# Income Inequality: Startlingly Bad! **URL:** \ **Category:** Great Debates\ **Created:** [March 26, 2013, 6:41pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029 "2013-03-26T18:41:31Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![BobLibDem](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/boblibdem/32/3149_2.png) [@BobLibDem](https://boards.straightdope.com/u/BobLibDem)\ **Post date:** [March 27, 2013, 9:31pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/41 "2013-03-27T21:31:30Z")
> [@puddleglum](#): > > People of working age in the top two quintiles of household income work on average of 33.9 hours per week. People in the middle quintile work an average of 29.9 hours per week. People in the second quintile work and average of 27.7 hours per week and those in the bottom quintile work an average of 21 hours per week. So I don’t know that the rich work harder but they do work longer. Call me crazy, but I wager that the average hours worked per week in the quintiles is inversely proportional to the unemployment rate. The average number of hours worked in the lowest quintile is lowest precisely because unemployment in that quintile is highest. > [@](#): > > Living paycheck to paycheck is not the engine of a sustainable economy. The engine of an economy is productivity which is caused by investment. I disagree. Spending is the engine of the economy. Corporate America doesn’t lack cash, it lacks customers. ---
**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:** [March 27, 2013, 9:51pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/42 "2013-03-27T21:51:30Z")
If I understand it the OP is claiming that the lower 90% of Americans have gained a total of $59 in buying power since 1966. This seems unlikely to me. Today’s Americans have [larger homes](http://info.stantonhomes.com/Portals/45149/images/Average1.jpg), [more cars](http://transportblog.co.nz/wp-content/uploads/2011/06/vehicle-ownership-rates.jpg), and more electronics than they did in the mid-60’s. That’s certainly not proof but it does seem to be a strong indicator that we’ve done better than $59. ---
**Author:** ![rat\_avatar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rat_avatar/32/255_2.png) [@rat\_avatar](https://boards.straightdope.com/u/rat_avatar)\ **Post date:** [March 27, 2013, 9:58pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/43 "2013-03-27T21:58:26Z")
The study is talking about averages and adjusted gross income. [http://www.taxanalysts.com/www/features.nsf/Articles/C52956572546624F85257B1D004DE3FC?OpenDocument](http://www.taxanalysts.com/www/features.nsf/Articles/C52956572546624F85257B1D004DE3FC?OpenDocument) With 40+ percent of the population paying no income I think the numbers may be suspect and I would appreciated it if anyone has better numbers that relate to disposable income etc… Note, I am not making any claims about income growth or mobility, just looking to see if the numbers are valid. ---
**Author:** ![Honesty](https://avatars.discourse-cdn.com/v4/letter/h/f04885/32.png) [@Honesty](https://boards.straightdope.com/u/Honesty)\ **Post date:** [March 27, 2013, 10:38pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/44 "2013-03-27T22:38:52Z")
> [@puddleglum](#): > > There is so much here that is wrong. Savings and investing help the economy by allowing new companies to be created and existing companies to expand. Saving does not take money out of circulation unless the money is being buried in the backyard, most of saving is in bonds or savings accounts which makes the money available to the economy. I cannot help but to disagree with this. When the rich puts money in the savings account, it is essentially out of circulation. It is not used to purchase goods, it isn’t used to invest, it isn’t used to purchase services, it is used as a springboard to generate income from interest. Interest, by the way, which is taxed at about 12 - 20%, much lower than what the average working American pays. > [@puddleglum](#): > > Living paycheck to paycheck is not the engine of a sustainable economy. The engine of an economy is productivity which is caused by investment. You should look up what a multiplier effect is, and, while you’re at it, take a glance at the data showing that during the 2008 crisis, the money given the poor by the Bush administration, had a palpable effect on the economy. The more the money that changes hands and is taxed, the better the health and vibrancy of the economy. The poor [and, increasingly, the middle-class spend more on food, utilities, gasoline/transportation, and health care](http://www.npr.org/blogs/money/2012/08/01/157664524/how-the-poor-the-middle-class-and-the-rich-spend-their-money). If Joe Poor gets $500 dollars and purchases goods from the local grocery store, the feds get a piece, the state gets a piece, the locality gets a piece, the utilities company gets a piece, the employer gets a piece,and, of course, the employee gets a piece. Now, conversely, if Joe Rich has $1,000,000 in a savings account at 1%, he gets $10,000 taxed at about 12%. He isn’t helping the economy at all. ---
