Let's Debate Inequality

[Kfox]

There is still value being generated by the labor. The exception would be when the employee messes up or when the employer is asking the employee to do something that doesn't generate value.

Let me provide an example: You buy raw goods and hire someone to produce a given final product. You, however, are unable to actually make a profit out of this for some reason (such as your lack of skills when trying to sell the product), that has zilch to do with the quality of the employee's work. So even though the employee is generating value, you are the one destroying it and selling the product at a net loss. Why should your employee's payment be reduced?

Because the employee pay is based on the profits the company makes! If the company doesn't make any profit, why should the employee get any pay?

Surely if the company has an history of massive losses that have yet to be balanced, that is a different beast altogether.

Name a fortune 500 company that does not have a history of massive losses!

 

[Koldo]

Because the employee pay is based on the profits the company makes! If the company doesn't make any profit, why should the employee get any pay?

I will repeat myself again: the employee pay is not based on the profit the company makes (given what I am suggesting), but rather the value generated by his labor. Please don't mix up profit with value.

Name a fortune 500 company that does not have a history of massive losses!

To the point they have gained much more money over the years than lost? How about Amazon and Walmart?

 

[Kfox]

Of course it didn't come to a complete halt .. that was not their intention.

But that is the only point I was disagreeing with. All that other stuff has nothing to do with the conversation.

 

[Kfox]

Have you had a formal education in economics, or have you ever looked into the field? What is the basis of your ideas?

I have no education, I've never went to school a day in my life! I just come to forums like this one, and make s**t up as I go along.

 

[Kfox]

"The top income tax rate reached above 90% from 1944 through 1963, peaking in 1944, when top taxpayers paid an income tax rate of 94% on their taxable income."

Yeah everybody talks about how the highest tax rate in the 1950's was over 90%, but the reality is, nobody actually paid that much in taxes due to the loop-holes of the day. Today the top 1% pays approx 40% of all income taxes, which is about the same percentage the top 1% in the 1950's paid.

 

[Kfox]

I will repeat myself again: the employee pay is not based on the profit the company makes (given what I am suggesting), but rather the value generated by his labor. Please don't mix up profit with value.

Who decides the value of his labor? The manager who hired the employee? Or some government bureaucrat who has no clue about how a business runs?

To the point they have gained much more money over the years than lost? How about Amazon and Walmart?

Yes they've gained much more than they've lost, but during those lost years, what should the employees wages be based on?

 

[sayak83]

I take it that you only mean higher taxes on the 5 to 8 sigma on the wealthy extreme, not the poor extreme, or do you mean doing away with taxes for the poor extreme? I'm ok with the 5 to 8 sigma extreme poor not having to pay taxes because of their position on this statistical income distribution, but I personally don't care for the idea of taxing the 5 to 8 sigma on the wealthy extreme anymore than beyond that 35% to 37% marginal tax rate.

The reason I don't care for it is because it could stifle the benefits & advantages of a free market system. When someone is able to legally achieve reaching the 5 to 8 sigma range of the top wealthiest, they did so because they know how to navigate the economy in such a way that improved it; they're the ones who are the best at finding the best industry, goods, and services to invest in and support, that made them that degree of wealth for them & this includes creating more jobs for everyone else.

They should only be rewarded, not punished, for making the economy better; their reward is that high degree of wealth, and I want them to keep it so they can use it to continue to decide what's best for the economy. They demonstrated that they know what they're doing by getting there.

If they lose that skill, or someone better than them in some way comes along, then that means that the economy automatically took that investment money from them to go to someone else or somewhere else to improve the economy.

Wealth inequality beyond a certain level is bad for society and bad for economy. By your same logic, anti monopoly laws should be disbanded because the companies, by legal means, were able to capture market share and should reap the benefits. You must understand that society allows people to accrue wealth as long as it helps to increase general Prosperity. As long as that relationship is vitiated, accrual of wealth becomes a social evil (read externality) which must be taxed just like tobacco is taxed.
Effects of economic inequality - Wikipedia

 

[Kfox]

Wealth inequality beyond a certain level is bad for society and bad for economy.

Why is it bad?

 

[sayak83]

.

Why is it bad?

See the wiki link I posted. It's an universally recognised and observed fact of economics.

 

[Kfox]

See the wiki link I posted. It's an universally recognised and observed fact of economics.

Wikipedia, are you kidding me??? Tell you what; read the Wikipedia link yourself so you can explain to me why rich people having less wealth causes criminals to commit less crime, why rich people having less wealth causes people to live longer, feel happier, etc. etc.

