Income inequality -- good or bad?

[Blaster_Master]

@begbert2

There are a lot of arenas where black markets are unlikely to arise, though, such as energy and electrical markets - if the Government decides to institute the Federal Power Supply Division, and doesn’t price things oppressively, then it’s unlikely that bootleg power plants will become common. Similarly, if the government wanted to ban health insurance and replace it with a UHC system that put health care at directly affordable levels, you’d be unlikely to see black market insurance markets emerging.

I don’t buy this. Power probably could work, simply by virtue of the sheer amount of infrastructure that it requires. I don’t see that happening at all with UHC. Let’s consider two possibilities off the top of my head. First, unless UHC is completely, or very nearly completely, funded by taxes such that everything it provides is free, then there’s always room for a black market doctor to provide surgeries or drugs at a rate below the premiums. Of course the problem with free, or very nearly free, medical coverage is that now people will abuse the system because there’s no cost incentive to keep them home when they have a mild headache. So you’re stuck with either a huge tax and infrastructure burden or with competitive markets.

Second, not every health problem can be solved with money. Consider someone who needs an organ but can’t wait 6 months on the organ list. You’ve now got a black market on organs. Consider someone who has a serious condition and a is aware of a drug or treatment that isn’t approved. You’ve not got black market drugs. Consider someone really wants a procedure that is deemd unnecessary or can’t be done without extensive costs to themselves like cosmetic surgery. you’ve not got black market surgery.

@Der_Trihs

Constantly and permanently. It’s called “taxes”. And no, they won’t all flee to other countries to avoid the taxes; they make speeches about it, but in reality that doesn’t happen. Besides, you could drastically raise taxes on the wealthy here, without them having anywhere to flee to that doesn’t either have higher ones or a far worse quality of life for the wealthy ( which is what they actually care about, not taxes ).

I could disagree more. Taxes are a method of raising funds for the government, nothing more, nothing less. We, as a society, make certain concessions to increase the available funds like progressive taxation because we believe it hurts the rich less to be taxed at a higher rate than the poor, or some concept of them owing more, or whatever. However, explicitly using taxes as a tool for social engineering is, imo, highly unethical because you’ve now transformed what is, at it’s root, a necessary and largely objective tool and turned it into a highly subjective tool that may or may not actually serve it’s original purpose, much less it’s new one.

Besides, wealth redistribution clearly hurts incentive and social mobility because you’re removing part of the benefit of working harder. And yet, I’m still lost as to how it will help raise the standard of living when, as I stated in my previous post, I think it will cause standard of living to grow more slowly or even decrease.

Nor can most people significantly “better their lot in life”. In the real world, if you are born poor you will most likely stay poor. Your claim amounts to just the standard sneer that the poor are all just lazy; the poor typically work quite hard, but that just makes them tired and poor.

This I absolutely agree with you here. Anyone who generalizes that the poor are lazy is wrong. When I did blue collar work as an undergrad, I worked as hard then as I do now, and yet I make several times more money in my current job. The working poor (as opposed to those who are simply unmotivated) just don’t have any skills in high demand.

I also agree with you that there isn’t really much anyone can do to help the working poor because they’ll never have skills in high demand. But what we can do is find ways to give motivation to those who are underachieving because they’re unmotivated (ie, your “lazy” poor). Then, by encouraging the people who can contribute more to do so, we can do some of those nifty things like be more innovative or productive and help raise the standard of living for everyone, even those who are stuck being janitors.

The more everyone contributes, the more everyone benefits, but the way to do that isn’t by penalizing the wealthy and rewarding the poor (who may or may not be “lazy”). Negative reinforcement of contribution and potential for positive reinforcement of a lack of contribution are bad things; why not just focus on maximizing positive reinforcement of contribution?

[Shodan]

…the poor typically work quite hard, but that just makes them tired and poor.

[The only problem with this is that it isn’t true.

Among poor families, when work does occur, part-time or part-year work is the norm. Examination of data from the U.S. Census Bureau’s Current Population Survey (CPS) for 1999 reveals the following:](http://www.heritage.org/Research/Family/cda-03-01.cfm)

Part time work is less strenuous than full-time pretty much by definition.

