You're saying, as maybe sort of a side point, that one of the problems with capitalism is the salaries firefighters get (you called it "appalling"). I'm just wondering what kind of alternative government pays them more, and who gets the make the decisions about the "worth" of various professions in that system.

At least with charity, as much as you crap on it (it's somehow demeaning to "resort" to charity), the people can help make those decisions. That's a great combination with a neutral system like well-regulated capitalism.

Also, the "disparity in wealth" that everyone complains about is largely based on jealously/envy, IMO.

If someone (or firefighters) made the same, and the rich made a lot less, a lot of those someone's would be a lot happier, even though their own personal situation hasn't improved. As long as the rich has less, they'd be happy (not everyone, but that mindset). That's jealousy/envy.

And that's typically what happens throughout history when the "rich" are taken down in the name of fairness and class warfare. The rich are replaced by the "state", everyone is a little worse off, but closer together in wealth, which was the goal, I guess.

Saying firefighters don't make enough money is one thing - there's ways to address that through capitalism, democracy, and charity. In some places in the U.S., firefighters do very well for public employees, in comparison to government attorneys, for example. But it's another thing to say that firefighters are underpaid in relation to what, CEOs in the private sector? That rage is about the CEO salary, not compassion for the firefighter. Once the CEO salary gets involved in the "fairness" debate, taking them down a few notches, while keeping the firefighter the same, would presumably solve that problem.

What I described as "appalling" was that such valued members of the community should have to resort to charity to cover things such as funeral costs. I was not aware of that until you said it which is why I said you made the point for me better than I could.

My own experience is of the UK and Australia and there firefighters, policemen, military personnel etc are certainly paid enough that can can fund these things out of their pay as well as most others without resorting to charity.They no more require help from charity than a car worker, or a lathe operator etc.

But we can get too hung up on one group - firefighters merely illustrate the point that when relying entirely on market forces then significant distortions can occur in remuneration which lead to unfair outcomes. It is not unreasonable to expect contribution to the community to have some say in remuneration.


There is nothing wrong with charity and those that fund it are to be praised. But it does not raise enough finance to fund many of the services that the disadvantaged in society need. It simply doesn't generate enough money. For example, it cannot fund worthwhile medical services to all Americans whereas graduated taxation and a more severe attitude towards excess charges by drug companies, insurance companies and medical staff can fund them for the British and Australians despite these being less wealthy countries.

I don't think tax rates should be zero, obviously taxes are a necessary component of any working society.

And I didn't mean to imply that firefighters in the U.S. need charity to survive (though there are some volunteers, but those are mostly in smaller/rural areas that don't need a full-time fire department). Just that in the U.S., firefighters are greatly respected, and that manifests itself in successful charitable organizations, which illustrates why charity is a great supplement to capitalism, which only cares about market value (when its working properly)

Public salaries are lower than the equivalents in the private sector in the U.S., across the board. Teachers, police, and firefighters get all of the sympathy for that phenomenon, but but it's true for everyone. I'm not sure that shows a failure of capitalism, or the evilness of rich people. If anything, it shows the opposite. In the private sector, you can get ahead. In government, weighed down by waste and corruption, the same financial opportunities aren't there.

Why is this point always made relative to the rich? What does the rich's income matter at all, if the goal is better living conditions for the middle class?

I don't doubt that the middle class, taken independently, not relative to anything, is worse off now than it has been at other times. But why aren't THOSE numbers the ones paraded? Why does it always have to be connected to this sentiment that the rich have too much?

It's not a zero sum game. Just hypothetically, would you rather have:

1. The rich increase their wealth/standard of living 10X,
and the middle class increase their wealth/standard of living 3X.

or

2. The rich decrease their wealth/standard of living by half,
and the middle class increase their wealth/standard of living by half

Or in other words, is this about the middle class improving their lot, or is it just about everything being more "equal". Would you be happy if half of the rich's wealth just disappeared, if that didn't benefit the middle class at all? I mean, there'd be less wealth disparity, right?

There is a factor here that I haven't seen mentioned. The government is not run like private industry, that is, it is not operated to make a profit. Government, by its nature, is a service provider. This does not allow it to bring in the same level of revenue, or subsequently, pay the same types of salaries to its employees that private industry does. This has both advantages and disadvantages of course.

In any case, this is why it is difficult to compare the income of a firefighter for example, with a privately owned company CEO. The goals are very different for these two types of positions, thus the pay scale and subsequently tax brackets will be substantially different.

That's not the option. It is that "someone" makes more and the rich make less. In other words the distribution of wealth isn't so heavily biased towards the rich.

A couple of years back there was a research paper that looked at the distribution of the nations' wealth across a number of first world countires. It did so by comparing the average salary of the boardroom with that of the lowest paid workers. I can't be exact but these were the rough numbers:

Socialist Sweden: 11 to 1 (ie if the low paid average were 30,000 then the boardroom average was 330,000)

Social Democrat Germany and France: 25 to 1

Free market Britain: 35 to 1

America? Would you like to guess?

40 maybe?

No.

50?

No.

What then?

187.

ONE HUNDRED AND EIGHTY SEVEN!!!!

The distribution of the nations wealth is 5 times that of the next highest country - Britain which certainly isn't remotely "socialist" these days.

Why? I suspect that the citizens of other countries do not automatically see criticism of excessive salaries as envy and recognise that there are other justifications. The cap on salaries is not imposed by government but by the public's attitude. Your tolerance of very high salaries is not shared by the citizens of these countries (as you will have gathered from me from my posts). It is not dictatorship or authoritarianism but imposition by public opinion. Democratic in fact.

The richest people in the world live in the U.S. If you look at a list of billionaires, its dominated by Americans. I don't remember many Swedes being on it, certainly.

I just don't think that's inherently bad. If we kill off all those billionaires tomorrow, our country is not better off. In fact, it would be much worse off.

Because it is to a certain degree a zero sum game. The nation generates a level of wealth and that wealth is distributed throughout society. If the rich take a larger proportion then others must take less.

