Except that some have suggested that one primary contributor to the crisis may in fact have been the wealth gap itself. To use an analogy – no, fuck analogies, they all end up oversimplifying a very complex system. In short, about half the money in the overall economy exists in a sort of abstract cloud of magnetic domains on bank hard-drives. The more spare capital the wealthy have to futz around with, the more they will lean toward devising devious schemes to futz around with their capital and draw more up into the cloud where, instead of fueling investment in the real economy, it passes from one croupier to another. The really wealthy have little interest in the holistic system, they just want the numbers to roll up, at whatever cost.
And that is another part of the problem. If tremendous success allows the powerful to escape the realities of life, why should we cede such power to them? Once they are secure in the mansion, chauffeured and entouraged everywhere, out of touch with real society, their ability to make sensible decisions affecting the lives of others becomes greatly diminished. The wealth gap is about a whole lot more than what numbers and graphs can relate.
When I play Civilization my first imperative is to make sure that I’m doing well. My second imperative is to screw over my competitors.
Henri Tajfel explored this mindset when he researched the “Minimal Group Paradigm”.
Gotta admit that I’m citing first year Psych and video games here, but it’s basically accurate. People are so small-minded that they’ll happily screw over other humans for the smallest comparative advantage. They don’t even care if doing so makes them better off. It’s all about being better off than the opponent.
ie “No, I don’t want to have $1 while my competitor has $0.95. I’d rather have $0.90 while my competitor has $0.65”
When you’re an asshole, that foie gras tastes oh so much better when you know that other people are eating ramen noodles and struggling to pay the rent.
I don’t have time to read the whole thread right now, OR even re-watch the video I’m about to post, but I believe, IIRC this Ted Talk by Richard Wilkinson shows a lot of data which correlates economic inequality with lots of bad things. I can’t remember if he makes any causal claims, but I think he does. I’ll watch it again later.
I don’t see how that can be. Again, you are confusing absolute levels with relative levels. If the non-wealthy had twice as much money in 2006, the wealth gap would be 50% less, but how would that effect what the really, really rich do with their investments? You aren’t making a case against a wealth gap-- you are making a case against wealth itself.
The wealthy have always been able to “escape the realities of life”. Again, you seem more concerned with wealth than a wealth gap.
Not sure this is true; in Canada, the “1%” threshold is so low and many people in upper middle class-type professions fall into it.
In 2010, the top 1% in Canada earned $201,400 and more:
As a lawyer, I’m in that class myself. It isn’t all that hard to do (at least, at the lower end); if you are a doctor, lawyer, financial manager, etc. working in a major metropolitan area you most likely are in the 1% in Canada.
In contrast, in the US it takes $343,000 in income to be a “one percenter”.
The capital in need of interest bearing investment requires – as a counter balance or simply to make it work – a degree of spending that can tie economic activity (based on principal) to match principal and produce investment return.
It is certainly true that there is lot of devising and scheming to make existing investments more efficient in terms of short term earning potential. In that sense, there is an obvious difference between a corporation issuing bonds to fund expansion of production facility vs. putting together exiting mortgages into mortgage-backed security and expand only amount of money but not the economic activity itself. The latter does not expand economic activity (effectively it is a zero-sum game albeit it frees up cash) the same way the former does.
So, yeah, there is something to be said of an imbalance in which modern financial engineering is capable of rearranging funding and spending dynamic and overbear economy with insurmountable dues thus leading to a crash.
Equally many would be in the category (otherwise you’d get the “Lake Wobegon” effect - from “Lake Wobegon: where all of the childen are above average!” ). The issue is one of social mobility - i.e., how easy it is to change categories. As in: do you have to be born to a family with wealth and connections to earn that kind of cash? Or can the average person not from a wealthy family, by choosing the right career path, join a profession (or become an entrepreneur) which earns that much?
Well, it’s not like there’s a huge cliff at the 1% mark, so I’m sure people fall in and out of that category all the time. And of course we all know “average people” who have done well, so I’m not sure that means much. I certainly wouldn’t use ease of getting into the 1% bracket as a good measure of social mobility, though.
If anyone has statistics comparing Canada and the US, it would be interesting to see them. BTW, the median income in the US is much greater than in Canada, too. From wikipedia it’s something like 31k in this US vs 25k in Canada.
