What's wrong with income inequality if everyone is well off?

Great Debates
81

Agree with the last few posts. While at first blush, the situation described in the OP is completely benign, on reflection it is not a stable set up. Those with most of the capital have a disproportionate influence on the laws that get written and the structure of the marketplace, and over time we might expect that a little more of the wealth will trickle up until some people are struggling to afford basic needs again.

I’m not exactly sure of the solution to that – I agree with others that 100% equality is not in fact a desirable goal, yet we need someone pushing for that otherwise the whole system goes backwards again. I guess it’s all academic anyway, as the real world is very far from the OP scenario.

82

The issue with this is twofold: 1) Nobody is talking about eliminating those programs, 2) I don’t know what you call this logical flaw, but if I pass law X and ten million people die, and you criticize it on that basis, and my reply is that fifty million would have died without the law, then I and my law win all of the time.

This is the very idea of a “net”: to catch you when you fall. Implicit in the idea of a net is that you survive to be able to climb back up.

A better analogy would be if we see that because of seat belts and air bags people are playing bumper cars on the highways and otherwise driving drunk and recklessly because they know that the seat belts and air bags will protect them. Everyone to a person would say that should not happen and was not the point of installing air bags and seat belts. They are for the hopefully rare instance where despite your best efforts, you are involved in a car crash and they save your life/reduces your injuries.

Likewise, the point of Medicaid is to provide for your health care when you are downtrodden. Not to have it for your whole life and have a bunch of children who will have it for their lives.

83

Indeed. The nice thing about the Free Market is that it’s an engine that runs on greed, ensuring that it will never want for fuel.

The OP’s situation is perfect if everyone involved is satisfied with their place. Human nature, however, will not support that. It’s Macroeconomics 101, limited resources vs. unlimited wants. The inequality of wealth and power means that over time, resources will flow to the 1% in order to satisfy their wants, and the 99% will be left with less. This is not even worrying about the status quo where the 99% will want more than they have and be unable to get it.

84

Well we wouldn’t want all those poor people to “climb back up”, would we?

You’re talking about “moral hazard”. The concept that safety nets enable risky behavior. Which they do. A circus net allows performers to practice tricks without injury. Safer cars are able to travel at higher speeds (making them less safe), rescue equipment enables people to explore remote areas without needing advanced wilderness survival training. Etc.

And in most cases that’s a good thing.

What we don’t want is the situation close to what we have now - where rewards are localized to the top 1% but the risks are socialized to society. Or where those safety nets become a spider web where once you get stuck, you have no means of extricating yourself.

IOW, safety nets should be for people, not corporations.

85

I very much liked @ msmith537 reply to this.

I saw your comments about gun control – your reference to availability of sub-machine guns in 1925.

This argument, like that one, seems to ignore about 8,000,000 profoundly relevant things that have changed dramatically in that time.

There aren’t boots (so: no bootstraps) anymore.

Boots became valuable and the – not only unbridled but celebrated and pimped, hard – greed that defines the US, largely since the 60’s but overwhelmingly since President Ronny was in office – placed a premium on boots.

So now the wealthy have targeted the boots of the poor. Mines.

In other words, the wealthy have taken it upon themselves to extract Every Last Penny from the poorest Americans, and no longer even see:

  • their (the poorest Americans’) labor as a commodity with inherent value, or
  • their well-being as inherently meaningful, ignoring for the moment that it contributes to the common good and creates a positive sum game (a rising tide is only lifting yachts. All ships would benefit if we really did lift all vessels)

Instead, everything is the spreadsheet, and spreadsheets ignore humanity. Everything is America, Inc.: maximize profits and mercilessly cut costs.

America, Inc. has absolutely no soul.

So when you relentlessly and continually take employment, education, nutrition, health care, safety, justice, and a million other elements that tend to create conditions for success (“opportunity”) away from the poorest Americans, it’s heartless and irrational to then inveigh that they ‘haven’t lifted themselves out of poverty yet.’

And it’s worse than that to declare the war on poverty a failure and constantly suggest that the problem IS the very safety nets that mitigate the misery that IS poverty in the US.

The second rung from the bottom on the American ladder has long been coated in grease.

We have to understand the factors that conspire to create poverty in America, just as we have to understand the factors that create mass shootings and gun violence.