The argument that if you pay the rich more this will filter down and also improve the position down the scale has always been a dubious, self serving argument. Margaret Thatcher used to go even further. She argued that if you reduce the taxes for the rich they work harder but if you reduce them for the poor they become lazy. It doesn't take much to see through that one and not much more to see through the trickle down argument either.

Wealth is distributed throughout society and if one group increases it's portion another sees a decrease.

We don't kill off the billionaires but merely reduce the number of billions ;)

Providing the changes you make don't significantly affect the wealth creation of the society - and the CEO will work just as hard for 25 million as he does for 50 because at some point the numbers become irrelevant - then things are ok.

OK. so let's assume the 187 number is inherently bad, and the 11 to 1 number is Sweden is correct.

What are we doing wrong? Not taxing the rich enough? Because its a common refrain on this board from liberals that they don't want to do anything drastic, they just want to return to the Clinton-era tax rates. And then they mock conservatives by saying stuff like, "Ya, if we increase that rate from 36% to 39% rich people will lose all their motivation".

I'd love to hear from them - if the tax rate was raised from 36% to 39%, does that bring the U.S wealth disparity ratio more in line with Sweden's "correct" 11 to 1? I'm sure we wouldn't be close. Even at 40%, even at 50%. Maybe at 95%.

Perhaps there's reasons for American wealth other than lower tax rates. Perhaps our economy actually creates wealth.

Or in other words - how do you fix the 187 wealth disparity problem? And would you consider it a solution to the problem if their money just disapeared and we were all equal?

False. Only 3 of the top 10 are from the United States.

List of billionaires (2009 - Wikipedia, the free encyclopedia)

The World's Billionaires - Forbes.com

Right, but at 25 million, we're still higher than the perfect Swedeish wealth disparity.

The issue is NOT motivation. That's a classic strawman that I hate to see brought up. I do not think the rich will work less hard if their taxes are higher. Someone somewhere makes that argument, and its a stupid one. I just think at some level, wealth beneifts soceity more when that money can be free from the government corruption, agendas, and politics. That doesn't mean I don't think regulations, etc, are necessary and don't play important roles.

And I don't have a huge problem with Clinton-era tax rates. It's the same economy, same government. We do pretty well, we just tweak here and there.

What changes, do you feel the U.S. actually has to make to reduce the wealth disparity to European levels. Clinton-era tax rates ain't gonna do it.

Let's take the whole list

USA: 40
Germany: 9
India: 7
Russia: 5
France: 5
Everyone else: less than 5.

It's also true for millionaires:

Countries with the Most Millionaires

United States … 3,000,000 millionaires (29.7% of worldwide millionaires)
Germany … 826,000 millionaires (8.2%)
United Kingdom … 495,000 millionaires (4.9%)
China … 415,000 millionaires (4.1%)
Canada … 274,000 (2.7%)
Australia … 172,000 (1.7%)
Brazil … 143,000 (1.4%)
Russia … 136,000 (1.3%)
India … 123,000 (1.2%).

Those are pretty shocking numbers. I would say that definitely plays into wealth disparity numbers.

The richest people in the world live in the U.S. I find it odd that people hate that, but whatever, I think its a great thing.

I wouldn't argue that Sweden's level is correct. I think that may have a significant affect on motivation and a loss of workers to other countries. I suspect the figure between Germany's 25 and Britain's 35 is closer to it. But it does depend on social attitudes and these are difficult to change. But change must come from society not be imposed by government (taxation I think will have little effect) which should only try to influence pubic attitudes.

The difference of opinion that we are expressing illustrates the difference in social attitudes. You accept salaries at any level and feel that should be irrelevant to others and see any complaint as merely envy. I think that salaries have reached unacceptable levels - no one needs 50 million a year - and that criticisms are justified.

One of us has to change attitude ;)

Just to be clear, I agree with a lot of what you both are saying and am fascinated by the debate. With that being said....

You said:


The list I provided clearly states that this is not the case. While the majority of "rich" people are from the U.S., the top of that list is dominated by other nations. Unless I am interpreting your statement incorrectly? :confused:

Edit: Meh, never mind. This is really just an argument about semantics which is pointless. I digress.

I certainly didn't mean litterally that "every" rich person lives in the United States. Just that there's far, far, far more rich people here than anywhere else. And that CAN'T be just because we have lower taxes. If we increase our tax rates far beyond what they were under Clinton, we'd still dominate that list.

The only way to "fix" wealth disparity to European levels is to somehow get all these millionaires to leave the U.S. and take their money with them. I don't think that's a good goal.

Well, I guess the other option would be to "nationalize" all that money, or basically have the government confiscate it all. I wonder if people want that.

And to tie it back into the vague original premise of this thread - that's why I see a lot of jelously/greed/envy. People having money in the U.S. is viewed as this huge problem, a problem so huge that it absolutely can't be fixed just by higher tax rates. The focus isn't on helping the middle class, its on taking these rich people down a notch somehow. I understand the appeal, we've seen revolutions over these ideas

I don't know what level is acceptable for salaries, but you'd have to REALLY change things up in the U.S. (revolution required, most likely), to get to the point where we're down to a 35-1 wealth disparity.

And if that's what someone advocates, that's fine, definitely an interesting argument. But the liberals tell us here is that we just need to increase our taxes on the rich by 3%.

If we decide, culturally, that CEO salaries in the U.S. are too high (which I think we've just about done), that will mainfest itself. But I'm not sure how much of the problem is those CEO salaries. How many CEOs make $50+ million a year? I think where we really do well in the U.S. is regular wealth - the insane amount of millionaires in this country. There's litterally millions of millionaires in the U.S., and that group is filled with success stories of achievment. But yet, that wealth is calculated into equations to show wealth disparity, and how capitalism is wrong, and how rich people are evil. Every time someone becomes a millionaire, it's another point in those charts for how we've lost our way. I just don't get that.

The problem I have with the disparity between the incomes of the wealthy and everyone else in the U.S. isn't the disparity itself, per se, but that the disparity continues to grow, and in fact is accelerating. As a trend, it doesn't seem very sustainable or healthy.

