Wealth Inequality - again

[devans0]

I ran across this, which made me pause on the challenges to come.

"A new study on The World Distribution of Household Wealth by the Helsinki-based World Institute for Development Economics Research of the United Nations University was launched earlier this week. The study shows the richest 2% of adults in the world own more than half of global household wealth. The most comprehensive study of personal wealth ever undertaken also reports that the richest 1% of adults alone owned 40% of global assets in the year 2000, and that the richest 10% of adults accounted for 85% of the world total. In contrast, the bottom half of the world adult population owned barely 1% of global wealth. The research finds that assets of US$2,200 per adult placed a household in the top half of the world wealth distribution in the year 2000. To be among the richest 10% of adults in the world required US$61,000 in assets, and more than US$500,000 was needed to belong to the richest 1%, a group which — with 37 million members worldwide — is far from an exclusive club."
The site implies a strong social bent that I don't subscribe to, but the facts cited are of the surprisingly extreme skewed world wealth and are real.
How the world's wealth is distributed - the top two percent own half - Image 4 of 8

 

[Independent]

It looks as thought statistics show that there is a larger than historically usual gap between the rich and the poor in the US. That said, can anybody cite any real statistics that show across whatever "class" of people you like a marked decline in standard of living now v. 20, 30, 50, 100 years ago, etc.?

I saw an interview with Milton Friedman in a documentary recently, he is a famous free market economist, who cited the inequality gap, but also the fact that over time and while the gap was growing so was the overall standard of living for the poor. His economic analysis would suggest that while the "rich" people were getting richer, they were also creating jobs and opportunities that "poor" people were able to take advantage of and that true increases in standard of living cannot come from redistribution but only from wealth creation by entrepreneurs and business.

From my perspective, so long as the overall standard of living is maintained or growing from a long term trend perspective, I don't think I care how much more than me Warren Buffet has or makes. I am beginning to think this whole argument isn't so much about what the best system is (as I think history has proven from an objective economic perspective that free markets & capitalism work best); but, about envy, laziness, and some convoluted concept of fairness.

I don't want anybody to give me, either voluntarily or via the government apparatus, anything that I haven't earned. I wonder how many others in our society can say this?

If you're interested in income histories, there are a bunch of tables here: Historical Income Tables - People - U.S Census Bureau
Try P-38 or P-43, or combine P-16 and P-17.

Generally, men's earnings leveled out in the mid 1970s and haven't done much since. If you focus on one educational level, men with exactly 4 years of college have been flat, while men with HS diplomas have declined.

Conventional wisdom holds that before 1980 each generation of American men had done noticeably better than their fathers at the same age (except during the depression), so "flat" is a new experience.

Note, however, that women are doing better than their mothers.

If the rich people actually "created jobs and opportunities" for American workers, I might be able to justify the big tax decreases we've given them over the last generation. However, I think our experience has been that mostly they've lived larger and invested overseas - great for Indian and Chinese workers, not so good for Americans.

It's a certainty that increases in productivity (which determines the size of the economic pie) can come only from investments in technologies, human capital, and physical capital. However, it's not true that such investments can come only from the "rich". 100 middle class people, each with $100,000 of invested assets, provide just as much financial capital as one rich person with $10 million. I don't know why we should raise taxes on the hundred just so we can lower taxes on the one. Nor is it true that when the pie grows all slices grow.

 

[youbet]

I'm about to have my first child, and I fear that unless she is very smart, and very hard working, she is going to be facing a job market in which $10/hr is considered a great job.

That is a sad note. I worry the same way for my grandchildren.

But, the issue is what to do about it. Even extreme punitive levels of taxation on the so-called wealthy will not come close to solving the problem. Although, zillions of folks will "feel better" about things knowing that someone at the next income level up is paying more.

Unless we can build GNP while limiting population, there will be reductions to our standard of living. Neither is likely IMHO.

