Devilman Palmer, welcome to the SDMB, soapbox and all. It’s good to ask tough questions and very few people 'round these parts speak from a neutral stance. So no need to apologize for yourself.
This question of income equality has come up many times and I’m glad that you recently posted some data to show that, in the US, the issue is to do with an historical trend, with income inequality having dramatically increased since the 1970s.
This gives the lie to the notion that serious inequality is the way it always must be, always has been, etc.
Duke: “The “L-Curve” you refer to…looks pretty similar for the US, the UK, and for many Western democracies. It’s slightly worse for the US, but not by much. It’s much worse for a lot of third-world dictatorships, and, surprisingly, not much better for former communist countries in Eastern Europe.”
Duke, I must beg to differ with this sketch. Yes, the US and the UK look similar, and yes both resemble a lot of third-world countries. Yes, the gap is widening in some parts of Europe, but, NO, the differences between most of Europe and the US aren’t “slight.” France, Germany, Holland, Denmark, Sweden–all of these are countries with a much larger percentage in the middle, fewer poor, less distance between the middle and the rich, the rich and the poor, and fewer ultra-rich. I don’t have time to provide cites at the moment but I think that any you look for will bear me out on this, as I’ve seen many examples.
It’s arguable that, say, Denmark’s level of income equality is as good as it gets in a market economy. If so, I’ll take it. When and only when the US reverses the current trend and moves in the direction of Denmark will I start to think, well maybe now growing inequality isn’t a major issue in today’s American society. For now, it rates super high on my list of concerns because it effects everything else–most especially, the state of our democracy.
(And I don’t, btw, think that Amartya Sen–of all people!–is arguing that inequality is inevitable and here to stay).
That said, I don’t see inheritance taxes as the only or even the main way to go about reversing the trend. It’s easy enough to evade inheritance taxes (give your money to your family before you die).
In the US, I would say reduce payroll taxes substantially for the majority of Americans who live off of their paychecks (and Guinastasia, I’d add to your post, that most Americans live off of paycheck to paycheck; most have little or no savings; most have credit card debt up to their eyeballs; only a small percentage could live for more than six weeks without a paycheck). Make up the difference by a more progressive income tax and by closing loopholes for corporations.
shagnasty: “I would argue that the average middle class American already has a perfectly acceptable amount of wealth. The poor have a different set of problems entirely that redistribution aggrevates as often as it helps. The truly wealthy have a lot of money, but, so what.”
The problem is that the percentage of people who can call themselves middle class is shrinking, while the number of poor, and especially working poor is growing. Also except at the higher end of the middle class, standard-of-living for the middle classes has also been declining slightly; so they are also feeling a kind of pinch. And, incidentally, for the people at the higher end of the middle class, whose relative income has grown by about 9% since the '70s–this has happened because they work more than they used to do (the equivalent of about one month per year).
Note: the latter stats were cited in a now defunct thread on Thomas Frank’s One Market Under God. The rest is from my memory, but, again, I think cites will bear me out.
So by and large, Americans, especially the working poor, haven’t cashed in the tremendous productivity gains of this period. Where in an ideal world productivity would translate into wage growth, R&D, and profits, in the US most has gone into profits and corporate profits disproportionately benefit the very, very, very rich.
mssmith: “The problem is that schools don’t teach people how to become wealthy. How can
they, they are government run institutions run by people who make $40,000 a year? What does a schoolteacher or even the superintendent know about accumulating wealth? Schools teach people how to become good employees. Not good entrepreneurs.”
This is a rather bizarre response to the problem of (growing) income inequality. First of all, most public schools are run by local communities, funded primarily by property taxes with some oversight and funding at the state level, a bit of oversight and funding at the national level.
The function of K-12 schools so far as I understand them is to provide students with the tools for becoming an educated, thinking citizen. In the best case this involves acquiring a wide range of basic skills (e.g. reading, writing, math, logical reasoning, arts), a store of knowledge (e.g. science, history, literature, arts, social science), and a desire to learn more as one grows towards specialized kinds of knowledge.
If your point is that schools should try to avoid conformity, and should attempt build individuality and diversity–I’m with you. On the other hand, I can’t imagine a more conformist society, this side of Brave New World, then the all-entrepreneurial-thinking-all-of-the-time world you seem to be envisioning.
Is money-making the only worthwhile goal you understand?
I would add that you should be grateful that there are still people willing to devote their lives for teaching for $40,000. Because I don’t think Bill Gates, or Sam Walton, or even–from the sound of it–you, wants to spend his time teaching kindergartners how to recognize the alphabet, or third-graders how to do fractions, or sixth-graders introductory computer sicence, or 12th-grade kids how to do calculus–or any of these kids some sense of the humanities and how important they are to the civic institutions that liberal democracies depend on.
And guess what, if there weren’t people doing that, our country would go straight down the tubes. Man, I bet even Bill Gates would feel the pain!