# Will the disparity of weath distribution destroy America? **URL:** \ **Category:** Great Debates\ **Created:** [April 12, 2011, 9:28am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068 "2011-04-12T09:28:22Z")\ **Posts on this page:** 20\ **Page:** 12
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [May 8, 2011, 5:22pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/221 "2011-05-08T17:22:46Z")
> [@BrainGlutton](#): > > The haves/have-nots divide was even sharper in the old British Empire – even within the UK proper – but I have never heard it cited as a cause of the Empire’s fall. That’s cause the “haves” write history, mate! ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [May 8, 2011, 7:14pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/222 "2011-05-08T19:14:46Z")
> [@emacknight](#): > > A healthy middle class is the single most important factor in a stable and functioning democracy. > > That leads to the next question: How do you get a healthy middle class? > > One half of society seems to say, “take money from the rich, give it to the poor, now you’ve got more middle class.” > > The other half of society seems to say, “All for upward mobility. A system that lets the rich get richer also allows the poor to get richer as well, now you’ve got more middle class.” Exclude middles much? How about this: enact laws and regulations that encourage the development of a healthy middle class? The natural result of unregulated capitalism is a wealthy oligarchy, who will trash the economy and the society in order to maintain their personal wealth even if it’s means their own downfall. We saw it in the 1930s, we saw it in the 2000s. We’ll keep seeing it until we address the real problem. The thing is, if you have capitalism going, you don’t have to worry about the wealthy. Capitalism will produce them, and their wealth will protect them. All this concern about the poor wealthy expressed by xtisme and others is misplaced, and useless. The wealthy do not need our help. They can help themselves. They are good at helping themselves. That is why they are wealthy. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [May 8, 2011, 8:10pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/223 "2011-05-08T20:10:31Z")
> [@Evil\_Captor](#): > > Exclude middles much? How about this: enact laws and regulations that encourage the development of a healthy middle class? Sure, what do you have in mind? > [@Evil\_Captor](#): > > The natural result of unregulated capitalism is a wealthy oligarchy, Right, which is why we’ve never had, nor ever will, have unregulated capitalism. And few are \*seriously \*suggesting it despite what ever rhetoric they choose to spew forth. > [@Evil\_Captor](#): > > We’ll keep seeing it until we address the real problem. Which is? > [@Evil\_Captor](#): > > The thing is, if you have capitalism going, you don’t have to worry about the wealthy. Capitalism will produce them, and their wealth will protect them. All this concern about the poor wealthy expressed by xtisme and others is misplaced, and useless. The wealthy do not need our help. They can help themselves. They are good at helping themselves. That is why they are wealthy. “Allow for upward mobility” was the statement I meant to write in that you quoted. A tide lifts all boats. Any system that allows everyone to get richer will benefit both the rich and the poor. Simply put, the rich are better at getting richer. But it also means that the poor have the ability to become lower middle class, and people in the middle class can move into the upper tax bracket. When you feel to you need to intervene at the top, it actually does have negative consequence for those at the bottom. Trying to slow down how fast the rich get richer will also hit the poor, making it even harder for them to get richer. If you want a strong and vibrant middle class you need the poor able to get richer. Like you said, the rich will be fine. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [May 8, 2011, 8:31pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/224 "2011-05-08T20:31:49Z")
> [@New\_Deal\_Democrat](#): > > We have never experienced a time when the over all standard of living declined as the rich got richer. The eventual political effects are difficult to predict. So far, there has been a move to the right. Millions of Americans face long term unemployment with little or nothing in the way of a safety net. There is no mass movement of the unemployed. The mass movement is the Tea Party. The Tea Party demands that the government does nothing to help the unemployed. The Tea Party did not start out as a mass movement. It was [pure astroturf in its beginnings.](http://www.guardian.co.uk/commentisfree/cifamerica/2010/oct/25/tea-party-koch-brothers) Now it has attracted disaffected baby boomers who want THEIR government programs protected and everyone else’s shut down, because that’s FAIR dammit! In short, the usual collection of self-involved baby boomers who can’t see beyond their noses. ---
