Income inequality - is it a problem?

[Sanaz]

Originally posted by MrPresident They don't earn the money but are given it by the accident of birth. This automatically create an artifical upper class based not on their abilities and achievements but on what their parents did.

OK, 4 years ago I was firmly entrenched in poverty - as stated earlier, I'm young enough where I was just going backwards for a while until some hard work paid off. I come from a good family, and sometime in the future there may be an inheritance. I obviously don't look forward to that day, and like most inheritance, it usually comes long after it's needed and is seldom wanted because it means that loved ones have passed away. However, my family has always been willing to help out - I have had plenty of opportunity throughout my life. This advantage would not be affected by any change to inheritance laws, nor any other laws.

My children will have a reasonably privileged life, and if someone suggests that they should not have it because they have not yet earned it I'll laugh at the silliness. I don't work as hard as I do, and use my talents the way that I do, so that my children would have nothing.

The problem with wealth comes from dishonesty and exploitation. Certainly, the wealthy have access to information via highly paid accountants and lawyers that will increase their wealth greatly over time. This information is freely available, but I certainly couldn't use it effectively without my advisors. But, many people would rather buy a new car than pay a good accountant. Bummer for them, great for me. I personally employ very conservative professionals to match my personality - I may get rich a little bit more slowly, but my conscience is clean. Many others are more "aggressive", and they may or may not pay a price for it. As long as everyone is treated fairly under the law, no problem. But I guarantee that the big corporations will outspend the average Joe with legal string pulling, so there are still many problems with equal treatment and equal opportunity. History has momentum, for both better and for worse.

 

[amadeus]

So, you want the government to determine someone's worth?

 

[Greadius]

Originally posted by Ohwell
Very often it is the hard working blue-collar worker with the best idea, unfortunately political systems worldwide close the door on the poor, branding them as lazy fools who know nothing.

For example...?

Originally posted by Ohwell
People are ignorant, money does but shouldn't run politics.

Then what system should we use to gauge the intensity voters feel behind an issue?
You know, from my involvement in campaigns, the more I realize that individual contributions from middle class people make up the bulk of the 'war chest', and a hand-written letter signed by a constituent is worth more than a lobbiest. People don't take advantage of these things, and you blame the politicians? Influence is easy to get, it takes either time or money.

Originally posted by Ohwell
While some rich people have good ideas on politics, this is rare.

When I'm rich I'll take that personally.

Originally posted by rmsharpe
Income equality would be a severe problem. I believe there was once a place called the USSR that had such a system.

You sure about that? None of the party elite ever seemed to wait in breadlines or drive Trabants.

 

[Akka]

If you consider a system, inequality is not a problem. After all, natural evolution existed BECAUSE there was inequalities. Law of the fittest is BASED on inequality.

So if you ask "from a technical point of view, is inequality a problem ?", I will answer "no way !". And I will kill you and stole you, hey after all it's the law of the fittest, isn't it ?

If you ask "from a moral point of view, is inequality a problem ?", then I will obviously answer "of course", as, moraly speaking, someone should be rewarded according to the amount of work he provides. The little problem is that rewarding the amount of work without rewarding the quality of work is not incentive to work better.

Hence my answer : "inequality is not a problem as long as the difference is not too wide between the richs and the poors."

 

[Mephisto]

i am a grad student in econ, so it's hard to say that i don't have a biased opinion on this subject. heheheh, this is actually one of the reasons i got my name to be mephisto.

akka, your answer is obscure, (what's too wide) though politically correct.

sanaz, i agree w/ most of what you said. but i don't think economic mechanism can be a problem, money is made & lost in disequilibrium.

ohwell, you are cool.

rmsharp, income inequality is not a problem per se, but it can create social problems. and i think that's worth addressing. (and yeh, communism may be too extreme a way to address it)


but seriously, nobody can save the world. such discussion is fun, but futile.

 

[Ribannah]

Originally posted by Mephisto
but seriously, nobody can save the world. such discussion is fun, but futile. [/B]

Dang. There goes my calling.

