a most valid one, but I went with “worth” deliberately.
That single person “worth” more than three Chicagos has done all sorts of things to diminish if not impoverish as many people for his own personal gain. How many hundreds of thousands of Chinese children are wallowing in toxic waste because he thought he could shave a few points off a share target by outsourcing production of this-or-that?
In such a person’s mind, his own worth most emphatically really is millions of times that of the common people, and we do ourselves a disservice to fail to understand the perspective with which he views us.
b&
>
Equality for health is primarily leveraged by knowledge (education) and the systematic undertaking of oneself to make a lifetime search for what diet and exercise best match one’s personal lifestyle.
Barring the unfortunate and mostly very low probability of traumatic accidents, early onset ofdebilitating diseases or cancer, most of our illnesses come from small decisions based on diet and exercise.
If people could treat their bodies like a lifelong scientific experiment, the ability for most people to have to avoid medical treatment would skyrocket. Obesity is an obvious example. Adequate sleep, is another.
Extraordinary amounts of money could be saved simply by eating better, sleeping smarter, and exercising more regularly and intelligently.
Ultimately, smart health equality must include education otherwise we could still generate an equitable health system that is based on responding to symptoms rather than preventing them.
Genetics have a lot to do with whether you suffer from many conditions, especially in old age.
Also, what about the people who are born with chronic conditions.
One of the reasons universal, single-payer healthcare is better is it enables the payer to focus on the fence at the top of the cliff.
One initiative NZ government, for example, is to try to make NZ smoke free by 2025. All political parties are cooperating on this goal, so it makes no difference which one is in power at any given time. Taxes on cigarettes, tobacco etc have been gradually rising for years. I think a pack of cigarettes is now almost $19, and the price will probably go up again in the next budget. The government also funds smoking cessation programmes (physical and mental) of all sorts to help.
Long term this, of course, reduces the cost of healthcare to the NZ government.
sub
I am very glad that you hit this one. The stats and the growing inequity in America should be one of the most advertised disasters going on. Bernie has been saying it for years but it just makes Wall Street fall asleep and say so what.
Forget the black to white comparison – just know that the 20 richest people on the Forbes list are worth as much as damn near half the population of the country. And as Bernie keeps saying, all the increases in wealth have been going to the top 1 percent while the average person has seen almost no improvement in 40 years.
If you cannot figure out the cause or think it might be a lot of factors – it is not. The lobby, the lobby and the lobby. K street as it is well known in Washington DC is where Congress goes to make legislation and also where it goes to make money. They are almost one and the same. That is why everything from guns for all, and less taxes for those rich folks comes from. And just to bore many I will say it again….until the money is removed from politics, we are just whistling in the wind.
For what it’s worth, wealth distribution would not be my main criterion for what kind of society I’d want to live in. Our Bill of Rights, specifically our First Amendment, trumps everything else.
That is an interesting idea there but the problem is – you cannot eat that bill of rights. You might find it interesting, however, to know that the last little piece of the first amendment – that is what they use to justify K street. Give it a read if you doubt me.
The freedom of the press is vital, yes, but ultimately meaningless if you can afford neither a press of your own nor the papers others are selling — let alone bread to eat.
The Bill of Rights should properly build upon a foundation of basic economic security. Ensure all have access to healthy (if modest) food and safe (if modest) shelter and modern (if modest) modes of communication and transportation, add in other basics like police and fire and health and education…take care of such fundamentals and then you’ve got something which can truly give great power to the Bill of Rights.
But if your biggest concern is whether or not you’ll find any moldy hot dog buns in the garbage can tonight so your kid won’t starve…you’re frankly not going to give a damn about such lofty luxuries as retaining editorial control over your blog.
b&
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I’m not sure why you single out freedom of the press rather than the more general freedom of speech/expression that the amendment grants overall.
And to both your point and Randy’s, I’m not exactly thinking of starving-level living conditions, only the general inequality being referred to. There may be individual cases to point out, but America is far from a third-world country in this regard.
My main point was simply that showing two types of financial living conditions and saying “pick one” is not a very accurate gauge of which country a person would want to live in.
I did not think picking countries to live in was the point at all. I could have sworn your point was that a thing like the bill of rights was much more important than equity in standard of living. In your words, wealth distribution would not be a high priority.
Are you aware that more than 40 percent of workers in the U.S. live at or below the poverty level? I bet if you ask them it matters and a whole bunch more than a bill of rights.
I was referring specifically to the study mentioned where they asked people which of the two countries they’d rather live in. I probably wasn’t clear enough about that.
My point was simply that choosing a country based on that one criterion in that particular study didn’t seem to mean much in the bigger picture, because there are so many other factors to consider as well.
