The fundamental question: Why is inequality bad?

Discussion in 'Political Opinions & Beliefs' started by FixingLosers, Mar 7, 2015.

  1. FixingLosers

    FixingLosers New Member

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    Fresh from another thread, I quote:

    http://www.politicalforum.com/polit...es-hits-record-high-thanks-united-states.html

    We all know it's a truism people on the left do not possess the most admirable logical skills, fully displayed here as this particular poster erroneously assumed there is a correlation, if not causation between people making too much and children starving to death. As if humanity is nothing but a zero sum game, that one man's gain is for certain another man's loss. As if your decision of not taking a bath tonight will ensure a family in the drought-suffering part of African having at least one day immunity to the feeling of thirst.

    But this thread is not about that, this thread is about this fundamental assumption:

    Inequality, or rather too much of it, is bad.

    BUT Why?

    Consider you yourself being the CEO of a company making smart phones. Would you rather A. everyone is poor to the point of not being able to purchase your products or B. everyone is so rich that your phone only costs a fraction of their daily salary in which case would make you much richer than you are?

    How poor would an everyday Joe be if every 1 out of 10 of his countrymen were billionaires? This is particularly true when America's "poor people" usually will get nothing but envy from real poor people from 3rd world countries who struggle to survive between the constant conflicts of warlords and drug kingpins.

    Is the problem with America and the world as a whole being having too many billionaires or too few?
     
  2. Keynes

    Keynes Well-Known Member

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    Here is an excellent example based on one put forth by former Secretary of Labor Robert Reich as to the problem of inequality (although I am sure it will be dismissed out of hand as 'liberal').

    When income is concentrated in relatively few hands, the overall demand for goods and services shrinks because the very rich do not spend nearly everything they earn, even with pricey temptations. Their savings are hoarded, circulated in a fury of speculation, or, especially these days, invested abroad.
    In 2007, Kenneth Lewis, then CEO of Bank of America, made one hundred million dollars even as he steered Bank of America toward a federal bailout. To spend all of that and return it back to the economy, Lewis would have to buy $273,972.60 worth of goods and services every day. If he devoted twelve hours a day to the task, he would have to spend $22,831 per hour or $380.52 every minute.
    Now, let’s say Lewis only made, say twenty-five million that year and the rest was divided up in the form of raises to five hundred employees, giving each of them a take home salary of $150,000. It wouldn’t be difficult to spend that much in a year, especially in areas like New York or other big cities. Being somewhat conservative, however, let’s say each of those five hundred employees manages to save ten percent of their income leaving them with $135,000 to spend. That would be $67.5 million – most of which would be put back into the U.S. economy.
    Let’s take it one step further and imagine that $75 million were divided up among two thousand people, giving each of them a take home salary of $37,500. If they saved 3%, (a generous amount) that would leave them with $36,375 or $72.75 million – again, most of which would be put back into the U.S. economy. (Granted, this doesn’t take into consideration for withholding tax, etc but the point remains the same)
     
  3. FixingLosers

    FixingLosers New Member

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    I read your post.

    So how about this: we line all the top 1% -ers in the street, and we shoot them. Then we part their properties.

    It's not like they don't know anything about offshore accounts or relinquishing their nationalities or anything right before a potential tax hike. Heck, the co-founder of facebook joined the grand nation of Singapore.

    When oh when you people will understand if you want wealth, create them, don't loot them?
     
  4. Sanskrit

    Sanskrit Well-Known Member

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    No, it's not simply liberal. When a garden variety liberal says what Reich says, it's just erroneous and misinformed. When Robert Reich says it, who damn well knows better, it's a purposeful, partisan lie crafted with the specific intent to deceive.

    Reich is bald-faced lying by omission here in hopes of fooling an uninformed partisan audience. He knows full well that unless money is buried in the backyard, it is -spent- by -someone- whether it is spent by the deposit owner or not. He knows that bank deposits are -multiplied- due to fractional reserve requirements, loaned out AND SPENT on goods and services once they are, as such, creating far more impact in the economy than merely street level or redistribution consumption.

