# How can economic inequality in the United States be reduced? **URL:** \ **Category:** Great Debates\ **Created:** [January 2, 2013, 2:19am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792 "2013-01-02T02:19:15Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [January 3, 2013, 3:49pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/41 "2013-01-03T15:49:48Z")
> [@RickJay](#): > > A more modern and progressive tax system would probably be a good start, and not just in the sense of redistributing income; there is a pretty strong argument to be made that the U.S. government simply doesn’t collect enough tax to the point that it actually hurts job creation and trade balance. Progressive taxation only helps if you can effectively redistribute it to people at the bottom. Everything I’ve seen here for the past 8 years tells me the US sucks at doing that. Money from taxation goes to the military, which gives it to [Robert J. Stevens](http://www.forbes.com/lists/2012/12/ceo-compensation-12_Robert-J-Stevens_RIMI.html). Anything used to try to help the poor simply ends up going to [Kendall Powell](http://www.forbes.com/lists/2012/12/ceo-compensation-12_Kendall-J-Powell_UBKC.html). Even though you’d think fixing the health care system would help, in reality it’s simply going to funnel more money to CEOs of health care companies like [Thomas Frist](http://www.forbes.com/profile/thomas-frist/). Convincing those three guys to move to Sweden (or Singapore) will go a long way to making the titter-totter tilt the other way. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [January 3, 2013, 3:52pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/42 "2013-01-03T15:52:03Z")
> [@Der\_Trihs](#): > > Except that you’ve just destroyed that market by drastically lowering the wages of the workers. How will they buy anything? Um no, I didn’t. If you were able to bring back a lot of the manufacturing that used to be done in the US (clothing, steel production, car production, etc) then that would represent jobs that don’t exist in large numbers here any more. Even if you paid the workers half as much as they were making in their hay day (IIRC, that was something like $40/hour for union manufacturer labor), you are talking about a large number of people being paid $20/hour instead. How will they buy anything? How do they buy anything TODAY?? I know you think that I’m taking about making everyone take minimum wage, but that’s your own ridiculous hyperbole talking. The reality is that the labor I’m taking about is worth more to companies than simple minimum wage…it’s just not worth what it’s currently commanding in the US. That’s pretty obvious, since if it WAS worth what companies were willing to pay then they would be shoving each other out of the way in a rush to build new facilities here in the US. Obviously, wages aren’t the only factor…you also have corporate taxes, regulations and laws, but to me the biggest thing holding the US back from having a new manufacturing boom is the cost of our labor, which is just to high for it’s perceived value. Nations like Germany (and Japan) are able to get top dollar for their labor because their products are perceived to be better…they have a value add, part of which comes from their labor. US products aren’t generally perceived to be premium, high end products (some are, but many aren’t), and haven’t been since maybe the 60’s…about the time when this disparity between the cost and value of labor first started to impact the US and US manufacturing. Notice what’s happened since then? Many US manufacturing companies went out of business. Many that are still around either cut their staffs by introducing automation in every increasing complexity and/or moved their operations to either cheaper labor states in the US or to other countries. That’s the reality you have to come to grips with…you are never, ever going to get companies to pay a premium for labor in the US well beyond what that labor is worth to those companies again. If you try then companies will either go out of business, automate even further thus further reducing their staffs, and/or move their manufacturing facilities and maybe all their operations to another country or at least to states with cheaper labor. How’s that going to help US workers? ---
**Author:** ![Kobal2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kobal2/32/20_2.png) [@Kobal2](https://boards.straightdope.com/u/Kobal2)\ **Post date:** [January 3, 2013, 4:01pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/43 "2013-01-03T16:01:16Z")
> [@XT](#): > > Preeeeeeeeeetttttttttyyyyyy sure that most of the countries you are using for examples here also have increasingly used automation, outsource and offshoring, Of course they do. And yet these countries do not experience a similar humongous economic disparity as the US. > [@](#): > > and in the case of the Germans they also have a perceived value add to their labor…their products are considered premium, and thus command top dollar. America used to have that, too. Used to. What changed since then ? > [@](#): > > Plus, you have what is for all intents and