And thus you get to the emotional appeal of the present system for many conservatives and libertarians. These super-wealthy folk (including Gates, Buffett, Zuckerberg, et. al.,) have won the lotto! But they have not just won the lotto because they are lucky. They won the lotto, say our libertarians and conservatives, BECAUSE they are good, responsible, intelligent, hard-working people, which are the values they aspire to, and think everyone should aspire to! And so they are thinking, "(He or she) won the lotto because (he or she) is a good, responsible, intelligent, hard-working person. I am a good, responsible, intelligent, hard-working person. Therefore I may win the … "
Well, fill in the blank, beanie weanies! Now you know the emotional appeal of the super wealthy … oh, excuse me, “Job creators” as saints of capitalism.
Well, part of it. It also subtly implies that people who do NOT win the wealth lotto do NOT have these desirable qualities. Therefore one need not be concerned with their suffering, it is all self-created. And that’s why conservatives and libertarians have no issue with dumping endlessly on the poor, and programs created for the poor, endlessly. Governmental largesse will not help them, they have character issues, as proven by their poverty.
For my next start-up, I will develop a company for selling custom straw for the creation of your own, personal strawman.
It takes Luck, Willingness to Risk, Hard Work, Intelligence, Education, Attitude and a few platitudes.
Yes - I want a system that rewards this risk taking, entrepreneurial spirit. It helps attract the best and brightest from around the world, and people can reap the rewards of their work. The Netscape IPO opened up the flood for the tech industry, and part of it was giving shares to everyone - vs. what happened at SGI where the engineers were not given shares.
I would rather keep the Silicon Valley style of employee incentive sharing and rewards.
I am still waiting to find out what is wrong with Zuckerberg owning a percentage of the company he started, and that percentage being worth a ton of money.
And the contrary appeal to the liberals - they don’t deserve any of it! They only won a lotto, and everything else is irrelevant! It would have just happened anyway!
What is wrong is that our current system makes it (increasingly) easier for guys like Gates and Zuckerberg to take that chance and reap that reward than someone that doesn’t start out near the top. This is for reasons already addressed.
First, they are far more likely to have the educational background and opportunity to develop the skills required to take the chance. They went to good primary and secondary schools. They had access to PCs when that was an extremely rare thing (more so in Gates’ case). They had a home life with two parents, both employed or at home by choice.
Second, they had a safety net the likes of which the bottom two quintiles can’t even dream of. If either of them failed they could go back to Harvard. Or move in with their parents. They were never at any risk of not having money for food, or having to take care of unplanned children. They only went without health insurance by choice (if they did).
The solution isn’t to take away Zuck’s or Gates’ wealthy out of spite. It’s to find a way to develop both opportunities in communities that don’t have them and to provide a safety net for all citizens robust enough to encourage risk taking even amongst those that truly are “risking it all”. That costs money, and it makes sense to get the lion’s share of the funding from those that have the lion’s share of the wealth.
Several years ago I was living in a relatively small town- Bend, Oregon. Beautiful town, lots to do- skiing, kayaking, bike riding- and absolutely gorgeous weather.
And lots and lots of retirees. Most of them from California. I met several who sold their houses in California and used the money to buy multiple houses in Bend. As a result, houses were very expensive. Most of the town’s population couldn’t afford to buy a house, so they had to rent.
Income inequality was directly responsible for the housing shortage in Bend. That guy serving you dinner? No way in hell he’ll be able to buy a house. Sure, income isn’t a zero-sum game… but to say that it’s not a bad thing is pretty shortsighted.
They should be allowed to collect all value generated by their creative efforts. No argument there. However, when their very wealth distorts the social fabric – by distorting the political system and making the perpetuation of their wealth certain – then upward mobility declines and fewer and fewer others get to emulate their success.
Instead of focusing on the huge wealth of Zuckerberg, et al - we should be looking to see what is keeping others from achieving more.
The biggest impact is the cost of higher education (which some would tie to easy loans and Pell grants allowing the top universities to charge more and more and more). Education matters.
After that, I don’t know how to change the system. Personally, I would try to spread more of the Silicon Valley “share the wealth” attitude, but there is a price there. You have to be willing to give up something in exchange.
I wish the unions would have bought GM for example, making it a truly employee OWNED company. Then each of the workers would have had a real stake in the future of the firm. It would have been risky, but what a story it could have become.
Fair enough. I don’t know how to change the system either.
I might suggest that the progressive income tax has in the past provided for a peaceful redistribution of wealth. It shouldn’t be necessary to return to the tax rates of the Eisenhower days, but if we did, we could surely make serious inroads against the deficit, provide a robust social safety net, and greatly enhance educational opportunities so future entrepreneurs can flourish. After all, that’s how we created the present “job creators”.