**Author:** ![gravitycrash](https://avatars.discourse-cdn.com/v4/letter/g/977dab/32.png) [@gravitycrash](https://boards.straightdope.com/u/gravitycrash)\ **Post date:** [May 8, 2011, 8:51pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/225 "2011-05-08T20:51:52Z")
As a"dwindling middle class person", get back to me when I no longer see the majority of people living in trailer parks with a satellite dish and a nicer car than I have parked in front. In many cases people are stupid with money and are at their station in life because of the economic choices that they have made. People for the most part still have every opportunity to succeed in this country if they are willing to put the effort in. I’ve been hearing about the shrinking middle class since the seventies when I began paying attention so I guess there are lots of phantoms living in all of these middle class houses around me here out in the burbs. Bah. Also the definition of poor in this country is laughable but that’s another debate. ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [May 8, 2011, 9:20pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/226 "2011-05-08T21:20:56Z")
> [@gravitycrash](#): > > I’ve been hearing about the shrinking middle class since the seventies when I began paying attention so I guess there are lots of phantoms living in all of these middle class houses around me here out in the burbs. Bah. Or they’re lower-middle-class folks desperately trying to keep their head above water or defaulting on their ill-advised mortgages when all they wanted was a similar house to the kind their parents had at their age. I’m describing MY burbs with that. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [May 8, 2011, 9:38pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/227 "2011-05-08T21:38:14Z")
> [@emacknight](#): > > Sure, what do you have in mind? > > Right, which is why we’ve never had, nor ever will, have unregulated capitalism. And few are \*seriously \*suggesting it despite what ever rhetoric they choose to spew forth. > > Which is? > > “Allow for upward mobility” was the statement I meant to write in that you quoted. A tide lifts all boats. Any system that allows everyone to get richer will benefit both the rich and the poor. Simply put, the rich are better at getting richer. But it also means that the poor have the ability to become lower middle class, and people in the middle class can move into the upper tax bracket. > > When you feel to you need to intervene at the top, it actually does have negative consequence for those at the bottom. Trying to slow down how fast the rich get richer will also hit the poor, making it even harder for them to get richer. If you want a strong and vibrant middle class you need the poor able to get richer. Like you said, the rich will be fine. Wrong, wrong, wrong. When you get rich by being a successful capitalist, in an unregulated system you are deeply aware that you are vulnerable to the next really good capitalist. So you do the natural thing and look for ways to game the system in your favor. This generally means looking for the legislative body to pass laws to make things easier for you and harder for others. And since legislators always want money for political campaigning and you, being wealthy, have tons of money, you tend to succeed at getting those laws passed. Or unpassed. The proximate cause of our most recent economic recession was the repeal of “Glass-Steagal” back in Bill Clinton’s term. It was a law that kept banks from getting into speculative financial instruments like, oh, credit default swaps. Bankers got Phil Gramm and the Republicans to sponsor a bill to end Glass-Steagal on the grounds that they had lots of money, and got Democrats to vote for it on the same grounds. Bill Clinton then triangulated and signed it into law. Result: a go-go-decade for bankers, a fabulous era … followed by the Bush Recession. Classic gaming the system! Sure, we were keeping a bunch of bankers from getting wealthier with Glass-Steagal, but it was a GOOD thing, not a bad one. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [May 9, 2011, 12:16am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/228 "2011-05-09T00:16:29Z")