Yes, I think the major gripe may have to do with the concentration of *power* into the hands of the wealthy. The graphs you see showing the acceleration of wealth concentration suggest to me that not only do Americans generate a lot of wealth (great!), but that wealthy Americans are increasingly successful at gaming the system to their benefit (not great!). I would guess that the differences you're looking for, Molson, between our country and others include a regulatory structure which is not so beneficial to the maintenance and increase of vast wealth.

YOu think firefighters don't get paid a ton because of waste and corruption in government? That seems pushing it a bit far. It seems clear they don't get paid alot because they're a public service. They don't generate revenue and therefore have to convince the citizens, through town government, to cough up money to pay them. It's clear in this thread that people aren't crazy about coughing up their money

Ya, I should have left that part out, it was definitely pushing things so far.

I was just trying to explain that culture. I see fellow government atttorneys generate tons of money for the government (by winning lawsuits, exposing fraud), and they're paid a fraction of what attorneys who perform similar work in the private sector get (and in many cases, they make far less than experienced teachers and police).

Now logically, it would make sense to spend a lot of money on those types of attorney positions that actually create revenue for a government. But that can't happen, because of the nature of government. Those salary decisions are made politically, often by people who don't understand which positions can be net economic gains and why. You don't have that kind of problem, at say, a private law firm.

(And that's not just sour grapes, just an observation, my own position generates zero income, and I'm probably overpaid if anything because there's a ton of out-of-work people in this field)

That's just kind of how it is, but it was a tangent to my real points.

USA: 1 out of every 103 people is a millionaire
Germany: 1 out of every 99
UK: 1 out of every 123
Canada: 1 out of every 123
Australia: 1 out of every 128

Obviously less developed countries like China, India, etc. won't have similar ratios but comparing developed countries the number of millionaires relative to the countries' total population is not significantly higher in the US.

OK, well then our millionaires are a hell of a lot richer then their millionaires, which is the apparent "problem" in the first place, right?

The "problem" is wealth disparity, even though we apparently have the same ratio of millionaires as other developed countries.

THank you. I thought population was sorely lacking there, but I wasn't sure how it would affect the numbers.

Well, don't change your argument. You just stated above that your point was that we have so many more "Low level" millionaires than other countries, and that this was a good thing, as opposed to only having a few billionaires. Now you're backtracking.

My argument is the same, I started it talking about billionaires, a list which the U.S. dominates. I think that's a good thing, some people think its a bad thing.

Assuming the accuracy of those numbers, yes, I'm suprised that the numbers are that equal, which certainly effectively attacks my point about lower millionaires, but is irrelevant to my other points. It also attacks the wealth disparity argument, IMO, as it appears the major difference between the U.S. and other countries in this disregard is the mega-successful, who we have a lot of. If we didn't have these mega-successfull (and these billionaires aren't made up entirely of these overpaid failed CEOs, I'm guessing), would we be a better country?

And if the whole "problem" is these super-rich billionaires (who are apparently entirely responsible for these dramatic "wealth disparity" numbers, since everyone has the same ratio of regular millionaires), how do we get rid of them? An income tax increase? I don't think that'll help.

Your definition of multimillionaires as "Mega successful" needs to be founded first, though. We can surmise all we want, but unless someone pulls up some detailed research I don't think any of us here know why the U.S. has these multimillionaires, what enabled them to amass that money, what effect it had on the population. You would suggest that they earned it through greater success than millionaires in other countries, and that this has a benefit to the country. Others would suggest that they amassed it because our regulations make it easy for millionaires to accumulate more and more wealth. There are undoubtedly many more scenarios, and none of us here know which is accurate.

Ummmm......really?

It doesn't matter. Let's assume every single one of them inheritted 100% of their money (not a chance that's true, go ahead and read the wiki biographies on these people - they're generally quite impressive in an achievement sense). That doesn't change the discussion. I still don't understand why they're bad for America.

If they all left and took their money with them, the "wealth disparity" charts would look a lot different. And people would feel better, I guess (but be worse off - that'd be a lot of tax revenue and talented people leaving town).

This is what I'm referring to. It appears, if you define rich as meaning above $1 million, that the U.S. does *not* have far, far, far more rich people here than anywhere else. Nor do we have more billionaires here than anywhere else. The point is that there is a greater disparity of income between the rich and the rest, those who manage to become millionaires are able to accumulate a *much* higher percentage of the country's wealth than people who become millionaires elsewhere. I agree that this doesn't have to do with tax rates. It probably has much more to do with tax loopholes. And I would surmise that it has to do with the fact that American businesses allow their owners to amass more of their company's wealth, while the workers in the business are not paid as well. This is the disparity people talk about, that while yes mega successful businessmen build big companies, their workers are doing worse and worse over the decades. Other countries seem to provide a higher standard of living for their workers while still creating wealth.

You just had us assume that they all inherited their wealth. So I would dispute your claim that "a lot of talented people" just left town ;-)

There's a lot more particulars other than A) inherited $100 million, or B) Generated $100 million in wealth through a successful business. Things aren't as simple as Millionaire A built a factory, providing 10,000 jobs, and made $100 million. The wealth produced by businesses has much to do with the way businesses are regulated, and there could be vast differences between someone who made $100 million off of a stock bubble, someone who made $100 million because of their company's complicated financial dealings while making widgets, and someone who build the world's best widget and made $100 from it. Some of those might be providing benefits to our country, some of those might in fact be a drain on our country. Without looking at particulars we can't really say.

There's a lot of complications along the way if you feel like the U.S. can just become Sweden over the next few years.

Though I'm still waiting to hear what kind of changes you'd make here to move us iin that direction.

Because that has to be what this conversation is about, practical realties. If it's believed that Europe is so superior to the U.S, what can we do to be more like them?

To get back to the other question - if we got rid of all of our bililionaires, and we didn't have the striking wealth disparity anymore, with this country be better? Why is DISPARITY the problem, and not the well-being of people?

Sure, go ahead and explain it then.

I haven't said anything of the sort. I'm trying to point out that your broad generalities don't really match up with life.

