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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

#71

Post by mooreds »

adaml_623 wrote: post #32
kokey wrote: post #5

I always feel a number of important metrics are left out, either by accident or on purpose, when people talk about inequality. Most importantly when it comes to wealth itself, by most measures there is a very, very long tail of people with no wealth. 'No wealth' ranges from the most poor, to those living from paycheck to paycheck all the way to those who have as much debt as their assets. Many of these people are fin…

No I think you are wrong to want to include those metrics. You are including people who are probably in the bottom 80%. And they may be fine in the long run. Certainly a large mortgage is not a terrible thing if you can pay for it. And they may make it to CEO but statistically they won't. This article is about the top 0.1% and the fact that the slice of the pie owned by the 0.1% is increasing faster than the size of…

It is worth noting that this trend is actually more common in history then what we consider normal (a large middle class, moderate income inequality). See Piketty's 'Capital in the 21st Century' for a comprehensive look at wealth ownership over time.

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

#72

Post by Frondo »

dandare wrote: post #56
kjjw wrote: post #20

Earlier quoted context omitted.

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 wit…

Individuals alone do not produce economic output.

They always rely on people all around them who engage with them, the people who came before them that built up the pool they're swimming in, the people all around them who maintain the pool today...

That doesn't diminish any individual's own effort; but to ignore the world around any successful person, when talking about their success, is a little nonsensical.

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

#73

Post by RodericDay »

totalrobe wrote: post #57
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.

If you believe in equality of opportunity, parents should not be the main source of provision for children.

Every time someone mentions "who will provide for your children if you don't leave an inheritance behind?" I immediately have to ask, "what about all the children whose parents are not able to leave them an inheritance (ie: most of them)?"

It seems that it is you who have not really thought it out. Here's Adam Smith on the topic btw:

> "A power to dispose of estates for ever is manifestly absurd. The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural." Smith said: "There is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death."

http://budiansky.blogspot.ca/2010/10/adam-smith-thomas-jeffe...

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

#75

Post by warfangle »

Retric wrote: post #13
blfr wrote: post #3

Earlier quoted context omitted.

39% of Americans either believe they are already among the top 1% or believe that they one day will be And how many people will actually be in the top 1% of earners at least once? EDIT: 12% http://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-t... What’s more, 39 percent of Americans will spend a year in the top 5 percent of the income distribution Not that far off.

Lots of things can temporarily boost your income by consolidating several years’ income into one big payment. Sell a flower shop you built up over 40 years for 150k and you are clearly not doing that well. Gamboling can be a net loss over someone’s lifetime and give them one very good year. Even just swapping jobs and seeing getting a few months of saved vacation in one big chunk. The point is for the 88% of American…

Wait, where can you save vacation and receive that time as paid as one big chunk?

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

#76

Post by 300bps »

whybroke wrote: post #26
kokey wrote: post #5

I always feel a number of important metrics are left out, either by accident or on purpose, when people talk about inequality. Most importantly when it comes to wealth itself, by most measures there is a very, very long tail of people with no wealth. 'No wealth' ranges from the most poor, to those living from paycheck to paycheck all the way to those who have as much debt as their assets. Many of these people are fin…

>while the average worker can be anywhere in their career including eventually being a CEO one day From the article: > our indifference lies in a distinctly American cultural optimism. At the core of the American Dream is the belief that anyone who works hard can move up economically regardless of his or her social circumstances. Aside from the factual error in the notion that there's more social mobility in the US t…

there is a difference between "anyone can become CEO" and "everyone will become CEO"

I favor a system that guarantees equality of opportunity. I do not favor a system that guarantees equality of outcome.

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

#77

Post by metaphorm »

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…

this is a distraction. first off, why should we suppose we have "doubled the pizza"? I see no point in discussing abstract hypotheticals. We ought to stick to real world examples of the real world economy or else we're not really talking about anything meaningful.

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

#78

Post by dandare »

dbpatterson wrote: post #48
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.

So where did their wealth come from? Most likely, they made it through 'business' - which usually means, through benefiting from the work of other, significantly less paid workers. The fact that our economic and political system permits this (and to the extent that it does) is not some natural phenomenon.

Workers are paid significantly less because that is the value of their work on the free market. Anyway, the important thing is whether they have equal opportunity to leave their shitty jobs and start business themselves and earn more through their genius (or loose their savings in free competition on the market).

Our economic and political system (mixed market capitalism) may not be natural phenomenon (what is?) but majority of voters prefer it to other systems.

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

#79

Post by PythonicAlpha »

The wealth of the US at times shortly after the second world war came from the broad middle class. Today the wealth of the US is lying in the hands of the top 1% of the society. Something must have been happening in between.

In the European Union there is also a similar trend. There exist studies that today it is much more difficult for somebody coming from lower income (and society) levels to become rich than it was 40 or 50 years ago. There is nearly no exchange anymore happening, because today's rich can rely on the fact that their money will beget more additional money nearly automatically. Also times are over, where many people build their riches from scratch. Most rich people today are rich in the second, third or fourth generation today.

Low taxes on wealth and inheritance are doing their job. But also the fact that earning money by just having (enough) money costs less tax than hard working for money in Europe (in Germany, you will pay for your worked-for money (if you earn enough) up to ~40% on taxes and additionally you have to pay social security fees that can eat up an additional 20% (estimated) of your earnings. For money you got threw having money, you will today come away with 25% flat rate tax.

With such tax laws in action, you could come to the view, that letting work your money for you is more difficult than working in a factory and must be promoted by the state.

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

#80

Post by LordKano »

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're being short sighted.

Consider the time, money and effort that people put into avoiding taxes under the current system. You would exponentially increase their incentive to do so.

Let's think about what would happen if this were to become reality...

When wealthy people were approaching death, they'd simply give their money to their heirs and only incur a gift tax.

Do you propose that we ban monetary gifts between family members or friends?

In that case, they would just hire their next of kin as advisers and pay them increasing portions of their remaining wealth. Then, they would only pay payroll taxes.

So next do we ban hiring family members?

In that case, they could set up a corporation, sell stock to their heirs, dump their fortunes into making the company valuable and the stock owned by the heirs would skyrocket. They could cash out and only pay capital gains taxes.

Do you see where I'm going with this?

People will find ways to avoid burdensome taxes.

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