 

[Koldo]

Who decides the value of his labor? The manager who hired the employee? Or some government bureaucrat who has no clue about how a business runs?

Here is an example on how to do it: Consider the point in the manufacture process where that employee intervenes to work in the product. How much more expensive did that product become after this intervention? That's the value of his labor.

Yes they've gained much more than they've lost, but during those lost years, what should the employees wages be based on?

On the value generated by their work. Why do you keep asking the same thing?

 

[Kfox]

Here is an example on how to do it: Consider the point in the manufacture process where that employee intervenes to work in the product. How much more expensive did that product become after this intervention? That's the value of his labor.

What are you talking about??? During the manufacturing process, the employee is working on the product. So how does he intervene in a process he's already involved in?

On the value generated by their work. Why do you keep asking the same thing?

So when the employee's work does not generate any value, he does not get paid? Most workers would not agree to your ideas.

 

[Heyo]

I don't see how that makes sense.
Most income tax is collected from people who are employed.

That's why I want #3 and #7, income tax on all income, no matter how generated and paid by the company.

The richer self-employed become, the more they are able to evade it, by employing accountants etc.

See #8.

Oh, and the IRS should employ more auditors. I haven't made a point on that, since that is only indirectly related to taxes. There is a sweet spot where auditors still generate more taxes by catching cheaters than they cost in wages. Currently, too many get away with cheating because there are not enough people going after them.

 

[Nakosis]

Not necessarily. Money is power too.

There are different kinds of power and not all power is bad. Money give you compensatory power. IOW, there is a voluntary exchange of wealth for goods or services. So money alone is not bad as both parties get something they want out of the transaction.

However if the power you desire is the power over other people's lives regardless of what they want then political power is the ultimate way to gain that as you can also gain the enforcement of the government. If they want that kind of power, money alone won't give it to them.

Which translates into roughly what numbers for income taxes?

IMO, that is too complex to be decided by you or me. It depends on what the money is used for and want the economy can bear. So left to the democratic process for better or worse. When I lived in Australia, taxes were higher than in the US. However that went mostly to education, healthcare and public welfare. A lot of the money came back to the public.

In the US it doesn't work the same. A lot of the money goes to fund foreign wars and special interests. More taxes in this case does not necessarily mean a greater benefit to the public interest.

 

[sayak83]

Wikipedia, are you kidding me??? Tell you what; read the Wikipedia link yourself so you can explain to me why rich people having less wealth causes criminals to commit less crime, why rich people having less wealth causes people to live longer, feel happier, etc. etc.

You do not believe these findings are robust?
https://www.sciencedirect.com/science/article/pii/S0264999318315967
Links between economic growth and inequality are of growing interest for researchers and policy makers. Previous studies of this relationship have focused mainly on inequalities in income rather than in wealth. Yet from many perspectives wealth inequality is arguably more important. Using a new panel data set from Credit Suisse for 45 sample countries over the period 2000–2012, this study investigates the effects of wealth inequality on economic growth. Empirical results from system GMM estimation suggest that the wealth inequality is negatively associated with cross-country economic growth. This result is robust to alternative estimators and measures of wealth inequality, as well as the econometric specification. Further empirical investigation reveals that impact of wealth inequality on growth is mitigated by better governance.

https://www.sciencedirect.com/science/article/abs/pii/S0147596718300027
Empirical results suggest that the rising wealth inequality significantly hampers overall economic freedom, property rights protection, freedom to trade, soundness of money and regulatory environment. Furthermore, this negative effect of wealth inequality is reinforced at a lower level of democracy. These findings are robust to alternative measures of wealth inequality, economic freedom, treatment for endogeneity, and model specification.
https://www.sciencedirect.com/science/article/abs/pii/S1353829217306573
We test whether income inequality undermines female and male life expectancy in the United States. We employ data for all 50 states and the District of Columbia and two-way fixed effects to model state-level average life expectancy as a function of multiple income inequality measures and time-varying characteristics. We find that state-level income inequality is inversely associated with female and male life expectancy. We observe this general pattern across four measures of income inequality and under the rigorous conditions of state-specific and year-specific fixed effects. If income inequality undermines life expectancy, redistribution policies could actually improve the health of states.

You need more?

 

[muhammad_isa]

But that is the only point I was disagreeing with. All that other stuff has nothing to do with the conversation.

False .. you are arguing that there is an unlimited amount of wealth that can be 'created'.
This is demonstrably untrue .. it is controlled by central banks and govts.

 

[Koldo]

What are you talking about??? During the manufacturing process, the employee is working on the product. So how does he intervene in a process he's already involved in?