So why are billionaires bad for the U.S? All I'm saying is that they're not, and that "wealth disparity" is incredibly misleading, and exposes jelousy/envy as perhaps being more important than the actual well-being of people.

I don't know that I'm talking in generalities, but I'm definitely talking in reality. You're talking in hypothetical ideals. What do you want us to change to fix these "evils"??????????? Anybody can take shots and complain.

How exactly does the U.S. go from that 187-1 ratio to 35-1? If it's not possible to do without a bloody revolution or some other kind of new government (and if that's what you're advocating, cool, that's pretty interesting), that what are we talking about?

I don't really have to, do I?

:)

I disagree. I think it probably has a lot to with the adage "it takes money to make money. A rich person who invests 10% of their money and gets a 10% returns is going to make a lot more money than a poor person who does the same.

We could write new "Anti-dog-eat-dog" legislation as it would be in the public's best interest.

Sorry, couldn't resist. :)

Um....again, seriously? There are far, far more loopholes in a EU style VAT then there are in the U.S.'s net income based system.


You forget the fundamental reason people start a business in the first place. People don't start a business to provide jobs, they do so to make money for themselves.

If they own the business, it's their company. There is no such thing as allow. It's THEIRS.

I'm waiting for Directive 10-289 to become law. I say that in jest, but I honestly wouldn't be surprised if it were passed.

But clearly the world is not that simple. The accounting on a business that makes $1 billion does not come down to "okay, I'll pay the salaries and now the rest of the money is mine." As you said, there are tax loopholes in the EU, there are tax loopholes here. There are regulations about salaries and worker benefits, safety conditions and accounting. There is the legal defining of wealth and ownership and assets, there are stock prices and stock irregularities.

I just find it silly to pretend that it's so simple that "rich people earned all their money," or "rich people stole their money from the hands of workers." The millionaires in Europe aren't less rich simply because they sold less widgets. People spend their lives trying to understand how the economy works, and to pretend that here in a a text football forum we can boil it down to a few simple statements of how it works is silly.

But that's true around the world. Clearly there is more to it than that.

People point out trends in wealth disparity, or if you like the accumulation of wealth, and say that these trends worry them. Your claim that the accumulation of wealth in our 1% is a good thing, and others are worried that it is not. I have not seen any proof of either side here in the discussion.

As for how we would change that ratio, we would have to know how it arose, and i continue to contend that we don't know, not anyone here at least. If we knew the mechanism perhaps we could change it, if we wanted to. Clearly it was created by something in our society. If it has to do with the regulatory environment, as I guess, then we could change the regulatory environment. It didn't take a revolution to produce the disparity so I think it's a bit much to assume it would take one to change it.

You're new around here....aren't you? :D

Do you have any factual evidence to back this up?

And I've been fighting the assumption that the billionaires in the U.S. are billionaires at the expense of everyone else. That if they were never born, that wealth would have instead been used to take people out of poverty somehow. That's the implied assumption whenever these disparity stats are paraded here, but nobody ever backs it up.

Further reading: Introducing This Blog - Paul Krugman Blog - NYTimes.com

i enjoy the inherent bias in the thread title.

not sure if anyone actually HATES them.

So explain your theory.

Just to note, a lot of wealthy Europeans tend to reside, at least legally, in low-to-free tax havens (Monaco, Switzerland, Gibraltar, ect.).

I think you are making a mistake in believing that the accumulation of personal wealth is inherently good for the nation. I could certainly see instances where that is true, but I can also see instances where that is false. It's an extreme example, but Bernie Madoff was a billionaire and he certainly didn't provide a net benefit for society.

I don't think that's the only possibility. There is also the possibility that they've generated wealth through their work, but also accumulated wealth that could have gone to their workers, their management, the cities and locales they work in, etc., that also played parts in creating that wealth. I would argue the suggestion that whatever wealth they managed to get is automatically wealth they've earned. We can see that in extreme places like Russia, with the oligarchs, but we have a harder time seeing it in our own culture. This is not a complete free market, as I think we can all agree, and there are many factors which determine the outcome of how much wealth a person ends up with, and where it came from.

I've been trying to make clear that I don't have a theory, I'm not an economist. I have my pet ideas, just as everyone here does. But without spending a great deal of research, none of us can come here and claim they know why income levels differ in the U.S. and other countries.

Maybe that's true, but when I read that article that was posted, I still hear largely the same refrain - the rich have too much. It's about the rich. The focus is not on the middle class. If the rich had less, we'd all be happier, even if we had less too. That's just my opinion, and I think it's the part of it that speaks to envy/jealousy/greed.

Oh, I'm sure some people do.

I can try to rummage up some numbers online, but it is my understanding that in general European workers earn more per hour, have better benefits and work less, while the U.S. outdoes them in income by working more hours (20% more I've seen) and working further into retirement age. As an aggregate I believe the U.S. economy outdoes them by quite a bit in pure wealth, but that measures of standard of living and personal income do not match up.

Well that's not surprisingly, really, humans seem to have an in-built desire for fairness. There is that experiment where it's shown that people will pass up the chance to earn some money if they see the division of money as being unfair. The incredibly top heavy numbers in the American economy make clear that people are going to focus on the wealthy, especially as so many in the middle class make good incomes yet still struggle.

That said, I'm all for all of us looking at our own situation and seeing how good we have it compared to most of the world, and then seeing what we can do for others. I invite everyone to search up the Kiva thread here on FOFC and joining the group.

I'm torn here.

I can't decide whether to go with "you're new around here, aren't you?" in tribute to Farrah's nice line earlier or "you don't get out much, do you?".

Hey I am doing my part to spread the hate!

I think you guys are all arguing statistical garbage. The recipe for success is not 1 parts rich dude, 11 parts other dudes, add salt and butter, stir...

