How do we actually address rampant income inequality?

Great Debates
1

First, do you think it’s a problem at all?
I used to not be overly concerned about it. I was extremely sympathetic to this thatcher sort of argument here:

Now in her example, the poor were still better off, just not as much better off compared to wealthier people. That is the kind of inequality I find more tolerable. What we are experiencing today is different though, the poor are falling further behind in purchasing power, and the middle class is sort of running in place if not losing ground.

Here is a slightly outdated graphic exploring the discrepancies visually:

Clearly, people want the spoils of our labor to be better distributed. This does not mean we want equal rewards to all people regardless of what they put in. You work harder, you are born smarter, you contribute more, it makes perfect sense that you are rewarded more.

But herein lies the problem with both liberals and conservatives.
The liberals think that the differential outcomes are a function of economic starting points and lack of quality schools and lower college attendance and racism. External factors all, so little focus on the variables that the individual brings to the table, like their own effort.

Conservatives tend to focus far more on internal characteristics, how hard the person works, ignoring starting advantages like wealth and environment. To the extent that they DO focus on external factors it tends to be around tax levels where lower taxes will inevitably lead to direct increases in wealth generation and general prosperity. They do not pretend to imagine that the scales will ever be equalized, but since theirs is a view focused more on the effort of the individual, they don’t much care.
Neither of these views is complete however. The more equal and just a society, the less racism, the more similar the starting conditions and educational opportunities, the MORE the innate differences between individuals will come to the fore to dictate outcomes. We know have the population is below average intelligence, digging deeper and deeper into the bottom of the barrel to scrape the grime to send to college as if that is EVER going to yield the same results as others that are more capable is a fantasy.

Same thing on the conservative side, they like to pretend the only variables that affect the outcomes of a person are based on their own efforts, with perhaps a little chance. But aptitude is a birthright, not someone earned, it is the LEAST meritocratic force in all of nature, and it not something the right “values” and work ethic can increase. The idea that we relegate people who make a good faith effort to get ahead, but were not born as gifted as others to some gutter level existence is an abomination of all decency.
Some may say we are far from that, but are we? Robots, AI, these things are coming on strong. The next industry that will be majorly disrupted is transportation, it also happens to be one of the largest employers of people without advanced skillsets and degrees.

uber drivers / delivery drivers / trucks that ship freight.

Self driving cars and trucks will eliminate the need for such drivers. Gone. Poof. There are forces that depress wages and the value of labor and income generation that are outside the realm of blanking taxes conservatives !!!
So what is the solution? A universal basic income?

Free college?
just lower tax rates to make a more (channels larry kudlow) “pro growth” economy?
Have everyone invested in the stock market by law so that not ONLY the wealthier are reaping the rewards there?

What?

A lot of solutions are bandied about that seem to me incapable of putting the slightest dent in the problems and distributions of wealth. I like Bernie, but free daycare and public college does not seem like a solution, especially not for the millions of people that are too dumb to graduate any college in the first place. They used to be able to work in a factory, where do they work now?

2

No, or at least not a very big one.

By world and historical standards, virtually no one living in 21st century America is suffering through a “gutter level existence”. Even the poorest Americans are doing quite well compared to most places in the world and most times in history.

This is my favorite solution of the ones you listed, but I’m here to read what others propose.

3

Yes, it’s a problem. A severe problem. Wealth is being concentrated upward, to the elimination of the middle class. Ronald Reagan got it started, and GW Bush made it much, much worse.

The national debt is an instrument of wealth concetration. Who do you think receives the vast payments on interest on the debt? Only the wealthy. The poor and middle-class aren’t in a position to buy large amounts of bonds. And yet we all have to pay toward those interest payments. Money is being slurped away from the poor and middle class, and given to the rich.

We need to break up that vast estates. That can be done by very modest tax increases, including a small estate tax, and annual property taxes. They very wealthy will have to moderate their life-style – instead of living in a 20 room mansion, a billionaire might have to move to a 15 room mansion. But, meanwhile, a family of nine living in a one-bedroom apartment might be able to move to a 2BRa.

The fact that these are not just abstract hypothetical examples, but real-life ones shows how dire the problem is.

4

I’m curious, what did Reagan and Bush do that the first President Bush, Clinton, or Obama didn’t do (or didn’t do that the others did)? Why did you single those two particular presidents out of the last five? Were there policies they pursued that lead to greater income inequality? If so, what were they?

Huh? You think the rich are getting rich from T-bill interest rates? That’s funny. Not to mention that plenty of poor don’t pay federal income tax, and the government programs that are driving up the debt (largely SS, Medicare, and Medicaid) are for the benefit of the poor, sick, and elderly.