    Reich knows full well that investments in stocks and bonds are neither "hoarded" nor "circulated in a fury of speculation," and that no financially educated person would ever typify as such, hence another lie with the specific intent to deceive. Investments in bonds are SPENT on building airports, roads, municipal buildings, bridges, and all other manner of infrastructure that communities need. Investments in stock prices are SPENT in the form of using the increased stock price as leverage to fund more R&D, capital investment, acquisitions, HIRING.

    More pure lying by Reich, and a childish diversion attempt an ape could see through in the "how much he would have to spend" canard. Lewis will SPEND some of the money directly. He will put some in a BANK, where it will be multiplied, loaned out and SPENT. He will invest some in municipal bonds, where it will be SPENT on civic improvements and repaid to him over time. He will put some in offshore accounts, where it will be multiplied, loaned out and SPENT, and since the US is a disproportionate beneficiary of foreign investment, the US comes out a winner on the proportion of funds held in offshore accounts that are SPENT in the US. Lewis will invest some in stocks like Google, who will SPEND some of the leverage an increased stock price allows on various goods and services under the headings R&D, P&E, acquisitions and HIRING. Lewis will donate some of it to charities where it will be SPENT. He will invest some of it in startups via VC and PE funds where it will be SPENT by the funded.

    In fact the only money that will not be SPENT is money he chooses to bury in the yard, wipe his ass with or BURN... likely not much, as people who are used to accumulating wealth don't do a whole lot of that. Reich KNOWS this, as sure as any financially literate person knows it. He is LYING to us. Did he fool you?

    The above not only demolishes Reich's LIES but Piketty's and all the other gov-edu-union-contractor-grantee-lawyer-MSM Complex LIARS that are LYING to all of us in ever more inventive and creative ways to persuade the people who pay little or nothing in taxes to take more from the 30% who pay 97% of all income taxes already, pay 30-50% of their entire working life at all levels to pay for the monstrous, corrupt Complex. It is plain, self-serving, Complex GRAFT and THEFT they are trying to perpetuate in the name of a HOAX, "income/wealth inequality."
     
  5. hudson1955

    hudson1955 Well-Known Member Past Donor

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    Increase inequality will always exist. Unless, the Federal Government were to unconstitutionally set a "wage" for every type of job that is the same amount. So Doctors, Lawyers, Politicians, Electricians, Plumbers: all workers would earn the same hourly wage. Of coarse, that would also mean the cost of all goods would have to be the same. I believe that is basically what the Fascists attempted to do. How did that work out?

    Not all individuals are capable of being a doctor or surgeon, lawyer, politician, nor do they want to do these jobs. The opportunity to obtain a good education is available to all and you can achieve most job goals. Not everyone is book smart but they have other skills. The Government can not create income equality. It is not possible in a Democratic Republic and has never been successfully achieved in any other form of Government.
     
  6. justlikethat

    justlikethat New Member

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    Your'e right, very liberal and right brain logic.

    The vast majority of Americans (regular folk) cannot manage money, so no matter how much money the get, they end up squandering it and they are back to square one, little money.

    That's why almost 70% of lottery winners go broke in less than 6 years.

    Can't pay the rent, but sure can afford a new iPhone, Starbucks, 24"rims or a Michael Kors handbag!
     
  7. Quantum Nerd

    Quantum Nerd Well-Known Member

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    LOL, it wasn't too long into the thread until Reich was being discredited. People should watch his movie on inequality, it is really good.

    I see, you like to extrapolate. So let's play this extrapolation game with respect to inequality:

    What if all the wealth were in the hands of one person? Would we still have an economy? We wouldn't, because nobody but one would be able to buy anything.

    Now, you'll say that we never come to this point. That's probably correct, but with wealth disparity rising we are on our way, until the increase in disparity stops or reverses. However, such a reversion of the trend is not in sight.

    As to the economic consequence, too much wealth disparity is as bad as too little. Things tend to converge to a natural steady state. We have surpassed this natural steady state distribution to the benefit of the wealthy. It will revert to the mean, it always has in history, something that is akin to the Boltzmann distribution.
     