I would guess most people assume that the question is intended to mean “all else equal, which country would you prefer to live in?” Obviously, you could make an argument similar to yours if the income was more evenly distributed but the per capita GDP was 25% of ours. Most people wouldn’t want to live in that country either.
+ 1
“So much for the evils of democratic socialism!”
Sounds as if PCC is starting to feel the Bern, there. 😉
Many people think it does not matter where the wealth is, as long as it’s there. This is not accurate. It is better for the wealth to be spread around, because it gets spent more, which is what drives the economy.
If 20 people have the same wealth as 160 million people, it does not matter how many houses, cars, boats, or loaves of bread they buy, they will not buy anywhere near as many as the 160 million people.
This is why things like increasing the minimum wage is good for the economy – poor people spend their money, or at least most of it, thereby increasing demand.
At the moment, US companies have plenty of cash. They aren’t employing people (creating jobs) because there’s no demand for their products. It doesn’t matter how much business taxes are cut, they will not employ people to increase production if there’s no demand.
Increase social security benefits and the economy will rally because poor people spend, and demand will be created. Then those people will be employed, taking them off benefits and further increasing the demand.
Economics 101.
Very good and true information. You should have a web site of your own…just kidding.
A couple of things to wonder about. With social security – why do they cut off payments into it with just a little over $100,000 of income? Could it be another rich man’s advantage? And yet, everyone says social security is going broke.
Why do capital gains only get taxed at 15% regardless of your income. Oh yeah, rich guy tax thing.
Why all those bank accounts in the Cayman Islands? Oh yeah…rich guys again.
It’s because Social Security is ostensibly a retirement program. You’re not supposed to be paying into it to fund general government spending, but rather to save money for your own retirement, and you only need so much money to survive in old age, so beyond a certain amount you don’t have to pay.
In reality, no money is saved and it all goes directly into the general budget to be spent, so it’s just another general tax. But it’s sold as saving for retirement.
If it’s just another general tax, as you state, then how is it also a retirement fund. You can’t have it both ways.
If you think the money the average person puts into SS will pay for what that individual gets back…think again. I could use myself as an example for you but trust me. The money I put in will not begin to cover what I take out. They do figure on lots of people dying young and so forth but you also have SSI, and whatever else they have come up with.
And my point on the fact that they stop paying in anything at just a bit over $100,000 – what do you think gets that done? The rich guys. If you are one of the fortunate ones making around $400,000 or even much more. Why should you not pay in more than the guy making $100,000. If they changed that one part of the inequality of SS, the system would be solvent according to many experts on it that I have heard. And by the way….why do you think that congress does not pay into SS?
There should also be a means test for SS benefits. Several rich liberals have stated that it’s ridiculous that they should get SS payments when they have absolutely no need for it.
From their point of view, yes, SS payments are pointless.
But from an administrative point of view, it may very well be cheaper to pay the same to everybody rather than get into messy details of people’s assets and income.
Here in NZ, everyone over 65, regardless of assets or income, gets the same superannuation payment. It’s included in income for tax purposes. (If you don’t have any other income, I think you end up below the threshold where tax cuts in anyway). The advantage is that the income tax mechanism already exists so there’s no additional overhead. Every now and then, some semi-wealthy entitled person foams at the mouth over the fact that they’re paying *tax* on their super while the indigent guy next door pays no tax on his – which just shows they’re completely missing the point, IMO.
cr
Geez. You NZ guys are so smart. Why are we U.S.ns so dumb? Maybe we should eat more Kiwi…which I love pie-wise-speaking.
I don’t know that it’d necessarily be that burdensome. My town has a property tax credit for senior citizens if they meet a means test. It’s based on gross income from the current year’s tax return. This of course could present problems with people using various schemes to circumvent taxable income and still collect social security, but it’d at least catch a lot people who have comfortable pensions or are living comfortably off taxable 401(k) or other investment income.
Surely, this system could be even easier to implement if our Government could hook a couple networks together. It always puzzles me why a Government agency needs you to provide your Social Security number plus documentation from another agency which also has your number on file. One would think the citizen needn’t be the middle man in having the left hand talk to the right.
Given the state of government system security, maybe we should be glad they don’t talk to each other more.
My wife was one of those who was hacked by the people that got into the government HR computer. And Snowden got away with absolutely no information at all what with all the tight government security controls. And if Apple gives them the key to my iPhone, it will stay private. And oh look a flying pig!!
“Geez. You NZ guys are so smart.”
I certainly wouldn’t claim that!
