# 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:** 4
**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, 7:28pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/61 "2013-01-03T19:28:11Z")
> [@foolsguinea](#): > > 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. Making the rich poorer is the easy part. How do you make the poor richer? ---
**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, 7:53pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/62 "2013-01-03T19:53:41Z")
I said negative income taxes. ---
**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, 8:02pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/63 "2013-01-03T20:02:20Z")
> [@foolsguinea](#): > > I said negative income taxes. Ack, so you did. My mistake. ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [January 3, 2013, 8:13pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/64 "2013-01-03T20:13:44Z")
Why stop at Americans? Why not reduce income inequality across the planet? Heavily tax all Americans who make more than $100/day and pay for infrastructure in other nations. ---
**Author:** ![DrCube](https://avatars.discourse-cdn.com/v4/letter/d/a3d4f5/32.png) [@DrCube](https://boards.straightdope.com/u/DrCube)\ **Post date:** [January 3, 2013, 9:23pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/65 "2013-01-03T21:23:02Z")
> [@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. Corporations absolutely DO want laws. They just want to be the one to make those laws. And, by and large in the US, they do. Lobbyists and regulatory capture ensure that our laws and regulations are by, for and of the corporations. The reason is that in the absence of law, you have to actually compete. And nothing is scarier to entrenched businesses than competition. When you make the law, on the other hand, you get to outlaw your competition. You get to enforce “standards”. You get to make consumers buy your product whether they want to or not. ---
**Author:** ![deryk](https://avatars.discourse-cdn.com/v4/letter/d/e36b37/32.png) [@deryk](https://boards.straightdope.com/u/deryk)\ **Post date:** [January 3, 2013, 11:21pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/66 "2013-01-03T23:21:59Z")
If anything, the discussions on this thread so far show that the solution is in your assumption. The first step is getting people to admit that wealth inequality is a bad thing. Which is to say that we must first get people who make millions of dollars to admit that it’s bad that they make millions of dollars (if, in fact, that’s true). Without this assumption being accepted as a universal truth, the people who own the majority of the nation’s wealth will never be inclined to voluntarily relinquish it. Thus we’ll require more and more laws and regulations to forcefully take it from them, which in turn will only dig the trenches deeper on each side. I think that’s why a discussion of “how” so often evolves into a discussion of “why.” If I said, “How can we solve the problem of everyone owning a car?” wouldn’t your first reaction be, “What’s wrong with owning a car?” ---
**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 4, 2013, 12:14am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/67 "2013-01-04T00:14:14Z")
> [@Human\_Action](#): > > That sounds like conditions without the rule of law, all right. Why is this unique to corporations? Corporations like them. ---
**Author:** ![Yeticus\_Rex](https://avatars.discourse-cdn.com/v4/letter/y/a698b9/32.png) [@Yeticus\_Rex](https://boards.straightdope.com/u/Yeticus_Rex)\ **Post date:** [January 4, 2013, 12:16am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/68 "2013-01-04T00:16:16Z")
> [@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. Plus 7.65% SS and Medical, FUTA, Worker’s Comp (Variable) + SUI (Variable) + SDI (Variable) + Employer Contributions towards insurance and IRA/401K (Variable) which can make closer to a minimum of $11.50 or much higher, not counting the operating costs of the physical plant that they would be working at. > [@Deeg](#): > > Why stop at Americans? Why not reduce income inequality across the planet? Heavily tax all Americans who make more than $100/day and pay for infrastructure in other nations. Maybe a world wide minimum wage applied to any American owned/established company might be a stepping-stone to that ultimate goal. Encourage other off-shoring companies in other countries to pay a world-wide minimum wage. Heck, it may be the equivalent to $5/hr. American, but that would be far better than what’s going on now to end World Poverty\*. That is the goal, right? Or is it just about American Labor? - = (At least that what was bandied about in the 70s and 80s, IIRC.) ---
**Author:** ![newcomer](https://avatars.discourse-cdn.com/v4/letter/n/e5b9ba/32.png) [@newcomer](https://boards.straightdope.com/u/newcomer)\ **Post date:** [January 4, 2013, 1:30am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/69 "2013-01-04T01:30:04Z")
> [@deryk](#): > > I think that’s why a discussion of “how” so often evolves into a discussion of “why.” If I said, “How can we solve the problem of everyone owning a car?” wouldn’t your first reaction be, “What’s wrong with owning a car?” You do realize that’s only because you see implicit assumption as non-existent; i.e. you don’t agree that there is inequality in US so asking about “how” is a waste of time. Boy, if we solved all debates this way :o ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [January 4, 2013, 1:43am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/70 "2013-01-04T01:43:53Z")
> [@Der\_Trihs](#): > > Corporations like them. At this point you’re both incoherent and derailing the thread, to be quite honest. Babbling about how corproations like the rule of law but don’t like the rule of law (which appears to be your position) isn’t answering the question the OP asked. What do other countries do? Smarter tax policy. ---