> [@Evil\_Captor](#): > > Wrong, wrong, wrong. When you get rich by being a successful capitalist, in an unregulated system you are deeply aware that you are vulnerable to the next really good capitalist. So you do the natural thing and look for ways to game the system in your favor. This generally means looking for the legislative body to pass laws to make things easier for you and harder for others. And since legislators always want money for political campaigning and you, being wealthy, have tons of money, you tend to succeed at getting those laws passed. > > Or unpassed. The proximate cause of our most recent economic recession was the repeal of “Glass-Steagal” back in Bill Clinton’s term. It was a law that kept banks from getting into speculative financial instruments like, oh, credit default swaps. Bankers got Phil Gramm and the Republicans to sponsor a bill to end Glass-Steagal on the grounds that they had lots of money, and got Democrats to vote for it on the same grounds. Bill Clinton then triangulated and signed it into law. Result: a go-go-decade for bankers, a fabulous era … followed by the Bush Recession. Classic gaming the system! > > Sure, we were keeping a bunch of bankers from getting wealthier with Glass-Steagal, but it was a GOOD thing, not a bad one. You can’t “game” an unregulated system. And the repeal of Glass-Steagal doesn’t mean an unregulated system. Are you aware of what unregulated means? You use it a lot and probably shouldn’t. People game the regulated systems, that’s what it means to game the system. The US has upwards of the highest corporate tax rate in the world, did you know that? Corporations pay about 34% tax on their profits vs just 18% in Canada. But the multitude of regulations, loopholes, and other nonsense allows corporations to game the system and pay less tax. I’m also not convinced you know what a credit default swap is, or how “regulation” would impact them. So the questions you have yet to answer: “enact laws and regulations that encourage the development of a healthy middle class?” Sure, what do you have in mind? “We’ll keep seeing it until we address the real problem.” Which is? ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [May 9, 2011, 3:03am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/229 "2011-05-09T03:03:45Z")
> [@Le\_Jacquelope](#): > > Well you do have one person on here who believes it’s justified because in his mind only 1 in 100 people generate wealth and everyone else is a bunch of “interchangeable carbon blobs”. Yes, and I also control American fiscal and economic policy. ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [May 9, 2011, 3:08am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/230 "2011-05-09T03:08:23Z")
> [@msmith537](#): > > Yes, and I also control American fiscal and economic policy. In that case, you mind writing me some tax breaks I can actually use? ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [May 9, 2011, 3:16am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/231 "2011-05-09T03:16:53Z")
> [@Zeriel](#): > > In that case, you mind writing me some tax breaks I can actually use? No. My girlfriend wants to go to Europe on vacation. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [May 10, 2011, 10:42am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/232 "2011-05-10T10:42:05Z")
> [@msmith537](#): > > Yes, and I also control American fiscal and economic policy. I kind of wish you did. We’d have collapsed already. The offshoring monkey would get flung right off our backs and the most fun part? You wouldn’t even be able to say it was because of those evil tariffs. I can see it now. Pro-offshoring fanatics pointing to the brand new America-based iPad factory, lamenting… “But this… this is _factory work_! Wouldn’t you rather be unemployed? What is up with all these American iPod software programmers and QA testers? Oh, the outrage! And… _gasp_ people making iPad hard drives and computer components _in America_? There are so many people working and not homeless… we’ll never see progress again in America. _sob_ Oh, the sheer job security, how horribly profane. And.. and.. what’s this.. an employee’s ma… mark… marke… _heart attack_” ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [May 10, 2011, 10:59am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/233 "2011-05-10T10:59:01Z")
> [@Le\_Jacquelope](#): > > I kind of wish you did. We’d have collapsed already. The offshoring monkey would get flung right off our backs and the most fun part? You wouldn’t even be able to say it was because of those evil tariffs. > > I can see it now. Pro-offshoring fanatics pointing to the brand new America-based iPad factory, lamenting… > > “But this… this is _factory work_! Wouldn’t you rather be unemployed? What is up with all these American iPod software programmers and QA testers? Oh, the outrage! And… _gasp_ people making iPad hard drives and computer components _in America_? There are so many people working and not homeless… we’ll never see progress again in America. _sob_ Oh, the sheer job security, how horribly profane. And.. and.. what’s this.. an employee’s ma… mark… marke… _heart attack_” Offshoring allows the untalented and stupid to work at places like Walmart and McDonalds. And best of all, they can afford to buy the products! Look, if you were a 300 lb high school dropout, would you rather be stamping bumpers in a hot auto factory or standing around the nice air conditioned housewares department? I don’t hear the smart, talented and educated complaining about outsourcing or having any trouble finding work. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [May 10, 2011, 11:20am UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/234 "2011-05-10T11:20:18Z")
