Wealth Inequality - again

[Independent]

I'd like to think that it is beyond debate that there is a gap.

Whether it matters is a very open question. My own view (and I'm happy to be convinced othewise) is that it does not matter and we should not attempt to do anything about it:

1. historical attempts to rectify preceived fiscal inequality have generally resulted in lower standards of living accross the board - the colossal human tragedies of the communist/socialist workers' paradises being the most extreme example;

2. I'd like to believe that if the less well off demographic segments of society are still (i) enjoying a reasonable and improving standard of living and (ii) are able to see at least the existence of reasonable opportunities for advancement, then our society is doing a better job of looking after its people than many (most?) other societies have done historically. In other words, absolute poverty is a greater issue than relative poverty.

I have to disagree with the first statement. One thing that "rectify perceived fiscal inequality" was free public education that we started way back in the 18th century. I think that was a huge success at both growing the economic pie and growing the pieces enjoyed at the lower end. Similarly, I've read that the WWII GI bill gave low income people an opportunity that they would have never had without it, and we all benefited.

I don't see anyone in the US recommending anything like Stalinism.

I agree that absolute poverty is a bigger issue than relative poverty. But if we've got absolute poverty, we work on it with gov't programs that use tax dollars. The practical issues are where do we get the tax dollars and who should we help?

 

[NW-Bound]

I am also one who believes that more vocational training would be good for society as well as many individuals. We have way too many desk jockeys and paper pushers already. Even China, a country whose economy has been on the rise and will be for a long time to come has found some of its college graduates not being able to find work. I found an article on this and reported on a recent thread.

My HS district proposed a bond to raise many more millions in the last election. It was good that it was voted down, as I do not see that this affluent district would need even more money for. And I have read how Ivy League schools are scrambling to compete with one another to build more luxurious student lounges. What was that for, as they could just be indulging in streaking as they have done in the past with very little cost (and clothes)?

Changes are needed, but I do not know why people keep bringing up the issues regarding money. The local state U tuition has also been raised, and I do not know how much of the funding goes to the real cost of education vs. administration. There are so many new administrative buildings in my old school that I really wonder what their occupants do.

PS. I brought up the point about the cost of private schools, although it does not involve public money, just to point out that not all the cost of something goes into its quality.

 

[Independent]

Seems to me, when it says Social Security deduction in my weekly check, that's spelling it out pretty clearly. That's no longer "This tax money is going to the general slush fund for whatever purpose."

I think labeling the tax is not the same as providing a legally enforceable contract.

We should know what happens to SS taxes, mostly they are used to pay the benefits of people who are currently retired. The hope is that the next generation is willing to do the same. I've talked to some young people who are quite blunt that they don't feel legally or morally bound to continue the system.

There was a period when SS taxes exceeded SS benefits (basically 1986-2009). Congress and voters could have insisted that those excesses be used to buy private bonds and stocks, and we could have set up legally enforceable private accounts with the money. But we didn't. We used the extra SS taxes to justify some combination of cutting FIT and increasing spending.

 

[nvestysly]

At Least One Person Has Declined SS...

I find it equally interesting that nobody who's advocated for lower government spending and cutting entitlements has ever returned a social security check or withheld their medicare card when getting health care or given money to their parents so they could do those things.

My father declined SS. He was able to wade through the red tape and they actually never sent him a check. He tried the same thing with Medicare but could not cut through all the cr*p! He was forced to utilize the Medicare program although he did not want (or need) its services.

 

[nun]

Believe me, if you were sitting in a public toilet and suddenly realized there was no TP, you would probably pay a lot for a few sheets.

It has value .

I am a strong supporter of progressive taxation to redistribute wealth. But given the corruption and inefficiencies of the US Government along with the misguided attempt to organize a country based on a literal reading of an 18th century document, I understand the reluctance of some to pay higher taxes. We get the governments and the societies we deserve....I'm not sanguine about the US's future and I'm with those that see many US institutions as essentially corrupt and wasteful.

 

[RetiredGypsy]

My father declined SS. He was able to wade through the red tape and they actually never sent him a check. He tried the same thing with Medicare but could not cut through all the cr*p! He was forced to utilize the Medicare program although he did not want (or need) its services.

That reminds me of this article:
Seniors Should Be Allowed to Opt Out of Medicare - WSJ.com

 

[ziggy29]

That reminds me of this article:
Seniors Should Be Allowed to Opt Out of Medicare - WSJ.com

All that would do is convince insurers to cherrypick the healthiest of them and make Medicare even more precarious by leaving it with all the higher risks.