By intervene, I mean whatever work is done by the worker on the product. Some given product had a value before his work, and then it has another value after his work. This is the extra value generated by his work.

So when the employee's work does not generate any value, he does not get paid? Most workers would not agree to your ideas.

As I have stated multiple times already: if the employee is the one responsible for his work not generating value, sure. Here is a very simple example: The employee picks up the product and discards it by himself. He destroyed value, rather generate it. Why would he be paid for that?

 

[PureX]

Is this the fault of the capitalists?

It's the fault of our accepting greed as an reasonable motive for making decisions that negatively effect millions of other people.

Or the politicians that citizens of the community else in office that make it difficult and costly to do business in the community?

Doing business in any community seriously effects the people living in that community. So yes, oversight is necessary. And that means telling the businesses what they can and cannot do in their endless pursuit of ever greater profits. It's only their greed that makes them think this is a "bad" thing. And it's your acceptance of their greed as a good thing that makes you think this is a "bad" thing.

Are you sure there is not a lot more going on here than greedy capitalists refusing to give people jobs and services?

With greed comes selfishness, ego, corruption, and malice. So sure, there is a lot going on.

Then don’t patronage their business! If Joe the capitalist opens a store in your community, nobody is forcing you to go there to buy his stuff, just pretend he isn’t there! Better yet, why don’t YOU open a business, and show everybody how it should be done!

Please stop being stupid.

Most businesses are surviving on the edge of economic catastrophe.

Most businesses shouldn't even exist. If they can't treat everyone well and fairly and survive, they don't deserve to survive. Or if we need them that badly, we should subsidize them.

So your complaint is capitalists open business in your community, and you don’t like how they pay people, or how they run their business? First of all, capitalists have no obligation to open a business and provide jobs, or services to your community; hopefully if they do it it will be beneficial to them and the community. But if it is not beneficial to them, they have every right to close it down and go somewhere else. Second; what are YOU doing? Are you providing jobs and services to the community? Or are you just sittin’ back and complaining about other people who at least tried! Why don’t you try walking a mile in their shoes before judging them as greedy and corrupt; let’s see if you can do a better job.

Capitalists have no interest in being beneficial to anyone but themselves and their fellow investors. Their only concern for the community ends at the profits they can extract from that community. And by community I mean their laborers, consumers, vendors, the surrounding population and the physical environment.

 

[Kfox]

You do not believe these findings are robust?
https://www.sciencedirect.com/science/article/pii/S0264999318315967
Links between economic growth and inequality are of growing interest for researchers and policy makers. Previous studies of this relationship have focused mainly on inequalities in income rather than in wealth. Yet from many perspectives wealth inequality is arguably more important. Using a new panel data set from Credit Suisse for 45 sample countries over the period 2000–2012, this study investigates the effects of wealth inequality on economic growth. Empirical results from system GMM estimation suggest that the wealth inequality is negatively associated with cross-country economic growth. This result is robust to alternative estimators and measures of wealth inequality, as well as the econometric specification. Further empirical investigation reveals that impact of wealth inequality on growth is mitigated by better governance.

https://www.sciencedirect.com/science/article/abs/pii/S0147596718300027
Empirical results suggest that the rising wealth inequality significantly hampers overall economic freedom, property rights protection, freedom to trade, soundness of money and regulatory environment. Furthermore, this negative effect of wealth inequality is reinforced at a lower level of democracy. These findings are robust to alternative measures of wealth inequality, economic freedom, treatment for endogeneity, and model specification.
https://www.sciencedirect.com/science/article/abs/pii/S1353829217306573
We test whether income inequality undermines female and male life expectancy in the United States. We employ data for all 50 states and the District of Columbia and two-way fixed effects to model state-level average life expectancy as a function of multiple income inequality measures and time-varying characteristics. We find that state-level income inequality is inversely associated with female and male life expectancy. We observe this general pattern across four measures of income inequality and under the rigorous conditions of state-specific and year-specific fixed effects. If income inequality undermines life expectancy, redistribution policies could actually improve the health of states.

You need more?

Those are just claims, they don’t explain WHY people live longer, feel happier, etc when the rich has less. I’m more familiar with what is going on within the USA rather than the rest of the world, but there is proof that in the USA when income inequality is at it’s greatest, the poor do better financially, and when income inequality is lessened, the poor are worse off financially. I care about how the poor are doing than anything else.

 

[Kfox]

False .. you are arguing that there is an unlimited amount of wealth that can be 'created'.
This is demonstrably untrue .. it is controlled by central banks and govts.

Demonstrable untrue? Demonstrate how a bank or government can prevent me from creating wealth at this very moment.