> [@msmith537](#): > > Offshoring allows the untalented and stupid to work at places like Walmart and McDonalds. Ah, so computer programmers, pharmaceutical researchers and computer engineers are untalented and stupid? We’ve been shipping those jobs overseas, too. I see why you are so hell bent upon harping on manufacturing jobs - it allows you to deftly sidestep the issue of all the other higher-value industries, including knowledge-based work, where we’re also losing jobs. > [@](#): > > I don’t hear the smart, talented and educated complaining about outsourcing or having any trouble finding work. Obviously it is pointless to show you the [number of college grads out there with no jobs and a ton of debt](http://blogs.ajc.com/momania/2011/05/10/congrats-2011-college-grads-you-owe-22900/?cxntfid=blogs_momania), a situation which is approaching a crisis level. Especially since their existence completely destroys your insane argument and you’ll be forced to move a few goalposts to support what you just said. “College grads are no longer smart, talented or educated.” Yes, I already know where your goalposts have to move. 😃 This is almost as hilarious as your “interchangeable carbon blobs” epic fail and your “only 1 in 100 generate wealth - uh no wait, 5 to 10 out of 100!” blunder. You got called out on that by a number of people and you seemed to have taken a breather to let those missteps blow by. You never did explain what wealth the top 1%, or the top 5-10% (after you moved the goalposts) can generate if they have no workers to help them out. I don’t even expect your level of economic genius to understand how much wealth depends entirely upon the untalented, stupid masses and the demand that they create. To wit, what jobs will your talented, intelligent and educated people have if the so-called uneducated, dumb masses have no money? Where is their wealth then? Yes, I know, that’s a bit too complex. Feel free to not answer. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [May 10, 2011, 12:13pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/235 "2011-05-10T12:13:01Z")
> [@Le\_Jacquelope](#): > > Ah, so computer programmers, pharmaceutical researchers and computer engineers are untalented and stupid? We’ve been shipping those jobs overseas, too. My staff will be disappointed to hear that. I see why you are so hell bent upon harping on manufacturing jobs - it allows you to deftly sidestep the issue of all the other higher-value industries, including knowledge-based work, where we’re also losing jobs. > [@Le\_Jacquelope](#): > > This is almost as hilarious as your “interchangeable carbon blobs” epic fail and your “only 1 in 100 generate wealth - uh no wait, 5 to 10 out of 100!” blunder. You got called out on that by a number of people and you seemed to have taken a breather to let those missteps blow by. Yeah, I think that was mostly all you arguing. I don’t think I “took a breather” so much as I don’t really care and my attention wandered off to something else. And hey! There you are again! I also don’t find a need to debate every idiotic position on the internet. I actually do have stuff to do sometimes. > [@Le\_Jacquelope](#): > > You never did explain what wealth the top 1%, or the top 5-10% (after you moved the goalposts) can generate if they have no workers to help them out. I don’t even expect your level of economic genius to understand how much wealth depends entirely upon the untalented, stupid masses and the demand that they create. That’s like saying the harvest is dependent on a swarm of locusts. > [@Le\_Jacquelope](#): > > To wit, what jobs will your talented, intelligent and educated people have if the so-called uneducated, dumb masses have no money? Where is their wealth then? > > Yes, I know, that’s a bit too complex. Feel free to not answer. Their wealth will be safely stored in their money vaults so they can smoke cigars, wear tophats and monocles. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [May 10, 2011, 12:56pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/236 "2011-05-10T12:56:44Z")
> [@msmith537](#): > > My staff will be disappointed to hear that. A staff of one. I’m worried now. > [@](#): > > I also don’t find a need to debate every idiotic position on the internet. Least of all your own. You claimed that wealth is generated only by the top 1%. What wealth can be generated by the top 1% (or 5-10%, or whatever number your goalposts have moved to now) if no one else can buy their stuff? What wealth would Bill Gates have created if he had no workers? Actually, you were better off dodging these questions than coming up with this nutjob argument: > [@](#): > > That’s like saying the harvest is dependent on a swarm of locusts. So now the working class = a swarm of crop eating locusts. You fail economics forever and ever until time itself rolls over. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [May 10, 2011, 1:41pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/237 "2011-05-10T13:41:50Z")