Regards,
Shodan

[Little_Nemo]

Yes, the dominance of Bill Gates Microsoft has “limited” the choice of computer operating systems. IBM OS/2, Amiga, Digital GEM are gone now. I acknowledge that many of you guys like to call this “coercion.” If you want to go into your corner of the universe and keep insisting that this is “coercion” but simply a non-govt form of it – fine – I’m not arguing with you. Use the term as you wish. However, keep in mind this is irrelevant to what economists call “freedom of choice.”

But our little corner is, like Microsoft’s marketshare, 90% of the universe. It makes no difference if it’s Bill Gates or Barack Obama who controls the market - it stops being a free market once any one entity controls it. And I doubt you can find any economist who would disagree (although you probably can find some “economists” who will do so).

[Little_Nemo]

Part time work is less strenuous than full-time pretty much by definition.

I’ve worked forty hours a week in an office and twenty hours a week in a field. Trust me, a part-time job can be a lot more strenuous than a full-time job.

[begbert2]

@Blaster_Master

I don’t buy this. Power probably could work, simply by virtue of the sheer amount of infrastructure that it requires. I don’t see that happening at all with UHC. Let’s consider two possibilities off the top of my head. First, unless UHC is completely, or very nearly completely, funded by taxes such that everything it provides is free, then there’s always room for a black market doctor to provide surgeries or drugs at a rate below the premiums. Of course the problem with free, or very nearly free, medical coverage is that now people will abuse the system because there’s no cost incentive to keep them home when they have a mild headache. So you’re stuck with either a huge tax and infrastructure burden or with competitive markets.

I said “a UHC system that put health care at directly affordable levels”. Your theory that UHC will be so expensive as to generate a lower cost black market of covert surgeons is a so-far-distantly-moved goalpost as to be absurd. Why not hypothesize that UHC is provided, but if you use it they kill your whole family? That would be even better at justifying a black market. :rolleyes:

And your theorized hypocondriacs are self-destructive to your own position - HC being too available would not incentivize black markets. Obviously.

@Blaster_Master

Second, not every health problem can be solved with money. Consider someone who needs an organ but can’t wait 6 months on the organ list. You’ve now got a black market on organs. Consider someone who has a serious condition and a is aware of a drug or treatment that isn’t approved. You’ve not got black market drugs. Consider someone really wants a procedure that is deemd unnecessary or can’t be done without extensive costs to themselves like cosmetic surgery. you’ve not got black market surgery.

Let’s be succinct - if you theorize that the UHC system is not providing a service and in effect banning it, then a black market might emerge to supply that service. Congratulations, you have struck upon the obvious. However that’s irrelevent to the question of whether it’s possible to remove the free market for something without a black market emerging, because to avoid it all the government has to do is supply the services that you’re presuming they won’t.

[Ruminator]

@Little_Nemo

It makes no difference if it’s Bill Gates or Barack Obama who controls the market

It makes a massive and fundamental difference. When the government distorts the market, it can use additional tools such as inflating the money supply, taking out debt to paid by your children and grandchildren, and drafting men for wars.

For example, let’s say the government wants to protect a monopoly of sugar or set its price at a particular level. It can take out debts that you and I must pay interest on to fund subsidies. Microsoft cannot take out loans that Little Nemo’s children must pay back.

Also, the government will always play favors to manipulate the “controls” of the economy to suit the agenda of any powerful people (including businessmen) who are not accountable to the citizens. Conceivably, Steve Ballmer (current CEO of Microsoft) could also be bribed by someone into stupid decisions but Microsoft pays the penalty by losing money for shareholders. They could also file bankruptcy or be acquired if the damage was bad enough.

• it stops being a free market once any one entity controls it. And I doubt you can find any economist who would disagree (although you probably can find some “economists” who will do so).

You are mixing up “competitive and hotly contested market” with “free market.” They are 2 different things. Read the first 2 sentences of “free market” definition at wiki: Free market - Wikipedia

But our little corner is, like Microsoft’s marketshare, 90% of the universe.

Actually, to truly control 90% of the universe would require government protection and intervention. Microsoft doesn’t have that protection. It may look like Microsoft controls 90% of the market but only to people with closed minds. Microsoft had billions in the bank and launched MSN in 1995 – a full 3 years before Google launched in 1998. Using your mode of thinking, it would have been impossible for Google to be a $23 billion company today.