The tax rates of those days wouldn’t touch Zuck’s wealth. They were also rife with deductions and shelters. You could setup multi-generational perpetual trusts for example, providing lifetime income for the family without any nasty inheritance hits or other taxation unless money was taken out. You have to compare the entire picture to get a good feel. I wish the CBO had done a further historical look at effective tax rates - the only version I have seen that breaks out the quintiles stops at 1979.
There is a summary version here on page 3, and it is footnoted:
One sensible place to start would be a trading tax, like they had in the 30s. Stock trading is of little or no real value to anyone but the traders, putting a tax on trades might help flatten the volatility somewhat, and might also throttle rushes into the latest fad.
No. We were assured that moderate increases in the minimum wage to keep up with inflation do not cause unemployment.
Once you propose increases that are no longer moderate (say, $7 to $9, or even $14) but rather substantial (to $25) the conclusions of the studies provided would likely be different.
Let’s see–people say breathing is good, so having oxygen forced down your throat at 10,000 psi must be better, right?
Eating is good, so eating 30,000 calories a day must be better, right?
Sleeping is good, so being in a coma must be better, right?
If you can spot why those are stupid arguments, congratulations, and stop making them.
I don’t have time to analyze that right now, maybe somebody else wants to step up. But please know, I don’t want to “touch Zuck’s wealth” if by that you mean reduce him to some lower economic level. He’s an outlier, after all, even among “the rich”. But he still deserves the rewards of his accomplishments.
And tax laws versus shelters is like coevolution (I’m a biologist). Ground squirrel develops some resistance to rattler venom. Rattlers respond (in an evolutionary sense) by making even more toxic, or differently toxic, venom. Lather, rinse, repeat. It’s a dance. So is taxation. And that is just fine, it’s a feature, not a bug. It allows for flexibility and accommodates change. But just because there is no single final solution doesn’t mean we cannot glean more tax revenues via higher marginal rates. Adjustments will be made on both sides. Again, the idea isn’t to bankrupt the wealthy, just to overcome their perfectly normal and natural desire to “keep what is theirs” to an extent needed for society’s overall benefit. How much is that? Well, society gets to make the call. Unless, as alluded to earlier, the wealthy use their wealth to distort the system. Then we’ve got an actual problem.
I love the squirrel / snake analogy (and is that true? I want to pass it onto my younger kid - he loves stuff like that).
The only reason I brought up the trusts, etc. is because of the oft-repeated desire by some to go back to the tax rates of year X. It is important to look at the whole tax package of that particular time before you jump on it as part of a solution. Kennedy carved away at the rates, Reagan did more, Clinton brought some up, and Bush dropped them. But these are only the Federal income tax rates of course. Here in California we have done a backwards applied tax increase and more and more people are finding out that they got hit with it. I know of several companies opening offices in Austin so that when they IPO, certain execs will move to Texas to avoid the California income tax on share appreciation.
Interesting game that is played.
I personally do not believe that the wealthy are manipulating the system so that they can maintain this wealth spread - they do probably support those who will let them keep what they have. I have never heard them want more at the expense of others though.
Yes, amongst the best and the brightest, it attracts the likes of Clark Stanley, L. Ron Hubbard and Kenneth Lay, PhD. I mean, I can understand that there will be some amount of collateral negative in the system, but what is an acceptable loss metric? Some of the fraud perpetrated upon the system has been breath-taking in scope – I would even suggest that the nominally legal activities that led to the most recent collapse be counted in the column of nefarious. And this is one of the issues, that as the gap grows, the so increases the potential reach of devious or fiendish activities.
What on earth are you talking about? Are you slamming our system because someones sold snake oil in the late 1800s and another one wrote some sci-fi and created a religion?
Ken Lay is the only real one to bring up, and most of his crimes are due to accounting games playing with off balance sheet financing backed by the rapidly accelerating stock price of an energy trading company. It is about as relevant to a discussion of the wealth gap as Jimmy Hoffa is.
I understand that Evil Economist said, “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.” There were no qualifiers about moderate increases to keep up with inflation. He doesn’t seem to believe that minimum wage laws are capable of causing unemployment. He’s wrong.
Yes, I made an assumption about the intelligence of the readership here and didn’t specifically spell out that I wasn’t talking about increasing minimum wages to $1 billion/hr. I see that I was wrong in my assumptions, so I’ll spell it out for you: I wasn’t talking about raising minimum wages to $1 billion/hr. Glad I could help.