Income Inequality.

[Stevicus]

All of communism but the word itself
is being promoted.

Joe McCarthy argued that even if one wasn't a card-carrying communist, it didn't matter, as he saw communism as a way of life and a way of thinking. To him and many others, communists were like heretics - an evil menace that had to be eradicated. Calling people "communists" is a political tactic. Always has been. It may not carry the same weight as it once did, but there are still some factions in America who use red-baiting, such as those who call Biden and his administration "communists."

Other than NK I think every country has some
degree of socialist / socialist system.

I had not noted nationalism as a main topic
from you. But sure, nationalism in combo with
any other - ism can be bad news

I look at it in terms of cause and effect. Historically, the rise in nationalism took place at the same time as the classic liberal economists, coupled with the rise of industrialism. One can discern the historical relationships and how they affected each other. I would suggest that there could be similar patterns in what exists in today's world, particularly with the noticeable rise of nationalism in multiple countries.

Nations are not unlike businesses, and historically, they tend to compete with each other just like rival businesses. But they don't always play nice, and one of the results has been world wars. I think those wars were so devastating that it gave some people pause, and it fed the desire for greater international cooperation, peaceful conduct between nations, human rights, as well as enhanced social programs, workers rights, civil rights, and a more benevolent system of government. That was seen as the key to avoiding any kind of extremist government.

Unfortunately, the world has wavered from those ideals. Maybe there's not enough resources, too many people, and the only thing left to do is to fight over what's left. At least that's what the U.S. government has been worried about, with all these rogue nations and belligerent powers to contend with.

 

[Alien826]

Sadly, your parents did not understand the actual purpose of engaging in commercial trade: to serve the well being of all those involved in the trade. They were only looking to serve their own well-being at the expense of the other person.

But according to what you said before, they, being operators of a small business, should have behaved in a very different way because they were forced to "know" their customers more intimately. But they didn't. My feeling, and that's all it is, is that a small business doesn't have enough "slack" in its income and customer base to be able to afford the more altruistic approach that a larger business has. That's not to say that there are not counter examples of both of course. Or maybe I have missed something in your argument?

 

[Nakosis]

Or perhaps you aren't grasping the difference between CREATING value, and exploiting it for the benefit of the capital investors. Because THAT"S what the "upper" management is about. The lower managers are just for keeping production flowing.

First thing you'd need to do is toss out the window everything Marx said about capitalism. A subject he really didn't have a clue about.
Otherwise there is going to be a gap between your thinking and reality.

 

[metis]

True! The pie chart shows percentages; but it does not show if those percentages are a good thing or a bad thing which is what we are trying to figure out

Generally speaking, the greater the income disparity, the more problems typically result. In anthropology, we have seen this pattern over and over and over again.

The U.S. Inequality Debate

Public policy experts call income and wealth inequality one of the defining challenges of this century. Recent crises have accelerated these divisions, and the COVID-19 pandemic has deepened them fur…

www.cfr.org

6 facts about economic inequality in the U.S.

Over the past 50 years, the highest-earning 20% of U.S. households have steadily brought in a larger share of the country’s total income.

www.pewresearch.org

https://www.npr.org/sections/health-shots/2019/06/28/736938334/the-gap-between-rich-and-poor-americans-health-is-widening

The problem with wealth inequality

The World Economic Forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas. Incorporated as a not-for-profit foundation in 1971, and...

www.weforum.org

 

[Koldo]

I agree; I never said that it did.

Why is it relevant to bring up that income inequality is great at economic booms if it doesn't have to be?

If income inequality doesn't have to be great to have an economic boom, then how does income inequality benefit the poor?

I don't think it is possible to prove workers getting a raise effects share price of a stock.

I haven't mentioned stocks. I was talking about net profit and dividends. If you own a LLC, for example, the ammount of money you can draw will be directly affected by the net profit of your company. Meaning that by paying higher wages you end up with less money. Likewise, if you are a corporate shareholder, the ammount of money you are going to get is also going to be directly affected by the same factor. And since you have mentioned stocks, having worse earnings is a factor that drives their prices down.

 

[Koldo]

First thing you'd need to do is toss out the window everything Marx said about capitalism. A subject he really didn't have a clue about.
Otherwise there is going to be a gap between your thinking and reality.

What made you reach this conclusion?
I definitely don't agree with everything he said, but to say he had no clue is quite a claim.