And we should be mindful of, and aggressively address, low hanging fruit as we see if the behemoth that is 'Murica can be incrementally changed to make it a better nation.

But that latter is going to be a bitch to address. We celebrate greed in a disgusting way. We deify and subsidize the wealthy in this country in numerous and inexplicable ways:

[That’s just today’s headline, as an example. It’s also apart from, and in addition to, what we don’t talk about]

America has lost its way. Blaming the poor for their poverty is just one outstanding example of that process, celebrating the role that the wealthy played in creating their poverty, and then popping champagne corks when plans to cut costs even further (and cement the poor within their impoverished lives) are turned into legislation.

86

So, are you saying that people stay poor in order to have Medicaid. Or do they deliberately get sick in order to get the benefits.

Easy solution to that (non) problem - UHC would remove the incentive to stay poor. As if there were such a thing.
I know people worried about the moral hazards of seat belts, but I don’t recall seeing any alarming statistics about accident rates rising. Getting in a crash, even if you survive, is not fun because odds are you’ve lost the use of your ride for at least a while if not forever. Likewise, being poor has some negative sides to it, even if you get healthcare.
And yes, I’m understating wildly here.

87

There is a third option:

We can remind everyone over and over that if they’d just stop being so lazy then they could be comfortable or even rich. We can remind everyone to pull themselves up by their bootstraps. Then, when they remind us yet again that they have no bootstraps to pull…

…just ignore them.

88

Of course you should have cradle-to-grave healthcare and your children should have it too. This is what civilized nations provide. If you are saying that only poor people should get universal healthcare that’s kinda messed up. IMO.

I don’t believe having universal healthcare only if you are poor is enough to make most people intentionally stay poor but it’s sure not much of a incentive to make more money in a country where minimally decent healthcare is affordable only for the old, the rich, and the very poor.

89

Fallacy of the survivor. (aka “we never wore safety helmets riding bikes and we did okay. Now kids wear them and drive like maniacs”)
Prove to me that people in general act more recklessly when they have a safety net. Or were you thinking of a shitty businessman who declares bankruptcy but is not personally hurt financially and yet magically gets to start up a new business.

90

Interesting personal anecdote: A couple years ago, I qualified for Medicaid. Then the subsequent year I made slightly too much money to qualify (something like a $100 too much) and lost it.

There actually is a perverse incentive here. I probably would have been better off making $100 less that year, just so I could have kept health insurance.

91

Sure, but the companies are in it to make a profit, not just break even. They could raise wages to the point where they just break even every period, but that doesn’t make the ownership any money, which will get the board called on the carpet, and by extension the company management.

This is doubly so when payroll is the largest expense the company has. It pays in that case to pay the bare minimum necessary to attract and retain workers- apparently in a lot of places that’s minimum wage. But not everywhere; In past years, I’ve seen messages on fast food marquees that say “Now Hiring $9/hr” and stuff like that- clearly in those cases the economy is such that jobs paying around $9 are plentiful enough that fast food places are not getting workers at a lesser wage.

But that sort of thing waxes and wanes. I’m sure it’s not the case now that they’re paying $9 an hour in my area. I’m not sure what the answer is; a higher minimum wage would seem to be it, even accounting for the economic distortion, in that it’s not basically playing Robin Hood to middle class taxpayers (who pay the majority of taxes).

UBI sounds good, but I have some reservations about the actual implementation. Chief among those reservations is the idea that if you pay everyone an adequate UBI, it’ll take the place of the current social safety net programs. I have a feeling there are too many people out there who are some combination of stupid, ignorant or misguided who would manage to starve, not go to the doctor, or whatever other thing UBI ostensibly pays for, and still require some sort of public help. I mean, if we still have to have food stamps, WIC, public hospitals, etc… in spite of a sufficient UBI, then what was the point? At that point, you’re just redistributing income, which is pretty unfair if you ask me.

In business school, we were taught that when it’s all boiled down, there are only TWO essential business strategies. One is to be the lowest cost provider, and the other is to differentiate yourself from your competition and charge higher prices. Everything companies do is a variation on one or both of those strategies.