**Author:** ![Honesty](https://avatars.discourse-cdn.com/v4/letter/h/f04885/32.png) [@Honesty](https://boards.straightdope.com/u/Honesty)\ **Post date:** [March 27, 2013, 10:43pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/45 "2013-03-27T22:43:16Z")
> [@Chessic\_Sense](#): > > _No one_ ever says it has anything to do with how _hard_ someone works. It has to do with 1) how much risk they took, and 2) how intelligent they were with their efforts. Why is that in this country we believe that the rich are risk-takers and are intelligent? This is not true at all. Sure, those are prerequisites _for some people_, but a great deal of those who are rich, gained their money by inheritance, serendipity, or just plain-old luck (e.g. wining the lotto). I don’t believe for a nanosecond that rich folks are smarter than, work harder than, or are intrinsically better than any other person. ---
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [March 27, 2013, 11:10pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/46 "2013-03-27T23:10:03Z")
> [@Chessic\_Sense](#): > > 1. how intelligent they were with their efforts. What does “intelligent” mean in this context? ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [March 27, 2013, 11:20pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/47 "2013-03-27T23:20:09Z")
> [@Frylock](#): > > What does “intelligent” mean in this context? How much money they made. If they made a lot of money, they were geniuses. If not, they were stupid. Therefore, anyone making money selling Beanie Babies in 2000 were full of acumen and savvy. Anyone losing money on Beanie Babies in 2003 were dolts who should have never been involved in business to begin with. I mean, srsly? Beanie Babies? What were they thinking? ---
**Author:** ![G-SE](https://avatars.discourse-cdn.com/v4/letter/g/f0a364/32.png) [@G-SE](https://boards.straightdope.com/u/G-SE)\ **Post date:** [March 28, 2013, 12:13am UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/48 "2013-03-28T00:13:02Z")
> [@Honesty](#): > > I cannot help but to disagree with this. When the rich puts money in the savings account, it is essentially out of circulation. It is not used to purchase goods, it isn’t used to invest, it isn’t used to purchase services, it is used as a springboard to generate income from interest. Interest, by the way, which is taxed at about 12 - 20%, much lower than what the average working American pays. Do you honestly think money put in savings is held under a giant mattress in the bank basement? ---
**Author:** ![Chessic\_Sense](https://avatars.discourse-cdn.com/v4/letter/c/7c8e57/32.png) [@Chessic\_Sense](https://boards.straightdope.com/u/Chessic_Sense)\ **Post date:** [March 28, 2013, 12:35am UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/49 "2013-03-28T00:35:08Z")
> [@Zakalwe](#): > > Or 3) How well they used their prior wealth to rig the system. A popular charge around these parts, but without substance. > [@Evil\_Captor](#): > > And 3) how much they inherited and 4) how skillfully they manipulate others into thinking that they deserve a bigger piece of the pie. 1. Hardly any. The vast majority of millionaires are first-generation. 4) Ah, I see. If anyone disagrees with you, they’ve been manipulated. How convenient for you. > [@MaxTheVool](#): > > So you’re saying that CEOs today are more intelligent and take more risks than CEOs 20 or 30 years ago? > > that seems a bit unlikely… They have access to much more technology which multiplies their abilities. The 17-year old kid with the news app that he just sold to Yahoo? Smart kid enabled by technology. > [@Honesty](#): > > Why is that in this country we believe that the rich are risk-takers and are intelligent? This is not true at all. Sure, those are prerequisites _for some people_, but a great deal of those who are rich, gained their money by inheritance, serendipity, or just plain-old luck (e.g. wining the lotto). I don’t believe for a nanosecond that rich folks are smarter than, work harder than, or are intrinsically better than any other person. First of all, I explicitly said they aren’t harder workers. Second, again, most millionaires made their own fortunes. The lotto winners and the trust fund kids are few and far between. Third, luck depends on how often you take your shots. If you have a 1% chance of success and try 100 times, is it really luck that you succeed? Finally, it’s not debatable that they’re smarter. The wealthy are much better educated than the poor. How many high school dropouts found successful companies? How many deputy directors for your typical GloboCorp International have MBAs? _Of course_ they’re smarter than the poor. If anyone asks for a cite showing how much more the college educated make over a lifetime than those with diplomas, you can kindly excuse yourselves from the discussion. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [March 28, 2013, 1:16am UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/50 "2013-03-28T01:16:42Z")