And today, Google looks dominant, but they too can be knocked off the top. New entrepreneurs come along with better ideas. Consumer preferences change. Paradigms shift. No business is immune from that – unless they are propped up by the government.

[Wesley_Clark]

@Shodan

No, it isn’t. This is like saying that “the goal of evolution is to produce human beings”.

Thee market is the dynamic equilibrium between perceived supply and perceived demand. It cares nothing about human standards of living or sustainability or any of the rest of it. It is neither moral, nor immoral - it is amoral. It just is.

That may certainly be the goal of your economic policy, but the market will do its thing whether you like it or not. You can distort it, you can change it, but you can’t stop it from working.

Regards,
Shodan

The goal of virtually everyone involved in the market is to make it work for us. If a good or service isn’t something people want, and it isn’t fair market value (based on the info consumers have) it will not sell.

However unregulated markets run the risk of becoming plutocratic. Information asymmetry where suppliers have all the info but consumers have nearly none, co-option of levers of power (politics, military, judiciary, media, religion) by suppliers, enslavement of your workforce, destruction of competition, forcing your consumers into dependence, etc. all make a supplier more profitable than a system where consumers have the upper hand of information, where the levers of power are independent, where your workforce is free to unionize and where you have competition and consumers who can walk away.

So the natural tendency is for suppliers to create a plutocracy since plutocratic companies survive better than ones in a ‘free market’, which isn’t free, it is heavily regulated to hold back plutocratic instincts. Even many libertarians generally agree you need some labor, anti-fraud, pro-consumer & anti-trust regulations in order for things to work.

The entire goal of wealthy countries seems to be to restrain the market from descending into plutocracy with public regulation.

[Shodan]

@Wesley_Clark

The goal of virtually everyone involved in the market is to make it work for us. If a good or service isn’t something people want, and it isn’t fair market value (based on the info consumers have) it will not sell.

Which has almost nothing to do with the notion that the market wants to reduce income inequity.

Regards,
Shodan

[Kearsen]

@DragonAsh

Maybe I’m just not reading you correctly, but I think we’re actually in agreement? I’ve been arguing the same thing: I’d rather have equality of opportunity (that we, in general, have in the US) compared to the more forced equality of outcome that exists in Japan. I have no idea why affirmitive action or no child left behind come into the discussion…

You are correct, we are in agreement. I brought up Affirmative Action and No Child Left behind to show the government trying to control (for lack of a batter word) that very thing (Equality of opportunity)

[Voyager]

@Ruminator

Actually, to truly control 90% of the universe would require government protection and intervention. Microsoft doesn’t have that protection. It may look like Microsoft controls 90% of the market but only to people with closed minds. Microsoft had billions in the bank and launched MSN in 1995 – a full 3 years before Google launched in 1998. Using your mode of thinking, it would have been impossible for Google to be a $23 billion company today.

And today, Google looks dominant, but they too can be knocked off the top. New entrepreneurs come along with better ideas. Consumer preferences change. Paradigms shift. No business is immune from that – unless they are propped up by the government.

I won’t defend his use of universe, but search engines are different beasts from OS’s and browsers. Clearly Microsoft had and still has a monopoly position in the OS market. And look at the browser market. Despite having a clearly inferior product, MS did and still does have dominant market share. Yes you and I can easily download FireFox, but my 70 year old neighbor, who is not dumb, is very uncomfortable with doing so and stays with what comes with the PC.

Search engines on the other hand are all equally accessible, and have no real learning curve. No search engine was able to maintain dominant share despite quality. That is exactly where Bill missed the web - it didn’t fit into his model, and he was late in recognizing the implications.

Technological change does break up monopolies without government intervention - eventually. But how many billions of dollars has been lost in time and disruption due to virus attacks and security problems made possible due to the poor architecture of Windows?

Do you deny that monopolies can distort markets every bit as much as governments, and that government intervention can make a market more open?

[Kearsen]

@Der_Trihs

Constantly and permanently. It’s called “taxes”. And no, they won’t all flee to other countries to avoid the taxes; they make speeches about it, but in reality that doesn’t happen. Besides, you could drastically raise taxes on the wealthy here, without them having anywhere to flee to that doesn’t either have higher ones or a far worse quality of life for the wealthy ( which is what they actually care about, not taxes ).