But I just quoted universal National Superannuation as a pragmatic approach to the problem of paying *one* sort of social security. I think it arose by political accident/compromise as much as anything – the wealthier sector would have been irate if, having paid more taxes in their working lives, they got nothing back. (As it is, they moan about it being taxable).
Our other social welfare benefits (unemployment, solo parents, etc) are tested and invariably there are controversies about ‘welfare cheats’. And of course there’s a lot of administrative work and expense involved in determining who’s eligible and who isn’t. National Super – possibly fortuitously – managed to avoid most of that.
cr
I personally hit the limit on FICA taxes every year (yes, I am very fortunate). I would be very happy to have it apply to all my income.
As I have said to one friend whose personal hobby horse is: “cut taxes!”, I do not feel oppressed by taxation.
In fact, I feel amazingly fortunate. And the ills of this nation (USA) I see are not because of too-high taxes. The exact opposite if anything.
I strongly favor a single-payer health care model such as in Canada.
“This is why things like increasing the minimum wage is good for the economy – poor people spend their money, or at least most of it, thereby increasing demand.”
Heck, even Henry Ford knew that!
cr
I disagree. A minimum wage may be a reasonable measure against insurance frauds, but if you try to introduce a minimum wage significantly higher than the current market situation allows, you will end up with economic stagnation and unemployment. To me, nothing is more harmful to the society (and more terrifying personally) than unemployment – you want to work but cannot.
Henry Ford knew that you should pay your workers enough to motivate them, and that those ready to work for peanuts are not always the best people to employ.
The minimum wage has been falling for decades (real buying power.)
If you can get an “real” Republican to be honest, they’ll tell you they are agin’ all them socialism schemes: Social Security, minimum wage, collective bargaining, Medicare, progressive taxation, student loans, publicly funded anything (well, except maybe sports stadiums), etc., etc.
Do you actually think student loans are a good practice? I think that US public colleges and universities should lower their tuition fees (currently stratospheric) to allow talented youths study without sinking up to their ears in debt.
I’m totally with you on that. A good education is the best investment one can make in one’s self. And that applies to society as well: Paying taxes to support others’ college educations will pay back handsomely. So, yes, that.
However, my wife, myself, and many, many friends were able to pay for university with student loans — it it worked out great. A college education (assuming you make a good major choice and complete a degree) is the best investment you’ll ever make in all likelihood. (We all went to public universities — mainly because of the cost.)
(I think people who borrow $100K, $200K, or more for a bachelor’s degree in French Literature (or similar) at a fancy private college are nuts. No degree of greatness in “the experience” of a campus can repay that cost. And the job it qualifies one for certainly won’t.)
The GOP wants to restrict college to the children of the wealthy — who can pay cash. Those little people don’t deserve it. That was my point.
John Oliver did a great segment on stadiums.
Jeez that’s a shocker.
Shouldn’t the attorney general be charging all involved with criminal misappropriation of public funds or something?
I personally find that more offensive than religions getting tax breaks. (And I’m not sure which I dislike more, religion or commercialised team sports). The religions are only getting to avoid taxes, these sports teams are stealing huge amounts of public money.
cr
Jerry has done posts of American feelings about divine intervention in sports, so it’s certainly fair to compare them. On the other hand, I find there’s nothing better than the smell of pine tar and leather mitts on a warm Spring day. There’s nothing worse than the smell of incense, wooden pews and stale crackers (maybe it’s not the smell so much as the associations I have with those smells). So, I’d definitely take sports first over religion but I’m with you 100% on hating the commercialization of it.
I think economist have said and shown it many times….increase in the minimum wage has almost no affect on employment. But…the republicans throw that stuff on the wall and of course, their followers swallow it. When half the states have already gone beyond the federal minimum wage…what does that say?
By the way…good old Henry Ford believed in dictatorship for him at least. He increased wages for his workers so they they could afford to buy one of the cars they were making. His motivation technique was to fire anyone who did not live the pure life he demanded of them.
“His motivation technique was to fire anyone who did not live the pure life he demanded of them.”
What do you mean? Did he mess with their personal lives?
Actually, Ford knew that he could sell more cars if workers made enough money to buy them. Which is exactly what Heather Hastie and infiniteimprobabilit were saying.
History has shown repeatedly that with no minimums, you’ll eventually wind up with slave wages. Think of the Industrial Revolution and people working ridiculous amounts of hours for what amounted to barely enough to put scraps of bread on the table for the family. You are right that increasing the minimum wage puts pressures on costs, but a fast food minimum wage restaurant will still have to staff enough people to serve the customers. Any cuts in employment demonstrate that there might already be waste in the system now.
