Right now, the upper class controls most of the wealth in this country. To wit:
If this is socialism, what must capitalism be like?
When you say most of the wealth new wealth is created by the middle class, there are two questions that leap out:
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Since the middle class is enourmously larger than the upper class, of what significance is that observation?
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How do you define “new wealth”? Why isn’t new wealth generated from what you call managing wealth? Bill Gates came from a pretty rich family. Did he not “generate new wealth” by starting and building MSFT? If Joe Sixpack was following the market in the mid 80s, invested $500 in MSFT, and let it sit for a decade or so, did he not “generate new wealth”, relaized as a tidy profit when he cashes out?
It appears that you are defining wealth generation thru investments as “luck”, because you think welath generation thru “work” is more real. But wealth generation is wealth generation weather it comes form manual labor or from typing on a keyboard to invest in stocks.
Once again. The misconception that the economy is a zero-sum game.
I’m not sure what it really matters, but wealth is genearated at all economic levels. When the equity of your home increases, wealth is being created. When a couple of wealthy guys get together to finance a new business wealth is created.
No, really it’s not. More a reflection of competition within a single market (e.g., a monopoly or oligopoly) and how political power can be used to establish, maintain, and solidify such.
Surely it’s obvious that some might prefer being the big (or only) fish in a little pond rather than being one of many fish in a big pond.
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And we’re still waiting for you to apologize for posting a gratuitous slam against another poster who has not even participated in this thread.
If you have “lurked” here long enough to know who Liberal is, you have “lurked” here long enough to know that interrupting threads for the sole purpose of making snide remarks about other posters–particularly outside the Pit–is a forbidden activity.
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[ /Moderator Mode ]
It’s well known that large corporations are often averse to free market capitalism. When you’re on the top of the heap you don’t want a free market since you have everything to lose and nothing to gain. So big players often attempt to get the government to regulate their industry more, impose barriers to entry, set production quotas, hand out subsidies, etc. This is called “rent seeking”. Mature companies can’t grow very easily, so they seek a guaranteed steady profit rather than risky growth or dangerous innovation that could change the market completely. Compare the heavily regulated “Ma Bell” era vs today’s competitive telephony market, or the old legacy air transporation market vs today’s market, or the old Detroit automaking industry vs today’s global automaking industry.
So yes, those at the top attempt to use their money and power to limit the free market. If this tendency isn’t countered we would concievably end up with a feudal economy again. Luckily there’s so much innovation happening all over that it is very difficult even for extremely powerful companies to stifle competition completely, since the more inefficiently an industry is run the more profit there is to be made by moving into an industry. And some ossified industries are just replaced outright or leapfrogged by new innovations.
I don’t get your point, John? Are you saying that the economy is a zero-sum game? I’m not. I’m saying that because the conditions for attaining wealth are so much harder in the middle class, that those who break into the upper class from the lower class are much more apt to be extremely capable individuals, as well as lucky. We want as many of these people around as possible. If the conditions for success are too harsh, a lot of otherwise very capable and useful individuals don’t succeed, and we all lose. Now, in the case of the wealthy, the conditions are infinitely less harsh. So a society that wants to maximize the potential of its talented, energetic people of all classes will pretty much ignore helping rich people (they’ve got all the advantages already) and work on making sure that middle class people have plenty of opportunity to succeed. Does t his not make sense to you?
Bad choice, John. Gates didn’t really bring the personal computer into existence. That was done by a collection of middle class engineers working for Intel and middle class hobbyists entranced by the possibilities of the chip the Intel guys created. Gates’ genius was more in harvesting and consolidating the wealth potential of the micrcomputer revolution. Furthermore, Gates, although he came from a KINDA wealthy family, really wasn’t all THAT weatlhy. True, he attended Harvard for a time, but he wasn’t a Kerry/Bush kinda attendee. More of a scholar. He had advantages that most middle class kids don’t, but not the kind of overwhelming advantage you seem to think he had.
Steve Jobs and Bill Wozniak, both solidly middle class guys, were much more powerful innovators that Gates was.
Sure, wealth is generated in all sectors of the economy. But typically, poor people generate relatively low amoutns of wealth on an individuial basis. A farmer who plows up some ground and plants crops on it generates wealth. But a person who discovers a cost-effective way to desalinate seawater generates a whole new industry.
No, my references to luck was to cover two points: the fact that some poor and middle class people get wealthy by winning the lottery. And some wealthy kids who do nothing productive win the Lucky Sperm Lottery. They’ve both done nothing to deserve their wealth, they’re just beneficiaries. They’re economic blanks.