Nor can most people significantly “better their lot in life”. In the real world, if you are born poor you will most likely stay poor. Your claim amounts to just the standard sneer that the poor are all just lazy; the poor typically work quite hard, but that just makes them tired and poor.

You quoted me and still managed to misconstrue something I said into your imaginary reality?
How do you misconstrue me saying “You cannot stimulate drive to do so” into poor people don’t work hard?

You have something agin poor folks Der Tris?

[Sam_Stone]

In all this debate, the hidden elephant in the room is the fact that it’s behavior that largely determines financial outcome. It’s not the man keeping you down, it’s not lack of access to resources, it’s not the rich taking everything for themselves.

There is plenty of experimental data to examine. Socialism has failed to lift the status of the poor. Social programs in capitalist countries have failed to lift up the poor. In the U.S., the ‘projects’ were a grand experiment to build cheap housing for poor people - the result was ghettos and a lot of destroyed cheap housing. In Canada, various provinces have tried extensive programs for the poor - In Alberta, we set up very generous welfare programs, free tuition programs for poor people, free mass transit passes, career counseling, life skills assistance, you name it. The result was a swelling of the welfare ranks, and not much change in actual outcome.

Let me amend that - there are different kinds of poor people. There are those who are poor because they are physically disadvantaged, such as the mentally handicapped or people who have physical or mental problems preventing them from working. There are those who are discriminated against to such an extent that they find opportunities closed to them. And then there is the class of poor people who simply don’t take the steps necessary to lift themselves out of poverty.

By all means, there should be social programs to help the first group. There should be anti-discrimination laws to help the second group. But it’s the third and largest group that represents the biggest problem, and they’re the ones who consistently make choices that keep them poor no matter how many resources are thrown at them.

The path to at least a middle-class existence is not hard to follow, for even the poorest of people. Work hard, save what money you can, improve your education. Don’t have a child out of wedlock. Be choosy about a mate, and minimize your chances of needing to get divorced. Don’t have children you can’t afford. Defer gratification until you can afford to buy things within a budget and without driving yourself into debt.

The problem with government social programs is that they tend to blunt the bad effects of making such choices, and therefore they carry a huge moral hazard. In addition, the class warriors and socialists have a vested interest in propagating the myth that the poor are downtrodden through no fault of their own, which breeds resentment and fatalism (but which also makes that population dependent on the socialists and politicians - which gives them power).

I’ve been around poor people my entire life. I’ve watched the ones who climbed out of poverty, and the ones who didn’t. The patterns are clear as a bell. The ones who made it out simply worked. They didn’t max out their credit cards, they didn’t buy big-screen TVs on credit, they didn’t quit their jobs on a whim or get fired because they partied too much. They didn’t buy brand new vehicles with their first paycheck.

I know a person who had all the advantages. He grew up lower middle class, but in an area with good schools. He got decent grades, and planned to go to college. But when he got out of school he got a job in a trade that paid pretty big money. Right away, he bought himself a whole bunch of toys and a brand new truck - all on credit. He took long-term loans out on everything, and rapidly found himself in a situation where he couldn’t leave the job and make his payments. So he kept on working, and in the meantime met a woman and got married. She had no skills and only worked part-time for minimum wage.

So now he’s doubly-trapped - huge bills, maxxed out credit cards, and a dependent wife. And he lost his job, defaulted on his credit, and now has no credit rating, no income, and a mound of debt. He’s in his late 20’s with a high school diploma and not much else. He’s well on his way to living a poor existence doing work he hates while staying one step ahead of his creditors.

Tell me how a social program would help this person? Tell me how society benefits from redistributing wealth from people who save, invest, and make good choices to people like him? What do you think the likely outcome would be if he suddenly got a $500/mo ‘redistribution’ cheque? Consider that for several years he was making as much money as I do now, and he has nothing to show for it and in fact the ability to make that money deflected his trajectory away from a longer-term but ultimately better path of improving his education and finding a career he loves.

I’ve seen that pattern repeat over, and over, and over again.

So what would have helped him? Perhaps the knowledge that the ‘safety net’ was a pretty hard place to land. Perhaps a culture which, instead of telling him he ‘deserves’ everything, told him that buying things you can’t afford is a really bad idea. Perhaps a culture that looks down on people who screw up in this way and screw over the people they borrowed money from, rather than seeing them as ‘victims’ of the system.