> [@Evil\_Captor](#): > > Well yes, simply increasing income would solve the problem. But here’s the thing: you said “the poor” and a large part of my point is that the middle class is gradually being shifted down into a lumpenproletariat with the poor. In any capitalist system, there will be rich, there will be poor, but the size and affluence level of the middle class looks kind of like an independent variable that is mostly determined by the mores of the society with regard to how workers should be treated, and the existence and extent of the social safety net. > > Libertarians and conservatives who argue against social safety nets and who say the marketplace should be the sole determining factor in workers’ wages are heading us toward a Third World sort of society with a small, wealthy oligarchy (actually, we’ve already got that) and a middle class notable by it’s absence. Our middle class retains some vestiges of its wealth, they are not yet poor people who get enough to eat and can afford a bit more bling than the really poor people – but that’s where the U.S. is headed. What can we do realistically? I don’t think politics is going to help, both parties are captured by the wealthy. Under Obama the well off have been doing great, capturing bigger shares of GDP for corporate profits and income for the top. Obama did do a few redistributionist things like the payroll tax cuts, the ACA, minor tax hikes on the rich, etc. But nothing truly powerful on economics like FDR did. Labor unions aren’t really powerful anymore so they can’t fight for higher living standards at the bottom or fight against too high corporate profits. Plus the well off can use their money to use media outlets to convince the poor that they will either be rich someday, or that inequality is a good thing. And it works, you see tons of broke people defending tax cuts for the rich. So what can be done realistically? I’d like to see it get better, but I don’t know what citizens can do. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [March 28, 2013, 1:21am UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/51 "2013-03-28T01:21:25Z")
> [@MaxTheVool](#): > > So you’re saying that CEOs today are more intelligent and take more risks than CEOs 20 or 30 years ago? > > that seems a bit unlikely… Some of them do take risks, very dangerous risks (witness the collapse of the financial system due to high risk behavior). They were well compensated anyway. ---
**Author:** ![rat\_avatar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rat_avatar/32/255_2.png) [@rat\_avatar](https://boards.straightdope.com/u/rat_avatar)\ **Post date:** [March 28, 2013, 1:49am UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/52 "2013-03-28T01:49:52Z")
This is not a complete fix but if you care about the citizens more than a solution to tax or penalize the rich you could improve STEM education and better prepare workers for the jobs that have replaced the manufacturing jobs which were the high wage bastions of the unions. There are thousands of high paying jobs that go unfilled each year in IT due to a lack of qualified candidates as an example. This will not fix the issues with excessive corp officer pay etc… but automation and globalization are reality which are just as responsible for the irrelevant of current unions as any “right to work” laws. In short…figure out how to get families and communities to start encouraging and valuing learning and knowledge. But this is a complex issue and there isn’t any one solution. As an example, IMHO the CEO pay issue is more of a symptom that the stock markets being more about gambling then investing, or about playing the split with super high frequency trades. The perceived value of short term increases in stock price are only ideal due to this kind of behavior. The current uber high CEO pay is due to an attempt to gain that for the share holders. If they could find some way to say…punitively tax the shorts while keeping them enough in the game to keep the longs prices stable the value of the CEO could be viewed in a more realistic fashion. The stock holders would realize they are not getting the value that the high wages seems to provide under the current system. But the real issue is that for most people income has been rising over time, the original quoted story’s numbers are fairly odd. Using the IRS gross adjusted income as an example, does a family who claimed the child credit’s income go down by $200 a year? If they buy a house and claim their interest does their “income” go down if itemizing is better than the standard deduction? No, but it does work when you are trying to make numbers say what you want. Why do these charts not agree with the link in the OP as an example… because they use the median vs the “average” and I don’t think they use the adjusted gross which is a pretty iffy number anyway. If people live 10% longer and are retired at the same age that AGI number is going to go way down even if a 35 year old family of 4 has a slightly better life. [http://en.wikipedia.org/wiki/File:US\_real\_median\_household\_income\_1967\_-\_2011.PNG](http://en.wikipedia.org/wiki/File:US_real_median_household_income_1967_-_2011.PNG) [http://en.wikipedia.org/wiki/File:United\_States\_Income\_Distribution\_1967-2003.svg](http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1967-2003.svg) Sure the 95th is going up faster than the 50th percentile but there is a trend up for “most people” I bet that means “most people” are OK with the status quo. ---