  8. RPA1

    RPA1 Well-Known Member Past Donor

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    Inequality is a vague term and is used by many to demonize those who are successful. Instead of emulating those who are successful, the term 'inequality' is applied in order to exact more money from the 'rich' which is also a vague term. Equality doesn't mean everyone has to make the same amount of money, it means the everyone should have equal opportunity.
     
  9. FixingLosers

    FixingLosers New Member

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    Why does he need one?

    What if your question is thoroughly stupid and impossible? What is the color of Jealous? To quote Richard Dawkins' famous counter-question?

    The havoc and disasters brought about and upon by artificial, engineering effort to either eliminate or reduce inequality punctuated the entire 20th century and are still now plaguing partially this very planet. While your hypothetical scenario has no reality basis whatsoever.


    Total, utter garbage. Natural? How natural? How much natural is "natural"? Can you quantify natural? What's your standard(s) for "natural"? Is anything that doesn't please you "unnatural"? Isn't the increment of wealth disparity in itself "natural"? Since it always happen within every boundary, geological or otherwise, while equality requires one way or another, certain governmental effort?

    You know why you are highly educated, intelligent, yet ask stupid questions? Because you were brainwashed by your liberal, PC, choose-an-intuitively-correct-side-first, find-evidence-for-it-later college education.
     
  10. Steady Pie

    Steady Pie Well-Known Member Past Donor

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    Very few support equality of results and even less support equality of opportunity.
     
  11. Quantum Nerd

    Quantum Nerd Well-Known Member

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    I gave you an answer to your question asked in the original post, and all you come up with is insults, as you apparently do not like the answer?

    Why don't you instead point out to what I said was wrong? Increasing wealth disparity will eventually end up with all wealth in the hands of one, which is a natural consequence of an exponentially growing wealth gap. That fact can't be disputed. Will we eventually get there? We won't. However, the ill effects of wealth disparity will be felt long before and are already felt. Reich points that out eloquently, as posted above.

    The issue can be understood from the viewpoint of game theory. Players will eventually stop playing when they see all the gains of the game going to one person. We have seen this in professional sports. The NFL was wise to instate salary caps and draft rules, because otherwise the same team would have won in perpetuity, at the end killing the whole sport.

    People are so worried about progressive taxes killing incentives for the rich. Who is worried about incentives for the poor? Who is worried about them stopping to play the game (some already do, as can be seen from the record number of people on welfare).

    I could give more examples of behaviors where outsized inequities kill the game. However, I don't think you'll listen.
     
  12. FixingLosers

    FixingLosers New Member

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    I'm sorry if you felt so strongly about my response.

    Will do.

    Except it isn't really a fact. It's more of a myth. It's impossible for any single individual, or even a single group of individuals to possess all skills necessary for them to be self-sustained and self-sufficient. (As long as it's a modern day setting we are talking about, in other words, this discussion precludes the scenario of a hunter-gatherer society) They will always have to buy, invest and employ. Call it "trickle-down" if you will. But when a real estate tycoon puts down 50 million on a project while an average Joe spends 1000 bucks a month to rent one of his many downtown apartments, who is more qualified and entitled to call the other "trickling-down"?


    Critical error: your example is a perfect testimony of market regulating itself, and again, who said it would kill the whole sport? There actually are such cases in the world of soccer. Funny thing is, such team, Real Madrid Club de Fútbol for example, does not "win in perpetuity". It loses, from time to time due to heated competition. The other clubs pile up on megastar-players too. Liek I said, you can't find one individual or group that could "have it all". And even it does, all these clubs have to do is to expand their territory, from regional to natioanl, form national to continental, and to international. As it was the case with Soccer. I admit it would be more difficult for football to become an international sensation since not many people outside of the states enjoy such a sport.

    No, progressive taxes have impact on both the rich and poor, a negative one of course. It's likely to have more negative impact on the poor. Hike up the tax on cheese tomorrow, Warren Buffet won't feel a thing, but many poor households will suffer a bit more, manageable but definitely unpleasant. And I don't think progressive taxes works in a industry-specific way.

    Not if it doesn't even pass the primitive phase of going through the test of logic and hypothesis.
     
  13. crank

    crank Well-Known Member

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    I agree with the game theory thing. People are refusing to play (in both productive and non-productive ways) in numbers not seen before. Most won't even know why they've stopped playing, though, they just know it felt bad to keep playing.

