Wealth Distribution

[Windigo]

The best way to decentralize wealth, stabilize the country and help your family is to start a small business.

The more they spend with you, the less Walmart and the Kochs get.

[Mr. Bigglesworth]

The best way to decentralize wealth, stabilize the country and help your family is to start a small business.

I don't disagree.  My brother's been a highly successful entrepreneur for 20 years now.  I myself have spent the last 15 years at a firm trying to bring more transparency and consumer value to the financial services sector.  We've done great by our shareholders, but are only slowly chipping away at the market imperfections that have so many people overpaying their financial firms without even knowing that they're doing it.

But you aren't responding to the data I put up there or the questions I posed. 

Are you saying, "No, I don't care about those data or those trends.  They're not a problem in America."  Or are you saying, "I don't like those trends, but the best way to fix them is to start a small business." 

I'm not trying to score points here debate-style.  I'm just trying to determine if there's common ground.

The latter. Over concentration of wealth hurts everyone around including the country.

[Windigo]

The best way to decentralize wealth, stabilize the country and help your family is to start a small business.

I don't disagree.  My brother's been a highly successful entrepreneur for 20 years now.  I myself have spent the last 15 years at a firm trying to bring more transparency and consumer value to the financial services sector.  We've done great by our shareholders, but are only slowly chipping away at the market imperfections that have so many people overpaying their financial firms without even knowing that they're doing it.

But you aren't responding to the data I put up there or the questions I posed. 

Are you saying, "No, I don't care about those data or those trends.  They're not a problem in America."  Or are you saying, "I don't like those trends, but the best way to fix them is to start a small business." 

I'm not trying to score points here debate-style.  I'm just trying to determine if there's common ground.

The latter. Over concentration of wealth hurts everyone around including the country.

I like to use ecosystem vs. economic system as an analagous pair.

Money is like energy, it drives the whole modern system. Complex ecological systems are more robust and resistant to environmental stresses. They are self moderating (in the long term). Disasters are more quickly rebounded from.

A complex robust economic system would allow nature to take its course (yes, no governmet bailouts OR SUBSIDIES) and it would be diversified.

People can readily see a healthy ecosystem/economy. A forest of trees for example. What many don't understand is that that big old healthy forest/economic system is ONLY MADE POSSIBLE  because of all the activity by critters/plants that are small and numerous.

Big corporations/Multinationals (like trees) can only exist when the little critters are numerous and healty... building soil and making nutrients that allow for the trees existence.

They represent a small but significant portion of the ecosystems stored wealth... and they die! All that stored energy/money is released back into the ecosystem for use by the litter soil and nutrient producing critters.

In our economy, these big ass trees must release their stored wealth sooner or later, otherwise the system suffers and it becomes less robust.

If you can follow that analogy, then you understand why I dislike corporations and accumulation of wealth.  "Let the energy flow throughout the ecosystem! Let the wealth flow throughout the economy!"

[Mr. Bigglesworth]

FarAwaySooner:
Excellent factually based post!

Lets talk about what caused this divergence since 1979.  There are multiple factors which occured relatively close together which drove this trend in the USA.
1] Reduced trade barriers.  Manufacturing technology became readily available world-wide which means that a lot of manufacturing jobs left the USA.
2] A Technological Revolution - Information technology really got going with the invention of the transister by Shockly.  When you have a major new
    technology that hits an economy it takes 20 - 40 years for it to get readily applied.  This has occured before (steam power, electricity) and had similar
    effects on employment while it happened.  Many, many "white collar" jobs in the USA were managing information.  Those jobs are now gone forever
    because we are far more efficient.
3] Fall of Communism & Modification of Communism (China) - A huge part of the world economy was grossly inefficient or had next to no world trade if
    you compare the world in 1913 through the fall of the USSR.  This greatly increased world demand, but also greatly increased world competition.
4] Flood of low skill workers into the USA.  Low skill jobs have had flat pay levels in part because there is a huge increase in the supply of low skill labor. 
    If you greatly increase supply, price falls.  This occurs with products and in the labor market.
5] Huge growth in government regulation - The barriers to entry for new firms, and especially for firms to expand are massive.  This is in part due to the
    massive regulatory costs imposed on business by State and Federal government. 

One more comment about technology.  Have any of you been inside a modern factory in the last 5 years?  There are a very few number of workers needed compared to 1980 for the same level of production output.

All of these factors have worked together to lower incomes in the bottom 75% of the income scale.  In many ways the US and World economy is undergoing structural changes to a great degree.  The USA is starting to get wealth and income concentration like that which existed in the 1900s when Roosevelt was President (TR not FDR).

In these situations about the only thing that really works is the inheritance tax if you want to keep your economy working.  But the US Inheritance tax is now 45%.  The only long term solution in my mind that would work is if you put the inheritance tax at say 90% for wealth over $500,000,000 dollars which is adjusted for inflation.  You can pick any number you want for the top inheritance tax - but if you get under $100 million you will break up a lot of small corporations and big family farms due to the asset values.