I am fine with not raising the minimum wage if we do an alternative that has actually been seriously proposed by some economists–a negative income tax. Providing low wage workers with a tax credit based as some percentage of their total earnings effectively increases the minimum wage while not spreading the cost across the economy. There is some merit to the idea that industries that have a lot of low skill workers should not be forced to pay more, while high skilled industries couldn’t care less about minimum wage increases. No one at my company makes minimum wage or anything close to it, so it’d be irrelevant if we doubled minimum wage, but retail stores may very well have to raise prices if all their workers end up getting huge raises.
The fact is, someone has to serve fast food, someone has to pick up garbage, someone has to throw boxes around in delivery hubs, someone has to staff retail stores, etc. There is no reason why people who work these jobs should be forced into poverty while the upper class proclaims they should simply work harder. How? Clone themselves? A straight minimum wage increase may not be the most effective answer, but the usual Republican answer (do nothing) definitely doesn’t solve anything.
Economic inequality is interesting, especially in perceptions. I figured Canadians would think we had a more egalitarian society but we would be much worse. I should have realized that as a typical Canadian, I always assume anything Canadian will somehow suck. We don’t like success. We think it makes you snooty. A.so we always think we are better somehow than the US and that isn’t always the case.
So I found a report and it is funny in that Canadians assume the inequality is bad but not too bad. But it’s much worse than we think. I knew it was shitty because of what CEOs make and what I made when I made a good wage in a corporation.
Pissed off is a very commonly used phrase in the UK and, I would suggest, much more prevalent than cheesed off. The latter might be more acceptable in some milieux but generally seems a rather outdated phrase (as is ‘browned off). In any case many Brits are certainly pissed off at the level of inequality in British society and how this is increasingly entrenched.
Yes, I thought ‘pissed off’ was a quintessentially British phrase.
(In fact I thought the US equivalent was just ‘pissed’. In British, ‘pissed’ means ‘drunk’)
A very versatile word, ‘piss’.
cr
And how about ‘taking the piss’ a very British art-form?
It is indeed.
Though, if you are going to take the piss out of someone who is out on the piss, it is advisable to piss off before you piss them off too much and they attempt to beat the piss out of you.
As I said, a very versatile word 😉
cr
Otherwise you’re just pissing in the wind.
I think the phrase is ‘pissing in*to* the wind’ and it has a very practical meaning. Something one learns very rapidly not to do since it usually relates to standing on the windward side of something (e.g. a boat, or a cliff) and the wind is therefore usually rising vertically up the hull, cliff face or whatever. With predictable results. 🙂
cr
Indeed. It gets used both with the full “into”, or just with “in” and a silent “to”.
“In other words, a person among that richest 100 has, on average, 420,000 times the average wealth of an African-American.”
I see no problem with this. Obviously they’ve worked 420,000 times harder to achieve that wealth.
Because American capitalism is perfectly meritocratic.
Because the circumstances you’re born into have no effect on your success in life.
Oh yeah, and taxes imposed by a democratically elected government are a form of theft.
(Seriously though, the only thing more outrageous than the preceding sentences is how many Americans would agree with them).
Makes sense to me. Poor African American works 30 hours a week at a minimum wage job; rich CEO works 12,600,000 hours a week in his leather recliner and on his business class flights.
Guess the CEO had to part with the Gulfstream V for appearance sake after the crash of ’08? The wages of sin is having to bare the indignities of the TSA.
It makes me sad to agree with your parenthetical statement.
Succinct with highly praiseworthy parsimony of the verbiage, good sirrah!
You’ll be wearing the bullet-proof vest and assault helmet for your daily perambulation then?
I love the smell of Rawls in the evening. Smells like…justice.
[clapping]
SOOO – OT I know –
Pope Francis is dissing Donald Trump.
The Trump is dissing the Poop.
Well, score two points for both of them!
(Two points? Because anyone dissing the Poop automatically gets a point, and anyone dissed by the Poop automatically gets a point. Ditto for the Trump).
cr
I love Trump’s comment that religious leaders shouldn’t comment on people’s beliefs.
Isn’t that their job?
… says the guy (Trump) who has disparaged the religious faith of rivals Ben Carson and Ted Cruz for political gain, and who has cozied up with the execrable Falwell family, which has made a career out of (and a fortune by) injecting their insipid religious cant into politics.
Re: inequality; read ‘The Spirit Level’ by Richard Wilkinson and Kate Pickett.
Or one of Kevin Philips’ books, like The Politics of Rich and Poor or Wealth and Democracy or Bad Money.
Most socioeconomic questions really just boil down to one key question:
How do we stop the ruling class from stealing everything?
(Obviously this is a simplification, based on a perhaps tautological definition of a ruling class, but I think it gets to the heart of things).