I’m not claiming any wider significance of the point - I was merely responding to the assertion that, in Canada, mobility into the “1%” was more difficult than in the US.
As for social mobility generally (the ‘are you born or did you earn?’ question), there was a Congressional Research paper posted upthread with references to some studies, which tended to re-enforce the point. From that paper:
Minimum wage laws exacerbate inequality by increasing unemployment among the least productive. Someone making 7 dollars an hour has a better chance of saving wealth than someone who is unemployed.
America has the most progressive income tax in the world and some of the highest income inequality so a progressive income tax is not going to cure income inequality.
Changing the deductability of executive salaries is one of the main drivers behind inequality. Congress changed the laws so the multimillion dollar salaries could not be deducted and companies responded by paying executives with stock options. Since these options are cheaper and less risky to companies they ended up being worth more than the high salaries and in certain circumstances much more.
As long as no one is made worse off by income inequality than theoritically it should be of no consequence how much it grows. Look at it from the opposite perspective. If taking one dollar from the poor could take 100 dollars from the rich, what is the optimal amount you should take from the poor? Obviously, the answer is zero. Likewise as long as rich people making money does not hurt the non-rich no one should care how much they make.
Income inequality affects how easy it is to move between income groups. If the median income in one country is $50K and the threshold to get into the richest 10% is $150. In the second country the median income is $25K and the threshold for the richest 10% is $50K. If a median wage earner in each society finds a way to increase their income by $25K, they would have moved up to the richest 10% in the second society, in the first society that person would still need to double income to get to the richest 10%. However, the person in the first society would still be 50% better off than the newly rich guy in the other society. Thus societies with flat and low incomes can do better on measures of social mobility than rich, diverse countries just because of statistical anomalies.
I admire the amount of willful ignorance it takes to claim that minimum wages increase unemployment in the face of dozens of threads we’ve had here showing that they don’t.
I honestly don’t know whether or not you’re fucking with me. I’m pretty sure I used plain English words in the way those words are generally used by normal people. I’m pretty sure today isn’t opposite day. Maybe you and I are having a private joke where we make fun of some other guy who likes to strawman people?
Seriously, I literally don’t know how to respond to you; humor (yeah, hahah, no real person would ever say something like that), anger (how dare you misrepresent my words), compassion (he’s doing the best he can, the poor man).
I think I’ll go with compassion: Bless your heart, you really are trying your best at this debating thing.
I’ts not obvious to me. The idea, I’m assuming, is that since they’ll be able to afford more workers, they’ll hire more workers. But that assumes they want more workers. I don’t know that they do.
its an hour long, but does a lot to answer the questions about the how and why the richest go about staying that way through the manipulation of law, government, and the political system in general.
Another datum to add to the mix: a New York Times article that corporate profits are soaring while US worker wages and income continue to do nothing. Here’s the lead:
Things are doing nothing but getting worse, in short.
The thing I found really interesting and alarming about the video is that it confirms the general impression I have had for some time now about the economy: if you’ll look at the chart showing the actual state of the economy, you’ll see that the middle class is rapidly becoming indistinguishable from the poor. And the poor are NOT getting richer. Which means the middle class and the poor are being squeezed into being pretty much the same thing, an economically powerless peasant class with no ability to influence their lives or to grow financially.
Welcome to the peasantry, Dopers!
Let me know when you are ready to grab a bow and go after the Sheriff and his men.
I do not admire the amount of hubris it takes to claim to have disproven the laws of supply and demand based on the mixed results of the minimum wage literature. Since minimum wage jobs only make up 2% of the labor force, it would take a huge effect to show up at all in the overall unemployment rate. Also since one of the strongest effects of the minimum wage laws are to keep teenagers out of the labor market many of those affected are not even counted as unemployed. Despite these difficulties the majority of evidence is that minimum wage laws do affect employment adversely, particularly for people of lower skill levels. PDF
). The issue is one of social mobility - i.e., how easy it is to change categories. As in: do you have to be born to a family with wealth and connections to earn that kind of cash? Or can the average person not from a wealthy family, by choosing the right career path, join a profession (or become an entrepreneur) which earns that much?
