Income Inequality.

[ADigitalArtist]

Never happened. Dragons are not real.

Yes they are, they just have bad toupes and boats they need historical bridges demolished to get to sea.

We do.

The villain in baby's first dystopia novel declaring that their city is a meritocracy.

The examples I provided, the salesmen purchased the rights to the product from the inventors and made more money.
Nowhere did I say ONLY the inventor makes money off the product he produces; we can come up with scenarios where lots of people make money off of somebody else’s inventions.

Actually in both your example a slimeball leech (not George Foreman,Tsann Kuen and Ray.)
used shady legal methods to buy the invention from under them and become the face of that invention despite contributing nothing to its invention, yet make a thousand thousand times more than the inventors did. It doesn't pay to be an inventor in the US. It's one of the least mertocratic places you could be.

 

[Father Heathen]

Why is the widening gap between the rich and poor bad?

Was this a serious question?

 

[Stevicus]

I was talking about in today's economy. After WW-2 Europe and Asia was destroyed, but the USA remained untouched; so we were the only country open for business, and it took Europe and Asia 30 years to rebuild and start providing us competition again.

That may all be true, although it doesn't change the basic point that when the gap between rich and poor is more narrow, that's a sign of a strong economy. Weaker economies are marked by extreme variances.

Top 10 Countries with the Highest Wealth Inequality (World Bank Gini index):​

1. South Africa - 63.0%
2. Namibia - 59.1%
3. Suriname - 57.9%
4. Zambia - 57.1%
5. Sao Tome and Principe - 56.3%
6. Central African Republic - 56.2%
7. Eswatini - 54.6%
8. Mozambique - 54.0%
9. Brazil - 53.4%
10. Botswana - 53.3%

Wealth Inequality by Country 2024

worldpopulationreview.com

 

[sayak83]

So you can see a scenario where income inequality results in good?

I think in my initial post I have already said that I do not mind income inequality as long as a society focuses on having basic needs of its citizens met.

 

[Kfox]

Any time they increase the wages of the poor working for them.

The rich don't determine wages, managers do.

 

[lewisnotmiller]

The rich don't determine wages, managers do.

This manager doesn't. I can influence them a little, but it's within pretty firmly set guidelines and limits.
If I want to exceed those, it goes to the board, who are acting on behalf of the shareholders. The owners.

 

[Kfox]

Since there is only so much money available within an economy at any given period of time, the above simply is not true.

I'm not talking about money, I'm talking about wealth. Wealth is constantly being created and lost minute by minute; this happens on a constant basis.

 

[Kfox]

Remember, I said we need to reward invention and innovation,

The only time invention and innovation should be rewarded is when somebody values it; and that reward should come from he who values it.

so SOME inequality is essential. But when we get to excessive inequalities we usually get:

- The powerful corrupt the government. (such corruption allows many of the following problems)
- Monopolies develop which usually hurt the consumer class (lower quality, lower availability, higher prices..)
- A financially insecure middle and lower class.
- Degradation in healthcare
- Degradation of the environment
- Imbalances in our legal systems
- Degradation in journalistic quality
- Increases in propaganda
- Degradation of food quality

And so on. Now I understand that you might want me to connect some dots here. I'd ask you to think through some of the issues I listed above and see if you can understand how excessive income inequality is causing or exacerbating these issues..

The fact that you say it, does not make it so. You need to provide evidence that income inequality causes those things.

 

[Kfox]

If there are more money making opportunities, it is the rich who are more able to take advantage of these.

I disagree! 80% of America’s millionaires are first generation rich

https://www.cato.org/commentary/real-1-percent#

the days of old money where the rich usually inherited their money still exist, but there are far more people like Lisa (from my scenario) who get rich coming from meager means.

The top 1% of Americans are now taking a much bigger slice of the pie, with the middle class being the group most heavily impacted, and the working class/poor the second most (negatively) impacted. Wealth is increasingly stratified.

I disagree. The rich increase the size of the pie to the point that even though they get a larger percentage of the pie, everyone else still have more pie even though their percentage of the much larger pie is smaller.

 

[Kfox]

Bill Gates was in an industry directly involved in the dot com bubble bursting

Doesn't matter; far more rich people lost money during that time so the gap between the rich and the poor shrunk.

 

[Kfox]

Actually in both your example a slimeball leech (not George Foreman,Tsann Kuen and Ray.)
used shady legal methods to buy the invention from under them and become the face of that invention despite contributing nothing to its invention, yet make a thousand thousand times more than the inventors did. It doesn't pay to be an inventor in the US. It's one of the least mertocratic places you could be.

My 2 examples were George Foreman and Ray Crock. George Foreman did not invent the George Foreman grill; someone else did, but you don't want to include Foreman in your slime ball example, so who are you talking about that stole from inventors? The McDonalds Brothers did not invent the Hamburger, they didn't invent the restaurant, they invented nothing! When Ray Crock bought the restaurant from the McDonalds brothers, he didn't buy from inventors, he bought from one of countless restaurant owners that was in the area.

 

[Kfox]

Was this a serious question?

Yes. What's your opinion?

 

[Kfox]

That may all be true, although it doesn't change the basic point that when the gap between rich and poor is more narrow, that's a sign of a strong economy. Weaker economies are marked by extreme variances.

