Why don’t you wander over to the nearest homeless person and tell him that he should be happy he’s not a Roman slave, or, even better, wander over to a refugee camp somewhere and tell them they should be happy they’re not Cro Magnons during the Ice Age.
People compare their situation to what they see, not to the worst case in the past.
Buying $1M worth of fireworks does create a ripple effect in the economy (economists call this the multiplier), but the multiplier is less than it would be if the $1M were used to buy factory equipment. In both cases the initial money went to the vendors, but the fireworks were blown up and of no further use. The factory equipment will be used to create widgets, people will be hired to use the equipment, people will buy the widgets, and the overall cost of widgets will go down as a result of greater supply and efficiency.
All spending is not the same.
Off topic but check the bottom of my post in about 1 minute.
Okay check my edit reason.
Well, I don’t think your analysis of the demographic makeup of the US is accurate, however that is one of the problems with income disparity. People no longer percieve that there are opportunities available to improve their lot in life. Or even worse, the high costs of education or living in a major city where those opportunities are available are now cut off from them.
It’d be intersting to see mobility among cities, exurbs, and rural areas.
Portland tends to have people move here from a set of “similar” locations: the Bay Area, Boston, Madison, Minneapolis, Austin and to a lesser extent LA, NYC, and Chicago. I’m not sure how often people make the leap from down-state Illinois to a city or vice versa.
I would argue that income inequality is secondary to income mobility. The ability to move up or down in the income ladder is of vital importance. Income mobility is an indicator that income is not destiny. Without it folks feel trapped and that can lead to all sorts of social problems.
I don’t think some income inequality is a bad thing, in fact I think it’s good for the economy, and will benefit the most people in the mid-to-long run. Edit: I’m assuming Gangster Octopus’s quantifier of Income mobility
However, having very large inequalities can definitely hurt both society as a whole and the people at the low end of the scale in particular, but the particulars depend on lots of factors. One example I can recall is that it used to be (and maybe still is, I don’t know) hard for schools in Amsterdam to find new teachers, because the cost of housing there is/was relatively high, while teachers get paid mostly based on years of experience regardless of location - so most new teachers rather move somewhere more affordable.
So maybe we can generalize that: if you have an area where a fairly large percentage of the population (say 25%) makes 400% more than the rest, it’ll drive up housing prices to the point where you’ll lose the bottom, say, 25% who can’t afford to actually live there, but is still needed to work there to do the “dirty work”, which is needed but doesn’t get payed enough. Extrapolating from that, there may be some real potential problems if the gap increases.
And that’s ignoring the obvious differences in (political) power between someone with a couple of million bucks at his disposal and someone just about able to pay his rent.
There may be some economic theories about this. If so, I’d be interested. In any case, it’s not about “absolute” income - these kinds of problems are precisely because of the differences. It doesn’t matter whether everybody makes around a 100 XINKYs a year or around a 100 million, but you’re definitely in trouble if a substantial amount of people make a 100 million and the rest (which will probably still be the majority - which is important in a democracy) makes 100.
The US Treasury Department begs to differ. Refer to my post above with the bullet points and links. I’ve tested my hypothesis over the last 200 years. It hasn’t been perfect, but, time has proven that it works. The world, and everybody who lives under capitalism, has prospered since its inception.
“piece of the pie too” Aha! That’s an issue right there. Capital and wealth in America is not some fixed pie that is diced up and doled out by the invisible hand of the market. One person doesn’t get more while the other gets less. This is not a Negative sum game of winners and losers. Capital is created and wealth is generated through innovation. The pie is constantly growing (and contracting too). Everyone’s incomes increase as the pie grows.
Also, why are people not entitled to their profits? “Think they’re entitled?” They started the company, they took the risks involved, they navigated it through hard times and took the numerous responsibilities involved. How are they less “entitled” to their salaries as the next man?
Thanks for the welcome Zoe! Of course, I’m not trying to insinuate that there are not poor people in America. I’m talking more along the lines of what would be considered the poverty line. I never said that government does not have a place in society and with taking care of those that are really desperate and in need (although social programs naturally evolve through prosperity). I start drawing the line though when people start arguing for redistribution under some misguided view of “fairness.” This is not an indictment of anyone’s morality, I’m sure all of the posters have great intentions. But, I feel like the unintended consequences of such a deal would be too much of a burden to bear.
here’s the link again:
This is the purpose of my cite. Real incomes stagnant or decreasing as productivity consistently increased. Pretending tax laws account for the increase in the wage gap is, I’m sorry, silly, Cato notwithstanding (I can grant that the magnitude of the change may not be what is reported because of this effect). Productivity gains went somewhere. If they didn’t go to improving median real incomes, where did they go?
