Wait–are we talking about income, or wealth? I could have sworn we were talking about wealth …
[quote=“Bosstone, post:18, topic:551553”]
Louis CK sums it up best with the way banks function:
I couldn’t have said it any better myself. Take a place where everyone has $100,000 and they’ll generally be pretty happy with the wealth they have. But put a multi-zillionaire into a place where everyone else has $10,000 and he’ll do everything necessary to take everyone else’s $10,000 and put it in his own bank account.
Bernie Madoff was already extremely wealthy before he started a massive ponzi scheme to steal money from various charities and middle-class Jewish Grandmas.
The Walmart heirs already had billions and were earning millions per day from dividends before they decided to wage war against American producers and demand that nearly all the stuff they sold be made in sweatshops.
The executives of AIG, Citibank, and other major financial companies were already among the richest people on the planet before they decided to run enormous financial scams that plunged the whole world into the worst financial crisis in 70 years.
etc…
There isn’t enough wealth to go around. Economics may not be a zero sum game, but if nearly all the growth goes to the top that leaves everyone else squeezed. The result of that is a society full of medical bankruptcy, debt and foreclosures like the one we have now. Almost all the wealth created since the mid 70s has gone to the top. So everyone else has higher expenses but stagnant wages.
Even if we had far far more resources and those at the bottom still had enough wealth you still have the undemocratic factors of a small handful having so much power to control a nations fate. In the 2008 presidential election several million small donors donated about 1 billion to various politicians and activist funds. But one billionaire can write one check and cancel all of that out. So you make it very easy for the wealthy, powerful and connected to change the socioeconomic and political system to serve themselves, which spirals the situation even more. Eventually you have a grassroots rebellion.
Wealth is everything that people can buy with money. How much wealth a person has is related to the total amount of money they have earned to date, so their income is a fairly decent measure. Or at least you certainly can’t have more wealth than all money you’ve earned to date unless people really really like giving you lots of non-monetary goods for no particular reason. While such a person might exist, he’s certainly not the norm.
inheritance.
Ever heard of investment?
Leaving aside the issues others have mentioned, there’s also the fact that cost-of-living is not some fixed objective item. It’s based on the total amount of capital in circulation. So somebody else’s wealth does make you poorer. The fact that he’s got a lot of money to spend causes prices to rise and you have to pay those same prices even though you don’t have his wealth.
The problem is that the 1% didn’t earn that money. They control the system that requires everybody else to funnel their a percentage of their efforts into the hands of a few. Look money. A government responsibility is to provide the monetary system that allows everyone to engage in commerce. But in the modern world somebody takes a percentage of every transaction. Try finding a job where you can get paid in cash, they are almost non-existent. Even if you don’t use credit/debit cards you will have to give up a portion of your income to get your check cashed. The best example is the money supply. No body can explain the reason that a few select ‘banks’ are allowed to borrow money from the government at a discount rate, and then everyone else has to pay them interest to get that money. Why can’t I borrow money from the government? I have a better credit history than those banks. Look at the annual federal budget omnibus bill. That stack of paper that resembles a set of phone books is full of laws to funnel our tax dollars into the hands of the rich.
The big joke on top it all. The rich have convinced so many people that the tax system is unfair because the top 10% pay 40% of the income taxes. Odd point of view, because they take in 90% of the money.
IMO, our basic Calvinist beliefs about money, which have been handed down mostly unspoken through the centuries, stop us from feeling that wealth concentration is all that wrong, or at least all that remediable due to human nature.
Calvinist doctrine says that if you succeed at anything, it was predestined: ie, God deemed you deserving all along. This easily leads to rich people being more deserving than the middleclasses, who are more deserving than the poor.
Calvinist belief is still influential because even nonreligious people construct rationalizations along the same model: the wealthy must be extra hardworking or doing something useful; the poor must be stupid or immoral about money, blowing it on booze, bawds and races; etc etc etc.
The biggest problem with this thread is that the number quoted isn’t even close to being true. I’m quite shocked that no one in this thread has challenged the OP’s numbers, since they are so far from reality.
The top 1% in America actually have about 35% of the wealth. Even if you go all the way down to the top 10%, they still only have about 69% of the wealth. And this is not so different than other major countries. In Switzerland the top 10% have 71% of the wealth. In Denmark, it’s 65%. France, 61%.
What you find is a relationship close to Pareto’s rule: about 80% of the wealth is held by 20% of the population. This suggests that roughly 80% of the country’s productivity comes from 20% of the population. I find that easy to believe, and I also don’t think there’s anything wrong with it.
Which is an excellent way to distract us from the issue at large: much money concentrated in few hands.
That is so wrong on so many levels it’s not even funny.
That 20% are not really creating the wealth. They don’t make the products, pack the boxes, drive the trucks, make the raw materials, settle invoices or deal with customers. they don’t generate anything on their own. They oversee.
It is called exaggeration for effect.
Why should you care? How about political unrest, insurrection , rioting and a few other themes like that. How about a crumbling infrastructure and people starving.
Yeah, facts are such an inconvenience. Who cares if the bottom 99% of the people have only 1% of the wealth or 65%? This is a mere trivial detail. A distraction from the important task of thinking about how to take the money from people who have more than you do.