purposes a captive market with the EU, since it’s a free trade zone for member nations. _blink, blink_ and the US, the largest consumer market across the board, is not a \*gigantic \*free trade zone for its member states ? Not to mention the South American market, which y’all have largely to yourselves. > [@](#): > > Well, minimum wage sets a low end bar on wages Precisely. Which means that, quite demonstrably, you _can_ in fact force companies to hire people at the rates YOU think they’re worth. > [@](#): > > Ok, but so what? If companies are over paying for their highest end then that’s a place they can be attacked by rival companies attempting to undercut them and steal their market share. Not if they concurrently underpay for their lowest. Which is what’s happening, apparently. Not to mention of course that mere price of goods/services is hardly the only (or even the most important) factor in market penetration. Hell, some business models & sectors actually \*rely \*on inflated prices. The “high fidelity audio cable” racket, for example - many, many people subscribe to the idea that “you get what you pay for” applies at both ends. I believe P.T. Barnum published birthrate statistics about them 😉 > [@](#): > > Your labor, whether you be a CEO or a pipe fitter is worth what someone is willing to pay you for it. That truism becomes largely borked when the someone paying you for it and assessing your labour’s worth also happens to be you. > [@](#): > > A hard cap would simply mean that people who are perceived to be worth more than the cap would find other ways to be compensated, so I doubt it would do much. And those other ways could be regulated in turn, making it progressively harder to dance around the law (and avoid the expected results). See: the tax system. ETA: you might as well be saying that the minimum wage is pointless since “the people who are perceived to be worth less than the cap, their employers will find other ways to compensate them less”. I don’t really see that happening. Well, not to legal citizens anyway. > [@](#): > > Certainly it’s not going to magically raise the wages of the people who we are discussing right now, so unless your plan is to lower the rich so that our GINI is better I fail to see how this helps. As I said, the company money has to end up _somewhere_. You don’t think they’d just accumulate it only to let it sit around and get taxed, do you ? Not that there’d be anything wrong with that… If the newfound profit turns into higher wages for the employees, I’m fine with that. If it leads the company to expand its operations and hire more employees, that’s good too (the resulting scarcity of the labour market will likely lead to higher salaries in turn anyway). If it’s invested, then someone will benefit from that investment to create or expand their own business. If the money goes into modernization and infrastructure or consulting, someone gets paid for that too. And so on. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [January 3, 2013, 4:05pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/44 "2013-01-03T16:05:38Z")
> [@XT](#): > > Um no, I didn’t. If you were able to bring back a lot of the manufacturing that used to be done in the US (clothing, steel production, car production, etc) then that would represent jobs that don’t exist in large numbers here any more. Even if you paid the workers half as much as they were making in their hay day (IIRC, that was something like $40/hour for union manufacturer labor), you are talking about a large number of people being paid $20/hour instead. How will they buy anything? How do they buy anything TODAY?? By barely scraping by with two incomes and often more than one job per person. And even then, they don’t buy much anymore; that’s a major reason we have such a recession, a lack of consumer demand because the consumers have no money. And there’s no way they’ll even be making minimum wage if they are competing for wages with the Third World, much less $20 an hour. They’ll be competing with people who in many cases are slaves in all but name. ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [January 3, 2013, 4:24pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/45 "2013-01-03T16:24:37Z")
> [@Kobal2](#): > > Precisely. Which means that, quite demonstrably, you _can_ in fact force companies to hire people at the rates YOU think they’re worth. Not exactly, no. If minimum wage were, say, $10, any job that doesn’t produce at least $10 in revenue will simply be eliminated. In this way, minimum wage creates unemployment. You can’t force companies to hire people at the rates you think they’re worth, because you can’t force companies to hire or retain people. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [January 3, 2013, 4:30pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/46 "2013-01-03T16:30:03Z")