**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 4, 2013, 4:43am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/71 "2013-01-04T04:43:53Z")
> [@Der Trihs](#): > > Corporations like them. Here’s a [list](http://en.wikipedia.org/wiki/List_of_countries_by_received_FDI) of the nations that receive the most foreign direct investment. Is it filled with nations that have… > [@Der Trihs](#): > > enough of a local hierarchy that they [corporations] 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. ? Let’s see… > [@list](#): > > 1. United States > 2. United Kingdom > 3. Hong Kong > 4. France > 5. Belgium > 6. Netherlands > 7. Germany > 8. Spain > 9. Canada > 10. Italy > 11. Brazil > 12. China > 13. Russian Federation > 14. Australia > 15. Switzerland > 16. Mexico > 17. Sweden > 18. Singapore > 19. Ireland > 20. Denmark > 21. Turkey > 22. Poland > 23. Japan > 24. Austria > 25. South Korea You have to get down to #36, Saudi Arabia, before there’s anything remotely like the nations you’re describing. This seems odd, shouldn’t investors be pouring funds into nations without the rule of law? They seem to be doing precisely the opposite. ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [January 4, 2013, 6:04am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/72 "2013-01-04T06:04:14Z")
> [@Yeticus\_Rex](#): > > Maybe a world wide minimum wage applied to any American owned/established company might be a stepping-stone to that ultimate goal. Encourage other off-shoring companies in other countries to pay a world-wide minimum wage. Heck, it may be the equivalent to $5/hr. American, but that would be far better than what’s going on now to end World Poverty\*. > > That is the goal, right? > Or is it just about American Labor? > > - = (At least that what was bandied about in the 70s and 80s, IIRC.) Yes, that is the goal, at least for me. I’m worried that a world-wide MW would have unforeseen negative effects but at least you’re talking about a potential solution. I guess I get irritated by people who want to solve income inequality in just the US; it sometimes feels like we want to pull down those fat rich bastards and I suspect that many of those in favor of income equality mean to pull down only those richer than them. Yet the difference in qualitify of life between me and Bill Gates is smaller than between me and someone in Haiti. Income inequality amongst Americans is not that big of a deal IMO. The income inequality between Americans and Haitians is monstrous. That said, I really don’t know what to do about it. ---
**Author:** ![deryk](https://avatars.discourse-cdn.com/v4/letter/d/e36b37/32.png) [@deryk](https://boards.straightdope.com/u/deryk)\ **Post date:** [January 4, 2013, 6:19am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/73 "2013-01-04T06:19:23Z")
> [@newcomer](#): > > You do realize that’s only because you see implicit assumption as non-existent; i.e. you don’t agree that there is inequality in US so asking about “how” is a waste of time. > > Boy, if we solved all debates this way :o I think you misunderstood me. I _do_ believe there’s income inequality in the US, (just as I genuinely believe that most people shouldn’t own a car). What I was trying to illustrate was that the answer to “How can we fix this problem” is to first successfully argue that there is indeed a problem that needs fixing. In other words, answering “Why?” is the first step to answering “How?” Because any solution presented in the form of passing more laws and/or regulations doesn’t actually solve the problem. The greedy, the wealth-hoarders, and their allies will all see these attempts as basically theft and will constantly fight against them. So what’s the best way to stop them? Convince them that they’re wrong. Demonstrate that economic inequality does, in fact, exist, then convince them that it’s a bad thing. ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [January 4, 2013, 8:46am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/74 "2013-01-04T08:46:46Z")
> [@Kobal2](#): > > _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. In which case, why don’t you try measuring inequality in Europe and then compare it to the US? I do believe things would look a little different. ---
**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 4, 2013, 11:25am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/75 "2013-01-04T11:25:13Z")
> [@bldysabba](#): > > In which case, why don’t you try measuring inequality in Europe and then compare it to the US? I do believe things would look a little different. See the GINI map linked upthread. The only European country that’s worse off than the US on that front is Bosnia.A\* war zone\*. Beyond that, and anecdotally speaking from my own experience living in France, we do have rich and poor, and some very rich ; the working class is sort of hopelessly fucked too (but when has it \*not \*been ?) - but things are nowhere near as off kilter as they are in the US, I don’t think. Our working poor don’t have to work 3 different jobs to make ends meet, they aren’t financially doomed if they catch a nasty disease or a bad break, our education system isn’t in complete shambles even if of course it could still use more help (most notably, college access is emphatically not restricted to the upper crust nor crushes poorer student under extortionate loans)… and on the flip side, our very rich seem just as hedonistically insane as yours - they too have large empty houses in many places, private jets, kitchy yachts, overpriced art, cocaine fueled parties, tabloid antics, the works. Honestly, once you’ve got a couple dozen mil’ under you belt, there’s not much having moaaaaar can buy in terms of worldly comforts that I can see. ---
**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 4, 2013, 11:33am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/76 "2013-01-04T11:33:28Z")
> [@Deeg](#): > > Why stop at Americans? Why not reduce income inequality across the planet? Heavily tax all Americans who make more than $100/day and pay for infrastructure in other nations. You’d need a global government to efficiently, fairly pull that kind of thing off. I think it’s past time we had one honestly, but getting over every nation’s tribalism and twenty centuries of mutual mistrust and outright antagonism is easier said than done. ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [January 4, 2013, 11:39am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/77 "2013-01-04T11:39:52Z")
