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Economic Inequality: It’s Far Worse Than You Think

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

#161

Post by Frondo »

nap wrote: post #149
metaphorm wrote: post #147

Earlier quoted context omitted.

you're probably not going to convince a lot of people that taxing is robbery. that's an incredibly extreme point of view that is completely at odds with living in a developed industrial nation.

Is property rights completely at odds with living in a developed industrial nation? When you're threatening to force people to give up their property - it's a robbery.

Living in a developed industrial nation, with all the benefits that incurs, and not paying for it? That's freeloading.

There's no moral standing in skipping out on the bill for something you're getting.

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

#162

Post by NoMoreNicksLeft »

cgearhart wrote: post #155
NoMoreNicksLeft wrote: post #125

Earlier quoted context omitted.

It's unclear that the mechanism you describe behaves as you claim. Supposing that it's true that a college degree confers (typically, on average, whatever) an extra million over a lifetime career, what would happen if everyone did attend college? Would that effect remain? If college educations become more common, they also become less scarce and valuable. You talk about how affordable it was in the 1960s, but this is…

The Supply/Demand analysis of college degrees assumes that education is a fungible commodity. In some ways that's true -- because many technical skills developed in pursuit of a degree are intended to be generally applicable. But there is also broad economic value in an educated population beyond the instantaneous value of the credential. A college education is about creating value by obtaining an education. The cent…

> But there is also broad economic value in an educated population beyond the instantaneous value of the credential. A college education is about creating value by obtaining an education.

Even if we assume this is true, none of your claims follow.

If it costs X to educate 10% of the population, it takes more than 2X to educate 20%. And that's only if the population is static. The population has increased since 1960, especially in the demographic we're discussing.

It's not so bad down in the 10% and 20% range, but once we start talking about universal college, it quickly becomes expensive.

> The central challenge of college today is not that everyone is going, but that everyone is going into so much debt to do it.

Costs have ballooned. No longer is it some spartan experience for the nation's managerial and elite classes, before they run off to their lives of gold-plated yachts and spas where they bathe in the tears of orphans.

Now college is something everyone's entitled too, and the dorm rooms no longer pack 4 students into something that looks like a closet. All those new buildings... someone must pay for them.

The price would be roughly the same even if those weren't paid with by loans, but rather with grants.

And since there is no relief from lowered enrollment, prices will stay high.

> Most people will be able to service their debt (in part thanks to the higher average earnings they'll realize),

Only the graduates. You should look at how many drop out after $20,000 or $50,000 worth of student loan debt. This number is significant, I do not know if it's half, but it's close enough.

This isn't a problem that can be fixed with "but those goshdarned republicans broke things, we need to return to the 1960s-era quasi-socialism and it will all go back to normal!". Those policies worked because so few attended college, attended colleges that were much different (and fewer) than today, and were already well within the upper middle class anyway.

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

#163

Post by yourapostasy »

ryandrake wrote: post #85
fullwedgewhale wrote: post #11

The point of the article is that the meritocratic system in this country is broken. In part this is because we have systematically transferred wealth out of the bottom to the top. For example, focusing on tax cuts that benefit high income individuals while cutting support for public colleges. These two things are usually done at different times with tax cuts usually to stimulate the economy and spending cuts coming t…

I'd build on that to point out that the systematic transfer of wealth from the bottom to the top is not something that "we're doing", but simply the natural product of capitalism. It doesn't require an evil mustache twirler sitting in a dimly list room scheming about how he's going to systematically conduct a massive wealth transfer. Wealth transfer is the natural result of any system that rewards the deployment of c…

This class of emergent behavior hypothesis of capitalism is a good point, but too much emphasis upon this behavior risks absolving and abdicating the agency all participants possess in democratic settings. It has always been pointed out that republican-type democracy only functions when both represented and representing participants continuously, actively engage the system and each other, making changes cautiously and introspectively. More than the economic system alone is broken; the political context it takes place within is arguably also severely missing vital transmission functions.

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

#165

Post by LordKano »

ryandrake wrote: post #107
LordKano wrote: post #80

Earlier quoted context omitted.

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 betwee…

Your points are good. I think most people can agree that dynastic wealth is a social ill, but good luck trying to devise a loophole-free way to stop it. But the IRS is not fooled by things that look like a duck, swim like a duck, and quack like a duck. For example, they catch employers who try to pass off employees as contractors. I think if there was political and cultural will, our society is capable of stopping pe…

It's a losing proposition to even try to stop people from passing their wealth to their offspring.

People will tolerate some taxation but once it becomes too burdensome, they will find ways to avoid it.

That's the biggest problem with using tax policy for social engineering.

We would see an unprecedented expatriation of wealth.

If someone has a billion dollars worth of assets that they know will be confiscated by the US Government upon their death, they wouldn't keep it in the US. They'd structure their finances in such a way as to make it impossible or impractical for the US to get anything.

One could become partners with (for example) a Costa Rican shipping magnate in a company located in Costa Rica so that upon their death, the US government won't get any liquid recompense. Sure, they can take that 49% ownership in the hypothetical Costa Rican company but then they have to find a buyer. Who's going to pay dollar for dollar to the US government for an asset that is only useful as a wealth sink?