 

[Nakosis]

What made you reach this conclusion?
I definitely don't agree with everything he said, but to say he had no clue is quite a claim.

He never ran a business. Never really had a job nor ran a company. Marx was on the outside looking in. I'm not saying that about everything he wrote. Just his ideas about capitalism. IMO, you need to have experience in a system to really understand it.

 

[Kfox]

Really? By paying corrupt officials to incarcerate them when the court might have otherwise chosen another alternatives. Or hand out longer sentences.

They aren’t exactly pulling people outta church, these people are committing real crimes! And there is no evidence the prison industry is influences juries to find people guilty to fill their cells

We can agree that being in jail has an economic impact?

How does that impact make people poorer?

Where did I say that? Strictly speaking, most of the examples of how income inequity affect the poor aren't illegal.

I gave you examples, as you asked, of where the poor are disproportionally affected by the actions of those seeking huge profit without any thought of how it affects people.

But those examples exist regardless of income inequality. IOW it happens just as much when the disparity is great as when it is lessened.

As of Q4 2021, the top 30,000 people in the US controlled 32.3% of the country's wealth. This means that the top 0.1% of the population controls more wealth than the bottom 90% combined. And I've given you many examples of how they use their income and it affects the poor.

No, you gave examples of how a tiny, tiny, percentage of rich rip people off; you’ve offered no evidence that most rich operate this way

Again, demonstrably false. These sorts of crimes occur less in places where the income disparity is less.

Like where? Where are some of these places where such things don’t happen as often?

Fair enough, but let's ponder that claim for just a second, and here I'm just asking, you might be right, maybe you've thought of something I haven't. All other things being equal (AOTBE), If a company makes a profit and pays the bottom 20% of its workers (from an income perspective) 10% of the profits as wages, then can you explain to me how paying them, let's say 15% more doesn't result in less profit for investors?

At the basic level, if you cut expenses of production, even if the cuts are made by cutting employee pay; of course that will generally increase profits for share holders (most of who are not rich). But there is so much more that goes into share price than raising or lowering wages. Suppose raising wages causes less people to quit resulting in less expense of hiring new people? Couldn’t that be an example of raising wages not resulting in decreased profits?

You could argue that a business might raise prices to offset the cost, but businesses don't exist in a vacuum. Companies generally exist in a competitive environment and raising prices, again all other things being equal, will result in shoppers going somewhere else if they can find a lower price. So for example, many towns have a Lowes and Home Depot. If Lowes increases there wages they can either decrease profit or increase prices, which will result in more people going to Home Depot.


All that said, I provided examples of what you ask, how income disparity affects the poor.

You responded by telling me that there will always be people that will try to rip other off (which I hope we can agree, AOTBE, having more money relative to others increases the capacity to affect those of lesser means (think back to the example with the Hedge funds buying up and evicting people in trailer parks so they can legally take their property and sell it to others in the form of rent. This simply wouldn't be possible on the same scale if so much money wasn't in so few hands.

Respectfully,

EG

You’ve provided a few anecdotal examples of rich people ripping off the poor and is claiming this as an example of income inequality hurting the poor. But nowhere did you provide evidence that this is a wide spread problem; typical of the super rich. Nowhere did you show an influx of billionaires buying up trailer parks and raising the rent on the poor renters. IMO this would be like me saying black people go around raping white women, then I provide a couple examples of black men doing this, without presenting any evidence of this being a wide spread problem. You would dismiss such a claim and rightfully so. Anybody can pick a group; rich/poor, black/white, male/female, tall, short etc. provide anecdotal examples of them behaving badly and claim it as typical of the group, but to be taken seriously you need to provide evidence that this is a noticeable problem within said group. In your case, you need to provide evidence that billionaires are ripping off the poor in a way that would not happen if billionaires and the poor did not live in the same country.

 

[Kfox]

Can you give me some examples?

Black Lives Matter, and what they accomplished.

Do you think that wealthy people are, perhaps, disproportionately represented within the social elites of America?

I think entertainers, athletes, actors, and influencers are disproportionately represented within the social elites of America

 

[Koldo]

He never ran a business. Never really had a job nor ran a company. Marx was on the outside looking in. I'm not saying that about everything he wrote. Just his ideas about capitalism. IMO, you need to have experience in a system to really understand it.

Having experience in a company doesn't entail you properly understand Capitalism though.

How about creating a topic with the main points he got wrong about Capitalism then?