Another form of luck, much more germane, involves the luck of someone who has a great idea for a business and needs about $20,000 to get it started, but has bad credit and can’t get a loan because of his wife’s gall bladder operation, but then … luckily … runs into someone who believes in his idea and invests in it. That’s the kind of luck that can make or break middle class wealth generators, and I’m all for spreading it around.
Do you even know what rich means in terms of economics? It is just a term to describe relation to another. Or, look at Spiritus’s reply in his description of “poor.” The rich have everything to gain when everyone else gains value or, to use generally, wealth.
For a more illustrative example, let’s talk about the poor. Poor people in economics can impart less and less value into the transation depending on how poor they are. With the increase of poor people, the value in that society lessens, thereby decreasing the overall wealth of that society. In terms of nominal wealth, rich people are making more money, but so too are the poor.
Again, this idea is only valid if economics, in general, is a zero-sum game. It’s not.
My point was to ask what your point was. I didn’t have a “point”. 
But I can pretty much agree with the above, although I’m sure we’d disagree on the fine points of what constitutes making sure the middle class has plenty of opportunity to succeed. Most people don’t need “opportunity”, they just need to not have too many roadblocks in the way.
But I never said Gates brought the PC onto the stage. I only said that he generated new wealth. If it was a bad example, then go to the guy who inherits money, plays the market, and gets richer. Has he “generated new wealth”?
Agreed. I hope you don’t think I was implying otherwise, because I wasn’t.
True, until they do something with that money-- either create more wealth or destroy the wealth they lucked into
Luck = preparation + opportunity. I think it’s a bad idea to artificially lower the barrier of entry to a new business (ie, the risks involved in borrowing capital). "Spreading it around’ sounds nice, but let’s talk specifics. If you mean low interest rate government loans, then you’ve artificially lowered the barrier of entry.
Your posts, along with Digital Stimulus paint the myth of the widening wealth gap between the rich and the poor is somehow detrimental to this country. The article you cited fails to mention that GDP overall is growing (it has, look at the US Treasury Data), and it is the largest it has ever been. In fact, as I’m way too busy today to dig up the numbers and statistics, I’ll just make certain points: The linked article shows that total percentage of all wealth in the US went down, 60.3% to 59.2% (most likely due to taxes). If their total ownership of a much larger pie went down, then obviously, those in the bottom 95% had their share of wealth increase. In fact, as the article states, more millionaires were created [*<-- this point is for you, * Digital Stimulus, i.e. where do you think this wealth came from?]
The sheer fact that the wealthy have more money, obviously, means that they have more opportunity to increase their wealth. So, of course they are going to have a larger percentage of the new wealth. What is wrong with that?
It seems that you are complaining that the poor in this country don’t receive a fair shake, that, if given the opportunity to succeed, they, too, could enjoy the increase in wealth with the rest of the nation. Who says that they aren’t?
The fact that the wealthy in this nation continue to pour money into the economy and not stuffing it into a mattress is good news for the rest of us. Let them spend, let them want, if it means that we as a whole will produce more wealth, i.e. supply side economics.
Look, I’ll willingly admit when I’m misusing terminology or become convinced that I was wrong. In this case, you’re misrepresenting me. Yes, the growing GDP can be beneficial for all; I’ve not said otherwise. At the same time, an even larger GDP would be even more beneficial to all. When saying:
you make a patently false universal claim. Specifically: the “rich” gain when everyone else gains. Note that I use quotes to inidicate that I’m not using the term “rich” in a precise way, just like I did earlier; rather, the term is meant to signify those who use their wealth to wield political power for personal gain. One counterexample is sufficient to prove that claim false. Rather than give a concrete counterexample, I refer you to the point made by Lemur866 in post 67 (much more eloquently and clearly than I have done with my “big fish/small pond” metaphor). Respond to that and perhaps you’ll convince me otherwise.
That’s no cop-out. The “competing” economic systems are all about equalizing everything. Fairness is taken as an economic principle.
Yes, our system is not fair. This is not going to change. It’s a fact of life that intelligence, wealth, and other resources are not evenly distributed. Luck falls on some more than others.
However, the question is not whether capitalism is fair, but whether there is anything else worth trying. Historically, we have strong evidence that no, there is not. At best, you can stifle the growth and potential of your best in favor of the worst segments. In the US, you have the chance to make good choices and reap the rewards - or make bad choices and be punished. That’s our society’s choice because we want to excel, to compete, and to soar.
Note that most of those 2 billion people used as a support for your argument that capitalism is bad… live (or lived until very recently) under regimes that were openly hostile to capitalism.
Five percent of the population controls 59 percent of the wealth, which you apparently don’t dispute, and you use the term MYTH to describe a wealth gap between rich and poor? Words fail me.
The “widening of the gap” was never set forth, merely its continued existence. That the gap has widened considerably over the last several decades is also an assertion I’ll make. Care to dispute it? I suspect the reason the gap hasn’t widened over the last several years is that most of the “low hanging fruit” has already been picked.