Behavior is a hard thing to change, but one thing is sure- throwing money at people who make bad decisions is a good way to encourage more people to make bad decisions.

[Little_Nemo]

It makes a massive and fundamental difference. When the government distorts the market, it can use additional tools such as inflating the money supply, taking out debt to paid by your children and grandchildren, and drafting men for wars.

For example, let’s say the government wants to protect a monopoly of sugar or set its price at a particular level. It can take out debts that you and I must pay interest on to fund subsidies. Microsoft cannot take out loans that Little Nemo’s children must pay back.

Also, the government will always play favors to manipulate the “controls” of the economy to suit the agenda of any powerful people (including businessmen) who are not accountable to the citizens. Conceivably, Steve Ballmer (current CEO of Microsoft) could also be bribed by someone into stupid decisions but Microsoft pays the penalty by losing money for shareholders. They could also file bankruptcy or be acquired if the damage was bad enough.

The differences are purely theoretical. In the real world both Microsoft and the United States are far too large for any individual to win out in a contest against them. So they can do whatever they want to you and you cannot do anything to them. In theory I could drive Microsoft into bankruptcy or overthrow the American government - but neither event is going to happen in practice. So Microsoft is effectively free to decide what runs on my computer and the United States is effectively free to decide how much I pay for sugar.

[Voyager]

@Sam_Stone

Let me amend that - there are different kinds of poor people. There are those who are poor because they are physically disadvantaged, such as the mentally handicapped or people who have physical or mental problems preventing them from working. There are those who are discriminated against to such an extent that they find opportunities closed to them. And then there is the class of poor people who simply don’t take the steps necessary to lift themselves out of poverty.

So, neglecting those discriminated against for a moment, you have the handicapped and you have the rocket scientists. You don’t see a continuum. You deny the existence of the hard worker with a 90 IQ, say, (to illustrate general intelligence) who would never be a banker or a lawyer or a doctor no matter how much drive he has.

In the old days this guy would have a good job on an assembly line, say. My wife worked for a vegetable cannery which employed lots like this; people who came to work every day and were conscientious about the quality of the product. But automation, outsourcing, and the destruction of unions have left this guy very little opportunity.

I’m not saying that you give this guy $100K a year - but is the bank CEO really worth 1,000 times this guy - especially when he screwed up? That’s the income inequality I worry about.

Would it really kill us to ensure that this hard working non-genius has adequate food, shelter, and medical care; even if the CEO only makes 500 times as much as he does?

I’m not nearly as worried about those who screw up, thought there is unfairness there also. Some people who drink, take drugs, and screw up their jobs and investments become homeless - and others become President.

[Delayed_Reflex]

@Voyager

So, neglecting those discriminated against for a moment, you have the handicapped and you have the rocket scientists. You don’t see a continuum. You deny the existence of the hard worker with a 90 IQ, say, (to illustrate general intelligence) who would never be a banker or a lawyer or a doctor no matter how much drive he has.

In the old days this guy would have a good job on an assembly line, say. My wife worked for a vegetable cannery which employed lots like this; people who came to work every day and were conscientious about the quality of the product. But automation, outsourcing, and the destruction of unions have left this guy very little opportunity.

I’m not saying that you give this guy $100K a year - but is the bank CEO really worth 1,000 times this guy - especially when he screwed up? That’s the income inequality I worry about.

Would it really kill us to ensure that this hard working non-genius has adequate food, shelter, and medical care; even if the CEO only makes 500 times as much as he does?

I’m not nearly as worried about those who screw up, thought there is unfairness there also. Some people who drink, take drugs, and screw up their jobs and investments become homeless - and others become President.

The thing is, while the guy with 90 IQ will never make the same money as your rocket scientist or CEO, he should be able to live a comfortable life. Anecdotally, virtually all of both of my parents’ extended families came from China to Canada without any assets to their name, and many with barely any ability to speak English. Many of my aunts and uncles never got an education - they worked as dishwashers, janitors, waiters, fast-food employees and other unskilled jobs. Without exception, they all were able to buy their own homes to live in (and pay off their mortgages), supporting children and living essentially middle-class lives. From what I have seen, it is certainly possible to live comfortably as a janitor or waiter.