What I would do is:
1] Cut government regulation so there is less crony capitalism.
2] Massively raise inheritance taxes at the very, very top of the scale.

A massive increase in inheritance tax is wealth redistribution. It is better to remove the source of extreme income than take the wealth.

[Windigo]

@Biggs,

the really bad thing about an inheritance tax is that it goes to the government...  we really need to smarten them the hell up

[GDS_Starfury]

we really need to smarten them the hell up fire the whole lot of them

fixed.

[Windigo]

and replace them with what????

[LongBlade]

The best way to decentralize wealth, stabilize the country and help your family is to start a small business.

I don't disagree.  My brother's been a highly successful entrepreneur for 20 years now.  I myself have spent the last 15 years at a firm trying to bring more transparency and consumer value to the financial services sector.  We've done great by our shareholders, but are only slowly chipping away at the market imperfections that have so many people overpaying their financial firms without even knowing that they're doing it.

But you aren't responding to the data I put up there or the questions I posed. 

Are you saying, "No, I don't care about those data or those trends.  They're not a problem in America."  Or are you saying, "I don't like those trends, but the best way to fix them is to start a small business." 

I'm not trying to score points here debate-style.  I'm just trying to determine if there's common ground.

The latter. Over concentration of wealth hurts everyone around including the country.

I like to use ecosystem vs. economic system as an analagous pair.

Money is like energy, it drives the whole modern system. Complex ecological systems are more robust and resistant to environmental stresses. They are self moderating (in the long term). Disasters are more quickly rebounded from.

A complex robust economic system would allow nature to take its course (yes, no governmet bailouts OR SUBSIDIES) and it would be diversified.

People can readily see a healthy ecosystem/economy. A forest of trees for example. What many don't understand is that that big old healthy forest/economic system is ONLY MADE POSSIBLE  because of all the activity by critters/plants that are small and numerous.

Big corporations/Multinationals (like trees) can only exist when the little critters are numerous and healty... building soil and making nutrients that allow for the trees existence.

They represent a small but significant portion of the ecosystems stored wealth... and they die! All that stored energy/money is released back into the ecosystem for use by the litter soil and nutrient producing critters.

In our economy, these big ass trees must release their stored wealth sooner or later, otherwise the system suffers and it becomes less robust.

If you can follow that analogy, then you understand why I dislike corporations and accumulation of wealth.  "Let the energy flow throughout the ecosystem! Let the wealth flow throughout the economy!"

Interesting.

I'll have to think on that.

You should study some economics. You like models and how they work. Econ is fun and has tons of graphs and models to help explain stuff going on around us.

[Greybriar]

and replace them with what????

Or, to put it another way, what the hell are we (or they) going to do about it?

[airboy]

FarAwaySooner:
Excellent factually based post!

Lets talk about what caused this divergence since 1979.  There are multiple factors which occured relatively close together which drove this trend in the USA.
1] Reduced trade barriers.  Manufacturing technology became readily available world-wide which means that a lot of manufacturing jobs left the USA.
2] A Technological Revolution - Information technology really got going with the invention of the transister by Shockly.  When you have a major new
    technology that hits an economy it takes 20 - 40 years for it to get readily applied.  This has occured before (steam power, electricity) and had similar
    effects on employment while it happened.  Many, many "white collar" jobs in the USA were managing information.  Those jobs are now gone forever
    because we are far more efficient.
3] Fall of Communism & Modification of Communism (China) - A huge part of the world economy was grossly inefficient or had next to no world trade if
    you compare the world in 1913 through the fall of the USSR.  This greatly increased world demand, but also greatly increased world competition.
4] Flood of low skill workers into the USA.  Low skill jobs have had flat pay levels in part because there is a huge increase in the supply of low skill labor. 
    If you greatly increase supply, price falls.  This occurs with products and in the labor market.
5] Huge growth in government regulation - The barriers to entry for new firms, and especially for firms to expand are massive.  This is in part due to the
    massive regulatory costs imposed on business by State and Federal government. 

One more comment about technology.  Have any of you been inside a modern factory in the last 5 years?  There are a very few number of workers needed compared to 1980 for the same level of production output.

All of these factors have worked together to lower incomes in the bottom 75% of the income scale.  In many ways the US and World economy is undergoing structural changes to a great degree.  The USA is starting to get wealth and income concentration like that which existed in the 1900s when Roosevelt was President (TR not FDR).

In these situations about the only thing that really works is the inheritance tax if you want to keep your economy working.  But the US Inheritance tax is now 45%.  The only long term solution in my mind that would work is if you put the inheritance tax at say 90% for wealth over $500,000,000 dollars which is adjusted for inflation.  You can pick any number you want for the top inheritance tax - but if you get under $100 million you will break up a lot of small corporations and big family farms due to the asset values.