> [@Le\_Jacquelope](#): > > I kind of wish you did. We’d have collapsed already. The offshoring monkey would get flung right off our backs and the most fun part? You wouldn’t even be able to say it was because of those evil tariffs. > > I can see it now. Pro-offshoring fanatics pointing to the brand new America-based iPad factory, lamenting… > > “But this… this is _factory work_! Wouldn’t you rather be unemployed? What is up with all these American iPod software programmers and QA testers? Oh, the outrage! And… _gasp_ people making iPad hard drives and computer components _in America_? There are so many people working and not homeless… we’ll never see progress again in America. _sob_ Oh, the sheer job security, how horribly profane. And.. and.. what’s this.. an employee’s ma… mark… marke… _heart attack_” For those following along at home, allowing international trade does not preclude anyone in the US from opening a factory and making a competing iPad. Or for that matter bidding on a contract with Apple to make the components current made in Japan. One of the many strawmen **Le Jacquelope** likes to create is this idea that people don’t want successful American factories. It’s all part of his larger strawman army that he thinks will vote in the next election. It’s all still about choice. Allowing international trade means that you as a business owners can set up a factory in the US or China. It means you can choose to sell stuff to Americans or the Chinese. It also means that if you’re most profitable venture is to produce the complicated stuff in Japan, the easy stuff cheaply in China, assemble it in Malaysia, then sell the final product to Americans, you can. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [May 10, 2011, 2:02pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/238 "2011-05-10T14:02:51Z")
> [@Le\_Jacquelope](#): > > A staff of one. I’m worried now. You’re right. I’m not including the team in India. > [@Le\_Jacquelope](#): > > So now the working class = a swarm of crop eating locusts. You fail economics forever and ever until time itself rolls over. Well…they aren’t really “working” anymore are they? LOL:D ---
**Author:** ![New\_Deal\_Democrat](https://avatars.discourse-cdn.com/v4/letter/n/9d8465/32.png) [@New\_Deal\_Democrat](https://boards.straightdope.com/u/New_Deal_Democrat)\ **Post date:** [May 10, 2011, 3:06pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/239 "2011-05-10T15:06:31Z")
> [@msmith537](#): > > Well…they aren’t really “working” anymore are they? LOL:D What are you laughing so loudly about? 😕 You obviously do not care about those on the wrong end of the growing income divide. A true conservative who cared about the health of American society would care. Pat Buchanan wrote, “Conservatives should ask themselves what they are trying to conserve.” ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [May 10, 2011, 3:54pm UTC](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068/240 "2011-05-10T15:54:44Z")
> [@emacknight](#): > > You can’t “game” an unregulated system. You “game” it by regulating it. Place a tariff on sugar to prevent foreign exporters from competing with you, that sort of thing. > [@](#): > > And the repeal of Glass-Steagal doesn’t mean an unregulated system. Of course not, the market was regulated prior to the repeal of Glass-Steagal, but Glass-Steagal was a CLASSIC regulation that prevented a certain group from engaging in some kinds of financial activity, for the benefit of the entire system. > [@](#): > > Are you aware of what unregulated means? You use it a lot and probably shouldn’t. It is shorthand I use for the capitalist theory of how the market works. The basic theory is, before there is regulation, there is trade. I got three fish, I want a chicken. You got a chicken, you want three fish. Or maybe only two fish. We swap, we barter. Taken as a whole in a society, these trades constitute an economy. We meet at the local crossroads to trade our chicken, fish, and what-have-you and we have a market! Information theory is then involved … I learn that NOBODY is giving three fish for a chicken, two at MOST is the going price, and suddenly, I’m not willing to make that three fish for a chicken trade. This is an unregulated market in capitalist theory. The basic idea is, a system like this will automatically do the best job of establishing prices for goods, rather than some guy in a palace reading entrails of sheep or economics texts and telling everyone how many fish a chicken is worth, because in the aggregate, people will work out