Admittedly this is Canada, not the US, so they have not had to worry about things such as health insurance.

I am quite on the fence as to whether high income inequality is bad or not (I think a certain amount of inequality is a good thing - as others have echoed re: reward based on merit). In principle I agree that as long as the poorest are reasonably well off, what does it matter how rich the richest are? It’s hard to fight the emotional aspect that makes you think that that money is wasted on the rich though (do they really notice the difference between making $200 million and $100 million?), and the suspicion that things such as CEO salaries are free of distortion.

[SteveG1]

@Bricker

So… even though people are not equal… and some people have greater intelligence, drive, talent, and ambition than others… we’ll all be happier if that greater talent, drive, intelligence, and ambition doesn’t actually produce much in the way of different results in life than the dumber, untalented, lazier, more complacent neighbor?

Um… I’m gonna say no.

I have to agree with the spirit of this, but I would add good luck as one of the factors too.

Ambition can be a good thing. Greed can be a good thing. Both within limits of course (you are still in control and don’t become an obsessed loony).

Oversimplifying the matter, why would I want to bust my ass and work harder, or try to find a better way of doing something, if I will just get the same pay and rewards as the lazy slug who sits there doing nothing, just killing time until some far off retirement?

I wouldn’t.

[Zoe]

[quote]
SteveG1: Oversimplifying the matter, why would I want to bust my ass and work harder, or try to find a better way of doing something, if I will just get the same pay and rewards as the lazy slug who sits there doing nothing, just killing time until some far off retirement?

[quote]

I can think of lots of reasons. One of them is pride in producing quality.

And I’ve mentioned elsewhere that no one could have paid me enough money to teach. The motivation came from somewhere else.

My Danish friends told me that in their country everyone works. It’s a matter of culture pride. Not working would be so uncool there. But no matter what job you have, you are respected

Besides, if wealth makes people content, then why aren’t Americans extremely happy? We are rich people. That is how most of the rest of the world sees us.

Ruminator:: The “free market” isn’t about solving income inequality. It’s about freedom of choices.

Then why do only a select few have those choices these days?

Bricker: So… even though people are not equal… and some people have greater intelligence, drive, talent, and ambition than others… we’ll all be happier if that greater talent, drive, intelligence, and ambition doesn’t actually produce much in the way of different results in life than the dumber, untalented, lazier, more complacent neighbor?

Bricker, I had a friend who was very poor. She was talented at home cooking and in making me laugh when I was down. She couldn’t read or write, but she had street smarts and a will stronger than any I’ve seen. (She finished cleaning the ashes of her boy out of his car after he had burned to death because she didn’t want any part of him left there.) Her ambition was to keep her family afloat and help her grandchildren have happy times.

She got sober for over two years and helped her man stay off crack. And she worked very hard --although all of it was at home without pay. She went without medical care and medicine that she needed and finally worked herself to death two years ago. She was my age.

And even though not many people were her equal, I would never want any of them – even the smug and self-righteous ones – to have to live in pain the way that she did.

[Voyager]

@Delayed_Reflex

The thing is, while the guy with 90 IQ will never make the same money as your rocket scientist or CEO, he should be able to live a comfortable life. Anecdotally, virtually all of both of my parents’ extended families came from China to Canada without any assets to their name, and many with barely any ability to speak English. Many of my aunts and uncles never got an education - they worked as dishwashers, janitors, waiters, fast-food employees and other unskilled jobs. Without exception, they all were able to buy their own homes to live in (and pay off their mortgages), supporting children and living essentially middle-class lives. From what I have seen, it is certainly possible to live comfortably as a janitor or waiter.

Comfortably? Maybe not anymore - as a janitor, anyhow. Waiters in classy places do well. In the old days that janitor worked for the company he or she cleaned up for, and got covered by the same benefits that your office worker did. Now all that stuff has been outsourced to janitorial services. I may be wrong, but I doubt employees of these companies get the same benefits as employees of the bigger ones. It is a necessary and respectable job, and I don’t see why people doing it don’t deserve a living wage for their contribution to the place they work. And lack of health care here is a big deal. It is as expensive for them as it is for me - probably more expensive - and they can afford it less. I don’t see why they don’t merit the same access to treatment as you and me and the CEO.