What it really involves is preventing wealth concentration tactics that are harmful to the country, including:
- Golden parachutes, bonuses for failure make no sense for most corporations, they are prevalent because of the good old boy network, not because they serve a true competitive purpose.
- Low rates of taxes for capital gains/dividends, high rates of taxes on income (remember the FICA only went to 90K or so, maybe they've changed that now, I should check). This makes it harder to bridge the gap out of lower and middle classes into the upper class.
- Massive government subsidies to corporations. Most of this money is a redistribution from middle class (higher relative tax rate) to the wealthy.
- Bailouts, it saves the super wealthy who are supposedly getting such high returns for taking risks and being smart about it. Clearly they are not smart (why I hates them), and are not really taking much risk if the government covers their debts.
- Overly complicated and useless regulations which mostly are used to strangle off small businesses from becoming big businesses. Often these laws are the last resort of a big business to kill off a rising company (that they cannot buy, and usually relegated to those areas which have complicated and useless regulations which you would be surprised how many exist. Every time a seemingly dumb law is in the books you can bet some connected interest put it there to knock out a small time competitor at some point).
- Insistence that employees should bear the brunt of every companies hardships, but are usually the last to receive money during a boom. If I read one more story about people cutting their pay or hours to help a coworker during this crisis while I know their executives have just cleared multiple millions in bonuses while running the company into the dirt, I will scream!
- More and more taxes/fees on anything and everything everyone does instead of ticking up a percentage point on the multi-trillion dollar pile controlled by a few wealthy individuals and corporations. A pile that despite complete and abject stupidity and failure, is going to GROW by quite a bit this year.
- Finally, its nice to know so many people have had their savings obliterated while the usual suspects who were managing said savings are pulling in reasonable (if not all time record) numbers. Yay, 401k = safety net for the big money (crash wiped out about 0.5 to 1.0 TRILLION in net 401k dollars by my rough guesstimate, I need to data mine the FED and government reports probably to get an exact number, this is just eyeballing and guessing by way of linked stats). My concern is the stock market is going to outright gaming of the 'dumb money' in the market to make up the difference, which makes sense in a cruel cruel capitalist world, but is why I am paranoid as hell and warn people to control their own accounts with an iron fist.


I could continue ranting, but the point is who cares about whether a billionaire has 1 billion or 2 billion, all I care about is the mechanisms they are using to go from 1 billion to 2 billion. If they build the next Microsoft and create thousands of jobs, yippee. If they steal a billion dollars out of grandmas life savings (I've seen stats that despite what you think about people automatically reallocating assets as they age, that the crash wiped out from 20 to 30% of wealth of people nearing retirement, not all people, as the average person is actually WORSE), it makes me want to break out the pitchforks.

I can probably game old grannies if I had a U.S. backed 'trusted' institution like Citigroup and make money too. Not a very useful skill for economies, very useful for getting filthy rich. Which is why I hate the excessively rich by default and make case by case exceptions.

I'll play, but only for a minute, I gots other stuff to do. Besides, we can broadly agree on at least a couple of points (bailouts & subsidies primarily).



BFD, if it's their money, it's really none of anyone else's business what they do with it. I'd sooner they spend it on strippers than the government redistribute it to another batch of crack whores.


Scream if it makes you feel better, but it does little to change the reality that the average employee at the average company is not only easily replaced but also damned lucky to have the job at all as often as not they could be downsized without the company noticing any real loss in productivity.


There's no such thing as excessively rich.

Great post. This is the kind of hate for the rich I can appreciate and even get behind (almost). It's reasoned, and you make actual points.

Great points, they illustrate the point above, which is what I was trying to say. It doesn't matter how much money someone has, but how they came to have it. And you point out a lot of ways that the ultrarich have come to have their money that are not "earning it".

What if a middle class person gets money they don't "earn"? Is that a problem?

I guess the obvious answer to that, if it's a problem, is to wipe out inheritence rights. And again, that's an interesting idea, if that's actually your idea. But it seems like you're just poking holes.

I agree that generally, capitalism works better if people earn their money. That's kind of the spirt of capitalism in the first place - let's make people earn their wealth, not leave it to a corrupt government to distribute it. That requires the right regulations, and the right aggressive fraud prevention and prosecution. I don't know that it requires the kind of things that would be necessary to move our wealth disparity to European levels though.

I'm not much talking about inherited wealth. I'm talking about those regulations and fraud prevention and the many things that SportsDino mentions above. I think I can rest easy saying we're not there yet on having the "right" things. Am I the one who can figure out what the right ones are? Nope. But the symptoms seem clear to me that we're not there yet.

Sure. But I think you've found the reason why you're seeing much more venom for the rich. How many middle class people are "gaming the system" and for how much money? Middle class people aren't the ones gaining those "benefits" that SportsDino mentions. When that business makes money by squeezing the pension of its workers, it's the middle class that pays for that wealth, generally.

And the support you have for this assertion is...?

I think it's logically clear. If the company saves money by reducing workers' pensions, the workers lose money, the company gains money.

See, and this is where the problem of human nature kicks in. While we may want things to be fair and balanced, I would wager that the majority of us, when faced with a dump truck of money, would rather keep it than give it away to those less fortunate (yes, there is always someone less fortunate than you, it just depends how you define fortunate).

You are correct, capitalism does indeed work better if people earn their money. Unfortunately, this is not how it always happens. Back to my point of human nature though. The more money we get, the more we want. Those that we deem as rich, obviously do not want to share with those less fortunate (there is that word again). This means that they will do whatever is in their best interest to improve their situation, or at the very least to keep it as is. I believe this is where a lot of the perceived hatred for the rich comes into play. Throughout history, we have seen that those with money have tried (usually with success) to keep those without money down.

The ones with money have the power, and this is where the problem really lies.

It is not logically clear that workers are middle class. You just assume they are. That's a big bit of stereotyping there.

I wasn't really creating some test scenario, I was just pointing out a very general example. In my example the workers were middle class, with pensions. Nowadays I suppose it would be hard to find a lower class person who had a pension.

Clearly the rich have tools to concentrate wealth that the middle and lower classes don't have, that's what i was saying. And that goes part way of explaining to Molson why people are concentrating on the rich and not the middle class. There's not much the rest of us can do that affects the concentration of wealth one way or the other, except affect policy somehow I suppose.

If I ever meet an ultra-rich person I will let you know if I hate them after the fact.