 

[Alien826]

He never ran a business. Never really had a job nor ran a company. Marx was on the outside looking in. I'm not saying that about everything he wrote. Just his ideas about capitalism. IMO, you need to have experience in a system to really understand it.

I have to respond, as this kind of statement annoys me. It's not necessary to be a participant in something to form an opinion about it.

I used to argue with a relative who had been a police officer. This was during the BLM days and I (foolishly) criticized the police regarding certain examples that were in the news. He said that I needed to "do the job" before I expressed an opinion about it. If I had accepted his position, I obviously couldn't win any argument, as I had never been a police officer nor had any likelihood of being one. Nevertheless, as long as I was careful to make sure the information I had was accurate, I saw no reason why I couldn't say that certain actions by the police were wrong. Agreed, I didn't have first hand knowledge of any particular case, but neither did he.

To pick a current example, I feel perfectly justified in reading the opinions of experts and forming the opinion that the Titan submersible vehicle was not safe to use. I don't have to actually be part of the crew (and die) to qualify for that opinion.

 

[Nakosis]

Having experience in a company doesn't entail you properly understand Capitalism though.

How about creating a topic with the main points he got wrong about Capitalism then?

Maybe, it's a fair request. Just not feeling that inspired to do so at the moment.

However ok, one example.
The idea that the labor that goes into a product should constitute its value. The labor theory of value.

It is obviously wrong that you can determine the value to me of the product you produce by the amount of labor you put into it.
My desire for something and how much I am willing to pay for it have no direct relationship to how much labor you put into it.

You could spend 10 years on a work of art which that work of art would have no value to me.

 

[Alien826]

I'm wondering if, in all these discussions, we have wandered off the main question, which relates to the ethics of extreme discrepancies in wealth. I'd like to invite everyone to participate in a thought experiment.

John is a brilliant programmer and also an incredibly unselfish guy. He works for years in the field of AI, and develops programs that run on a super computer. He gives this computer the task of solving all the world's problems. It succeeds to an extent that surprises even John. Most diseases and pathologies are cured. Machines are produced that build low cost housing for everyone. It devises a political system that ensures that everyone has everything they need, and the machines handle the production of these things. War exists only in history books. Machines do all work that people don't want to do. Climate change is stopped and reversed.

There's one thing that John falls short on. He can't quite trust the system he has created to continue if he relinquishes control of it, so at each stage he retains ownership of everything he has created. Eventually he owns everything in the World, though other people are allowed the use of things they need. John lives at the same level as everyone else, and continues to work to improve his creations.

So here we have the ultimate wealth discrepancy, created totally unselfishly, for the benefit of all. Is it a good or bad thing? That's not the system itself but the fact that John owns the World.

It's still my gut feeling that John shouldn't own everything.

 

[Nakosis]

I have to respond, as this kind of statement annoys me. It's not necessary to be a participant in something to form an opinion about it.

I used to argue with a relative who had been a police officer. This was during the BLM days and I (foolishly) criticized the police regarding certain examples that were in the news. He said that I needed to "do the job" before I expressed an opinion about it. If I had accepted his position, I obviously couldn't win any argument, as I had never been a police officer nor had any likelihood of being one. Nevertheless, as long as I was careful to make sure the information I had was accurate, I saw no reason why I couldn't say that certain actions by the police were wrong. Agreed, I didn't have first hand knowledge of any particular case, but neither did he.

To pick a current example, I feel perfectly justified in reading the opinions of experts and forming the opinion that the Titan submersible vehicle was not safe to use. I don't have to actually be part of the crew (and die) to qualify for that opinion.

Well I'm certainly not saying you can't have an opinion about a subject. However having experience with whatever subject you are talking about gives your opinion more value IMO.

People on RF who tell me they have, however many years of experience, dealing with a subject, I will give their claims more value, even if I disagree with them than someone who has had no experience with it.

 

[Koldo]

Maybe, it's a fair request. Just not feeling that inspired to do so at the moment.

However ok, one example.
The idea that the labor that goes into a product should constitute its value. The labor theory of value.

It is obviously wrong that you can determine the value to me of the product you produce by the amount of labor you put into it.
My desire for something and how much I am willing to pay for it have no direct relationship to how much labor you put into it.

You could spend 10 years on a work of art which that work of art would have no value to me.

Your criticism is completely fair. However, the labor theory of value is not specific to Marx. It was espoused by Adam Smith before Marx was even alive.