I hear you and second you on health care.
I am not hostile to your point of view on income inequality, but I keep hearing liberals decry income inequality, without telling us in any concrete terms how they are going to accomplish it. Which, of course, avoids the conversation about the consequences of the means by which this endeavor is achieved.
Everyone loves these Nordic social democracies, but they are all small and ethnically homogeneous, and they have high levels of social cohesion. In contrast, America is big and diverse, and any action by the government to redress inequality invariably creates ethnic resentment (if you disproportionately help the white working class, the blacks and latinos will be unhappy. If you disproportionately help the blacks and latinos, the white working class will be unhappy. Even if you help everyone equally, ethnic groups will feel they aren’t getting their fair share and be unhappy. So you can always play on ethnic resentments, suspicions and legislative inertia to derail or defang any socially democratic policy.) Further, I am not even bringing in the political influence of the Billionaire set on the democratic process.
I just don’t see how America, in all its diversity, can ever be a Scandinavian social democracy. I don’t know that the welfare state is doomed (but it might be), but any welfare state is going to be a lot more stingy.
If you look at the New Deal, the policies were all directed to disproportionately benefit the white working class, what we would essentially call white supremacy today. If you look at Johnson’s Great Society, the benefits were targeted more at the bottom, which while probably helping white ethnics numerically, helped minorities as a percentage as minorities had a lower SES profile as a group. This, of course, led to the mass defection of white ethnics to the embrace of the GOP which pursued a reactionary neoliberal agenda, which was then co-opted by the “New Democrats”, so 50 years of reactionary neoliberalism.
But I don’t see how you can make the ethnic politics work if you actually tried any major income/wealth redistribution. Ethnic groups always want the biggest slice of the pie for their own group, and so the easiest political solution is that no one gets any pie except the ruling class so there is nothing for the plebes to fight over.
“…so the easiest political solution is that no one gets any pie …”
You keep ignoring the other solution–everyone gets a piece of the pie.
“I am not hostile to your point of view on income inequality, but I keep hearing liberals decry income inequality, without telling us in any concrete terms how they are going to accomplish it.”
Bernie Sanders has a detailed plan on how to reduce income inequality. You may not like it, but it certainly exists.
Yes, but will it work? Many economists do not think so.
Bernie Sanders is trying to get elected using the same tactic as Obama used – selling hope. And in the current political climate, we see how well that worked out.
Yes, look at what abject failures Social Security, Medicare, and unemployment insurance have been, universally reviled by ethnic and racial minorities and the white working class because they aren’t getting their fair share of the pie.
Shame the rightwing didn’t succeed when it fought them tooth-and-nail as “creeping socialism.”
I am attempting to attach this link to an article entitled “Fear and the New Deal” in the American Prospect Magazine:
http://prospect.org/article/fear-and-new-deal
The New Dealers thought very carefully about the ethnic impacts of their policies, and generally tracked white supremacist, which was a lot easier to do in the 30’s.
If you look at the present, you can listen to all the yammering about “Obamacare” by white ethnics (many of whom benefit from it). . . are we to believe the politics of ethnic resentment are buried in there somewhere?
I think you could get a decent program of national health insurance or something equivalent through Congress without ethnic politics interfering.
But income redistribution, in contradistinction to social insurance, well, are you going to do reparations for example?
In enacting New Deal legislation, FDR simply recognized that the racist southern Democrats were part of the Party base that had to be fed and cared for to keep the coalition that elected him intact.
The fissures in that coalition became evident in 1948 when Strom Thurmond and the Dixiecrats walked out of the Democratic convention following then-Minneapolis mayor Hubert Humphrey’s ringing speech moving a civil-rights plank in the Democratic platform. That coalition fractured for good after passage of the Civil Rights Act of 1964, with several states from the old confederacy going for Alabama governor George Wallace in the 1968 presidential election, then migrating to the Republican party with Richard Nixon’s infamous “southern strategy” in 1972 and with Ronald Reagan’s equally infamous “state’s rights speech” in Philadelphia, Mississippi (site of the 1964 civil-rights murders) kicking-off his 1980 presidential campaign. Now the solidly red states of the old confederacy form the mainstay of the Republican base. And, yes, simmering white resentment underlies much of the Republican opposition to Obamacare.
In just a few years, however, Obamacare — or, let us hope, the single-payer program that succeeds it — will be as popular with American voters as the programs I cited in my earlier comment (which were also met with similar initial resistance) are now. The American public may balk and drag its feet at new social programs involving wealth-distribution, but so long as the programs are facially neutral and fairly administered, the public will accept them, and then come to cherish them in the long run.
