More Doom & Gloom - 15 examples

[traineeinvestor]

I've been listening to and reading about "the rich getting richer and the poor getting poorer" since I was in school.

Since then literacy rates have gone up, education levels generally have improved, child mortality has gone down, the range, quality and affordability of "stuff" that people own and/or use has expanded very significantly. Although I'm feeling too lazy to actually pull up some data to support this, I would expect these statements to be true in more countries than the opposite is true. If (on average), "the poor have got poorer" it is because the benchmark has changed.

Sure, we collectively still have huge issues with poverty and other social and economic problems and it is unlikely that they will be solved any time soon, but to continuely assert that the poor have got poorer, is, at best, sloppy journalism and, at worst, a weak echo of the calls for a communist revolution.

Also, it has never been explained to me how the fact that some people end up rich has anything to do with others ending up poor.

 

[ERD50]

This is one of those topics that brings out the name callers. "Class warfare, socialists...."

"Class warfare" and "socialists" are descriptors, as are "Capitalism" and "Reaganomics". They exist, they are real, and they affect our lives and are all worthy of discussion here, IMO. I suspect it is viewed as "name calling" when one does not like what is being said about those topics.

Feel free to call me 'Libertarian-minded', I think it is a reasonable descriptor.

Can't we have an intelligent conversation about a real problem without name calling?

Apparently not both in the same post.

+1.

OK, maybe you could start a thread on the 'real problem', with some solid factual info/sources that don't appear to have so much spin to it?

-ERD50

 

[youbet]

I suspect it is viewed as "name calling" when one does not like what is being said about those topics.

-ERD50

+1

Yep, one person's "put-down" is another's objective description.......

 

[haha]

It's billed as "rich v poor" but is seems to be much more about "rich v everyone else". It hardly mentions the genuinely poor at all.

Anyone who has seen poor will realize that there are between very few and no "poor" in the US. Few seem too poor to have pretty nice clothes, a cellphone and money for alcohol.

Poor is mostly a political posture.

Ha

 

[BigNick]

BTW, I think those high rates made for clever tax shelters more than anything, which really only made the "gap" between the rich-enough-to-play-legal-games and everyone else worse.

That's one way to explain the observed phenomenon of high earners jumping through tax avoidance hoops, but I suspect that the major motivator for someone with "big$ x big% = big tax" to do such jumping is on the right hand side of the equation, not the left.

If you make $10 million a year and your marginal rate is 50%, that's $5 million in tax, ouch, hey Mr Accountant guy, find me a way to reduce that. If you have a flat tax at 22%, $10 million is "only" a "reasonable" $2.2 million... ouch, hey, Mr Accountant guy, I still need you.

This idea that anyone, rich or less so, is happy to pay a certain amount of tax, is totally against how people actually behave in the real world. From my experience of my mother trying to keep her wealth below the level at which inheritance taxes kick in, I would say that some people are actually capable of making irrational decisions in order to reduce their tax burden.

Mum was at one point proposing to give move money into less-performing assets because she would rather have $100 less than pay $30 in inheritance tax and keep the $70. Weirdly, she doesn't apply that reasoning to income tax. She claims it's because she considers income tax to be fair and inheritance tax to be unfair. I believe her, although I wonder whether the fact that she won't be the one actually paying the inheritance tax might not be a factor - ie, she would feel bad about leaving a "tax bill", even though her heirs will by definition have the money to pay for it.

 

[ERD50]

Anyone who has seen poor will realize that there are between very few and no "poor" in the US. Few seem too poor to have pretty nice clothes, a cellphone and money for alcohol.
...
Ha

Maybe the real increasing gap is the one between what is called 'poor' (may have cable, A/C, color TV, cellphone, brand name clothes) and the truly indigent ( probably have mental/addiction issues, and are too out of it to seek help).

-ERD50

 

[HFWR]

Maybe the real increasing gap is the one between what is called 'poor' (may have cable, A/C, color TV, cellphone, brand name clothes) and the truly indigent ( probably have mental/addiction issues, and are too out of it to seek help).

-ERD50

Do they even sell b&w televisions any more?

I wouldn't begrudge someone having a cellphone or a tv, and if you've ever lived in Texas, woe is you without a/c...

A quick trip to the valley in Texas, numerous hollows in WVa/Ky/Tn/NC/SC, maybe a jaunt through south Dallas, inner-city Detroit,etc. will reveal some "true" poverty. Much of it is generational and cyclical. It's caused by lack of opportunity, lack of education, culture, etc.

This is different from the "declining middle class".

 

[freebird5825]

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[skyvue]

I don't prescribe to the "soak the rich" with higher taxes mindset. In fact, if I were in charge I would implement the flat tax where every american paid X% of their income in federal taxes. There would be no deductions for kids, mortgage interest, or anything else. It would very simple and require a much smaller IRS to adminster.

Having said, that I am very concerned about the growing inequality in wages in America. I work for a $8 billion dollar 150 year old American consumer goods company. 85% of our revenue is from the U.S. and an even higher percentage of our employees work in the U.S.

Our CEO last year by himself made more money the all 380 employees combinded in our largest factory! This just doesn't seem right to me. People are paid fairly in both the blue collar or white collar workforce but only what the company "has" to pay based on wage surveys.

This applies to middle management all the way up through the plant manager or director level in the company. However, once you become a Vice-President (probably 50 of them in the company), their pay more than doubles at each level they go up. I see no reason for this? Up until that level in the company, each layer of management makes about 10-15% more than the layer below them.

Why do we all of a sudden need to double their pay and triple their stock options? The answer is we don't. Most of these guys would take the VP job for that same 10% raise their are used to.

In the 15 years that I have worked here we have never had a senior executive leave the company to pursue a better opportunity so I don't buy the argument that we need to pay at that level to be competitive. It seems more like their is "fraternity" of 50 people here who are the only ones making any real money while the other 28,000 folks simply work to make them and the shareholders richer. In my idealize world the CEO would only be able to make some multiple of the lowest paid person in the company (20 times?).

 

[Independent]

On this topic, I think we need to distinguish three questions:

1) Is income/wealth really a lot more unequal in the current US than in the past or than in other countries?
2) Is this a Bad Thing?
3) Even if it is a Bad Thing, is there anything the gov't can or should do to change it?

I'd say:

1) Yes. 5-10 years ago you'd get a debate on the facts, now I think they are just too solid to debate.

2) This is judgement, not facts. IMO, it is a bad thing.

Partially because of the way people get into the very top, which I think is too often by pure luck (we are becoming the Lottery Economy), or by simply re-juggling assets instead of producing something (think micro-second traders, or the people who hire Washington lobbyists), or by using insider status (skyvue's CEO).

Partially because I think that immense wealth really makes a different class of people. The Constitution prohibits titles of nobility, but when you can count on your Senator returning you phone calls just because you're so rich, I think you're modern day "nobility".

3) I don't think the gov't can offset some of the underlying economics (globalization is partly responsible). I think that even when it seems that gov't could do something we need to be concerned about unintended consequences. I think all that gov't can do is nibble around the edges. At the vary bottom of the income ladder, we could have put a tariff on Chinese goods to offset their currency manipulation, and we could do obvious stuff to enforce immigration laws. At the top could put a very small transaction tax on financial instruments and be less generous with patents/copywrites. Mostly, we could have reasonably graduated taxes and actually make an attempt to collect them (why does a hedge fund manager earning $100 million per year have a lower tax rate than the guy who runs a plumbing business?).

But, even though I think those things are all better ideas, in total they are just going to take the sharpest edges off.