People are essentially a business for themselves. If your only value is in working for cheap, then YOU are the one setting up that race to the bottom, because you’re essentially saying that you’re going to drop your price to be the lowest-cost worker. Most people go the other way and try to distinguish themselves from the competition somehow- college degrees, skill, experience, networking/connections, etc… Whether or not someone has a family is pretty much tangential; it’s not like employers should pay people more for the same job based on their family status.

92

Businesses with bad strategies fail. And a clever person wouldn’t start a business with a bad business model. But people don’t get to choose their built-in assets. And we’ve decided as a society that businesses going bust are okay, but we don’t want to allow people to starve in the streets.
Now some people might deliberately shoot themselves in the foot at work by goofing off, not showing up, etc. But I suspect most people in low paying jobs couldn’t make it through college or had bad family environments. Lots of people in these jobs work really hard, and aren’t deliberately being low cost suppliers.
Think of something you suck at. Do you suck at it because you deliberately are bad at it, or are you naturally bad at it? I’m tone deaf. I could have practiced musical instruments for hours a day, but I’d never become a rock star or a classical pianist.
Perhaps things like work ethic is partially genetic and partially learned also. Those of us with good work ethics might feel that those with bad work ethics are just lazy bums, but maybe they have no choice.

93

I think you made some excellent points and you made them well.

At the proverbial bottom rung of our society, though, labor is virtually fungible. Most people making minimum wage, by definition, don’t have skills that another couldn’t fairly readily obtain in pretty short order.

So finding somebody to take fifty cents per hour less isn’t necessarily a difficult thing, particularly as the inverse relationship between intelligence and fertility continues apace (said only a bit tongue in cheek), as we lose our quantitative standing against the other developed nations, and …

Considering illegal immigration – a hugely complicated issue in its own right – but we can mostly agree that many who come here will work the low skilled jobs for far less than many native-born because it still translates to a better QoL than they’re escaping.

Usually by a country mile.

At least at first.

Which is why I always say that:

  • Democrats love the potential supply of new voters
  • Republicans love the endless stream of exploitable labor
  • Every administration loves the bump to GDP

Provided by illegal immigration.

Illegal immigration is kind of the fly in the ointment of many B-school treatises like you provided above – at least when applied to labor. Illegal immigration tends to serve as the bypass valve (as has outsourcing), preventing upward pricing pressure from raising wages at the proverbial bottom.

94

You haven’t considered the demand side. If 50% of the demand comes from customers wanting the lowest price, while 75% of the supply is putting resources into differentiation, there’s a mismatch.

You get supply that put time and effort into differentiation, without enough customers who want differentiation. They spend the money upgrading the product, but the only customers left are paying rock bottom prices. This is how you get people with college degrees, or some college education, working jobs that pay very little. Low paying jobs aren’t going anywhere, and good paying jobs have limited availability.

95

I don’t think anyone disagrees with that. The answer is what do we do about it. And implicit in all of these “solutions” is that those at the bottom get UHC, a universal basic income, a doubling of the minimum wage, etc. and that we can do so by tapping into an unlimited revenue source, e.g. business owners and rich people and take more money from them and then redistribute it to those who do not earn that money through a market based wage. It further assumes that there will be no market failures or any other harmful side effects from this because instead of the rich bastard making $2 million/yr, he “only” makes $1 million/yr and everyone is fine.

Let’s call that what it is: socialism. Now, you may argue that it is not pure socialism, that it is what Denmark and Norway do, etc., but it is a sea change from what WE do and have done as a country. It goes against the American ideal that you keep what you earn and I keep what I earn.

That is indeed a perverse incentive and many conservatives have complained about it. I don’t have a cite, but it was from this board where a single mother of two who makes $29k/yr is in the sweet spot for quality of life with government benefits. As she gets promoted, she starts losing benefits and is worse off until she starts making $69k/yr, at which point she is living as well as making $29k/yr with government benefits.

If I was in her shoes, I would not try to advance. She is essentially trapped by the side effects of the system to stay in her job and stay on government assistance. I do not blame her for that at all. But it is one of the unintended side effects of massive government spending. Let’s start with that instead of a massive shift towards socialism.

96

Let me run through the thought process:
Assume 100m people in the ‘active workforce’ just to keep the numbers easy.
there are 97m jobs for these people
currently 95m are employed, so 2m jobs are ‘open’ at any point in time, i.e. 5% unemployment

This is a manageable situation, most people are employed, there’s some churn, but nothing outrageous going on.