> [@Human\_Action](#): > > Not exactly, no. If minimum wage were, say, $10, any job that doesn’t produce at least $10 in revenue will simply be eliminated. In this way, minimum wage creates unemployment. You can’t force companies to hire people at the rates you think they’re worth, because you can’t force companies to hire or retain people. Exactly. In the case of minimum wage, it definitely creates a distortion in the labor market, and has the negative effect you say here, but it’s a fairly small distortion and a small negative effect so it’s nothing that can’t be worked around. But the real world effect is that if the labor is worth less than $10/hour to a company then their most likely course of action is to cut their staff, either making those that remain do more, maybe through increased automation and productivity through expert systems or more efficient processes. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 3, 2013, 4:54pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/47 "2013-01-03T16:54:24Z")
> [@Human\_Action](#): > > Just to add to this, with American workers, you also have literacy; familiarity with the basic concepts of the workforce, like being on time; reliable infrastructure; and rule of law. So? The Chinese have all that too, with the arguable exception of rule of law. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 3, 2013, 4:57pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/48 "2013-01-03T16:57:14Z")
> [@Leaffan](#): > > Tax stock offerings at 75% or some ridiculous number or somehow detach executive compensation from share value. Of course in a capitalistic society this is impossible. I’m sure they said that once about income tax, minimum wage and the 40-hour week. It’s possible, all right. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 3, 2013, 4:59pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/49 "2013-01-03T16:59:19Z")
> [@2sense](#): > > If we allowed for broader recognition of foreign medical credentials and let in more foreign doctors, for instance, we could reduce health care costs. 😕 Don’t we let them in **now?** Just go to any walk-in clinic, you’ll be treated by a foreigner. I always figured that was a result of a government policy that America can always use more doctors. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 3, 2013, 5:00pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/50 "2013-01-03T17:00:20Z")
> [@emacknight](#): > > Or, just let them hide their wealth/income the way Europeans do. Cite? ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 3, 2013, 5:02pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/51 "2013-01-03T17:02:45Z")
> [@Scotty Mo](#): > > I’ve always considered this a major issue up until this thread. But now I find myself agreeing with the poster above who said that we should be alleviating poverty directly rather than trying to create income equality. I would be interested in hearing more about this and why income inequality is not necessarily a bad thing, of course, if that’s ok with the OP? Well, that’s a fundamentally different kind of question; it involves questions of values and ethics and sociology and political ideology. It is well worth discussing, but it really should be addressed in a different thread. Like I said, I’m trying to keep this one laser-focused on “how,” not “why,” to reduce income inequality. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [January 3, 2013, 5:05pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/52 "2013-01-03T17:05:41Z")
> [@Human\_Action](#): > > Just to add to this, with American workers, you also have literacy; familiarity with the basic concepts of the workforce, like being on time; reliable infrastructure; and rule of law. > [@BrainGlutton](#): > > So? The Chinese have all that too, with the arguable exception of rule of law. And corporations don’t want the rule of law anyway. They want to do as they please. ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [January 3, 2013, 5:07pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/53 "2013-01-03T17:07:16Z")
> [@XT](#): > > Exactly. In the case of minimum wage, it definitely creates a distortion in the labor market, and has the negative effect you say here, but it’s a fairly small distortion and a small negative effect so it’s nothing that can’t be worked around. But the real world effect is that if the labor is worth less than $10/hour to a company then their most likely course of action is to cut their staff, either making those that remain do more, maybe through increased automation and productivity through expert systems or more efficient processes. The distortion is small so long as the legal minimum wage is fairly close to the market wage for a given job. Businesses hire people to perform labor that will result in revenue higher than the cost of the labor. They are not agents of social welfare, social engineering, or wealth redistribution, and trying to make them serve these functions is misguided. > [@BrainGlutton](#): > > So? The Chinese have all that too, with the arguable exception of rule of law. Reliable infrastructure? [Only](http://www.forbes.com/sites/williampentland/2011/05/17/china-braces-for-blackouts/)[somewhat.](http://news.bbc.co.uk/2/hi/asia-pacific/3916789.stm) > [@](#): > > A wave of rolling power blackouts that began earlier this year in coastal areas and several inland provinces of China has crippled businesses in the delta regions of the Yangtze and Pearl rivers. The power shortages are likely to get worse before they get better – to put it mildly. > [@](#): > > Beijing has experienced its first “brown out” of the year - a partial power cut to save energy as China grapples with soaring electricity demand. And the level of government control over the economy introduces all sorts of uncertainties that a business doesn’t face in the U.S. ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [January 3, 2013, 5:12pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/54 "2013-01-03T17:12:46Z")