 

[M Paquette]

Funny thread!

I'm sure a society can run for quite a while with a significant wealth inequality. It's a metastable state, after all. Remember that Golden Rule; "He who has the gold makes the rules."

There's a gotcha, of course. At some point that society will eventually encounter an Outside Context Problem, a problem the society cannot anticipate, that will nudge the situation out of it's somewhat precarious stability. That's when things get interesting, as in that old curse, "May you live in interesting times." "Ladies and Gentlemen of the Second Estate, we will now demonstrate for you Dr. Guillotin's wonderful invention!"

"An Outside Context Problem was the sort of thing most civilisations encountered just once, and which they tended to encounter rather in the same way a sentence encountered a full stop." -- Ian Banks, Excession

 

[winger]

It is depressing to send a very well thought out letter raising a particular issue and get a form letter back which entirely misses the point.

It may help to include an in impressive donation with your letter.

 

[Silver]

My personal theory is that if 100% of wealth were redistributed equally among 100% of living persons, within 10 years the same persons that were wealthy before would be wealthy again, and the same persons who were poor would once again be poor.

 

[RetiredGypsy]

Funny thread!

I'm sure a society can run for quite a while with a significant wealth inequality. It's a metastable state, after all. Remember that Golden Rule; "He who has the gold makes the rules."

There's a gotcha, of course. At some point that society will eventually encounter an Outside Context Problem, a problem the society cannot anticipate, that will nudge the situation out of it's somewhat precarious stability. That's when things get interesting, as in that old curse, "May you live in interesting times." "Ladies and Gentlemen of the Second Estate, we will now demonstrate for you Dr. Guillotin's wonderful invention!"

"An Outside Context Problem was the sort of thing most civilisations encountered just once, and which they tended to encounter rather in the same way a sentence encountered a full stop." -- Ian Banks, Excession

Wasn't this what happened after the Black Death? After so many people died, kings and whoever was hiring went into competitive frenzy to get more workers by way of better living conditions and more wages?

 

[MasterBlaster]

Wasn't this what happened after the Black Death? After so many people died, kings and whoever was hiring went into competitive frenzy to get more workers by way of better living conditions and more wages?

You may be onto something there.

Perhaps we could use it as a means to bring the unemployment rate down.

 

[RetiredGypsy]

Well, Bart, your Great Uncle Horace used to have a saying: "Shoot 'em all, and let God sort them out." Unfortunately, one day put his theory into practice. It took 75 federal marshalls to bring him down. Now let's never speak of him again.

-Marge Simpson.

 

[Gone4Good]

FWIW, I have never collected a cent in SS or Medicaid; but I have been paying into the system for 40 years with the promise of a future benefit; i.e. a contract with the federal government. Now that contract is being unilaterally changed because they comingled/overstated/mismanaged/wasted/overspent the funds I paid them... and now [-]you[/-] they want more. I held up my end of the bargain; they didn't. That is why I have a hard time with those who feel we have a "duty" to pay higher taxes to prop up a bloated, wasteful self-serving government with no accountability. Time to start cutting instead of spending. If tax hikes are inevitable (like death and taxes? ) then everyone needs to shares the burden; we all have a stake in the outcome.

PJ O'Rourke said it best ~" "Giving money to the Federal Government is like giving whiskey and car keys to teenage boys"

I'll take that as a "No, I won't decline part of my Social Security entitlement in the name of reducing government spending."

 

[traineeinvestor]

Well, they are not seeing a reasonable and improving standard of living and not seeing reasonable opportunities for advancement. Class mobility in the US is problematic and worse than many European countries. US-vs-Europe structural rigidities: A re-think | vox - Research-based policy analysis and commentary from leading economists
http://www.oecd.org/dataoecd/2/7/45002641.pdf

For increasing income of the next generation you are better off in Canada, Australia and much of Europe.

Our education system may be much of the problem.

For the US this is true over the last several years, but since the 1950s, living standards in the US have improved (car ownership, literacy, longevity, access to health care, educational attainment etc) and absolute poverty has declined by a lot. At the risk of being overly optimistic, I'd like to believe that the longer term trend will reassert itself as the economic recovery gathers pace. I agree that class mobility has declined in the US and many other western countries and this is not a good thing - I suspect that the sheer cost of getting a good education is one of the material contributions to this trend.

Globally, there has been a noticable decline in the number of people living in absolute poverty, a massive increase in the number of people who could be viewed as middle class and a huge increase in social mobility.

