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Wealth Inequality - again
Old 03-22-2011, 02:48 PM   #1
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Wealth Inequality - again

I know there have been a lot of discussion threads on wealth inequality. Here is another one. I saw this article in today's New York Times. The contributors statements are fairly short but I like that they have links to their reference sources.

Rising Wealth Inequality: Should We Care? - Room for Debate - NYTimes.com

A couple of the points I think are good:

* Americans think they are doing well because they have a lot of stuff. They seem to be unconcerned about the debt incurred to get the stuff.

* People are more concerned about comparing themselves to people they interactive with daily rather than the wealthy whom they never see or talk to.

* Americans believe that government's function is to provide more opportunity rather than redistribute wealth.

* Facts don't seem to move public opinion.

(Darn NYT's . . . should I pay for the access when they start charging ? ? ? )
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Old 03-22-2011, 02:51 PM   #2
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They seem to be unconcerned about the debt incurred to get the stuff.
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(Darn NYT's . . . should I pay for the access when they start charging ? ? ? )
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Old 03-22-2011, 02:53 PM   #3
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I predict that before this thread gets shut down it will first be relocated to the politics forum.
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Old 03-22-2011, 03:12 PM   #4
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A couple more

* Americans don't want to tax the rich because they think their children will be rich. (IIRC, in 1831 James Madison was surprised that voters weren't trying to soak the rich, and used the same explanation.)

* American's ideas about the "ideal" distribution of wealth is more level than they think we are today. And, their estimate of where we are today is significantly wrong (as in the underestimate inequality).

Mankiw has an interesting recent post comparing the US to other countries on the progressive level of taxes. I believe the writer says the US has a more progressive tax system, a less redistributive social services system, and more inequality to work with, and more final inequality, then most other countries. Greg Mankiw's Blog
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Old 03-22-2011, 03:21 PM   #5
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Mankiw has an interesting recent post comparing the US to other countries on the progressive level of taxes. I believe the writer says the US has a more progressive tax system, a less redistributive social services system, and more inequality to work with, and more final inequality, then most other countries. Greg Mankiw's Blog
many of those "tax-comparison" between countries articles ignore SS, Property, State, and sales taxes.

When the all-in comparison is made tax levels are more equitable than the articles would lead you to believe.
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Old 03-22-2011, 03:51 PM   #6
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many of those "tax-comparison" articles ignore SS, Property, State, and sales taxes.

When the all-in comparison is made tax levels are more equitable than the articles would lead you to believe.
But but but half the people don't pay tax...
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Old 03-22-2011, 03:55 PM   #7
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But but but half the people don't pay tax...
Hey. Get it right. It's 40%. Unless it is actually half.

I'm American, you expect me to get off my lazy butt and actually look it up?
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Old 03-22-2011, 04:05 PM   #8
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It is interesting to note that, even in European countries that love to "soak the rich", wealth inequality is currently as wide as it's ever been (although not as wide as in the US).

Nowadays, "The rich are getting richer and the poor are getting poorer" is commonly muttered on both sides of the Atlantic. Millionaires and Billionaires are striving, not only in the US but also in "soak-the rich" Europe and "communist" China. Three different economic models, 3 different tax structures and yet similar results.

What does it all mean? I don't know for sure. Perhaps a handful of people will always find a way to pull away from the pack. But it seems like there are global forces behind this phenomenon.
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Old 03-22-2011, 04:10 PM   #9
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I wouldn't dispute a growing "wealth inequality". I just have a problem when anyone thinks they have a simple solution to it. "Redistribution" by definition would work in the short run. Not so sure it would work in the long run. Any "one size fits all solution" simply stirs the pot IMHO.

Maybe there is an answer, but it will never be found in a 15 second sound bite. Obviously, just my $02 worth and YMMV.
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Old 03-22-2011, 04:40 PM   #10
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* Americans believe that government's function is to provide more opportunity rather than redistribute wealth.
And yet most Americans appear shocked, shocked I say, that the rich have figured out how to keep applying the methods that got them rich in the first place to enrich themselves even further.

Why, it's almost as if anyone could do it...
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Old 03-22-2011, 04:45 PM   #11
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I predict that before this thread gets shut down it will first be relocated to the politics forum.

I'm sure you'll do your part.
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Old 03-22-2011, 04:50 PM   #12
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It is interesting to note that, even in European countries that love to "soak the rich", wealth inequality is currently as wide as it's ever been (although not as wide as in the US).

Nowadays, "The rich are getting richer and the poor are getting poorer" is commonly muttered on both sides of the Atlantic. Millionaires and Billionaires are striving, not only in the US but also in "soak-the rich" Europe and "communist" China. Three different economic models, 3 different tax structures and yet similar results.

What does it all mean? I don't know for sure. Perhaps a handful of people will always find a way to pull away from the pack. But it seems like there are global forces behind this phenomenon.
Taleb, in his Black Swan book offered an explanation for this. In modern societies, technological advances level the playing field and allow for better competition. However, the tendency for the "winner take all" outcome is also greatly reinforced.

Taleb cited an example of how in the old days, traveling troupes were able to circle the continents to provide entertainment to people in far out reaches. The better singers stayed in large cities, and the lesser entertainers would have to go further out, and make less money to perform for peasants. There were places for everyone.

Now, the globalization effect of the airwaves and recently the Internet means that only the very top can make money, and then, they take it all.

Taleb also noted that luck plays a big part in who gets to become the player on top. How does the public determine who the best violinist or cellist is, or if we could even determine that? Most often, it's PR or just by some random chance that propels an actor or actress to fame. Then, by word of mouth, people would flock to see a certain movie, read a certain book, buy a certain CD, and would not give the runner-ups a chance. They simply want the best, as if some qualities could really be determined by putting them on a scale.