My issue with Golden Parachutes is that it is not the exec's money, it is shareholders (yes that group has some overlap). In my opinion the shareholder oversight part of the corporate world is broken, they are overpaying what I consider to be replacement level executive talent. You can argue the execs are the majority shareholders, but maybe that is why they suck so much at their jobs since they have no accountability (my opinion).

I don't want the money redistributed to the government, I think that is half the problem. I want it put towards making more money, whether it is factories, jobs, or positive executive incentives like targets based bonuses (i.e. I'd rather give out a 50 million dollar bonus if they hit a X% growth or something target, than ten 5 million golden parachutes). Golden parachutes are for the most part a failure bonus, suck enough and we pay you to leave... wrong direction in my mind.

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I understand labor is easily substituted for, my concern is that what I consider the unproductive individuals in a firm are being increasingly compensated and sheltered in a hands-off, don't wanna hurt the 'talent' sort of way. Even worst now that the government has gotten into the business with bailing out some of the critically incompetent top dogs. These are people who sat on their hands while their market share drops 5, 10, 20 percent... instead of adapting like they are paid millions to do. When they failed to save that billion dollars of revenue, they are still paid, but then they pull out the threats on the productive people (though substitutable) to chop a billion out of the company.

Do they have the power, yes, but are they using it responsibly, or more importantly, profitably? In my opinion no. I also object to the factor where the villain is rewarded excessively while everyone else is feeling the pain. I have lots of respect for the executives that cut their pay when productive jobs were in peril. Productive meaning that the job contributes to revenue, I'm a ruthless advocate of cutting any job that has less benefit than cost, but its not all pure waste being cut. A lot of job cuts come down to 'you generate X revenue, but we have Y short term expense target, sorry'.

I consider if you are going to cut down expenses, you start with the most expensive mistakes first, then work your way down, thats all. The reason it doesn't happen is because of all the inbreeding that happens at the top of these organizations, are you going to fire Cousin Billy Bob even if he is getting a 3 million dollar bonus, and despite the fact that he botched 3 out of the last 5 decisions you asked him to make (and the other two were probably routine)? Maybe, but if he is tied to your network designed to keep your CEO position at all costs? Hell no.

The assumption that corporate leadership is trying to maximize shareholder value is assuming too much (a pretty intricate debate, but it comes down to individual risk of person's power weighed against net gain of the company, there is almost always some efficiency loss because of this, because it logically makes sense you are seeking to maintain your CEO position). The game is much too complicated, and once that assumption fails completely most of the jargon thrown out by politicians/business/pundits starts to unravel. If companies do not maximize wealth, a tax cut may not lead to increased investment (it can even decrease it). A subsidy might be pocketed. An executive might sell off corporate assets for a dime on the dollar. An insurance giant may post a monumental multi-billion dollar loss, on purpose! (Someone should really write a book on the true game of the AIG explosion)

The idea that the private sphere is inherintly rational or efficienct is incorrect, in fact I argue as it increasingly resembles government we are getting in deeper trouble.

All this to say that I am still offended by exec bonuses while the ranks are expected to sacrifice. And while those ranks are easily substituted (although it has expenses and it would be interesting if people started to call the bluff), I argue that not only are these same execs replaceable, but in many instances for the sake of sanity and getting filthy rich, many of these executives should be replaced.

Are we painting the rich as people who don't "earn" (such as lying, fraud) their wealth ratherly broadly? We do have scumbags like the Madoffs and Ken Lewises. However, the percentage of those people in the wealthy group can't be that big.

Also, are we confusing the rich with corporations/companies in terms of public CEOs?

Ya, it seems like the appropriate response to the super-rich that don't "earn" their money is to more aggressively investigate, prosecute, and punish them when they commit crimes. Or even expanding the definition of criminal conduct in some contexts. So why isn't THAT the target, why is the group as a whole considered the problem? The honest achievers are still counted in those wealth disparity tabels.

I think there are those who have committed fraud, etc. But then there are complaints about the system which has produced their wealth. These aren't questions of fraud and lies, it's just a question of what do we want the priorities of *our* regulatory system to be? Wealth is produced not just by people's work but by how the society chooses to handle it legally and financially.

It's that choice just, "I want money, he has it"?

So the ones with the money become the bad guys, kind of by default of human nature.

Edit: Farrah said it better. If someone ELSE has money, more than me - there MUST be something wrong with the system!!!

Since the rich are "someone else", from the perspective of most, they're money holding is by default, wrong.

But again, we're all rich in America. It's just the rich complaining about the richer.

That being said, of course, the poor and middle class can do what they can to try get the money from the rich, either through democracy, civil unrest, or their own achievment. I just don't think there's an inherent evilness at play in the equation.

FALSE.

Wealth is PRODUCED by work. You produce nothing, there is no wealth created. Regulatory framework produces nothing, and in fact retards the production of wealth.

My point is that it doesn't even matter whether the person earned the billion dollars. I'm not all that offended by an inheritance in the billions. I assert that if we want a functional economy we must make all reasonable effort to prevent theft and exploitation. This means enforcing somewhat hard things to enforce like front running, insider sales (or worst manipulation), or an investment bank using its general pool (say mutuals, grannies funds, creatively-backed assets) to offset losses to its hedge fund clients.

I'm not even asking for an arms race, or loophole wars. I want to go a different direction, make everything for public companies... public! Encourage public investment only in full disclosure companies, and anyone who doesn't want to play doesn't get invited to the party. A natural ecosystem will spring up to process and distribute that information, and the ironic side effect is despite all the crybaby behavior you will see up front by the schemers, the net effect more closely aligns with pure capitalism, and you will see massive success stories and efficiency increases as people adapt to the new bandwidth (think invention of the internet magnitude effect on the economy). Once we have a more vicious and true analysis based financial world instead of the country club elitism, a person will be able to truly invest instead of just gamble.

No opaque balance sheets and other annual/quarter reports are not full disclosure, I run crazy amounts of custom made software to try and reverse engineer the internals of a company from their public information (notice its always subject to later modification and time shifting of cash flows makes it a computationally impossible problem against a company truly dedicated to cooking the books).