So yours is a moral position or an economic one? I’d like to clarify before I even attempt to wade through the rest of your comments.
Why is private spending efficient and government spending wasteful? If a billionaire spends fifteen million and a government program spends fifteen million, what evidence is there that the billionaire always made better choices than the government program? Face facts, most people just unquestioningly believe this is true because they’ve been repeatedly told it was true. By people who are, coincidentally, very rich.
The Free Market says that some people make good economic decisions and some people make bad economic decisions and competition between their ideas will allow the good to succeed over the bad. It does work overall but the premise is clear - some decisons were bad. So sometimes when a billionaire spends a few million dollars, he really is just wasting it. Being wealthy doesn’t make anyone perfect and incapable of error.
Most people have no problem with earned success. Nobody will say that somebody like Bill Gates or Warren Buffett doesn’t deserve the billions they’ve made. The grievances are with people whose main accomplishment was just showing up - people who are billionaires because they were born into a wealthy family. These people didn’t start the companies or take the risks or responsibilities or do any navigation. Most of them dedicate their efforts to preserving their fortunes - to ensure that nobody else founds a company that will significantly change the economy and possibly upset their place in it. Progress isn’t made by the people who started at the top; it’s made by the people who are trying to get to the top.
As products become more commodity items, productivity gains are more evidenced in the increased value they bring to the consumer. This works with non-standard/non-wage labor, too, but it’s easier to see in a commodity product. For instance, cars with traction control were priced as a higher option than those without on the same model. 8 years later, it’s standard on most cars (well, most of the ones that I was looking at 8 years ago), yet the price stays the same or is lower. Your cite does not disprove that people are buying better and better stuff. How much did a plasma tv cost 8 years ago? What drugs were more expensive but are now cheaper?
If utility/value is increasing, yet prices remain the same, either people are buying less or taxes and other costs are taking a hit on profits, or both. You can’t ignore the fact that taxes have a direct impact on income.
If the price for things stays the same or is lower, real income will stay the same or increase. My cite shows it has stayed the same/decreased.
While this is a good question, I don’t know the depth to which real income is plumbed. I must admit my ignorance here and appeal to the definition of inflation and real income as support that this effect is already included.
Thankfully, I didn’t.
This is the point I was making above. Money collected as taxes doesn’t evaporate. It gets spent just like any other money. People say that millionaires are serving society by throwing a big party because they’re giving money to caterers and musicians and bartenders and they spent it buying things. But if the government had collected all that money as taxes, it would have given it to policemen and school teachers and welfare cheats and they would also spend it buying things. Either way the money is still circulating and society as a whole receives the benefit. The only person who it made a difference to was the millionaire - society got the benefit of his money either way but he didn’t get to have his big party.
Not necessarily. My apologies for not being more clear. Let’s take another example: a machinist making parts/tools/etc. for a car. 8 years ago, he made X parts at $Y/hr. Now, he makes X+8 parts at the same $Y/hr. Is he not being more productive? Let’s assume the market for the parts slows down. The factory is now on reduced hours and are laying off. Of course, to be more productive, the factory keeps the more highly skilled employees. Now productivity goes to X+10 at the same $Y/hrs. Wages for overall society have now decreased. Productivity for workers have increased, but wages remain the same, or have decreased (because of reduced hours, and no overtime).
If the sample size is concentrated in manufacturing, wages will be sharply reduced due to economies of scale, particularly if innovation and technology are outpacing labor output. What we are seeing, and have been seeing since the dotcom days are massive increases in technology and capacity, and suppliers trying hard to justify workers’ existence, particularly in commoditized supply chains. This is also an indication of a workforce with diminishing skills.
Think of it another way: as products become more a commodity item, and technology limits skill in production to pushing a button, demand for skilled labor will decrease. As demand for skilled labor decreases, more unskilled labor will be able to join the workforce at lower wage levels.
Government intrusion on spending in the market place creates distortions. Some of them or benign or even helpful, but I think the law of unintended consequences belies the notion that government intrusion is overall helpful. Arguable, yes, but government spending also discounts the notion of the spender’s (in your case, the millionaire’s) utility. It’s his money, he should be able to spend it as he wants. Even discounting this argument, there is still a non-zero cost to government intrusion and redistribution.
What’s stopping you from starting your own business or going to law or business school? You (most people, not you specifically) mill about in the underclasses because you probably aren’t particularly smart or creative or talented at anything people would be willing to pay you a lot of money for. Or you don’t have that singleminded “dumbness” that let’s people excel in jobs like sales.