“Some 92 percent of Americans chose Sweden’s distribution.”
I wonder at this. If Americans prefer the social model of another country, they can try to import it. However, I do not see in the USA any grass-root movement with the goal to achieve more equal distribution of income.
Have you not heard of Bernie…you know, the guy running for president.
Have you heard of Bill Moyers or ever watched PBS or read one of his books? Maybe some American History would help?
Bernies plan is to Tax wall Street and the wealthy, plays well in sound bites to the people who will get more benefits vs the amount their taxes will increase. What will that do to the pension funds that are managed by the big banks and wall street? How will that affect teachers, fireman, cops, or even normal folk’s 401k balances? One reason America was founded is because of un fair taxation on people (without representation) who were willing to work hard. If you remove the incentive to work hard and get a good return on your investments, then that money and effort will move to a market that will reward your efforts. Any plan will have unintended consequences.
Please. If we’re to talk about unfair taxation, let’s focus on the fact that normal people are working two and three minimum wage jobs at places like Walmart, and taxpayers are subsidizing Walmart’s payroll because Walmart is only paying minimum wage. That is, we’re using public tax money to pay Walmart employees for food (SNAP, formerly food stamps) and medical care (MEDICAID) because the Waltons are too fucking cheap and greedy to pay their employees a living wage.
If we’re going to subsidize the Walmart payroll like that — with the profits from the subsidy going straight to the Waltons — we might as well tax the shit out of the Waltons and give the money to the real wealth creators, their employees.
Or we could, you know? Have real minimum wage laws, mandating a living wage? And tax the wealthy at the 80%+ marginal rates from America’s economic heyday rather than the effectively-untaxed rates we have today in the wake of Reagan?
We should be a land of opportunity, yes — but that should be an opportunity to be comfortable, wealthy, even stinkin’ rich. It should not be an opportunity to have a personal net wealth greater than most UN member states.
I’d be perfectly fine with a 50% tax on all income over $1M and 99% on all income over $100M. If you can’t live a life of obscene luxury with that kind of income, I have no sympathy for you. And if that’s not incentive enough to aspire to such accomplishment, you’re a lazy bastard who’s done nothing more than inherit the ill-gotten gains of your parents.
…and think of the roads, the hospitals, the luxury orbital resorts, the other infrastructure we could build with taxation at those levels! Why should we satisfy ourselves with a parasitic few lounging in private luxury when all could enjoy even more fabulous wealth?
b&
>
You make some good points, but aren’t you concerned about what will happen to your pension or investments if Bernie takes down wall street as promised? Tax the shit out of Walmart and other large corporations, their stock will drop, and so will the value of pension funds and other assets held by the middle class. His plan does not contemplate the unintended consequences of which there will be many. Money will flow out of the country to areas that will provide a higher return. That’s how it works.
All the money has already left the country, in the form of both overseas investment in manufacturing (in areas with lax environmental and worker protections which now are relearning the hard lessons which led to our own environmental and worker protections) and tax shelters.
Basically, what we have now is an unsustainable bubble. The damage is done already. The only real question is how much worse we’re going to make it before we stop pretending all is well.
The fix is going to require fixing our broken down infrastructure and rebalancing wealth. But the parasites — those twenty people Jerry cites — are in control and don’t give a damn about the rest of us.
What would do us wonders would be to take those twenty people, take all their assets save for a few million dollars each in cash, and spend it all on rebuilding crumbling infrastructure and basic research.
Or any of practically an infinite number of less unrealistic variations on that theme…tax 100% of all earnings (of any variety, wages, bonuses, stocks, perks, whatever) over twenty (or even an hundred) times that of the lowest-paid employee at the company (including temporary, part-time, contractor, whatever): the CEOs can get $10M salaries, but only if they pay the janitors $500K. Charge companies ten times the total amounts of means-based public assistance their employees qualify for; they’ll figure out it’s much cheaper to pay a living wage than to use corporate welfare to make up their own payroll shortfalls.
But, until we do something along those lines…we’re screwed.
Cheers,
b&
>
“I’d be perfectly fine with a 50% tax on all income over $1M and 99% on all income over $100M. If you can’t live a life of obscene luxury with that kind of income, I have no sympathy for you. And if that’s not incentive enough to aspire to such accomplishment, you’re a lazy bastard who’s done nothing more than inherit the ill-gotten gains of your parents.”
I believe it’s quite well-established that, once certain basic needs are met, *people don’t work for money*. They work mostly for job satisfaction. I also recall a comment in ‘Up the Organisation’ (the only management book I have ever read, I hasten to add), that Robert Townsend had never seen a successful idea that originated as ‘this will make money’. He had seen many successful and profitable ideas that originated as ‘this could be a good thing, let’s try it’.