Top 10 Countries with the Highest Wealth Inequality (World Bank Gini index):​

1. South Africa - 63.0%
2. Namibia - 59.1%
3. Suriname - 57.9%
4. Zambia - 57.1%
5. Sao Tome and Principe - 56.3%
6. Central African Republic - 56.2%
7. Eswatini - 54.6%
8. Mozambique - 54.0%
9. Brazil - 53.4%
10. Botswana - 53.3%

Wealth Inequality by Country 2024

worldpopulationreview.com

The opposite has been true in today's economy.

 

[Kfox]

This manager doesn't. I can influence them a little, but it's within pretty firmly set guidelines and limits.
If I want to exceed those, it goes to the board, who are acting on behalf of the shareholders. The owners.

I disagree. The manager is responsible for turning a profit. If he can make more profit by raising wages, he would be free to do so.

 

[lewisnotmiller]

I disagree. The manager is responsible for turning a profit. If he can make more profit by raising wages, he would be free to do so.

I'm sure it varies from business to business, but I can only speak to how it works in the businesses where I have been managing a team. I work in professional consulting services, so this might be different to manufacturing, etc.

I am free at any time to add additional staff, with the assumption that any staff I do add will become utilised and chargeable to our clients. If I suddenly add 10 people, the heat would be on me to keep them all busy. We are aiming to make about 30% as a base profit on each employee in the team. If I am paying them $1000 a day, then I need to sell them at $1300 as a minimum, and keep them very busy.

When I am hiring, I have a fair amount of discretion in the wage I offer. There is oversight, but it's something I can have a fair amount of control on. Yearly salary increases are a different story, because they are not built bottom up in the same way. The business unit is effectively given a global revenue budget, based on existing staff numbers, plus forecast hire numbers, and allowing for 'normal' levels of loss.

As a simple example, I might have a total staff salary pool of $2,000,000 this year, and be funding for 2 new hires, and a $100,000 increase in existing staff salaries.
In theory, I could give that whole $100,000 to a single employee, and tell the rest they are getting nothing. There is oversight of this process by my manager, and by HR to prevent that, , etc. What I typically do is determine a baseline increase I can give everyone to offset inflation (tough this year!) and then work out what discretionary amount I am left with. In the above example, I might 'spend' $75,000 on small increments for everyone, and then have $25,000 left to split out as I see fit, based on performance, taking on responsibility, and to bring up people who were bad at their initial negotiations, and are basically underpaid.

In rough terms, the company I work for is listed on the stock exchange, and numbers approximately 1000 people.

 

[icehorse]

The only time invention and innovation should be rewarded is when somebody values it; and that reward should come from he who values it.

The fact that you say it, does not make it so. You need to provide evidence that income inequality causes those things.

You're skating very close to sea-lioning territory

 

[Koldo]

The rich don't determine wages, managers do.

This manager doesn't. I can influence them a little, but it's within pretty firmly set guidelines and limits.
If I want to exceed those, it goes to the board, who are acting on behalf of the shareholders. The owners.

It is just like @lewisnotmiller said. The managers can't just raise wages according to their own volition. They must necessarily act within the limits set by the owners.

 

[Koldo]

I disagree. The manager is responsible for turning a profit. If he can make more profit by raising wages, he would be free to do so.

Weren't we talking about the cases where the rich lose money and the poor gain more money?

What does that have to do with making riches richer?

 

[lewisnotmiller]

I disagree! 80% of America’s millionaires are first generation rich

https://www.cato.org/commentary/real-1-percent#

the days of old money where the rich usually inherited their money still exist, but there are far more people like Lisa (from my scenario) who get rich coming from meager means.

I'm really not interested in the raw percentage, though. Is 80% good? Bad? Who knows, and how would you measure?
I'm interested in the trends.

1. Trends in income and wealth inequality

Barely 10 years past the end of the Great Recession in 2009, the U.S. economy is doing well on several fronts. The labor market is on a job-creating

www.pewresearch.org

The distribution of wealth held by the middle class is shrinking, and it's the wealthiest who are getting the difference. The working class/poor have actually reduced slightly.
So, more power to Lisa. What I don't want is a situation where Lisa gets rich, but does so by offshoring jobs, underpaying workers, or fostering poor working conditions. If Lisa works hard, pays fair wages, establishes good working conditions...then she's fully entitled to sit back and be proud of her accomplishments in my mind.

I disagree. The rich increase the size of the pie to the point that even though they get a larger percentage of the pie, everyone else still have more pie even though their percentage of the much larger pie is smaller.

It's a worthwhile point. If the pie is growing, then even a reducing percentage of the pie means a bigger slice.
Looked at from a holistic GDP point of view, that's not the optimum way to grow the pie, though. I alluded to it earlier in this thread, but increased wealth inequality was estimated to have taken a little over 4% off GDP growth. So the pie could be grown more quickly, and at a lower social cost.

 

[Nakosis]

Any time they increase the wages of the poor working for them.

Not necessarily true.
Henry Ford decided to double the wages of his employees in 1914.
In doing so he reduced his employee turn-over rate from 370% to 16%. Saving a lot of recruiting costs.
Also by paying his employees they were able to afford to buy the product they were producing.
So by paying his employees more he was also increasing the size of the market for his product.

Greed is actually bad for capitalism. Capitalism benefits from having a healthy market.