The fundamental question: Why is inequality bad?

I'm not disagreeing that counterfeiting reduces the value of others money. Typically, these counterfeit bills are snagged by banks and eliminated from the pool.

If your argument is that bankers are being enriched without producing value, they would have to stand in line behind many other leeches in society. Much of our governments are unnecessary overhead. There are loads of welfare addicts(including unemployment benefits, disability and SS/Medicare).

The little train that could has never been more truer than it is now, but the little train is going to explode eventually.

 

Inequality is bad for more than just moral reasons.

The main issue I have with inequality is that it causes gross economic inefficiency and distortion.

If you look around the world, especially at the developed nations, you will find a strong correlation between income equality and overall economic prosperity for the nation as a whole. Not only that, but those nations with income equality are generally more liberal politically, more transparent, less corrupt, etc. etc.

The reasons for this are complex but the main issue is that without income equality, a strong middle class cannot exist. The middle class is the bedrock to all successful modern nations both economically and politically.

 

Even if the counterfeit bills are snagged and eliminated from the pool, they have already given the counterfeiters a share of production. A share which they did not earn.

The bankers took more in government handouts in '08 and '09 then the “welfare addicts” took in the previous 40 years. That is why the welfare addicts are still poor … but the bankers are mind-boggling rich. If you are in the grocery store and you simultaneously see a kid steal a candy bar while an armed gunman takes $4,000 from the cashiers box, if you were the store manager, who do you think we should hunt down first? I'm not saying that we shouldn't punish the candy bar thief, but wouldn't it make more sense to catch the armed gunman first, since he took so much more.

 

A bird in your hand is better than 2 in the bush. While you are worrying about raiders raiding pensions, the greatest heist has already occurred by the government raiding SS/Medicare. This is why I have been vehemently against any form of public/private pensions.

States are not properly funding their pensions, why is it you are concerned with a company here or there? The whole practice of letting others be our retirement nanny is a huge mistake. IMO, it is a risk that we invest to the match on my wife's 401k. I would never consider it our reliable nest egg.

 

I hope you are not under the impression that I support bailouts for bankers. IMO, the major banks going bankrupt would have been a longterm good for the country, though being a short term disaster.

My point is that bankers play a role in the economy. Just as police and fire that really produce no wealth. Bankers manage the risk of investing in productive ventures. They are part of the efficiency process.

This is why I'm against government participation in the housing market which distorted the bankers important role as risk managers. There should be no "Too big to Fail" entities in a free market.

 

I have already voiced my chief complain about those issues in previous threads. I agree with you that we would not have the problems we currently have, if our elected representatives were brave enough to bear true witness to our own laws.

 

We have all hear the tale about "killing the goose that laid the golden egg," and I certainly believe it is true.

However, what tends to be forgotten when thinking about this tale is that someone has to take care of and feed the goose.

 

First the presumption that there is absolutely no zero-sum game involved is wrong. That the rich getting more means the average worker gets less is often very true.

If you look at the late 1800's, the era of the robber barrons, there were a few extremely rich men, and lots of people living in extreme poverty. Unions, minimum wages, labor safety laws and so forth gave rise to a much larger group of people reaping more benefits from their work.

That is the key you miss, labor productivity creates wealth. Should that wealth that is generated from labor go to just a few, or also be shared more widely with those laboring. With the increase in labor productivity since the 80's, the extra wealth generated has gone to just a few, rather than be spread more equitably.

Not many people on the left or right would say that everyone should make the same. But the concept that all the spoils of everyone's labor should be rigged in a system that give it all to a very few is the issue.

 

No by academia I meant conservative people. No personal offense intended.

 

Ah, I see. You think I'm a conservative.

Also, you haven't said why it is better for people to spend their money on consumer goods as opposed to spending their money on capital goods.

 

The fundamental problem is that the wealthiest can simply purchase better privileges and immunities than the anyone who cannot under our form of capitalism; regardless of the socialism of our fundamental laws.

My chief complaint about the right, is that they are willing to sacrifice the End of a moral of "goodwill toward men" to means of the coercive use of force of the State to enforce extra-Constitutional laws; while complaining about communism and socialism in public venues.

 

Well for starters capital goods are already important in the economy. So such an increase in these goods to account for the loss of consumer spending is unlikely.
In the end I'm all for increased savings.

 

Everyone is equal in their poverty.

 

Not so! Compare what is considered impoverished inside any reasonably affluent western nation to what is considered impoverished to most third world nations . . . shudder!

 

Thats not really relevant to the point I was making.

Some of the most economically equal countries in the world are Ukraine, Belarus, Afghanistan, Albania, Kazachstan, Iraq, Etiopia etc..

Poverty rate is the primary issue and the cause of problems, not inequality. Poverty rate preferably measured in some objective manner that can be generalized globally and takes welfare policies (or their absence) into account.

Because ultimately, when the lower classes live in an acceptable manner, it does not matter what the wealthy earn.

 

then it isn't poverty but a Standard of living. would they be better off with more inequality and more poverty?

 

And this hoarding could be eliminated if you provide opportunities for people to build thier own empires by reducing the regulations that hold them back. Or by redistributing the wealthy Democrats money, till they are no more.

 

No. The rich don't hoard much in the way of currency. Maybe a few hundred dollars in their wallets. Everything else they either lend or spend, pumping it back into the economy.

 

No, it is poverty. Some third world countries are very equal while also very poor. Their precious equality is useless in such case.

They would be better off with less poverty and they would be worse off with more poverty.

But inequality is not very important.

What is important is the standard of living. As long as standard of living is acceptable for the people, it does not matter much what the inequality is. Most of those "negative effects of inequality" are really due to poverty, not inequality, and are present in all poor nations no matter their inequality measures, even in those that are quite equal.

 

how about we just stop taking the 10% less then the working class.... seems like a easier solution to me

when oh when will the right care as much about the working class as they do about the rich.....????

.

 

I would say they cannot be very equal, or there would be less inequity regarding poverty.

 

Exactly, most wealthy people don't have fat personal bank accounts - most of their wealth is tied up in assets and investments.

The last thing an entrepreneur would do is hoard cash. The only way to make more money is to reinvest your profits (which the majority of business owners do, the majority don't see a paycheck for years).

 

You say the savings are hoarded. In most cases, they are invested. In most cases to grow businesses. Those businesses create jobs.

 

Is hedge funds, mutual funds, Exchange traded funds, FDIC insured bank accounts, commodity funds and real estate fall under your "pumping it back into the economy"? Because that is where the wealthy put their money.

 

Your foolish... investing in stocks, does not grow businesses.

You are spewing the supply side propaganda you have been told to spew. Let me ask you a simple question.. If the wealthy have the most money to invest in the last 100 years, corporations have the largest profits in decades, and the most cash reserves in history... why is your belief not creating jobs?

Hint:; because you fail to realize one giant mistake of supply side economics,,,, it only works if there is unlimited demand... a business doesn't build a new plant and hire new workers if they don't see a demand for the production of their labor. Boosting supply only works if there is unmet demand. But if there is not shortage of supply, then increasing money to create supply doesn't work, because business will hold the cash instead of invest in creating unwanted supply.... demand creates supply, not supply creates demand.