The age old solution to lack of opportunity and declining living standards is to immigrate - and I am seeing plenty of anecdotal evidence that many well educated Americans (particularly those of Asian descent) are moving from the US to Asia because they see better opportunities here. Irconically, American companies seem to be the preferred employers out here.

 

[Westernskies]

I am a strong supporter of progressive taxation to redistribute wealth.

Perhaps you should use this as your signature line so everyone will know where you are coming from on some of these taxation threads in the future. Might save a lot of discovery for those new to the forum who are trying to figure out where this redistributionist rhetoric is coming from.

 

[Ronstar]

Yes, it's time to start cutting instead of spending. The problem is, any politician brave enough to specify exactly where he'd cut loses the votes of the people who benefited from that spending. It's always "Don't cut me, and don't cut thee, cut the guy behind the tree". Every beneficiary of federal spending believes that lots of spending is wasteful, but their favorite program is different.

The solution is simple. The gov't spends about 3 trillion, and takes in 2 trillion. Cut 33 pct spending across the board and we balance the budget. Everything gets cut the same pct. There are no favorites in this scenario.

It's not government's job to rebalance wealth of the people. It's their job to provide opportunity to the people.

 

[Westernskies]

I am a strong supporter of progressive taxation to redistribute wealth.

It's not government's job to rebalance wealth of the people.

This is what makes this forum so interesting.

 

[NW-Bound]

My personal theory is that if 100% of wealth were redistributed equally among 100% of living persons, within 10 years the same persons that were wealthy before would be wealthy again, and the same persons who were poor would once again be poor.

Looking at some of the people I know, I suspect that you are right.

 

[photoguy]

The solution is simple. The gov't spends about 3 trillion, and takes in 2 trillion. Cut 33 pct spending across the board and we balance the budget. Everything gets cut the same pct. There are no favorites in this scenario.

Depends how you look at it. There will certainly be clear losers in this scenario -- anybody who gets more in assistance from the government than they are currently paying in.

 

[RetiredGypsy]

It's not government's job to rebalance wealth of the people. It's their job to provide opportunity to the people.

You know, anyone can easily read their job description in great detail. It's available to everyone so they can clearly see what it is.

 

[jdw_fire]

My personal theory is that if 100% of wealth were redistributed equally among 100% of living persons, within 10 years the same persons that were wealthy before would be wealthy again, and the same persons who were poor would once again be poor.

i dont think that is 100% correct. for example, buffett (if he were still alive) would probably rebuild his fortune but i dont think gates would. a lot of the gates fortune required luck. he was lucky that IBM didnt care about the software rights to the operating system (PC-DOS) so they just gave them away to gates (hence MS-DOS), that wouldnt happen again. gates was lucky that he (and apple) got windows from xerox, that wouldnt happen again, etc. i think there were 1 hit wonders that wouldnt be able to reproduce their 1 hit. and hence wouldnt be rich again.

for the most part i do agree about most poor people as most would probably squander their new found wealth. but there would probably be some that wouldnt

 

[Westernskies]

i dont think that is 100% correct. for example, buffett (if he were still alive) would probably rebuild his fortune but i dont think gates would. a lot of the gates fortune required luck. he was lucky that IBM didnt care about the software rights to the operating system (PC-DOS) so they just gave them away to gates (hence MS-DOS), that wouldnt happen again. gates was lucky that he (and apple) got windows from xerox, that wouldnt happen again, etc. i think there were 1 hit wonders that wouldnt be able to reproduce their 1 hit. and hence wouldnt be rich again.

for the most part i do agree about most poor people as most would probably squander their new found wealth. but there would probably be some that wouldnt

Wow, I'm glad to know that Bill Gates and Steven Jobs were really just a couple of lucky schmucks, because I was beginning to feel like an underachiever in comparison.... Pretty amazing luck, revolutionizing the PC Industry, developing new operating systems, software, hardware, licensing, distribution, service, support, building their multi-billion dollar companies into world-class leaders in their fields. Heck, practically anyone could have done what they did, with a 30-year lucky streak...

 

[Ronstar]

Depends how you look at it. There will certainly be clear losers in this scenario -- anybody who gets more in assistance from the government than they are currently paying in.

My gut feeling is that the budget could be cut 33 pct by getting rid of waste across the board without diminishing assistance to those that truly need it.

 

[NW-Bound]

I think Silver was making the point that some people, for one reason or another, would not know to maintain and grow the wealth that would be given them. And it is true that not all billionaires would regain their old status, but no doubt, they would not become beggars either.

I do not want to see poor and miserable people around me. So, the talk about providing education and opportunity has come up before. Still, no matter what we do, there will always be homeless people.