 

[Stevicus]

Hmpf

Gimme something to argue with

It seems all you want to do is bicker.

 

[Nakosis]

I'm wondering if, in all these discussions, we have wandered off the main question, which relates to the ethics of extreme discrepancies in wealth. I'd like to invite everyone to participate in a thought experiment.

John is a brilliant programmer and also an incredibly unselfish guy. He works for years in the field of AI, and develops programs that run on a super computer. He gives this computer the task of solving all the world's problems. It succeeds to an extent that surprises even John. Most diseases and pathologies are cured. Machines are produced that build low cost housing for everyone. It devises a political system that ensures that everyone has everything they need, and the machines handle the production of these things. War exists only in history books. Machines do all work that people don't want to do. Climate change is stopped and reversed.

There's one thing that John falls short on. He can't quite trust the system he has created to continue if he relinquishes control of it, so at each stage he retains ownership of everything he has created. Eventually he owns everything in the World, though other people are allowed the use of things they need. John lives at the same level as everyone else, and continues to work to improve his creations.

So here we have the ultimate wealth discrepancy, created totally unselfishly, for the benefit of all. Is it a good or bad thing? That's not the system itself but the fact that John owns the World.

It's still my gut feeling that John shouldn't own everything.

Who gets to decide what everyone needs?

Also what ever gets built, like housing, those resources have to come from somewhere. Are you assuming John gets to take everything he needs from the provious owners?

Not sure how anyone could end up owning everything without a fair exchange. Which would mean John has to trade something of value for something of value.

Capitalism would prevent one person from owning everything. Sorry, I can't imagine how a system where one person who owned everything would work.

I suppose it I could get everything I want, fine I don't care who owns what. Everything would intrinsically have no value so who cares who owns it.

However if I only get what someone else decides I need, I wouldn't like that very much.

I'd rather the inequality than the absence of any ability to decide for myself what I want.

 

[Nakosis]

Your criticism is completely fair. However, the labor theory of value is not specific to Marx. It was espoused by Adam Smith before Marx was even alive.

Ok, then you pick something Marx said against capitalism.

 

[Heyo]

Why do you have to be insulting this way? If you can’t give me the same respect I give you, I will no longer talk to you. I will let this one go, but please; from now on be respectable in your responses.

I was insulting because I felt insulted myself. For me it seemed you didn't or didn't want to take the time to read my post. You seem to be very hostile to the idea of the proposal to better the equality of opportunity; so much so that I felt you weren't even listening when you misread my post.

Okay so you said the Government takes the stock and acts like any other shareholder. But as people die, the Government will eventually take controlling interest in every company and nobody will want to invest in the stock market because their vote won’t count. Where is the incentive to start a company if you know in a few years the Government will eventually take it over once enough shareholders die leaving their stock to the Government?

1. You're assuming the government to be a bad actor. If it acts like any other investor, nobody would have to fear anything.
2. You don't control any corporation unless you have 51% of the shares.
3. I didn't lay it out and it is not part of the general idea but I'd prefer that the government should be bound to sell stock in excess of 25% of any corporation that isn't essential (like water and energy). But it should be done over a period of time to not interrupt the market. (And I'd prefer workers to be specially incentivized to buy stock from the corporation they're working at.)
4. There is still incentive to start small corporations where you have control. (See #2) Most businesses don't start as corporations but as civil law associations and change to corporations as they grow.

I never said inequality causes economic growth, I pointed out how economic growth causes inequality.

Well, yes, I agree. When there's something to grab, some are faster to grab it than others, especially those who already have big hands. But is that fair? Should not "a high tide raise all boats" - and all boats equally?
What we have seen in the US over the last 40 years is that the rich got richer much faster than everybody else. Adjusted for inflation the average worker has minimally more than 40 years before. And when we compare wages to productivity, wages have gone down.

 

[Heyo]

I don't think it is possible to prove workers getting a raise effects share price of a stock.

A corporation has an amount of revenue.
Wages are costs which reduce the surplus from the revenue.
The surplus is what is paid to the stockholders as dividends.
So, wages influence the dividends.
Stockholders buy stocks with high dividends and sell stocks with low dividends.
Selling stock lowers the value of the stock.
Higher wages = lower stock price.

That's it in a nutshell. That calculation doesn't take into account that higher wages tend to influence turn around which tends to influence productivity which influences revenue.