 

[photoguy]

But, the issue is what to do about it. Even extreme punitive levels of taxation on the so-called wealthy will not come close to solving the problem. Although, zillions of folks will "feel better" about things knowing that someone at the next income level up is paying more.

I thought the tax increases folks are talking about amount to a few percentage points. I wouldn't consider that extremely punitive.

 

[Texas Proud]

I ran across this, which made me pause on the challenges to come.

"A new study on The World Distribution of Household Wealth by the Helsinki-based World Institute for Development Economics Research of the United Nations University was launched earlier this week. The study shows the richest 2% of adults in the world own more than half of global household wealth. The most comprehensive study of personal wealth ever undertaken also reports that the richest 1% of adults alone owned 40% of global assets in the year 2000, and that the richest 10% of adults accounted for 85% of the world total. In contrast, the bottom half of the world adult population owned barely 1% of global wealth. The research finds that assets of US$2,200 per adult placed a household in the top half of the world wealth distribution in the year 2000. To be among the richest 10% of adults in the world required US$61,000 in assets, and more than US$500,000 was needed to belong to the richest 1%, a group which — with 37 million members worldwide — is far from an exclusive club."
The site implies a strong social bent that I don't subscribe to, but the facts cited are of the surprisingly extreme skewed world wealth and are real.
How the world's wealth is distributed - the top two percent own half - Image 4 of 8

Way back when.... when Bill Gates was at the top (when Microsoft was a lot more expensive and he had not given away a lot).... I read an article that said if you took the poorest 100 million people in AMERICA, they would not have as much wealth as Bill....

You have to remember.... lots of people in the US are negative... they have good jobs and good salaries... but actually owe more than they own... upside down on the house, upside down a a few cars, maybe even a boat or RV... have college loans and CC debt of $10K to $20K... they are living a lot better than the guy who owns a goat in Africa, but he has more 'wealth' than the US person...

So, it is not easy to just use these numbers on their face...

 

[youbet]

I thought the tax increases folks are talking about amount to a few percentage points. I wouldn't consider that extremely punitive.

What does your comment have to do with my post? I made no reference to "tax increases folks are talking about" whatsoever.

I stand by my statement that:

Even extreme punitive levels of taxation on the so-called wealthy will not come close to solving the problem. Although, zillions of folks will "feel better" about things knowing that someone at the next income level up is paying more

Improving the outlook for Hamlet's daughter and my grandchildren in terms of their ability to earn a living will not be solved by further taxing of the rich. In fact, I think that folks who throw that out as a overall solution to the problem are actually diverting attention from the real problems.

If you think that only increasing taxes on the so-called rich "a few percentage points" fixes our issues with jobs and income for our rapidly expanding population, I think you're wrong.

 

[rescueme]

Unless we can build GNP while limiting population, there will be reductions to our standard of living. Neither is likely IMHO.

I agree with you. Unfortunately, the world has changed from a generation or two, ago.

My parents (1st gen American - their parents were immigrants) had a decent life, when I was a child of the 50's.

I was fortunate after serving in the military (drafted) and having so-so jobs in the 70's to finally getting a decent (e.g. pay/benefits) job in 1979.

It was for a major manufacturer (at the time), which was "vertically integrated". That means that all parts were made by them, from the screws to the final product.

At the time, the idea of a global marketplace, along with "global sourcing" of assembly material was unknown. You made it in the U.S., you manufactured it in the U.S., and the profits were retained in the U.S.

The change came about in the mid-late 60's, when companies realized that they did not have to actually "build" a product. My mother, who spent her life in sewing clothes, saw her j*b go offshore, to other countries that could do the same thing, with a lesser wage.

My company? It moved from creating its own parts to "global sourcing" over time. That meant that the parts our "own people" could create, could be purchased at a reduced price somewhere in the world. The company eliminated the personnel, along with the machines and physical property since they could purchase the same "result" in a less expensive manner.

As time went on, our company was purchased by a Euro based company. After a time, it in turn, was purchased by a bigger Euro "fish".

Now the products were sourced, produced, and manufactured at any place around the world that could do the w*rk for a cheaper price.