Most people float through high school with Bs and Cs. They go off to some nth tier college (if they are lucky) where they graduate middle of the bell curve in some major. Then they take whatever job they can get after graduating, grind it out for as long as they can take it and then maybe take a new job somewhere else. And they probably earn decent enough livings doing that.
Few people have what it takes to become wealthy and it’s not because some overclass is keeping them down.
Well, let’s see–I just spent a year working with a partner in a startup business. We have a good product, lots of potential, did the major R&D on a shoestring and made it to the prototype level. To get to production requires a major outlay of capital that neither one of us has. So we went courting financing. Found some, did some dancing around, and they sent us a contract. The contract says, basically, “We own this current product in every possible way AND any further product of any sort you might ever think up.” Then it went on with some interesting verbiage that basically said “We reserve all rights to do whatever we want, including this neat clause here that says we can overwhelm you with orders we know for a fact you aren’t ready to fulfill, then when you can’t do it we can take this neat idea you’ve been working on for years and since we own all the rights we can go have it made in China and there isn’t a fucking thing you can do about it.”
We revised the contract proposal to make it more evenhanded. They said “fuck you, take it or leave it.” We left it, and right now there’s dick-all of capital available to borrow, because those other greedy ass rich fucks screwed the pooch with credit default swaps and the entire economy is in the shitter. Rich fuckers who have nothing to offer other than money think they can get all the skull sweat and knowledge and work that others have done and take it, just because they have some money and they want more money. These aren’t people who can do dick themselves, aside from fuck others out of their hard work. Then if, out of desperation to get something going some poor bastard DOES sign the contract from hell, gets fucked in the ass and his idea stolen–guess who has all the money to pay for lawyers from now until doomsday? (HINT: It’s not the assfucked guy. He’s SOL.)
If you seriously think that life is a Horatio Alger book where gumption and sticktoitiveness and pluck are all you need to make millions, you’re living in a serious la la land. People point to Bill Gates as an exemplar of the self made billionaire–people who don’t know how he got the original DOS kernel in the first place. (HINT: He did not write it himself.) His is the most common way to get rich there is–find somebody smarter than you, take their idea because you get them to trust you and then stick it in and break it off. Then sue everybody else you think might be cutting in on your territory, no matter how specious that belief is. Because to a thief, everybody else is a ripoff waiting to happen.
Another hint for you–lawyers and people who go to business school do not get into the ranks of the uber-rich elite. They are hired hands, who might do well, but who aren’t good enough to get invited to the parties. They can be well off, well to do, comfortable, but they will seldom be mega-rich or running things unless they get lucky enough to marry the boss’ kid. The plucky entrepreneurs mostly end up either being bought out by a megacorp that’s threatened by whatever it is they’re building, or they end up sued into the stone age because a megacorp can hit them on patent infringement (after buying up applicable patents) or just hounded into the ground–he who has the most resources also has the most ways to make somebody else miserable, and usually also has the most desire to do so.
Also, some of those people go through high end colleges their parents pay for, get their “gentlemen’s C’s” and have their various peccadilloes ignored, then go into family businesses or businesses belonging to friends of their family, and continue to rise regardless of their complete incompetence because it’s inconceivable to these famillies that their scions might actually be totally useless wastes of flesh with the intellectual capacity of cherrystone clams. Besides, it’s child’s play to find whole hordes of much smarter people without rich families and pay them a relative pittance to act as glorified babysitters, making the stupid fair haired child of privilege appear competent. The chance of any of these smart, capable people who actually do the work ending up running the company? Zero. Zip. Zilch. Nada. Ain’t gonna happen–because they’re not the “right kind of people.” You know, rich.
But hey, if it makes you feel all warm and gooey inside to continue in your fantasy of America as the Land of Unfettered Opportunity–work out. It don’t befront me any.
Yes, that is the reason the cite gave for the data: job losses were heavy early on and later growth could not make up for this.
But this attributes job loss to productivity growth, which means that the wage gap really is increasing and the benefits really aren’t being shared.
But this is a real problem. Skilled laborers cannot be cranked out as fast as technology changes. Couple this with the notion that companies no longer show the same dedication to their employees as in the halcyon days of yore and you’ve got a real recipe for disaster. Instead of selling HDTVs we’ll be selling copies of Das Kapital. :eek:
Which seems like a problem.
You’re talking about a different issue. I was addressing spending not the marketplace. How is a dollar spent by a private citizen any different than a dollar spent by the government?
As for claiming a millionaire should be able to spend his money as he wants, you’re just invoking a right. Where does that right come from? All kinds of people claim all kinds of rights. Where do their rights come from? Whose rights have priority when there’s a conflict between them?