What I would do is:
1] Cut government regulation so there is less crony capitalism.
2] Massively raise inheritance taxes at the very, very top of the scale.

A massive increase in inheritance tax is wealth redistribution. It is better to remove the source of extreme income than take the wealth.

Your idea is a bad one.  You want people to generate economic activity.  You don't want to discourage economic activity or discourage people from accumulating wealth.  If one is upset about the distribution of wealth - then the real issue is at the extreme tails of the distribution.  Then the issue becomes how do you address this with the least disruption to the economic health of the country.

Many of you think that the tail ends of the wealth distribution are big, publically traded company CEOs.  This is not backed by the evidence.  Most CEOs only serve for a handful of years.  Very few of them make the ranks of the absolute most wealthy.

[Windigo]

Heh, surely you jest, I already have two post-grad courses in economics under my belt.


Environmental Economics (top of class... OK the cohort was only 28 or so in size, but still... )
Economics for Decision Making (3.7)


just because I refute many of the postulates of Adams as being from a fruit-cake prophet that many have shared koolaide with (self-interest benefiting social/human welfare), doesn't mean I am without formal knowledge of economics

IIRC, the tenants of growth/greed/inflation, without acknowledgement of the necessity of recession,depression, social licence and deflation (back when the USA housing bubble grew and burst big time) is where we had our first big disagreement.

(BTW that housing bubble seems a long time ago now doesn't it?)

[Windigo]

FarAwaySooner:
Excellent factually based post!

Lets talk about what caused this divergence since 1979.  There are multiple factors which occured relatively close together which drove this trend in the USA.
1] Reduced trade barriers.  Manufacturing technology became readily available world-wide which means that a lot of manufacturing jobs left the USA.
2] A Technological Revolution - Information technology really got going with the invention of the transister by Shockly.  When you have a major new
    technology that hits an economy it takes 20 - 40 years for it to get readily applied.  This has occured before (steam power, electricity) and had similar
    effects on employment while it happened.  Many, many "white collar" jobs in the USA were managing information.  Those jobs are now gone forever
    because we are far more efficient.
3] Fall of Communism & Modification of Communism (China) - A huge part of the world economy was grossly inefficient or had next to no world trade if
    you compare the world in 1913 through the fall of the USSR.  This greatly increased world demand, but also greatly increased world competition.
4] Flood of low skill workers into the USA.  Low skill jobs have had flat pay levels in part because there is a huge increase in the supply of low skill labor. 
    If you greatly increase supply, price falls.  This occurs with products and in the labor market.
5] Huge growth in government regulation - The barriers to entry for new firms, and especially for firms to expand are massive.  This is in part due to the
    massive regulatory costs imposed on business by State and Federal government. 

One more comment about technology.  Have any of you been inside a modern factory in the last 5 years?  There are a very few number of workers needed compared to 1980 for the same level of production output.

All of these factors have worked together to lower incomes in the bottom 75% of the income scale.  In many ways the US and World economy is undergoing structural changes to a great degree.  The USA is starting to get wealth and income concentration like that which existed in the 1900s when Roosevelt was President (TR not FDR).

In these situations about the only thing that really works is the inheritance tax if you want to keep your economy working.  But the US Inheritance tax is now 45%.  The only long term solution in my mind that would work is if you put the inheritance tax at say 90% for wealth over $500,000,000 dollars which is adjusted for inflation.  You can pick any number you want for the top inheritance tax - but if you get under $100 million you will break up a lot of small corporations and big family farms due to the asset values.

What I would do is:
1] Cut government regulation so there is less crony capitalism.
2] Massively raise inheritance taxes at the very, very top of the scale.

A massive increase in inheritance tax is wealth redistribution. It is better to remove the source of extreme income than take the wealth.

Your idea is a bad one.  You want people to generate economic activity.  You don't want to discourage economic activity or discourage people from accumulating wealth.  If one is upset about the distribution of wealth - then the real issue is at the extreme tails of the distribution.  Then the issue becomes how do you address this with the least disruption to the economic health of the country.

Many of you think that the tail ends of the wealth distribution are big, publically traded company CEOs.  This is not backed by the evidence.  Most CEOs only serve for a handful of years.  Very few of them make the ranks of the absolute most wealthy.

But have the most wealthy ever acted in the capacity of a CEO or their ilk?

[GDS_Starfury]

having a degree or a class and actively participating in a given field are 2 very different things.
FFS man you took those classes so long ago seashells were still valid currency.

[Labbug]

Just to add to the conversation.  In general, wealth usually last only 3 generations.  The 1st generates it, the 2nd maintains it, and 3rd destroys it.  There are certainly exceptions to this, but it is just difficult to pass down economic values and work ethics down from one generation to the next. 

[GDS_Starfury]