Of the 97m available jobs, let’s say 57m are ‘good’ jobs, the remaining 40m are… well… shit jobs. You’re stocking shelves, being the warm body in front of the register, handing out Whoppers, and cleaning toilets. They suck, they don’t pay, there’s no benefits, no expectation of excellence, just a shit job for shit pay.

Come hell or high water, 40m Americans are going to be working those shitty jobs because… wait for it… they need to eat, and pay bills, care for themselves and their families. No amount of personal responsibility, bootstrap pulling, or poverty based misery is going to stop those 40m terrible jobs from having Americans showing up to work them.

This is a zero sum game, while you can point to any one of those 40m workers and blame them for having a low paying job, some American is going to work those jobs. The market based fix is a pathetic fantasy land where those jobs become high paying because reasons. Is there even a conceivable market based path to these jobs garnering a ‘living wage’? Not a path for Joe Smith, Walmart Associate, getting a better job, but a path for Walmart’s workforce, hundreds of thousands of them, becoming well paid. If there isn’t, I’d like to hear a Republican mention that his economic plan depends on Walmart’s destruction.

97

Of course you are spitballing the numbers, which is fine. I haven’t provided full cites in this thread and I don’t think any of us really can, again, because a “good” job and a “shit” job are in the eye of the beholder. I worked minimum wage–$4.25/hr, with a raise to $4.35/hr because I was a “great” employee–but I did it when I was 17 years old. I wasn’t supporting myself, let alone a family.

So that is my main dispute with you on this. Not every job is one that requires full support. My parents paid the bills and that money was used to take my girlfriend to the movies and out to dinner and fail at getting laid. :slight_smile:

I think it would be a massive side effect in society to eliminate these types of jobs by requiring an employer to pretend that everyone who wants to work for them, not desires as of course I would have accepted double pay, but requires a wage that will pay all of the bills when workers are out there who do not need all of their bills paid by the job.

And that is one side effect of that. It was either you or another poster that said that this is just too bad, that we can’t have jobs to pay teenagers or spouses of others who are already making a good living. We have to carpet bomb those so that the others who need “these” jobs can have them for support. Putting aside the argument that “these” jobs were never meant for support and shouldn’t be part of the calculus, what will happen if nobody can get a job until they are an adult?

Working at a shit job like that taught me a valuable lesson: get an education or learn some skills so I don’t have to continue at such a job. If I never had that job, or otherwise understood that I could do whatever I wanted and still fall back on such a job to make a living, where would I and millions of others be? If you upset the balance, some unexpected things happen.

98

Ah, yes: the “these were never intended to be careers” argument.

I’m old enough to remember when the unskilled jobs got you work in a union shop, making enough money to own a home, drive reasonably serviceable cars, and to put your kids through college.

Yes: lots of things have changed since that time, but the most salient for this conversation is that those jobs are largely gone. We’re in a two-class-of-service airplane where knowledge workers are lords and grunts are serfs.

And we didn’t saddle up the poor and follow them out of the US in the Race to the Bottom – where labor cost a buck a day and you could crap right in the cafeteria sink (no worker protections, no environmental protections, etc.).

People vote against their self-interests but I’m pretty sure it wasn’t the poor that took industry out of the US.

But we’re making it nearly impossible for the serfs to even get a bowl of gruel or a hovel, much less a decent education or – Ogg Forbid – health care.

“They weren’t meant to be careers” is disingenuous sophistry. They are careers, as @Cheesesteak described.

So … since we’ve now meandered closer to the Really Real World, shouldn’t people be able to make a living wage in those jobs – even people whose life circumstances make it much harder for them to rise above that wage the way that you did, that I did, and that many others did.

Not so recently, I might add, and not against the powerful RW headwinds steadfastly advocating for today’s equivalent of The Peculiar Institution.

99

Kinda buried the lede there, if there isn’t someone stocking shelves and being the warm body in front of the register, handing out the Whoppers, and cleaning the toilets Walmart and Burger King can’t conduct business.

100

Exactly. And just to put some actual numbers on this discussion, over one-quarter of the total US workforce earned less than $15/hour in 2019. That’s a hell of a lot of ostensibly “non-career” jobs on which many workers are dependent for their livings.