> [@Kobal2](#): > > See the GINI map linked upthread. The only European country that’s worse off than the US on that front is Bosnia.A\* war zone\*. I don’t think you understand my point. You said that the US is one market the same way as the US. If you really want to stand on that point, inequality in Europe taken as a whole must be the consideration, and you can’t do that by looking at inequality country by country. In other words, Bosnia’s poorest citizens must be compared to France’s richest, not just Bosnia’s richest. On the other hand, you could look at US inequality state by state. ---
**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 4, 2013, 11:50am UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/78 "2013-01-04T11:50:50Z")
> [@bldysabba](#): > > On the other hand, you could look at US inequality state by state. Ask and [ye shall receive](http://en.wikipedia.org/wiki/File:United_States_by_Gini_Coefficient.png). None below .41. As for the EU as a whole, [this](http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&plugin=1&language=en&pcode=tessi190) cite rates it at ~30.5, both when only considering the “core” 13 members (the rich boys’ club) and the extended 27 membership roster. Interstingly enough, the global GINI of the recent additions (mostly Balkanic states, plus Cyprus) has actually regressed over time, from 37.4 upon receiving membership, to the same ~30.5 now. ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [January 4, 2013, 12:06pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/79 "2013-01-04T12:06:33Z")
> [@BrainGlutton](#): > > 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. Push the people at the bottom up, but at the same time remove other restrictions that hamper productivity. Have a negative income tax in place, but remove things like minimum wages and healthcare benefits tied to jobs. If you want to be a welfare state, don’t make private citizens do the welfare that the public has decided is needed. Those just cause distortions. But my point was, inequality is something of a zen thing. Focus on it by not focusing on it. Focus on growth, and providing equality of opportunity to participate in that growth. For instance, in the western world, considering a slightly longer time frame(a couple hundred years), I’m willing to bet consumption inequality is at its lowest ever. And that’s happened without any conscious attempt to address the issue. It’s happened through technological breakthroughs and relatively free markets that allow those breakthroughs to spread. There is no doubt that investments in public goods like law and order, education, infrastructure, public health (as distinct from healthcare) have supported these advances. Make governments continue to focus on them. Governments are, by their nature, highly inefficient. They have a broad set of responsibilities, with limited resources to address them, and even more limited ways to measure their success or failure. Once equity gets decided as a goal, politicians will invariably look for highly visible, quick fixes that will show their constituencies that they are “doing something about it” but end up doing far more damage than good, in pursuit of a goal that is questionable at best. To give an example, again from India (sorry, it’s where I’m from, it’s what I know best). Emphasis added to ease readability. > [@](#): > > One subtle example from the current policy regime further illustrates the point. **Along with electricity, high-quality roads connecting the rural areas to the national and state highways constitute the most important public good the government can supply to assist the rural poor in translating their entrepreneurial talents into effective income.** After decades of poor-quality roads, **India has now learned to build world-class roads**. This is evidenced by the Golden Quadrilateral project that is nearly complete and by other national highway projects under way. A key factor behind this success has been the contracting out of road construction to top-class domestic and foreign companies.\*\* But the same success has not been achieved in building reliable rural roads\*\*, despite the allocation of vast sums of resources to them, most recently under the Bharat Nirman initiative. **The reason is that equity considerations have led the government to parcel out the contracts for these roads in small projects** of 10 to 50 million rupees each. Few world-class companies, whether domestic or foreign, bother to bid for such small projects. Moreover, the ability of the government to monitor a large number of very small projects is limited. The result is continued non-delivery or poor delivery of rural roads. **While the policy promotes equity among road builders, it punishes the rural poor.** ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [January 4, 2013, 12:10pm UTC](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792/80 "2013-01-04T12:10:35Z")
> [@Kobal2](#): > > Ask and [ye shall receive](http://en.wikipedia.org/wiki/File:United_States_by_Gini_Coefficient.png). None below .41. > As for the EU as a whole, [this](http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&plugin=1&language=en&pcode=tessi190) cite rates it at ~30.5, both when only considering the “core” 13 members (the rich boys’ club) and the extended 27 membership roster. Interstingly enough, the global GINI of the recent additions (mostly Balkanic states, plus Cyprus) has actually regressed over time, from 37.4 upon receiving membership, to the same ~30.5 now. I’m not entirely certain the numbers are comparable. The cite for Europe says > [@](#): > > The Gini coefficient is defined as the relationship of cumulative shares of the population arranged according to the level of **equivalised** disposable income, to the cumulative share of the equivalised total disposable income received by them. Emphasis mine. That makes it sound as though PPP considerations may be involved. Which kind of defeats the purpose. I may well be wrong on this though. [Previous page](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792.md?page=3) [Next page](https://boards.straightdope.com/t/how-can-economic-inequality-in-the-united-states-be-reduced/645792.md?page=5)