    Having said that, there are still plenty who do know why they no longer play, and can therefore make the links between spastic, unbridled capitalism, and poor field conditions. Their numbers are growing at the same rate as the former.

    When enough people stop playing, we'll see how inequality fares.
     
  14. Longshot

    Longshot Well-Known Member

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    Kenneth Lewis and other rich people don't actually hold onto their dollars. In fact they probably only have a few hundred in their wallets at any point in time. All the rest they either lend to others or use to buy things, both of which circulate those dollars back into the economy.
     
  15. Mr. Swedish Guy

    Mr. Swedish Guy New Member

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    But "the poor" and "the rich" are not enduring classes of people. They are not the same people from year to year. Most people who are rich or poor in one year does not stay in that category a few years later. Mostly, it's due to the mundane fact that young people often start out poor and become richer in their later days when they've worked all their lives and have a good job and experience. If we look at the income quintiles, the rich might be getting richer, but who really cares about abstract income categories when we can look at REAL people? Looking at real people will show you that most people in the poor category will have moved out of there. This talk about "increasing inequality" doesn't mean that two enduring classes of people are getting farther apart. It means basically that the average percentage increase in income for a given person during their lifetime is greater today. I'll explain with an example. Consider the scenario in which everyone started making x dollars in their 20's and x5 dollars in their 50's. Now consider if they started to make x20 dollars in their 50's instead. That would show up as "the rich are getting richer" but it's a very misleading, wouldn't you agree, given that it is the very same people who were once "the poor"?
     
  16. creation

    creation New Member

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    Are you saying progressive taxation makes poorer people buy less cheese? Or is that just higher taxation in nominal terms?

    Are you in favour of a flat tax or a progressive tax and why?

    - - - Updated - - -

    Um no the poor and rich are generally the same from generation to generation.
     
  17. creation

    creation New Member

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    No that's not true. It is held by banks as capital. Or lent out for profit. That's doesn't mean it is being spent on anyone else. That does not mean we are all better off for these people having billions at their disposal.
     
  18. Mr. Swedish Guy

    Mr. Swedish Guy New Member

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    um, no, they're not.
     
  19. creation

    creation New Member

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    Interesting but historically and across the world they are indeed.
     
  20. Mr. Swedish Guy

    Mr. Swedish Guy New Member

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    Across the world is a wholly different matter. This is about the USA, and perhaps -likely- also the west in general.
     
  21. publican

    publican Banned

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    Income equality=communism. If the doctor makes the same money as the plumber, what do you have? Ever wonder why everyone wore the same thing when Mao ruled? Oh it was 'equality' alright.

    [​IMG]
     
  22. Hotdogr

    Hotdogr Well-Known Member Past Donor

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    This theory assumes that there is a single pie, and that the 1% taking a larger slice necessarily causes the 99% to get a smaller one. And since the 99% get a smaller slice, they cannot spend as much on goods. This is fallacy. Each individual has his own pie, and the size of that pie is determined by his own baking skills. There is no limit imposed on people's ability to grow their own incomes.

    So, in order to show that income inequality reduces demand for goods in the economy, you must first show that income inequality reduces the income of the 99%.
     
  23. Longshot

    Longshot Well-Known Member

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    It is true. They only keep a small amount of dollars (1s, 5s, 10s, 20s, 50s, 100s) in their wallet. The rest they either spend or lend out. Lending it to a bank would fall under "lend out".
     
  24. creation

    creation New Member

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    Right so they still keep most of it. They don't spend it all. Instead they put in it banks or investment funds etc.


    In my country the landed elites owned all the land and numbered only 500 families. Do you think that's a concentration of wealth?

    - - - Updated - - -

    Nonsense there exists a finite amount of resources on the earth.

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    Not sure what do you have if they make the same money?

    - - - Updated - - -

    Not sure what do you have if they make the same money?

    - - - Updated - - -

    Perhaps inequality increases everyone's income. What do you think?
     
  25. publican

    publican Banned

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    You have income inequality. Unless you think the plumber deserves as much as a doctor.
     

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