Income inequality has surprisingly little effect over a long range - until the poor don't have enough to get by and/or the rich have so much they can excercise absolute power.

Unfortunately, those extremes are reality in most of the world, the exceptions getting fewer over the last few decades.

Still, generally a greater effect both socially and economically has the fact that income and wealth are generally work-related. If part of your income would be a certainty (like the oil revenues in Alaska but preferably higher), you would have far more freedom to choose your education and occupation, and more types of work would be economically feasible. And if wages to pay would be lower, employers had less reason to substitute labour with machines.

 

[amadeus]

Originally posted by Greadius
You sure about that? None of the party elite ever seemed to wait in breadlines or drive Trabants.

Party elite? You mean military brass

 

[Greadius]

Originally posted by Ribannah
If part of your income would be a certainty (like the oil revenues in Alaska but preferably higher), you would have far more freedom to choose your education and occupation, and more types of work would be economically feasible. And if wages to pay would be lower, employers had less reason to substitute labour with machines.

Jobs would become more feasible for the individual, but society as a whole would take the hit. The 'oil revenue income' has to come from somewhere... in a place like Alaska its easy, but Alaska and Kuwait don't spread very far in any economic system. As a result, the money being 'guaranteed' out would have to be taxed or taken at some point along the economic ladder, to be handed out at another point. Any state program that gives out money is exchangable, its just a measure of how inefficient it is and who is favored and punished in the exchange.
Jobs that don't have a demand for the service or labor provided high enough to sustain living are not economically feasible. Or I'd be a proffessional couch potato.

And employers substituting labor with machines is a great thing. The employees who loose out in the short term are hurt, but society as a whole benefits from greater efficiency. In the long run, the elimination of the jobs will mean that the low-skilled manual labor they were undoubtedly doing (which causes a myriad of health problems and are never in great demand) won't be replaced, and the potential 'replacement' workers will be funneled towards the place in the economy they are most needed by job demand. The machines will be more efficient at the job, lowering the price of production and temporarily increasing the profit margins, making the market more appealing to competitors, increase the supply because of the profit margins, and lowering the equalibrium price for consumers. What more could you want?

 

[FearlessLeader2]

Originally posted by MrPresident
I agree with most of what FearlessLeader2 wrote but I think that there could be a problem in the way the rich accumulate their wealth.

Not as long at it is legal.

Originally posted by MrPresident
The most common way they do this is through inheritance. They don't earn the money but are given it by the accident of birth.

If a person does not have the right to assign their heirs, then why ever struggle for anything? If I cannot give my children the things I was denied, then why have children? If you don't like the fact that the Walton family's dad did better than yours did, and that as a result, you are not rich and they are, too bad. But there is one saving grace. If YOU do well, you can give YOUR children a leg up. Isn't that nice?

Originally posted by MrPresident
This automatically create an artifical upper class based not on their abilities and achievements but on what their parents did.

Again, boo-hoo. Your jealousy is not a valid justification for confiscating the accumulated wealth of those who did better than you did. Get over it, get an education, get a good job, buy a lottery ticket, whatever it takes to make you happy, but don't expect the world to take from others the wealth they worked hard for and give it to you instead of their children. What makes you so damn special anyway?

Originally posted by MrPresident
We all know that money equals power. So that means that this artifical class wield a lot of power that they not only don't deserve but might not have the ability to wield wisely. The people who could wield this power the wisest might not be part of this artifical class and because they don't have the same money/opportunities they might not be able to get up to the same level and wield the same power.

And who are you to judge whether a person is worthy of power or money? Your arrogance is 'showing a tire' on your envy.

Originally posted by MrPresident
That means that the natural upper class (those with the highest ability) who should run the country, companies etc do not.

Are you saying that life is not fair? Oh thanks ever so much for the newsflash. Now instead of whining impotently about it, how's about you actually go out and do something about your situation, and leave the rest of us alone?

Originally posted by MrPresident
Some of you are probably going to say that if you work hard enough then you can make it to the top. And for some exceptions you will be right but for the majority working hard is simply not enough.

Right, you need education and drive too. Mostly drive. If you don't have it, you don't deserve it.