I really doubt that billionaires care at all about property taxes, especially “very modest” ones. And aren’t there already significant estate taxes (40% on estates over $5M), not just “small” ones? In other words, haven’t we already tried what you’re proposing in this paragraph?

5
  1. Increase taxes on the wealthy and corporations.
  2. Tax or otherwise discourage hiding money offshore.
  3. Corporations will invest in new equipment, expansion of operations, development of new products, etc., which are tax deductible, so that they will not be just ‘giving money away’ to the government. Wealthy people will invest for the same reason.
  4. People will need to be hired to develop the new products, manufacture the new products, build the new facilities, and so forth. More people will be employed, and wages will be higher.
  5. Thus, the income gap decreases.
6

Well, Clinton, by turning in a balanced budget (a surplus!) isn’t in the same category as Reagan and Bush, who simultaneously cut taxes (drastically) and oversaw huge military budget increases. Cutting taxes and increasing spending is how they exploded the debt. Bush the elder, Clinton, and Obama didn’t engage in that practice (although Obama hasn’t done enough to raise taxes, either.)

Cutting taxes and then running a trillion dollar war is just about the worst conceivable possible combinations of public policy decisions.

7

There is no good mechanism by which to tax wealth.

8

The OP’s analysis ignored the link between economic and political power, the most salient problem of extreme economic inequality. Or how over financialization hurts the real economy. But that’s fine.

There’s nothing different about it. It’s normal capitalism. There is a pining across the political spectrum for the 50s and 60s when America dominated the world economy, but that was an anomaly that can’t be repeated. Unless people want to start WWIII.

This does describe the safe, mainstream consensus. If only everyone had the proper credentials! Then it would be worth even less than it already is. The riskier liberal position is that profits are being redirected to the top. You see this reported in the mainstream press sometimes, but I’m not aware of any politically acceptable solutions.

Not many Americans work harder than Mexican day laborers.

It’s interesting talking to conservative, economically insecure blue collar workers. They’re inundated with so much propaganda they have difficulty formulating their grievances, but subversive thoughts bubble right under the surface.

Wasn’t the old idea that America would transition to a service economy? You know, everyone could be a barber or masseuse, something you do in person, safe from foreign competition and robots. Yeah…

Near as I can tell the plan is to keep going until collapse. Send the trouble makers to the ever expanding prison industry. It’s a good plan.

9

If it’s public debt you’re worried about, there’s no question that Obama’s been the biggest deficit-spender in history. Go grab the OMB’s Historical Table 1.1 and chart out receipts, outlays, and the surplus or deficit columns. Clinton’s second term was a rare anomaly.

It’s interesting to read articles like this and see how things panned out. “The White House projects a surplus of $393 billion in 2009” HA! Missed it by that much!

10

A very low standard. I should hope poor Americans in 2016 are better off than poor Americans in 1940 or the 1800s, let alone the standards of Some impoverished African country.
I suppose the question is what level of a floor would you be willing to tolerate?

You certainly tolerate some floors of redistribution. You give the green light to have the government bankroll k-12 education through taxes, even though poor people usually don’t pay enough in taxes to cover the cost of their kids attendance. Healthcare? Are you ok with that? Or leave it to the individual, and if they can’t pay, just head to the emergency room or die in the streets? For Reagan in California as governor it was cutting funding to mental hospitals and releasing mass numbers of mentally ill people onto the streets. Large swaths turned into the homeless population, because, as it turns out, the mentally ill are not in very high demand in the workforce when an employer can just as easily hire someone sane and mentally stable.

So what should we do with them? Let them stay on the streets and maintain the freedom to live in squalor?
Where is your line of re-distributive tolerance?

11

I didn’t say just compare them to poor Americans from 1940. Compare them to wealthy Americans from 1940 if you like. When 2/3 of the Americans that live below the poverty line have satellite or cable TV, I think there’s something wrong with the label “poverty line”.

Quite low. The federal government takes money from me to redistribute as it sees fit largely because it has more men with guns to take it than I have to defend it. If it were up to me, I wouldn’t give a dime to the federal government for any means-tested benefits. I’d grant the states considerable latitude to impose taxes and enact welfare programs as they see fit, and I’d probably move to the state that did the least of both of those things.

12

Campaign Finance Reform.

13

America’s rich not only enjoy more luxuries than the poor, but longer and healthier lives, more contentment, more political power, and, when criminal, better results from the criminal justice system. Most agree that the wealthy “deserve” more luxuries. Do they also deserve preferential treatment for crimes?