Do we ban foreign investment? What happens when the rest of the world retaliates and bans their people from investing here? Do we require government oversight for all investment decisions? That will certainly cure the problem of there being too many rich people. It'll make everyone poor.

The only way to prevent the generational acquisition of wealth is under a totalitarian regime and that is a far worse problem than modern day robber-barons.

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

#166

Post by kzhahou »

We have an inequality problem in our own backyard: the disparity in equity between CEOs, SVPs/upper management, and rank-and-file employees.

I remember all the stories of how google made 1000 millionaires at IPO. Wonderful! They built a powerhouse and were rewarded. But Larry and Sergey had BILLIONs between them. Possibly more than all the rest combined. Two people (plus throw in Eric Schmidt and whoever else).

We all just accept this huge inequality and take it for granted, spouting some rationale about risk, etc. I do believe the founders and earlier people should have higher reward, but not at such extremes.

Every time an engineer joins a startup as employee #5 and accepts .5% of the company, they are promoting this huge discrepancy.

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

#168

Post by was8309 »

ryandrake wrote: post #2

And, it's only going to get worse while [1] 39% of Americans either believe they are already among the top 1% or believe that they one day will be. If your mentality is one of "Don't tax the top because that's me (or will be)", you're going to constantly vote against your own economic self-interest, and continue to support policies that help the real rich get ultra-rich. 1. http://www.nytimes.com/2003/01/12/opinion/t…

an admittedly cynical view is that we can be sycophants and cowards, and so we want to feel that we belong in the most powerful group. I think this is why some of us bash welfare, even though there isn't much evidence of fraud. if a little steals my one dollar bill and runs one way and a big guy steals my hundred bill and just stands there laughing, I turn and run after the little buy screaming 'Thief'! we know we've been robbed, but we're too afraid to confront the big guy

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

#169

Post by cgearhart »

NoMoreNicksLeft wrote: post #162
cgearhart wrote: post #155

Earlier quoted context omitted.

The Supply/Demand analysis of college degrees assumes that education is a fungible commodity. In some ways that's true -- because many technical skills developed in pursuit of a degree are intended to be generally applicable. But there is also broad economic value in an educated population beyond the instantaneous value of the credential. A college education is about creating value by obtaining an education. The cent…

> But there is also broad economic value in an educated population beyond the instantaneous value of the credential. A college education is about creating value by obtaining an education. Even if we assume this is true, none of your claims follow. If it costs X to educate 10% of the population, it takes more than 2X to educate 20%. And that's only if the population is static. The population has increased since 1960,…

> ...none of your claims follow.

That was my claim. To wit, that a college education is more valuable than the credential.

> If it costs X to educate 10% of the population, it takes more than 2X to educate 20%.

Why would the cost of providing education to more people increase as a multiple of the baseline costs?

> And since there is no relief from lowered enrollment, prices will stay high.

Restricting enrollment would increase costs as there is more competition among prospective students for the service. Students would have to outbid each other, not merely outperform each other to secure a spot.

> Now college is something everyone's entitled too... [sic]

An education is what we should entitle them to. As you note, colleges have been locked for decades in a competition for students by investing in new buildings, amenities, and sports with no regard for the effect on costs because of the price inelasticity of demand. And it has been a safe investment because student loans & grants have been so readily available.

The best price controls available to us are exercised by holding the institutions accountable for certain outcomes (like excessive dropout & loan default rates), by providing an equivalent service at a lower cost (something like Obama's "free community college" option), and by making student loan debt dischargeable like most other debts. The ready availability of capital is part of what has driven up costs.

> You should look at how many drop out after $20,000 or $50,000 worth of student loan debt.

The national graduation rate was approximately 60% in 2012 [1], while the national student load default rate was 13.7% in 2014 [2]. Students who do not graduate are several times more likely to end up in default, but it is still a manageable risk overall for investors because student loans are so difficult to discharge and because most people will eventually pay them back, and still worth it for students because they still have a positive net ROI.

[1] https://nces.ed.gov/fastfacts/display.asp?id=40 [2] http://www.washingtonpost.com/local/education/national-stude...

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

#170

Post by woobar »

sokoloff wrote: post #137
Shivetya wrote: post #47

Earlier quoted context omitted.

Wealth transfer because of the tax code occurs all the time, every day. Yet some here I can guarantee would scream bloody murder if they lost their piece of that wealth transfer. Two of which are easy, the ACA and EV tax credits, both transfer wealth but in different ways. The first from the young and healthy who usually are at the beginning of their income generating years and hopefully their lowest pay in their car…

There are more EVs sold with an after-credits price under $25K than over $50K. And there's an awful lot of people driving $25K new ICE cars, so I can't agree that the EV credit is mostly going to cars that are beyond the reach of average workers. (I also don't think that the average worker is financially well-advised to buy a new $25K car, but they're doing it in droves, so...)

But this is the point. Without the credit they will not be able to afford $32.5K car.

And btw, average worker makes $35K, and pays federal tax up to $3200. So their "after credit" price would be close to $30K.

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