And a lot of the meltdown came from unscrupulous mortgage brokers calling up this kind of person, who dreamed of owning a home, and convincing them that signing up for a subprime mortgage would get them one. And they wound up in worse shape than before.

[SteveG1]

[quote=“Zoe, post:77, topic:531835”]

I can think of lots of reasons. One of them is pride in producing quality.

And I’ve mentioned elsewhere that no one could have paid me enough money to teach. The motivation came from somewhere else.

My Danish friends told me that in their country everyone works. It’s a matter of culture pride. Not working would be so uncool there. But no matter what job you have, you are respected

Pride is OK, but it doesn’t pay the bills. Also, just drawing anecdotal snippets from my own experiences, you wind up getting their work in addition to your own work - simply because they don’t want to do it. Then, if it isn’t perfect enough, you catch holy hell, even from the lazy slugs, while no one says a thing to the slugs. That sort of situation can over time become a large disincentive.

[Wesley_Clark]

@Sam_Stone

In all this debate, the hidden elephant in the room is the fact that it’s behavior that largely determines financial outcome. It’s not the man keeping you down, it’s not lack of access to resources, it’s not the rich taking everything for themselves.

There is plenty of experimental data to examine. Socialism has failed to lift the status of the poor. Social programs in capitalist countries have failed to lift up the poor. In the U.S., the ‘projects’ were a grand experiment to build cheap housing for poor people - the result was ghettos and a lot of destroyed cheap housing. In Canada, various provinces have tried extensive programs for the poor - In Alberta, we set up very generous welfare programs, free tuition programs for poor people, free mass transit passes, career counseling, life skills assistance, you name it. The result was a swelling of the welfare ranks, and not much change in actual outcome.

Let me amend that - there are different kinds of poor people. There are those who are poor because they are physically disadvantaged, such as the mentally handicapped or people who have physical or mental problems preventing them from working. There are those who are discriminated against to such an extent that they find opportunities closed to them. And then there is the class of poor people who simply don’t take the steps necessary to lift themselves out of poverty.

By all means, there should be social programs to help the first group. There should be anti-discrimination laws to help the second group. But it’s the third and largest group that represents the biggest problem, and they’re the ones who consistently make choices that keep them poor no matter how many resources are thrown at them.

The path to at least a middle-class existence is not hard to follow, for even the poorest of people. Work hard, save what money you can, improve your education. Don’t have a child out of wedlock. Be choosy about a mate, and minimize your chances of needing to get divorced. Don’t have children you can’t afford. Defer gratification until you can afford to buy things within a budget and without driving yourself into debt.

The problem with government social programs is that they tend to blunt the bad effects of making such choices, and therefore they carry a huge moral hazard. In addition, the class warriors and socialists have a vested interest in propagating the myth that the poor are downtrodden through no fault of their own, which breeds resentment and fatalism (but which also makes that population dependent on the socialists and politicians - which gives them power).

I’ve been around poor people my entire life. I’ve watched the ones who climbed out of poverty, and the ones who didn’t. The patterns are clear as a bell. The ones who made it out simply worked. They didn’t max out their credit cards, they didn’t buy big-screen TVs on credit, they didn’t quit their jobs on a whim or get fired because they partied too much. They didn’t buy brand new vehicles with their first paycheck.

I know a person who had all the advantages. He grew up lower middle class, but in an area with good schools. He got decent grades, and planned to go to college. But when he got out of school he got a job in a trade that paid pretty big money. Right away, he bought himself a whole bunch of toys and a brand new truck - all on credit. He took long-term loans out on everything, and rapidly found himself in a situation where he couldn’t leave the job and make his payments. So he kept on working, and in the meantime met a woman and got married. She had no skills and only worked part-time for minimum wage.

So now he’s doubly-trapped - huge bills, maxxed out credit cards, and a dependent wife. And he lost his job, defaulted on his credit, and now has no credit rating, no income, and a mound of debt. He’s in his late 20’s with a high school diploma and not much else. He’s well on his way to living a poor existence doing work he hates while staying one step ahead of his creditors.

Tell me how a social program would help this person? Tell me how society benefits from redistributing wealth from people who save, invest, and make good choices to people like him? What do you think the likely outcome would be if he suddenly got a $500/mo ‘redistribution’ cheque? Consider that for several years he was making as much money as I do now, and he has nothing to show for it and in fact the ability to make that money deflected his trajectory away from a longer-term but ultimately better path of improving his education and finding a career he loves.