Nothing is wrong with the wealth having the opportunity to increase their wealth. I just don’t think the wealthy are typically innovators. They already HAVE a bundle – the majority of them will be engaged in either protecting it, or spending it. It’s the ambitious folks from lower down on the ladder who are going to work hard to make more, come up with new inventions, ideas, organizations, etc. That’s why I think capitalism works best when the middle class’ opportunities to make wealth increase are optimized, by giving them leisure time and decent wages.
Poor people very, very, very rarely become wealthy. Mostly they move up into the middle class. Frequently they fall out of it. I’m against poverty. I think everyone should be wealthy. Got a problem with that?
AKA “trickle down” which was thoroughly discredited in the Reagan years. if this is the best you can do for economic theory, you need to update. What’s next, “divine right of CEO’s”?
I am arguing that most of the innovation that drives economies, whether it’s invention, new ideas for organizing businesses, new kinds of businesses, come primarily from the middle class. I don’t dispute that the wealthy create wealth, only that they don’t innovate as much as middle class folks pursuing the American dream do. They don’t have the motivation, why should they?
False dilemma. YOu are not either a total laissez faire capitalist or a socialist (or an advocate of some other economic system). It’s perfectly reasonable and possible to ask, “What does capitalism do, and how should we as a society maximize it’s actions for our own rewards?” and come up with answers that are far removed form laissez faire capitalism and still not be a socialist at all.
This is silly. The wealthy are not going to spend so much that their desires will fuel the economy. Supply side economics are a farce as they will never put enough back into the economy to get it humming the way a more prosperous middle class will. The fact that the GDP is growing is not news, the GDP is always growing. Even if their percentage of wealth declined 1.1%, with 3% growth of the GDP they should still be doing better than last year. Some of their wealth will go into stock investments that won’t pay off for years and are taxed lower than wages, or go off-shore to avoid taxation all together. And we’re still waiting 5 years later for the explosion of new jobs promised by this latest round of supply side tax cuts.
Good point. Free market conservatives like to point out how much money the wealthy pour into the economy on the one hand, and how easy it is for them to move their money offshore on the other hand.
Mmm, how WOULD you go about using capitalism to encourage innovation in the middle class, John?
Smiling Bandit:
In this thread you’ve seen me give short shrift to mindless knee-jerk redistributivist schemes promoted by critics of capitalism, but no, I do not agree that our system is inevitable or reflects “facts of life”.
Human interactive behavior as we see it is not mostly (and certainly not merely) reflected in the workings of the market economy. We see the behaviors that we do see as a consequence of humans playing their roles within the structure of the market economy. Capitalism may not be a zero-sum game on the level of the individual transaction but it works as a zero-sum game in the larger context of rewarding winners by making it easier for them to win, by punishing winners who do not rack up points to the point of totally destroying their competition (insofar as other also-winning competitors who do so will end up with a leg up and eventually end up destroying them), certainly by punishing losers by making it ever more likely that they will lose some more. Human behavioral tendencies may and do include kinder and more cooperative, less competitive ways of interacting with others, but that is largely marginalized within the confines of a system that has rules that dictate game-play. A foursome of saints playing Monopoly will still find that whoever gets a lock on the expensive properties and gets hotels up on an entire block is going to win the game, no matter how saintly they play, and it’s a consequence of the rules of Monopoly rather than a consequence of human nature.
Economic systems not based on a competition motif are possible and practical. We need not reward people for doing work or deprive them for not doing work. We need not require compensation before providing someone with items of value that we have produced, as long as, generally speaking, we can acquire items of value that we ourselves cannot personally produce without directly compensating the ones who did. This is general reciprocity as opposed to the specific transactional reciprocity of the market economy.
Fairness is the reason usually given for demanding specific transactional reciprocity, too: “It’s not fair that yonder lazyass get to eat roast pork with the rest of us when yonder lazyass didn’t help trap the hogs” / “Ya don’t work, ya don’t eat” / “Why should the money I worked hard for be taken away from me as taxes to be spent in part on people who have done nothing to deserve it?”
But as we’ve apparently established here, the market economy isn’t fair, so it is not fair to turn around and condemn a general-reciprocity scheme on the ground that it would not be fair either!
(The other usual dissent takes the form “But it would not work, everyone would be a lazyass if you did that”. I disagree, but that’s not really the point I’m making in here. My point is that either we need to look beyond the market economy in order to address its evils, or we need to accept the market economy and acknowledge its unfairnesses and understand that they aren’t going away and are not in existence because of any evil personality disorders on the part of the rich, it’s just how the rules of the game dictate that the game plays out)