**Author:** ![rat\_avatar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rat_avatar/32/255_2.png) [@rat\_avatar](https://boards.straightdope.com/u/rat_avatar)\ **Post date:** [March 28, 2013, 2:22am UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/53 "2013-03-28T02:22:49Z")
FYI, I found a link with some better “charts” than the OP, I have not fully vetted this info but it does show a much more complete view. It is from russellsage so if it did have a bias (and I am not claiming any) it wold be towards showing inequity. WARNING PDF [http://www.russellsage.org/sites/all/files/chartbook/Income%20and%20Earnings.pdf](http://www.russellsage.org/sites/all/files/chartbook/Income%20and%20Earnings.pdf) But note that while growing slowly the top 4 quentiles of income have been going up. Maybe not ideal and the top 5% and 1% have some pretty amazing numbers that should be examined but my point is that income has been going up for most people if not as fast as for the super rich. But with the fall the value of labor (world wide) I am not sure how we fix this and help the lower 20% rise except to provide education and try to mold society to value and foster the pursuit of knowledge. People forget that for a long time the US was growing out of being a “developed nation” and that a huge amount of the increase in wealth was from automation of food production etc… which allowed those individuals to produce products as the burden of feeding the population diminished with the advances of technology. WWII also launched us on an upward path but around the mid 70’s the rise of pure low skilled labor hit the same wall that farming did as technology and automation became cheaper than labor. (Once again, I don’t think that is the only problem but it would be the fastest way to help the lowest quintile rise IMHO) ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [March 28, 2013, 5:42am UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/54 "2013-03-28T05:42:06Z")
> [@Tom\_Tildrum](#): > > I think we’re disagreeing over “is vs. ought.” Whatever it ideally ought to be, health insurance is a substantial part of employee compensation and one that has risen sharply during the period in question. Well increasingly it is NOT a part of employee compensation. A lot of companies now keep their non-skilled employees health insurance-free by jiggering their hours so they are not full time workers. Or they “offer” insurance but they don’t cover any of it, so the employee has to pay it all, and for a low-skill worker, that’s generally equal to or greater than their salary, especially if they are in that part-time mode. So … not sure how that can be taken into account, but I’m sure it should. ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [March 28, 2013, 6:11am UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/55 "2013-03-28T06:11:21Z")
There’s also a very simple and much more fundamental answer to why the rich have been getting richer and the poor not so much. Globalisation. The rich have a much larger market to sell to. The poor have a much bigger labour pool to compete with. Basic supply and demand. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [March 28, 2013, 6:28am UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/56 "2013-03-28T06:28:31Z")
[quote=“XT, post:33, topic:654029”] Our? Facts? Numbers? Charts? Did you have some, or are you still referring to the article linked in the OP? Feel free to present your facts, charts and numbers since that’s what I was asking for. As I said, even a cursory Google search seemed to indicate that the gist of your OP was, at best, an attempt to spin the numbers to slant the debate. [quote] Good lord, XT, did you even read the article I cited? It’s full of facts and figures.[The article by David Cay Johnston](http://www.taxanalysts.com/www/features.nsf/Articles/C52956572546624F85257B1D004DE3FC?OpenDocument) that the Huffington Post cited is even fuller of fact and figures and includes a chart. Johnston’s primary source is a study done by a pair of economists named Emanuel Saez and Thomas PIketty, in a report published in the Quarterly Journal of Economics in 2003. No links to the original publication, but Saez did publish a less technical summary of the paper, you can[find it here in pdf form.](http://elsa.berkeley.edu/~saez/saez-UStopincomes-2007.pdf) Now please continue your arm-waving, it’s really fun to watch, though you must understand, it impresses no one. It’s always fun to watch a man who hasn’t a leg to stand on try to stand on that leg. > [@](#): > > You are saying that the gay marriage issue is a bread and circus manufactured debate to try and detract from REAL issues, and you got a pass on that. It’s hard for me to believe that 'dopers are really willing to do that…to me it’s the equivalent of saying ‘well, sure those blacks have a point, but it’s not a REAL issue, just something the media is drumming up’. Ironically, I’m actually old enough to remember people actually making similar arguments about civil rights. Nope. I’m not saying it’s a manufactured debate. I’m saying that both Obama and the corporate oligarchs who own both the Democrats and the Republicans are very happy that so many people are so concerned over an issue that involves two or three percent of the population while they continue to loot 90 percent of the population. It’s a real concern, especially for gay people, but it’s not nearly as important as the destruction of the American middle class. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [March 28, 2013, 3:36pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/57 "2013-03-28T15:36:29Z")
So, what do we, well, y’know, do about it? ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [March 28, 2013, 5:19pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/58 "2013-03-28T17:19:25Z")