High income is often a reward for innovation, and conservatives make much of this. But the fact is that today much American “innovation” isn’t about technology to help mankind, but ways to manipulate regulations, to “game” a system, or to exploit the ignorant. Look at the huge portion of the U.S. economy which is now diverted to the financial sector; look at the shenanigans they’ve done to develop high profits.

It is normal for the rich to get richer, even when the innovator who earned the original wealth is gone. But in the U.S., the gap continues to widen due to preferential tax treatments, and to “rent -seeking” – rent-seeking supported by corruption or misregulation and which contributes little to society. While huge inequality is, by itself, undesireable, it is often a symptom of other problems, e.g. corrupt regulation. One point where the right-wing isn’t completely wrong is that often government is the problem. But it’s not pro-human progressive policies that are the problem, it’s that U.S. government policymakers and regulaters are often in the pockets of rich vested interests.

In a previous thead I recommended Joseph Stiglitz’ Price of Inequality for those who want to learn. There were two takers!

But mostly from the right we hear comic-book appraisals that do not reflect any reasonable debate. For example,

I wonder if Mr. Ditka knows what the cost of quality food or healthcare for a family is, compared with the cost of cable TV?

14

Seeing as how I pay for both of those things myself (to be clear, I have health insurance which helps offset the more severe and costly medical expenses), I have a pretty good idea what they cost, but what does that matter? I don’t have to know what they cost to know that the people buying cable either have enough money / food stamps to purchase both cable and food (in which case, I don’t consider them particularly impoverished), or they really, REALLY suck at prioritizing their spending (in which case I don’t particularly want to give them more free money to waste).

15

I’m not sure it’s a problem although I can be convinced otherwise. I really liked this opinion piece by Paul Graham. He basically says that income inequality is not itself a problem but it may be a symptom. He says the problems are:

  1. Social/economic mobility (or lack of it).
  2. Poverty.

Tackling those two problems may reduce II but doesn’t make it the goal.

16

If I were dictator I’d do the following:

1). No more minimum wage, welfare, or food stamps.
2) expand free breakfast and lunch at schools and provide more calories and higher quality calories with those meals.
3) implement a nation wide basic income for citizens
4) a more diverse education system that provided easier access to vocational training

I don’t care about inequality with regards to wealth or income. I care if children or people are starving to death or are condemned to violent and shitty neighborhoods and schools.

17

I think part of the problem is that for some neither is much of a concern to tackle in the first place.

  1. Social/economic mobility? As long as they have theirs, through their own labors, inheritance, chance or some combination of the three - all is well. 3 of the 10 in a group are on fire? What’s it to me.

  2. Ditka came out and rejected the notion there is an issue with our poor, after all, they have electricity and heating and a better standard of living. And a longer life span than a wealthy person living in 1800. More than that, there seems to be genuine indifference to the added struggles people on the bottom end deal with. It’s still relative, sure, our poor are not starving, but they are not thriving either. Is it really so terrible to take a fraction of the greater rewards of those who are already thriving to shore up those who aren’t?

He gave the answer, only if it’s done by a state (a distinction without much difference in my mind in terms of policy) and even then he’d prefer to move to a state that was closer to Galts Gulch/Rapture from Andrew Ryan.

It’s interesting, the circle of concern really only extends to oneself and perhaps a family in this sort of view.

Too callous for my tastes.

18

The deficit shrunk every year Clinton was in office, from what was an all time high when he entered office to surpluses in his last three years. That’s a pretty consistent anomaly.

I suspect there are people in both parties that actually care about the deficit, and it’s not clear to me how reducing the conversation to “my team is better than your team” does anything to further the issue.

19

It’s instructive that this nit was the only thing of interest to you in my post.

And yet you still managed to misunderstand even that nit. The point is that many poor families in the U.S. can afford neither healthy food nor minimal healthcare. The prices of electronic toys have plummeted, but not that of life’s necessities. Some do not begrudge the poor if they spend modestly to bring a little joy into their lives.

Most interesting of all is that, when pressed on the point, you effectively admit that your original point was wrong – many Americans are poor – you just wanted to find a way to the blame the victims who “REALLY suck at prioritizing their spending.”

20

I didn’t mean that to come across as a partisan critique. And when I said Clinton’s second term was an anomaly, I meant that the surplus was a rare thing. If you care about deficit spending, Clinton was awesome, the best President in decades. Obama was the worst, followed by GWB, and his father and Reagan. I wasn’t trying to claim one party was better than the other. In the last few decades, I see it as basically a wash: best and worst vs a bunch of average-ish deficit spenders.