It follows that the argument that ‘tax is a disincentive to success’ is right-wing neocon bullshit. People who are motivated to achieve something will do it anyway. They might hire an accountant to minimise their tax but they’re not going to drop the idea just because the tax man might take some of their profits.
cr
Cite your sources, because my basic needs are met, yet I continue to work for money so I can buy things that lead to personal enjoyment and recreation. And those good ideas you refer to won’t go anywhere without the investment to make them a reality. Heavy taxes will take those ideas to places where they can make better returns for the founders and investors, which leads to jobs, etc. Not all big corporations are Walmart-esque; many provide millions with great wages and benefits and enable them to live better lives.
WRT to the Parasite Class Ben refers to above, that list includes the founders of the Gates Foundation, and many others who have signed the 95% pledge (Bloomberg, Zuckerberg, Warrant Buffet)
See http://givingpledge.org/
Granted some of the people on the list inherited their money (6 of 20, Mars and Walmart), but to say they all don’t give a damn is unfair and inaccurate.
“Cite your sources,”
Try the Wikipedia page on ‘Motivation’, including Maslow’s ‘Hierarchy of Needs’.
“Heavy taxes will take those ideas to places where they can make better returns for the founders and investors, which leads to jobs, etc.”
What, like they might get outsourced to China? Oh, wait…
“WRT to the Parasite Class Ben refers to above, that list includes the founders of the Gates Foundation…”
All credit to Bill Gates for his foundation. He didn’t *have* to do it. (OTOH, when you’ve got more money than G*d, what else do you do with it? Buy another corporate jet?) But all that money came from Microsoft, whose predatory practices are well documented. A very large proportion of it was extorted from computer users who could have put the money to some better use. Not for nothing were licensing fees and the extra hidden cost of buying a PC with Windows compulsorily pre-installed called the ‘Microsoft tax’. You spoke of good ideas being stifled… Whether the overall global good would have been better served if the world of computing had had genuine competition, as opposed to money being siphoned off and some of it eventually distributed by the Gates Foundation, is something sociologist thesises could be written on.
But I’d agree, not all the top 20 don’t give a damn. My criticism (and I suspect Ben’s) would be aimed at those who actually don’t give a damn, and the shoals of almost-obscenely-rich just below them on the pyramid who don’t make the headlines because they’re not Bill Gates or Donald Trump.
+ 1
True, I’d never heard of Bill Moyers and PBS. And I thought that Bernie Sanders’ support is largely “protest vote” of Democrats against Hillary Clinton.
Go to the library and check out the card catalogue for “Economic Populism in the U.S.A.”
Without such movements, we’d be ruled over by robber-barons and the landed gentry. (Ok, ok, to a disturbing degree, we are.)
I sought something on the Web, but found only about Mr. Sanders and Mr. Trump.
Otherwise, I remember Steinbeck’s Grapes of Wrath, but it didn’t impress me the way its characters would want.
Take a look at the struggles of organized labor in the US in the late 19th and early 20th centuries. Check out especially the history of the “Wobblies” (the IWW or Industrial Workers of the World), as well as the UAW (United Auto Workers), and the early days of the United Mine Workers and the AFL-CIO.
If nothing else, it’s an interesting political history lesson and will give you insight into the tortuous perambulations of socialism American-style whence Bernie comes.
I cannot see this wage envy BS at all, it’s just hand waving flim flam.
The fact that some people have lots more money than me is not at all significant. It doesn’t make te any less, all that matters is that I have reasonable resources I’m ok.
This belief is based on the popular fallacy of a fixed pie. Wealth of a society is driven by circulation–circulation is all that matters. The fact that some have more does NOT make others have less. Increased circulation increases overall wealth. The ‘incredible wealth’ of some people is not hidden in a mattress, it’s in investments–so it IS circulating, and that’s what counts.
You can take ALL the wealth from the wealthy and you would not make society any richer, indeed it will probably become poorer as circulation drops.
Just one question really — Are you the economic adviser for the republican party or just Donald?
Or maybe he has lived through some socialist wreck, like me.
“The ‘incredible wealth’ of some people is not hidden in a mattress, it’s in investments–so it IS circulating, and that’s what counts.”
Yes, some people. Many do in fact have their money in the financial equivalent of a mattress. Not all investments are the same. (Which brings up the problem of financial sector making money by creating nothing and the disaster of 2008)
As pointed out by someone in a comment above, corporations are sitting on incredible amounts of money. That money is sitting around doing very little. For the most part they are not hiring workers or expanding businesses.
