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Economic Inequality: It’s Far Worse Than You Think

scientificamerican.com

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Re: Economic Inequality: It’s Far Worse Than You Think

#51

Post by adamc »

proveanegative wrote: post #27

I think the popular conceptualization of economic inequality (effectively, "inequality is suffering") is misleading because it doesn't take marginal utility into account. What I mean is, take the pizza-dividing example and suppose we have doubled the pizza. The inequality (expressed as the ratio of pizza owned to the available total) would stay the same but those with the smallest part of the divide would be noticeab…

"...in a world where a minimum slice of pizza was a birthright of a citizen."

We do not remotely live in such a world, or even such a country. (I'm referring to the U.S.)

Re: Economic Inequality: It’s Far Worse Than You Think

#52

Post by SigmundA »

thecopy wrote: post #22
ghouse wrote: post #14

Earlier quoted context omitted.

Well, but it also does not mean that he didn't take anything from me. Generally, the US tax code is designed in such a way that capital begets capital. Put differently, if you make money passively from the money you already have, you pay a lower tax rate then if you haul brick on your back, or teach children. Is this taking? No, not directly, but indirectly, sure.

I would argue that the state is taking, not the rich (which are not the only people with money invested in the market).

That would be like arguing your landlord is taking your rent.

Re: Economic Inequality: It’s Far Worse Than You Think

#53

Post by whybroke »

Thriptic wrote: post #35
snarfy wrote: post #25

The estate tax should be near 100%. We do not need dynasties. I don't mind people making the wealth, but they can't take it with them. It shouldn't just transfer to their children.

What is the incentive to continue working once you hit a threshold to comfortably retire with a good quality of life then? Might a 100% inheritance tax remove significant capital from the markets which would affect growth? In this scenario, what is stopping people from transferring all of their money to their children before they die at a much lower tax rate? How would assets like real estate be handled?

You assume that such wealth was earned in the first place which is rarely the case and is less so every year. The meritocracy is broken and will be so exactly to the degree that there is inheritance, the two are directly connected.

Inheritance is the exact definition of anti-meritocracy.

Re: Economic Inequality: It’s Far Worse Than You Think

#54

Post by mason240 »

tormeh wrote: post #31
dandare wrote: post #4

The fact that someone is rich does not mean he took anything from you, no matter how poor you are. Statements like "If poor people knew how rich rich people are, there would be riots in the streets" are not only stupid but also dangerous.

The allocation of money is about the same as the allocation of the economy's output. Someone's getting more out of it than others. If "him" disappearing from the economy would damage the economy more in dollars than he earns, then he's not taking your money. Otherwise he is. My guess is that the filthy rich add orders of magnitude less to the economy than they take out. Warren Buffet and Steve Jobs are probably excep…

This view seems to come from the mindset that the output of the economy is static and that there is a fixed amount of wealth.

Re: Economic Inequality: It’s Far Worse Than You Think

#55

Post by spuz »

jplahn wrote: post #23
spuz wrote: post #15

Is it just me, or does the article contradict its own conclusion? > They asked about 55,000 people from 40 countries to estimate how much corporate CEOs and unskilled workers earned ... the patterns were the same for all subgroups, regardless of age, education, political affiliation, or opinion on inequality and pay > One likely reason for this is identified by a third study, ... that suggests that our indifference l…

I think the keyword is "indifference." While everybody miscalculates the CEO - unskilled pay ratio, the article is implying the indifference caused by "American cultural optimism" is what prevents us from changing it.

That may well be true but there is a difference between 'ignorance' and 'indifference'. The former is relatively easy to measure but the second is not. In fact the study on social mobility that supposedly demonstrates this indifference doesn't mention the word. It simply shows ignorance of American's understanding of social mobility but does not compare these findings with populations from other countries.

Let's say that American's perception of social mobility was found to be significantly skewed relative to that of other populations'. Would that show more or less indifference? You could argue that the 'American Dream' cultural thinking leads more Americans to believe that the poor can become rich and at the same time more passionate about ensuring that that is indeed the case. The fact that it blinds them to the reality does not imply that they don't care.

Re: Economic Inequality: It’s Far Worse Than You Think

#56

Post by dandare »

kjjw wrote: post #20
dandare wrote: post #4

The fact that someone is rich does not mean he took anything from you, no matter how poor you are. Statements like "If poor people knew how rich rich people are, there would be riots in the streets" are not only stupid but also dangerous.

The fact that someone is rich does not mean they took anything from 'you'. But the fact that there is such a disparity between their income and your income means they claim a much larger part of the economic output of the planet, and a much larger part of any increase in that output.

The planet does not produce economic output, individuals do. In totally free market everyones output would be proportional to his work x talent x luck. The market is not free and the rules are skewed but that does not mean inequality is on its own bad or that we should eat the rich. You still have democracy, you may blame the rich but in fact 60% of voters don't even bother to come (and most of those who do agree with tax cuts for the rich anyway).

Re: Economic Inequality: It’s Far Worse Than You Think

#57

Post by totalrobe »

snarfy wrote: post #25

The estate tax should be near 100%. We do not need dynasties. I don't mind people making the wealth, but they can't take it with them. It shouldn't just transfer to their children.

You haven't quite thought this out. Young parents die too, and children need to be provided for.

Re: Economic Inequality: It’s Far Worse Than You Think

#58

Post by knowaveragejoe »

"Work hard enough" doesn't mean the same thing it did in the middle of the 20th century. The amount of resources available to the everyman today is orders of magnitude larger, be it tips on frugality or ways to supplement income. They don't really expand upon it in this piece, but it feels like they're using it in the "older" sense, i.e. simply working your job dutifully and being conservative with your money.

Re: Economic Inequality: It’s Far Worse Than You Think

#59

Post by adaml_623 »

j09jfdasj2 wrote: post #50
ghouse wrote: post #14

Earlier quoted context omitted.

Well, but it also does not mean that he didn't take anything from me. Generally, the US tax code is designed in such a way that capital begets capital. Put differently, if you make money passively from the money you already have, you pay a lower tax rate then if you haul brick on your back, or teach children. Is this taking? No, not directly, but indirectly, sure.

Apples and oranges. Ordinary income is not capital gains. If you buy your first stock, you are using money that was already taxed at the ordinary income tax rate.

You are forgetting that trust funds step around the income tax 'problem'

Re: Economic Inequality: It’s Far Worse Than You Think

#60

Post by JanneVee »

dandare wrote: post #4

The fact that someone is rich does not mean he took anything from you, no matter how poor you are. Statements like "If poor people knew how rich rich people are, there would be riots in the streets" are not only stupid but also dangerous.

Well the statement is not about logic. It is about revolution.
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