I’ve seen that pattern repeat over, and over, and over again.

So what would have helped him? Perhaps the knowledge that the ‘safety net’ was a pretty hard place to land. Perhaps a culture which, instead of telling him he ‘deserves’ everything, told him that buying things you can’t afford is a really bad idea. Perhaps a culture that looks down on people who screw up in this way and screw over the people they borrowed money from, rather than seeing them as ‘victims’ of the system.

Behavior is a hard thing to change, but one thing is sure- throwing money at people who make bad decisions is a good way to encourage more people to make bad decisions.

These seem to be your arguments:

If you let people see the rewards of their good behavior and the penalties of their bad behavior, they will change their behavior. Rewarding people for nothing or protecting them from the punishments of their actions will prevent them from changing behavior.

Here is my problem with that. As America becomes more and more plutocratic and economically right wing, the rewards for those at the bottom dissipate while the punishments grow severe, while at the top the rewards become expected rather than earned and you are protected from punishment.

In the US, you can do everything right but if you get sick you can lose everything. As a person who is just starting his career/life in the real world, I have had to grapple with this fact. I realize I can save my money, make good investments, get a good paying job, etc. But one illness will destroy everything. It doesn’t matter if I blew everything I earned up to that point or invested it, I will lose it all. That is not something you have to worry about in Canada (or France, Germany, Israel or dozens of other countries). What happens to my incentive to invest and save when I realize it will be destroyed if I get sick? I realize that there are many things that could go wrong in my life, but I do not need to lose everything by getting sick. Minor legislative changes would protect me from that, and give me an incentive to make better financial decisions since I wouldn’t lose everything.

Or take the financial crisis. Those at the top were rewarded financially no matter how bad they screwed up. And unlike the scandals of the 80s like the S&L scandal, there are no investigations or arrests. So they are rewarded for failing and protected from punishment.

Those of us at the bottom (those of us who lost 8 million jobs) were punished for other people’s behavior. Now there are politicians saying those on unemployment are just too lazy to work, and cutting UI might be a good idea. So now there is talk of increasing punishment for failure that isn’t even our fault.

So punish the bottom 90% for things that aren’t their fault, and reward the top 1% even when they fail. And protect the top 1% when they do fail/screw up from the consequences of this. However create a system where the bottom 90% can do everything right and lose everything anyway in a health crisis.

So you end up with a sense of fatalism and frustration in many people in the United States. People realize the deck is stacked against them. In many ways liberals share the same attitude you do that people should be rewarded and punished for their successes/failures. The difference is that to us it is conservatives who are messing up the system. Conservative economics seeks to unconditionally reward those at the top while protecting them from punishment while stripping rewards from the bottom while putting them through unfair punishments until fatalism and frustration start setting in.

There is a good chance the global economy will collapse again w/o meaningful financial regulation. It almost collapsed in 1999 when LTCM almost went down. Here is a video from the ex-chief economist from the IMF talking about that. We are headed for another disaster.

Another disaster means millions more jobs lost, trillions in new public/private debt. But when it happens, again, there will be rewards at the top and no punishment. While there will also be talk of punishing the bottom 90% more harshly by cutting their unemployment compensation.

After nearly collapsing the global economy, the top bankers in the US paid themselves $145 billion in compensation in 2009, which is 1% of GDP. For $145 billion you could offer employers in the US a $10,000 subsidy to create a new job and as a result create 14.5 million jobs in the US (we currently have 30 million unemployed/underemployed).

It is an absurd system, and it creates a sense of fatalism, frustration and apathy for those at the bottom. It also creates a moral hazard at the top. At the top if you take risks and win, you get paid big. If you take risks and lose, you get paid big anyway, never go to jail, and the burden in lost jobs and debt is passed onto taxpayers. And in that situation, the reward/punishment dynamic doesn’t work.

Also, your statement that anti-poverty efforts do not work isn’t true. Social security has done a great job of lifting people out of poverty. Poverty rates were cut in half in the 50s and 60s, however I don’t know how much was due to the war on poverty. When I was in college I got various government grants, which had I not gotten would mean I would’ve had to go even further into debt to get an education.