My job in IT? It was U.S. based, but over time the development was done in India (of course) along with support functions in South America, along with similar functions done by subsidiaries in China (e.g. 24-hour development and support).

Guess what? We (as American's) aren’t in Kansas, anymore. It's a different world, at a different time.

 

[NW-Bound]

The people with money conspire to keep that from happening. Substandard wages, predatory lending, school loan scams, the evidence is everywhere.

Often, it is not an outright conspiracy as much as "sh!t happens". Many of us work for megacorps that want to maximize profits by outsourcing, paying lower wages, reducing benefits, gouging customers (sometimes the customers are tax payers)... It's the ugly side of capitalism, and needs to be balanced against its positive side. It's tough.

I do not know the answer to the above problem. Many of my libertarian friends say that we have too many laws, and not all are effective. I countered that if businesses behave, there would not be these dumb laws. Even Greenspan, a proponent of the free market, admitted that he was wrong in thinking that the mortgage and banking industries would know to exercise self-restraint. But that is too much to expect from CEOs who were licking their chops at compensation packages of hundreds of million, and in the case of the ex CEO of Country Wide, approaching $1B!

That is a sad note. I worry the same way for my grandchildren.

But, the issue is what to do about it. Even extreme punitive levels of taxation on the so-called wealthy will not come close to solving the problem. Although, zillions of folks will "feel better" about things knowing that someone at the next income level up is paying more.

Unless we can build GNP while limiting population, there will be reductions to our standard of living. Neither is likely IMHO.

Yes, taxing the super rich would not raise enough money to solve the problem. There's just not enough there!

 

[GregLee]

... - great for Indian and Chinese workers, not so good for Americans.

If Indian and Chinese workers are doing better, that's something, anyway. Maybe we could take a few seconds break from bemoaning the future of American workers and celebrate some increases of prosperity elsewhere.

 

[NW-Bound]

If Indian and Chinese workers are doing better, that's something, anyway. Maybe we could take a few seconds break from bemoaning the future of American workers and celebrate some increases of prosperity elsewhere.

The economy, whether on an individual country or world-wide level, does not have to be a zero-sum game. People keep forgetting that!

Any transaction could and should be structured in such a way that everybody becomes better off. Nobody has to be a victim.

 

[Independent]

Improving the outlook for Hamlet's daughter and my grandchildren in terms of their ability to earn a living will not be solved by further taxing of the rich. In fact, I think that folks who throw that out as a overall solution to the problem are actually diverting attention from the real problems.
.

I can agree that increasing the share of taxes paid by the "rich" won't help our kids earn more money. All Congress can do directly is determine who pays the taxes.

If $10/hr = $20k per year, then a $10/hr single worker pays about $1,000 per year in FIT, about $1,500 in the "employee share" of FICA, and another $1,500 in the "employer share" of FICA. So Congress could shift the tax burden and let her keep more of the money she earns.

I'm wondering what the "overall solution to .... the real problems" is?

 

[Hamlet]

I agree, we aren't going to solve the problem by taxing the rich.

However, continually cutting the progressive taxes (income, cap gains, estate) while increasing the regressive taxes (FICA, sales, gas, property, sin) is making the problem worse.

There is something wrong when the guy working at Subway is paying a higher percentage in taxes than the heirs of Sam Walton.

That is a sad note. I worry the same way for my grandchildren.

But, the issue is what to do about it. Even extreme punitive levels of taxation on the so-called wealthy will not come close to solving the problem. Although, zillions of folks will "feel better" about things knowing that someone at the next income level up is paying more.

Unless we can build GNP while limiting population, there will be reductions to our standard of living. Neither is likely IMHO.

 

[Hamlet]

It is a wonderful thing. From a global perspective, we are seeing a vast amount of misery being relieved in the world.

In 50-100 years, it may actually start making the average American's life better as well

If Indian and Chinese workers are doing better, that's something, anyway. Maybe we could take a few seconds break from bemoaning the future of American workers and celebrate some increases of prosperity elsewhere.