Tax incentives could change that. There is currently very little incentive for businesses or high wealth people to create jobs. There is a great deal of incentive for them to sit on the money.
Higher wages also circulate money in the system and they do it far more effectively than low taxes. The last 30 years of lack of wage growth and loss of benefits shows wealth is not being distributed.
“You can take all the wealth from the wealthy..”
Taking wealth can mean simply demanding (and getting) higher wages, not outright appropriation. Or it can mean taxes that incentivize businesses to spend money by expanding, or paying higher wages rather that sitting on it.
Labour laws and policies have been slanted towards business. Businesses and wealth creation shouldn’t exist for their own sake, but must also benefit society overall. As the article points out, wealth generation has been lacking among the majority.
The fallacy is not that it’s a fixed pie, we understand economics. The fallacy is that everyone gets a piece of the pie, or even an opportunity to get a piece of the expanding pie. They don’t.
Contrary to your inference the wealth of America has not increased along with the rich and corporations.
Wealth creation has been lacking in the majority of people due to deliberate polices that have been implemented over the last 50 years.
Wages for workers have been stagnant as worker productivity has reached record levels along with record corporate profits and record CEO pay packages and benefits.
This doesn’t even cover the problem of wealth and power accumulation in a small number of hands, to the point that two brothers can spend a billion dollars to try to swing a single election.
“Tax incentives could change that. There is currently very little incentive for businesses or high wealth people to create jobs. There is a great deal of incentive for them to sit on the money.”
I’ve never really understood this. If I make one dollar and the government takes 25 cents I’m incented to invest but if they take 50 cents I’m not. And yet I’m still up 50 cents. Sure, I’d rather have the 75 cents profit, but why is zero, what I get by doing nothing, better than 50 cents?
It must depend on how much profit you expect from your investment.
True enough. So why is the top percentile so resentful about distributing some wealth downward, since it will result in an increased demand for goods and services thereby circulating wealth back up to the top? They’re the ones approaching it illogically as a zero-sum game.
I disagree with this idea.
Imagine you own a bakery and some poor people wish to buy your bread but haven’t enough pennies. You give them some of your profit (or you lend it to them without expecting the loan to be ever returned) and they buy your bread. Has your wealth circulated back to you? Yes, it has, but because it was your wealth to begin with, you are now poorer. You have the same money, and you have given away your bread.
You’ve over-simplified your example to the point where it no longer applies.
To see why, imagine taking it to the other extreme. Charge an exorbitant amount and nobody will pay in the first place. Force people to pay and, though they buy your bread, they do not buy your neighbor’s milk…and your neighbor goes out of business and you no longer have milk for yourself. In either case, you’re poorer in reality even though you have a larger bank balance.
Money is a proxy for resources. Payments are a proxy for resource allocation and distribution. In any system, there will be an optimal range for distributing resources. Deviate significantly from that optimum — as with both your example and mine above — and the system breaks down.
The American system is very far from optimal and is breaking down. Far too many resources are being allocated to a negligible handful of people, and unconscionable millions are being starved of even the most basic of resources. Any proposed solution — including maintenance of the status quo — that fails to restore balance is doomed to failure.
Cheers,
b&
>
If that loaf of bread sells for ten cents. And costs me five cents to make, and my neighbor has only 6 cents, marginal cost would indicate that I’d be better off selling for six cents and making a penny than not selling it and making nothing.
I lived through such a thing:
https://en.wikipedia.org/wiki/Zhan_Videnov#Crisis
Prices were not “exorbitant”, people had just remained penniless. In my city, a poor man saw a bread inside a parked car, broke the window in broad daylight, snatched the bread and left. A lot of bystanders, nobody called the police. Maybe they remembered Hugo’s Miserables.
Many manufacturers went bankrupt. Foreign consumption could save them, but the country had little connection to the world market (this allowed robber barons to crash the economy in the first place). The worst was a massive emigration wave. Americans are spared at least this scourge.
Recovery was slow, but at least people learned some lessons.
+ 1. Have you a blog?
The 32 trillion stashed in offshore accounts is “circulating”? Please enlighten us as to how.
Taxes are a method of circulating money to areas that may not attract a lot of competitive demand–mundane necessities such as roads, railways, utilities, education….
Number of hours worked is also skyrocketing amongst the middle and lower classes. So in a way it is worse.
Moreover, there’s increasing evidence that inequality itself is bad news for social solidarity, irrespective of where the bottom is (so even if it were true that the bottom has gone up, which it isn’t, this would be still an argument to do more than “high tide raises all boats).
Impressive that this “brief note” has produced a gross of comments and growing. The response has certainly not been brief and good discussion it has been too.