Originally posted by MrPresident
So there should be some redistribution of wealth from the rich to the poor to try solve this problem.

No, there should not be, you commie twit. Robbing the rich to feed the poor just leads to a situation where everyone is poor, and all starve together.
The rich create jobs and expand the economy by accumulating wealths into large chunks that can be used to increase businesses, educate and house people, or start new ventures. If you take away their wealth, you take away the capacity for the economy to grow.

(Edited to take out all the instances of the 'f' word. People who think like MrPresident does REALLY piss me off.)

 

[Supernaut]

An interesting restatement of the same old views here. Missing a couple of points:

1) Recent research has shown that income inequality has a major effect on health. In other words, countries with more equal income distributions have better health and life expectancy for both rich and poor than inequal countries.

2) Trickle down - the idea that the wealth of the rich comes down to the poor in the end and makes them richer - is, at best, an imperfect system for income distribution. Just look at the Middle East.

Yes, I know people will want sources for these, so I'll try to find some

 

[gr8ful wes]

good posts here

Wealth doen not automatically mean you are a bad guy.
While redistribution of wealth sounds good, even moral, especially to the poor and middle class, it isnt necessary.
I am poor by most standards(rich in spirit though) and I don't hate a rich person for being rich. ( I despise a$$holes for simply being a$$holes though)
Redistribution of wealth is not natural, unless it is voluntary, and in the free world there are many benefactors and patrons who give huge sums of money to better their community, country. Most of our non profits could not function without gifts from the financially able.

 

[Akka]

Wealth doen not automatically mean you are a bad guy.

It does not mean they are better or more deserving neither, though.

Redistribution of wealth is not natural, unless it is voluntary

Justice, morals, ethics and so on are not naturals either.
Law of the fittest/strongest IS natural.

 

[Gerard]

We are 10 people and we have a cake. How do we cut it?

The first answer that appears is: in 10 same pieces.
Then somebody says: I made the cake, I deserve more. But I cut it, so I also deserve more. Well, I am the owner of the house, so I also deserve more. Then we probably arrive to an arrangement. Meanwhile perhaps somebody is left without cake.

Then somebody says: this is a communist, let us kill him.
Another says: he is an idealist, let us forget it.
And another says: hey, the one that didn't eat cake died from hunger...

 

[Greadius]

Is that the Marie Antionette solution?

In the hypothetical situations we use, the 'cake' can only be split into a certain number of slices, and there are much more people wanting 'cake' than there is 'cake' available.

Unlimited wants, limited resources.

 

[Damien]

This was already discussed many times,of course it's a problem:
The state needs money to live and therefore those controlling economics control the state.

About your last sentence,Greadius...since ressources are limited,wants are limited too.

About the cake,cut it in 10 equal slices since the owner of the house invited everybody and the one making the cake didn't eat it in his corner.

The invitation and the cake were intended to be for everybody.

 

[Pliny The Elder]

I find the exposition that "the rich create jobs, so everyone can make money" interesting. A company, and the jobs that are involved in running it, do not exist in a vacuum. If the richer classes squeeze everyone so tightly that the poor have no excess income, then who will buy what these magical companies are producing?
Henry Ford raised the wages of his workers to $5 a day, at a time when the average wage was $2 a day. He didn't do this from altruism, as I have never heard anyone ever suggest that old Henry was dirty commie rat.
He did this because he had the foresight to see, that, by raising workers' wages, he increased the potential market for his product.
Our modern tycoons seem to have forgotten this lesson. Sure, it's cheaper to move manufacturing to China, where the workers make $.04 to an American workers' $1. But who, in the end, taking this to the extreme, is going to be able to afford anything but the bare necessities for survival?
Much wealth nowadays is made simply by moving money around, because actually making a product produces less and less, for the investment...
Also, economic systems are amoral. Anyone who argues that any economic redistribution, under any circumstances, is immoral, is a fool. When people are squeezed so tightly that they feel desperate, they will act in, what seems to them, a rational matter...they will do whatever it takes to survive. If this means violating the law, and taking what they need, then that is what will happen. All the whining about morals, and what is right, in the world, will not convince a man to let his children starve, when food is within sight.
I know, many are going to post that anyone can better themselves, there is no justification for that, ect. No Western nation is at that point, yet...I was pointing out the logical extreme. Income inequality WILL eventually become a huge problem...and not just for the poor.
Pass all the laws you wish, if the law effectively tells a person that they must effectively lay down and die, don't act shocked when it is broken, lol.