No, it’s called making shit up because it matches your biases and helps create the political unrest and rioting you’re talking about.
I don’t think you have the foggiest notion of what creates real wealth.
I’m not denigrating people who drive trucks and make the raw materials and settle invoices. Fine, honorable jobs all, which deserve respect. But desperately poor countries also have people who drive trucks or toil in the fields or haul water or do other labor. Wealth is not labor. Labor by itself does not create wealth. That was Marx’s prime fallacy.
Wealth is created from the invention of processes, from the accumulation of capital and its use to build things in quantity. Wealth comes from risk taking and a willingness to try things and succeed or fail. Wealth comes from the emergent order resulting from billions of tiny improvements in productivity created by trial and error in a large marketplace of ideas. Wealth comes from being able to concentrate and use energy in large quantities to transform things from low-value use to high-value use on a large scale.
When you look at GDP growth in a country, it may look like a smooth number - millions of people just working hard and making things more valuable. But you don’t have to dive very far down into the guts of an economy to see where GDP growth comes from. It comes from someone figuring out how to save 10% of material from a common widget by using an innovative stamping pattern. It comes from the hard work of some engineers to figure out how to reduce waste on an assembly line by 5%. It comes from a person with a cool idea for an auction web site having the balls to go out and raise millions of dollars to try to make his vision come true. It comes from oil companies spending millions of dollars to explore for new sources of oil. It comes from the office manager who figures out how to streamline the paperwork process to save a couple of hours of labor per week. It comes from the replacement of 100 workers in a factory with ten robots that work twice as fast. It comes from the software engineer who figures out a user interface that shaves 10% off the time it takes for an operator to enter the values for a material test. It comes from efficient division of labor and comparative advantage - free trade between people and between countries.
The Pareto rule tells us that 20% of the population will be responsible for 80% of the gains in productivity. And 80% of their gains will come from the top 20% of that group, and so on. This rule is remarkably constant across a wide range of disciplines. It comes up all the time. Any time you do a root cause analysis of a complex system and draw a Pareto chart, that relationship is usually there. 80% of the bugs in software come from 20% of the code. 80% of sick days are caused by 20% of workers. 20% of working activities create 80% of the value of the worker.
In Project management, 80% of the project’s time is consumed by 20% of the features. Did you know that typically 80% of a company’s sales come from 20% of the sales force? And that if you look at the inventories of most companies, you find that 80% of their inventory comes from 20% of suppliers, and that 20% of their products take up 80% of the space?
This 80/20 relationship is called Pareto’s rule, and it holds across a wide variety of complex systems, including wealth creation. In fact, Pareto’s Rule was formulated by Vilfredo Pareto, an Italian economist. He discovered it while trying to understand wealth inequality in Italy, where 80% of the people had 20% of the wealth. In 1906. Amazing how that’s virtually the same number for America today and close to that for many other countries. This is because it is a reflection of reality - of fundamental principles of how distributions happen in a complex system.
This is important to remember when you start talking about redistributing wealth. If wealth truly is arbitrary and is held by the top 1% simply because they are ruthless and greedy or because the deck is stacked such that they can hold onto it without creating real wealth, then it would follow that taking the money away from them won’t hurt anything.
On the other hand, if 20% of the population has 80% of the wealth because they truly are the ‘vital few’ (in Pareto’s words), then you’re killing the goose that lays the golden eggs by reducing the incentive for your most productive people to continue to be productive. The history of wealth redistribution suggests that the latter is more true than the former.
I wonder what would happen if the 80% went on strike compared to the 20% if they stayed home?
Exaggeration for effect is another way of saying “lying.”
Crumbling infrastructure and people starving are both problems, problems that should be remedied, but I’m not sure how that’s related. That’s a case for more overall taxes, not more taxes on rich people.
As for political unrest, insurrection and rioting – fuck 'em. I wont be told what’s right or wrong under the threat of violence and insurrection. Insurrection wasn’t enough to “free” The South, and the threat of it shouldn’t be enough to prevent the government from making logical, reality based laws and tax codes.
You shouldn’t care. And the fact that you can’t figure out why you should care is a very good sign. One of the worst traits common to liberals everywhere is an obsession with other peoples’ money. You know how we could reduce political bickering in the world by … oh, I don’t know … about 99%? If liberals would just finance their political agenda out of their own pocket and not out of everybody else’s pocket.
It’s a damn shame that more people don’t think like you do. You sound like a guy who has his head screwed on straight.
Wikipedia article on the Pareto principle, aka the Rule of 80/20 or the Law of the Vital Few.
The writer does call it a “rule of thumb.” S/he also says that “There is nothing special about the number 80% mathematically, but many real systems have k somewhere around this region of intermediate imbalance in distribution.” Not all, not even most, but merely many.
I think this is more what social-welfare-minded administrations have in mind than what you describe just below.
More true, or more often true? How about some quick examples from that history? Would you say it’s possible to sort out the greedy from the productive by progressive policy, or is that a slippery slope to central planning?
And I realize no one in a discussion of economics gives a wet shit about social or moral attitudes, even when they concern money, but I would still like some reaction yea or nay about what I think ix our basically Calivinist money morality.