Anyway, you prevent abuse and you align the incentives of wealth back towards creating it through productivity and goods. Then it doesn't matter whether I leave my billions of dollars to my kids, charity, the government, or strippers... the economy will function. Not everyone will have champagne and caviar, but you will see a natural deconcentration of wealth, but more importantly, it is because it is merely accompanying a massive increase in the net total wealth available in the country (only possible through technology, goods, standard of living, and population growth... wealth is not a zero sum game unless you only look at ratios which are mostly useless).

That is the best possible case for decreasing inequity gap, often the fastest growing times in terms of wealth creation (real dollars) is accompanied by increased wealth spread, because most of the growth comes from increase standard of living from a 'middle class' (and with it the accompanying net spending increase that boosts the already wealthy to super wealth). This is why I inevitable digress towards my old argument that the best game for the super rich is to grow the pie and pay for more people to get to work. More workers generally equals more shoppers, and while you can screw it up (paying too much for no benefit = waste), it is generally the story of America's ascendancy.

I find it amazing that people in this country actually think wealth is some finite amount and too much of it is being hoarded.

This is America. In this country, if you work hard and make smart choices you will be wealthy. Sure you may have to make sacrifices, your choices may be between the lesser of two evils but everyone here is given the same opportunity to make something of their lives. No one is born into bondage in this country anymore. If you want to run a huge Fortune 100 company, you can...if you have the courage to work for it.

It disappoints and saddens me that people would rather take from those who do have the courage under some misguided sense of "fairness" and "protection those from being exploited", rather than encourage people to work hard and make smart choices.

I guess it's just easier to take.

Farrah is pretty much hit it with "Wealth is PRODUCED by work."

Finance does not create wealth except when it finances investment that leads to something being produced that makes someone's life better. This is why I generally have railed against the unbridled growth of derivatives, which are all based on zero sum wealth redistribution, and only have value when they are appropriately set against risks in the production economy. I.e. the classic derivative of an oil future, simplifying the price and distribution of oil which is subject to numerous physical sources of disruption (supply breakdowns, hurricanes destroying refineries, more buyers than sellers on a specific day, etc).

Similarly a regulation can not create wealth, by fiat the government may print money, but in so doing it merely increases the theoretical amount of dollars per good by an equal amount. Now there is some information gap theory involved here, if you give everyone a newly printed $100 bill they certainly feel richer, and don't truly notice the inflationary impact psychologically, but the impression of creating wealth does not really create wealth. And pursued to excess you end up with Wiemar Germany.

However, regulation of criminal activity can prevent behaviors that retard the growth of wealth. For instance, allowing a company to assinate the CEO of a new rising company is clearly bad for overall economic growth. All Bill Gates would need to do in such a world was to have strangled Steve Jobs when it was convenient. So clearly, we don't allow killing business rivals. Similarly we shouldn't allow other behaviors that are wrong, even if they involve subtle economic analysis to understand just how bad they can be.

In my opinion, we could do with some regulation. But those laws should be of the form of 'thou shall not do extravagant manipulation A that results in embezzling funds from your own corporation' and not of the form of 'thou shall not make more than 1 billion a year as CEO of your company if you take government funds'. The latter is at best a bandaid, and in reality a bullshit tactic to look like you are doing something while you help said CEO loot the company for all its worth (see GM stock redistribution after about 5-10 years and I guarantee you will see a scandal that no one will ever mention).

The argument that government is always bad is wrong, although I must say that most specific arguments about why government is bad are usually right. I learned as a kid the government does not promise equal outcomes, it should and needs to do a better job of, promising equal rights and protections.

C) Both. How many in that top 1% ever really stop working? The various CEOs and high net worth individuals I've worked with and for are working every waking moment. They are on call 24/7, and are never on vacation. How much of the middle class works like that? If they are, and are still middle class...well that goes back to my statement about making good choices. If you're working 24/7 and you're still middle class, are you really making good choices?

I also think the nation as a whole, not just "middle class", has gotten more lazy in the pasty 40 yeas. People expect things to be given to them more now than ever before. The healthcare debate going on in this country is a perfect example.


I'm not sure what you're saying here.

You can go to college and not rack up $50k in debt to do so. You may not get to go to Harvard, but that's the choice you have to make, yes? Why should I pay, via someone taking the money I work very hard for in the form of my taxes... so that you don't have to make the same choice and sacrifices that I did?

Now, if you'd like to give me the power to make your choices for you, then I'd be happy to write a check to the government. :D

I have to agree with Farrah here on this.

There is no one holding anyone back from attaining the 'wealth' that you want other than yourself. Sure, being born into a well to do family helps, but, if you're an idiot and blow all of the money, what good does that do? One of my dads best friends started out as the janitor for a company over 30 years ago...he retired as the president of the company and now is very very well off. Yeah, it took a few years, but, he earned it. It can be done, but, it isn't something that's going to happen over night.

I think there is too much of a 'I want it now' attitude or 'how come they get to but I don't?' whining in this country. "Everybody" wants to be rich, but, not "everybody" wants to put the blood, sweat and tears to get it and they just want it handed to them instead. Nope, instead, they want to penalize the people who are rich (in the monetary sense) because of really, no more of an argument than, "It's not fair." The whaambulance is on its way to pick you up.

That's my opinion and I'm sticking to it.

I don't think the 20 million dollar guy needs any help either. But I don't think you can 'tax away' the problem. If anything willy nilly government spending among other interference has done its part to contribute to increased education and health care pricing.

More college graduates unfortunately won't create jobs anyway. As Jon said, most employees can be replaced, all we are doing is pumping the supply and crashing the market. Hell, you bring up 20 million dollar guy, that is a heck of a lot closer to me than to your Madoff's or your average Forbes lister. If you take me from 14 million after taxes to 8 you are doubling the tax rate (that is 40% already by the way), and since my goal is building a giant ass company to give you a job (and statistically I'd be more likely to do so than your average Forbes member).. you just doubled my timeline before I could even get started.