 

[kcowan]

The quality of tomatoes and apples is one of the few downsides to living in Hawaii. They're awful.

Our apples here in Mexico (the good ones) are from Washington State. But the mangoes are amazing, as is the watermelon, melons and bananas, et al. In fact, the biggest quality of life improvement is the fresh fruits and vegetables.

BTW I find that average quality of life makes my parents life in the 40s look downright poverty level! I think we have all become used to the great strides in the 50s and 60s and come to expect that to be the new normal.

It was those 2 decades that were abnormal! Maybe the 80s too. Thanks to technology.

 

[rescueme]

Our apples here in Mexico (the good ones) are from Washington State. But the mangoes are amazing, as is the watermelon, melons and bananas, et al.

Yeah, but the peas still suck ...

Hey, it a texture thing (for those confused, search for my name in another thread)...

 

[nvestysly]

Making the Pie Larger

The economy, whether on an individual country or world-wide level, does not have to be a zero-sum game. People keep forgetting that!

Any transaction could and should be structured in such a way that everybody becomes better off. Nobody has to be a victim.

+1

I firmly believe that goods and services produced and consumed make the pie larger not simply re-slice the same pie. By adding value to the economy not only do I have more pie but I've helped increase the size of the pie. It's the proverbial "win-win."

I'll rephrase my earlier sentiments - if your portion of the pie is getting smaller and you're concerned that other people have too much pie (i.e. wealth inequality) there is only one person to blame! Look in the mirror.

Yes, this is an oversimplification but it rings true in many situations. I see it in my own circle of family and friends.

 

[photoguy]

What does your comment have to do with my post? I made no reference to "tax increases folks are talking about" whatsoever.

Sorry my bad. I was getting confused with one of the other threads.

If you think that only increasing taxes on the so-called rich "a few percentage points" fixes our issues with jobs and income for our rapidly expanding population, I think you're wrong.

Well many other countries both have slightly higher tax rates which they use to fund social programs (e.g., education, etc.) resulting in greater social/economic mobility than the U.S.

 

[Westernskies]

The people with money conspire to keep that from happening. ....the evidence is everywhere.

Must type faster, I think I hear the black helicopters closing in...

 

[RetiredGypsy]

Must type faster, I think I hear the black helicopters closing in...

And they're coming for Wikipedia first. Free education? Off with their ISP!

 

[rescueme]

I'll rephrase my earlier sentiments - if your portion of the pie is getting smaller and you're concerned that other people have too much pie (i.e. wealth inequality) there is only one person to blame! Look in the mirror.

I have to agree. It seems that we (as a nation) look to others to fill our needs, be it parents who support their "adult children" or the position of an ever increasing society (world-wide) that believes "the government" is there to supply their every want/need.

Personal responsibility is lacking and becoming more of a problem, IMHO. Sure, if you're born in a 3rd world country and scratching for food/shelter each day, that's one thing. But if you're lucky enough to be born in a 1st world country but unwilling to put forth the effort to make a good life for yourself and your family (succeed or not), than you have only yourself to blame...

 

[engprodigy]

I have to agree. It seems that we (as a nation) look to others to fill our needs, be it parents who support their "adult children" or the position of an ever increasing society (world-wide) that believes "the government" is there to supply their every want/need.

Personal responsibility is lacking and becoming more of a problem, IMHO. Sure, if you're born in a 3rd world country and scratching for food/shelter each day, that's one thing. But if you're lucky enough to be born in a 1st world country but unwilling to put forth the effort to make a good life for yourself and your family (succeed or not), than you have only yourself to blame...

 

[kcowan]

Yeah, but the peas still suck ...

Hey, it a texture thing (for those confused, search for my name in another thread)...

I have a rich friend in Canada who has squishy peas for a treat when he has us over for dinner (I knew he was comfortable but then he just donated $1 million to a local university!) and I enjoy the peas as a reminder of the kind I used to get at home before frozen peas were available.