> [@Der Trihs](#): > > And corporations don’t want the rule of law anyway. They want to do as they please. They why aren’t American businesses flocking to Somalia or the Sudan? I assure you, you’re mistaken. Business as we know it is based on contracts and equal application of the law, as part of the certainty one needs to invest capital. When your factory can be seized if the regime falls, you don’t build the factory in the first place (at least not without trepidation). ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [January 3, 2013, 5:19pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/55 "2013-01-03T17:19:28Z")
> [@Human\_Action](#): > > They why aren’t American businesses flocking to Somalia or the Sudan? Too much uncontrolled violence. They want enough of a local hierarchy that they can bribe the local thugs to keep them from being attacked, kill workers who try to unionize, round up forced workers, that sort of thing. But they don’t want law; they don’t want anything that restricts their actions or protects their workers or their customers. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 3, 2013, 6:28pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/56 "2013-01-03T18:28:07Z")
> [@Human\_Action](#): > > Businesses hire people to perform labor that will result in revenue higher than the cost of the labor. They are not agents of social welfare, social engineering, or wealth redistribution, and trying to make them serve these functions is misguided. Well, then, for purposes of this thread, something else must serve those functions; by your admission, the free market won’t do it. ---
**Author:** ![2sense](https://avatars.discourse-cdn.com/v4/letter/2/e47774/32.png) [@2sense](https://boards.straightdope.com/u/2sense)\ **Post date:** [January 3, 2013, 6:39pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/57 "2013-01-03T18:39:41Z")
> [@BrainGlutton](#): > > 😕 Don’t we let them in **now?** Just go to any walk-in clinic, you’ll be treated by a foreigner. I always figured that was a result of a government policy that America can always use more doctors. My understanding is that it is a large barrier, yes. ---
**Author:** ![newcomer](https://avatars.discourse-cdn.com/v4/letter/n/e5b9ba/32.png) [@newcomer](https://boards.straightdope.com/u/newcomer)\ **Post date:** [January 3, 2013, 6:49pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/58 "2013-01-03T18:49:59Z")
Increase minimum wage Clean up tax code to favour long term profitability Restructure central banking by way of instituting no-interest central bank loans to fund federal & state expenses Restructure tort-law and impose limits on money paid out Make fewer wars Settle illegal immigration That would be a good start… ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [January 3, 2013, 6:51pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/59 "2013-01-03T18:51:50Z")
> [@Der Trihs](#): > > Too much uncontrolled violence. They want enough of a local hierarchy that they can bribe the local thugs to keep them from being attacked, kill workers who try to unionize, round up forced workers, that sort of thing. But they don’t want law; they don’t want anything that restricts their actions or protects their workers or their customers. That sounds like conditions without the rule of law, all right. Why is this unique to corporations? > [@BrainGlutton](#): > > Well, then, for purposes of this thread, something else must serve those functions; by your admission, the free market won’t do it. Agreed; if you wish those functions to be carried out, it must be through the state, or through voluntary works (i.e., charity). ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [January 3, 2013, 7:10pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/60 "2013-01-03T19:10:13Z")
My first thought: You **steal from the rich** and **give to the poor.** OK, seriously, go through the tax code. Have high marginal taxes on both income and net worth, with high negative income taxes. Possibly also a high marginal tax on inheritance or estate, maybe some other blatantly redistributionist programs. And remember, sodding off to Monaco to avoid tax isn’t always easy, but if they go, you can still tax their holdings in your country, with a tax on business that is written off (is that the term?) their personal income tax if they reside in your country. [Previous page](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792.md?page=2) [Next page](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792.md?page=4)