what they most need and what they can afford and can’t afford. It’s a logical, sensible theory, that’s why it works. Even an unregulated system like this needs a legal framework, primarily, laws/customs assuring the right to own property, otherwise, next time we meet I will club my former trading partner over the head and take his chicken, leaving me with three fish AND a chicken, and him with nothing. Zero sum game, man. Very bad. So I get tossed in jail if I do stuff like that. A legal framework to make free trade possible. And a form of regulation … no stealing! … so THOROUGHLY violated throughout the history of capitalism … but still utterly necessary. In short, totally unregulated markets don’t exist, but generally market regulation involves rules that affect the prices or ways in which trades may be conducted in an economy, such as tariffs or the rule requiring full financial disclosure for publicly traded company (so people will have good information on what is being traded, another rule that is regularly violated, see the IPO scandals for an example). Conservative economists believe that the less regulation, the better, as a general rule, in any market, that regulation tends to distort the market especially where it directly affects prices, such as with tariffs, taxes, etc., interfering with its efficiency, even if they do heartily support some forms of regulation like property rights. That’s why you frequently hear a great wailing over any proposed tax, tariff, etc. Bad by definition, in their eyes. > [@](#): > > People game the regulated systems, that’s what it means to game the system. The US has upwards of the highest corporate tax rate in the world, did you know that? Corporations pay about 34% tax on their profits vs just 18% in Canada. But the multitude of regulations, loopholes, and other nonsense allows corporations to game the system and pay less tax. I guess I should say MINIMALLY regulated system, and possibly more, but I didnt realize I was in Econ 101 class. And yes, corporations have learned their tax rate really does not matter as long as they got those loopholes. What was Google’s actual tax rate? Two percent? Nice! I wish I could get taxed at that rate! They game the system like mad. [quote] I’m also not convinced you know what a credit default swap is, or how “regulation” would impact them. [/qoute] Well, here’s what Wikipedia has to say about credit default swaps: > **[Credit default swap](https://en.wikipedia.org/wiki/Credit_default_swap)** > > A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default (by the debtor) or other credit event. That is, the seller of the CDS insures the buyer against some reference asset defaulting. The buyer of the CDS makes a series of payments (the CDS "fee" or "spread") to the seller and, in exchange, may expect to receive a payoff if the asset defaults. > In the event of default, the buyer of the credit default swap re... I have a much simplified explanation: Let’s say I make a deal with you: I’ll pay you $5 bucks for your bundle of mortgages from Riskytown USA. But … I’m worried that the mortgagees might not pay off and those mortgages will become valueless if they don’t. So I want some kind of insurance. So Goldman Sachs says, hell, we’ll do a credit default swap … I’ll pay off the liability of the loan if it doesn’t work out, in return for $1. It’s like insurance! Only it’s not … cause Goldman Sachs then lets anyone bet on this viability of the loan between me and you. And Cecil, Le Jaquelope, olivesmarch, Captain Amazing, and a whole HOST of Dopers, being sharp-eyed speculators, get in on the action, and the $5 mortgage bet suddenly has $5000 worth of speculation attached to it! That’s credit default swapping for you. That’s what amplified the mortgage market collapse into a recession. And financial speculation like THAT is exactly what Glass-Steagal kept banks from becoming involved in! > [@](#): > > So the questions you have yet to answer: > > “enact laws and regulations that encourage the development of a healthy middle class?” > > Sure, what do you have in mind? > > “We’ll keep seeing it until we address the real problem.” > > Which is? the real problem is that capitalism produces winners and losers, the winners game the system so they remain perpetually on top and the losers remain perpetually on the bottom, and we have a capitalist oligarchy running things. the laws … I’ve wasted enough time on that today. I’ve answered the question several times on other threads. Basically, we should do all we can to promote a healthy a middle class by gaming the system in their favor, combatting the efforts of the wealthy to divide the economy into the rich (them) and the poor (us). [Previous page](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068.md?page=11) [Next page](https://boards.straightdope.com/t/will-the-disparity-of-weath-distribution-destroy-america/578068.md?page=13)