 

[Sanaz]

Originally posted by Gerard
We are 10 people and we have a cake. How do we cut it?

The first answer that appears is: in 10 same pieces.
Then somebody says: I made the cake, I deserve more. But I cut it, so I also deserve more. Well, I am the owner of the house, so I also deserve more. Then we probably arrive to an arrangement. Meanwhile perhaps somebody is left without cake.

Then somebody says: this is a communist, let us kill him.
Another says: he is an idealist, let us forget it.
And another says: hey, the one that didn't eat cake died from hunger...

What about the other options? Make another cake? Eat dinner first? Divide base don need or hunger? When the view of the economy is oversimplified, even I can tell that there's an agenda that's being pushed. Our dopey old friend Ronnie Reagan tried to convince the world that trickle down economics was THE answer to ALL of the economic problems, and that it was SIMPLE. Basic agenda pushing propoganda tool; ask any salesman. He couldn't have pushed this over if it weren't at least partially true, but the reality is always that there's at least one piece of unknown information. That's why we have econmic THEORIES, or psychological THEORIES - no one is ever 100% positive of the short- or long-term effects (but they can be partially predicted, within reason). I doubt there's some huge Conspiracy, where the FED, the Government, and Big Business get together and try to hose the proverbial Little Guy. The truth is, most people don't want to play the power games - they want to have simple lives, and that's great, but it's extremely boring when they then place the responsibility for the world's problems on those willing to play the games...

 

[MrPresident]

since ressources are limited,wants are limited too.

You are wrong, wants are unlimited.

Not as long at it is legal.

Just because it is legal doesn't mean it is right.

If a person does not have the right to assign their heirs, then why ever struggle for anything?

To provide for your children during your lifetime. And I am not saying that a person doesn't have a right to provide for their heirs. I am saying there is a problem with creating rich people and therefore powerful people based not on their achievements but on their parent's achievements.

Your jealousy is not a valid justification for confiscating the accumulated wealth of those who did better than you did.

What makes you so damn special anyway?

I am not talking about myself and never mentioned it in what I said. The fact that you believed I did tells us a lot about you.

And who are you to judge whether a person is worthy of power or money?

Again I didn't judge anyone. I am just saying that there is a natural upper class based on their abilities and their achievements. These are the hardest workers, the smartest, the best businessmen etc. The people who deserve to be a the top not because of what their parents did but because of what they do. Understand?

Right, you need education and drive too. Mostly drive.

I don't think there is anything more important than education (drive included). This does not however necessarily mean academic education.

No, there should not be, you commie twit.

Did I miss something? What exactly about my post made me a "commie" and a "twit"? Because I am sure you wouldn't say such things without justification.

The rich create jobs and expand the economy by accumulating wealths into large chunks that can be used to increase businesses, educate and house people, or start new ventures.

I understand how this would create businesses and new ventures. But how exactly would it educate and house people?

People who think like MrPresident does REALLY piss me off

To be perfectly honest I developed a lot of my ideas from a man called Thomas Jefferson, but what did he know. And finally I would like to finish on a high note by saying that although the way I think may piss you off, at least I do think.

 

[Gerard]

Hey, Sanaz, it seems that we agree.
I only try to down the discussion to the basics.
Of course, is the cake is the national economy, well, the objective should be to enlarge the cake.
But, what about the distribution?.

I agree effusively with your concept about Ronnie and the theory neo-conservative (if you visit my country you will be able to see the devastating effects that it had here).

 

[Gerard]

One more think: you can love or hate FD Roosevelt, but he made the actual USA with the ideas from Keynes, it is: the State should regulate the economy.
I don't agree the non-State ideas from Chicago.