> [@John\_Mace](#): > > Rich people getting richer doesn’t make other people poorer. This is another right-wing(\*) meme that is false on so many levels, one doesn’t know where to start. I’m guessing that Mace’s ideation is that high salaries are a reward for high work. Even if this were true, it would ignore that [the major source of rising U.S. inequality is not high salaries, but high _unearned_ income](http://crooksandliars.com/jon-perr/low-capital-gains-tax-rates-fuel-record-inequality), e.g. gains to stockholders. [Corporate profit margins have been soaring](http://www.businessinsider.com/corporate-profits-just-hit-an-all-time-high-wages-just-hit-an-all-time-low-2012-6) even as taxes on dividends and gains have been cut. (\* - I do keep hearing that Mace isn’t a right-winger. :dubious: Are those who say that the same who say David Brooks isn’t a right-wing commentator? 🆒 ) ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [March 28, 2013, 6:08pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/59 "2013-03-28T18:08:13Z")
> [@Honesty](#): > > I cannot help but to disagree with this. When the rich puts money in the savings account, it is essentially out of circulation. It is not used to purchase goods, it isn’t used to invest, it isn’t used to purchase services, it is used as a springboard to generate income from interest. Interest, by the way, which is taxed at about 12 - 20%, much lower than what the average working American pays. > > You should look up what a multiplier effect is, and, while you’re at it, take a glance at the data showing that during the 2008 crisis, the money given the poor by the Bush administration, had a palpable effect on the economy. The more the money that changes hands and is taxed, the better the health and vibrancy of the economy. The poor [and, increasingly, the middle-class spend more on food, utilities, gasoline/transportation, and health care](http://www.npr.org/blogs/money/2012/08/01/157664524/how-the-poor-the-middle-class-and-the-rich-spend-their-money). > > If Joe Poor gets $500 dollars and purchases goods from the local grocery store, the feds get a piece, the state gets a piece, the locality gets a piece, the utilities company gets a piece, the employer gets a piece,and, of course, the employee gets a piece. > > Now, conversely, if Joe Rich has $1,000,000 in a savings account at 1%, he gets $10,000 taxed at about 12%. He isn’t helping the economy at all. You don’t seem to understand how banking works. The money deposited in a savings account does not stay in a bank vault. The bank lends it out at interest and pays the interest out to the depositor out of what it owes. In terms of the economy the money is loaned from people who have more than the need to those who need it. This includes people getting new houses, starting new businesses, and fixing houses. All of these things add money to the economy. If invested wisely they cause the economy to grow. You seem to be confusing multiplier effects with marginal propensity to consume. Poor people have a very high marginal propensity to consume but much lower overall consumption, because that is what makes them poor. The rich have a lower marginal propensity to consume but high overall levels of consumption. They also have higher levels of investment. Investment is what drives economic growth, this is easily illustrated. Consider two farmers who have similar plots of land and both harvest 100 bushels of corn. From this they make 1,000 dollars. After expenses they both have 100 dollars left. Farmer A spends the 100 dollars on a hookers and cheap wine. Farmer B buys fertilizer. The next year Farmer A harvests 100 bushels of corn and Farmer B uses the fertilizer and harvests 120 bushels. Thus Farmer B has helped grow the economy. If everyone were like Farmer A then there would be no economic growth. You are also confusing increasing taxes with economic growth. If taxes are just transfers then they have no multiplier and do nothing for economic growth. In fact because of deadweight loss they are likely to shrink the economy if they are merely transfers. If taxes are invested in things that an economy needs and are not otherwise being provided they can have multiplier effects. But if you look at government spending transfers are most of the governments budget. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [March 28, 2013, 6:11pm UTC](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029/60 "2013-03-28T18:11:08Z")
> [@septimus](#): > > This is another right-wing(\*) meme that is false on so many levels, one doesn’t know where to start. I’m guessing that Mace’s ideation is that high salaries are a reward for high work. Even if this were true, it would ignore that [the major source of rising U.S. inequality is not high salaries, but high _unearned_ income](http://crooksandliars.com/jon-perr/low-capital-gains-tax-rates-fuel-record-inequality), e.g. gains to stockholders. [Corporate profit margins have been soaring](http://www.businessinsider.com/corporate-profits-just-hit-an-all-time-high-wages-just-hit-an-all-time-low-2012-6) even as taxes on dividends and gains have been cut. > > (\* - I do keep hearing that Mace isn’t a right-winger. :dubious: Are those who say that the same who say David Brooks isn’t a right-wing commentator? 🆒 ) At least you admit you don’t know where to start, but here’s a good place. You missed a step, how does stockholders getting rich make the poor worse off? [Previous page](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029.md?page=2) [Next page](https://boards.straightdope.com/t/income-inequality-startlingly-bad/654029.md?page=4)