In some recent threads, people talk about this or that school being "THE best". It is the same phenomenon. It is bogus! In the past, when I watched a beauty pageant on TV, I told myself I would not be able to determine which woman would be the most absolute beauty.

Yes, we see the "winner takes all" scenario being played out over and over again in this modern world, even though there is often little evidence that the winner is really "best" at whatever we value.
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Old 03-22-2011, 05:01 PM   #13
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Now, the globalization effect of the airwaves and recently the Internet means that only the very top can make money, and then, they take it all.
I'd say it's been an opportunity for more people to make even more money almost easier than ever. Sites like Blip.tv have ads that pay those whose videos they run on, to the point that several people have been able to live off the advertisements alone, plus building their recognition into businesses selling DVDs, shirts, statues, books, toys, whatever. The same with artists, writers, independent game designers, programmers, webcomics, blogs; people who would have otherwise gone unnoticed are able to make hundreds or thousands a year from donations, advertisements, sales, where it otherwise would have been impossible.

It seems like there are more opportunities than ever. But then, that roving troupe didn't have the options to spend those earnings on the boggling assortment of things we have now, and that's what overwhelmingly seems to be the trouble -- at least to those incapable of reigning their spending.
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Old 03-22-2011, 05:04 PM   #14
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But but but half the people don't pay tax...

Half don't pay income taxes... almost everybody who has a job pays taxes...


Unless of course you are including kids in your quote....
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Old 03-22-2011, 05:14 PM   #15
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I predict that before this thread gets shut down it will first be relocated to the politics forum.
Fine with me. I thought of that too.
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Old 03-22-2011, 05:19 PM   #16
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In Other Words...

The rich keep doing the things that made them rich and the poor keep doing the things that made them poor.

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And yet most Americans appear shocked, shocked I say, that the rich have figured out how to keep applying the methods that got them rich in the first place to enrich themselves even further.

Why, it's almost as if anyone could do it...
Some of my siblings (there are 9 of us including me) seem the think "the man" is out to get them. They just can't get ahead... always wondering how they are going to pay their bills. I suspect they are for some sort of weath redistribution.

I am a firm believer in the methodologies depicted in The Richest Man In Babylon. It would be hard to convince me that most people cannot improve their situation in life if they simply payed themselves first. I realize that in itself does not make one rich - but it would certainly go a long way toward a solution of the wealth inequality discussion. With few "coppers" saved, individuals would learn to make their money work for them rather than expect somebody else to hand money to them.

After reading the NYT article I find it interesting the author suggests wealth "should" be redistributed - implying if you have money you're part of the problem and you should start giving it too those that don't have money.
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Old 03-22-2011, 05:22 PM   #17
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One way to synthesize the points made in the article is that people think that if there is greater opportunity then there will be greater competition. All those competitors with divide the pie up many ways and the result will be greater distribution of wealth and less of a gap.

With less competition you end up with a few people getting insanely wealthy. In this case the "Lottery effect" is working and everyone hopes beyond hope that they or their children will "win".
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Old 03-22-2011, 05:27 PM   #18
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USSR had Wealth Equality.

Everyone were equal, but some were more equal. In US everyone has a chance, and this is most important.
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Old 03-22-2011, 05:27 PM   #19
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Taleb, in his Black Swan book offered an explanation for this. In modern societies, technological advances level the playing field and allow for better competition. However, the tendency for the "winner take all" outcome is also greatly reinforced.

Taleb cited an example of how in the old days, traveling troupes were able to circle the continents to provide entertainment to people in far out reaches. The better singers stayed in large cities, and the lesser entertainers would have to go further out, and make less money to perform for peasants. There were places for everyone.

Now, the globalization effect of the airwaves and recently the Internet means that only the very top can make money, and then, they take it all.

Taleb also noted that luck plays a big part in who gets to become the player on top. How does the public determine who the best violinist or cellist is, or if we could even determine that? Most often, it's PR or just by some random chance that propels an actor or actress to fame. Then, by word of mouth, people would flock to see a certain movie, read a certain book, buy a certain CD, and would not give the runner-ups a chance. They simply want the best, as if some qualities could really be determined by putting them on a scale.

In some recent threads, people talk about this or that school being "THE best". It is the same phenomenon. It is bogus! In the past, when I watched a beauty pageant on TV, I told myself I would not be able to determine which woman would be the most absolute beauty.

Yes, we see the "winner takes all" scenario being played out over and over again in this modern world, even though there is often little evidence that the winner is really "best" at whatever we value.
I've never read the book, but I think this is very accurate. Technology allows the people at the very top to squeeze out the next tier. Globalization allows them to do that in a much bigger market. IMO, it often has more to do with "star power" than with substance. There's also a monopoly angle in many technology stories (a social network internet site is only useful if you friends are on it, so the first guy in can build a natural monopoly), which again can be leveraged around the world.
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Old 03-22-2011, 05:28 PM   #20
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After reading the NYT article I find it interesting the author suggests wealth "should" be redistributed - implying if you have money you're part of the problem and you should start giving it too those that don't have money.
Bill Gates and a few others have decided for themselves that this is what they should do with their money.

There is also a train of thought that says that if the income gap becomes too wide (however wide that is) then society will somehow breakdown and it will ultimately be bad for the wealthy too. That it is ultimately beneficial to the wealthy to maintain their wealth by making sure the gap doesn't become too large. I'm not sure I believe this . . . but it is often alluded to discussions of the income gap.
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