So this is a prime example of 'everyone richer than me' is the enemy thinking. We shouldn't be thinking about wealth lines and tax rate games to make things 'fair', because your line and your suggested rate just kills half the economic growth in this country, and probably 90% of the growth most likely to give your $50K college debt a job!

Where the tax wars lie to me is when states make a new sales tax of say 5% to cover their budget, which could be settled by a .25% tax on the billionaires. Rationally that is unfair, you litterally are making poorer people share a larger ratio of the pain when they are the least capable of adapting to it... so I would of course say go with the 0.25% despite it hurting me since it really makes sense for public policy. This is why we have progressive tax systems. But anything to excess is stupidity, we should focus on making the fundamental nature of our economy work. That doesn't mean standing aside and let the banks run amuck either (they have done enough damage), but it sure as hell does not involve relying on tax distribution to solve a problem that requires actual thinking.

Just throwing this out there: More jobs = larger tax base...

Also, more billionaires = larger tax base.

There was an article in the paper the other day about Arizona spending "stimulus" money on job training programs for the unemployed. Throughout the article all I could think was "training for what jobs? I thought there weren't any?". The article didn't say either.


I think this is bad policy, as the tax base is narrow and the state would be relying on the fortunes of one or two people to cure its ills. Imagine the state that assessed that tax on John McAfee. They'd be screwed right now.

Ah yes, that too. Good point.

I think sports are the best analogy here. Take Albert Pujols and Craig Counsell. Almost everyone who has played with Craig (Florida, Arizona, Milwaukee and others) say he has a fantastic work ethic. He has had a solid career and makes an average MLB salary (maybe a little higher). Pujols makes a lot more money, but doesn't necessarily work any harder. He is simply more talented (or better suited) to have success in baseball. But, since he has gained so much more than other hardworking players, does that mean we need to give him an "anti-coordination" drug so that he hits .260 next season? After all, it isn't "fair" that he makes so much more than Counsell despite the fact that he doesn't work any harder.

I doubt many on this board (outside of Cubs fans) would want to take the above approach to Pujols, but that's exactly what many want to do to the "super rich".

In this world, there are some hard-working, honest and smart people who will not make a ton of money. Just like there are some complete douchebags who will make millions. But the fact remains that if you work hard, have passion and aptitude for what you do and are willing to make certain sacrifices, you have a much better chance at wealth/success than someone who doesn't. It's no guarantee, but it's about the best we can hope for and certainly something our government should support. So, I don't see the reason to group "the rich" as an enemy anymore than grouping "engineers" or "text sim developers" (most of which certainly aren't rich ;) ).

Don't you have a game to get out? GBTW!

:D

Would that be a wealth tax or an additional income tax on whatever they earn that year?

He's checking out the hotties on Ashley Madison. :D

I think that's oversimplifying it. Yes, on a societal scale wealth is provided by work. But the amount of wealth that a person ends up possessing goes through many, many layers of abstraction, financial arrangements, regulations and laws. I clearly have not been able to make this point clearly during this whole discussion, so I'll just bow out unless I think of a great way of describing it. But suggesting that Bill Gates's billions are directly correlated to the amount of wealth he has produced is simplifying it to the point of uselessness. If the value of the dollar changes, has the amount of wealth he's produced changed? No, but that's just one of the myriad things that goes into the calculation of how much wealth an individual has.

I see that you really want to push this point, that people think people with more money than them are bad. But it really has nothing to do with what I'm saying, so please find someone else's comments to pin it on.

I do not think that it is wrong for someone to have more money than me. Can I put it any plainer than that? I don't want as much money as they have, but they're welcome to it. We have a society and a government which creates and defines the system of corporations, a tax structure, regulatory systems for business and labor and safety. I am a citizen of that country, so I have a stake in what that system is. That's my pony in this race.

We don't live in some Ayn Rand free market where people are just making money from the sweat of their brow. We live in a complex society and economy where we're all entangled. The way the system works affects me, and the billionaires and everyone else. And it's just that, a system. It's something we created and continue to create. I'm not talking about "tampering with the natural order of things" in order to deal with my dollar envy. I'm talking about taking part in making wise decisions about the maintenance of a system that exists, that is our creation and our responsibility.

Fixed that for you.

It is truly unfortunate we don't live in an Ayn Rand free market, for in that market it is truly equality of opportunity and not equality of results. It's my version of a wet dream I guess.

In any event....I wholeheartedly agree with most of this statement. I like the system that exists and I think it should be maintained. I also agree those who participate in it should make wise and well reasoned decisions. The devil is in the details of course.

More regulations....How many more regulations would have prevented the Madoff fraud when the SEC was tipped off about the Ponzi scheme on multiple occasions going back as far as 1999? Not to mention the sophistication at which his fraud operation was structured....how would more regulations have caught that?

If more regulation is what you seek, better pay attention to Chuck Schumer and the move towards the EU style accounting standards known as IFRS and away from American financial accounting standards of GAAP. The regulations surrounding IFRS are about an inch thick. The regulations surrounding GAAP fill volumes.

I gotta tell you, I'm fucking tired of these remarks. Just because I'm the one here discussing this with you guys doesn't mean I'm that bogeyman you're chasing who's envious of the rich.

I could have spent this entire thread simply making quips like that, but I tried having an actual conversation. And I thought I made pretty fucking clear that I don't give a shit who has money and who doesn't. If I was interested in being rich I'd be working a lot more than i am right now, instead of working part time and struggling to get by so I can be with my kids instead.

Stop painting me with your one color brush and actually listen, or leave me alone.

I know a lot of you would like a more ideal free market. I'm not sure it's the best, but it's clearly not what we have. I think it's therefore misleading to act like everything that happens is due to market forces, that's all.

And no I dont really want "More" regulation. I'm talking about "different" regulation, if we actually wanted to change the way things are. obviously many don't, but I think it's clear that the regulation we have (and I use the term regulation loosely) contributes to the way things are.

We really need to bring back QOTM.

There are ways to define rich that don't involve currency or balance sheets or fair market values....

:)

Not in this thread there aren't ;-)