This is Extreme Wealth Inequality: How Does One Fix This?

[BrentWil]

Last edited Thu Feb 2, 2012, 11:31 PM - Edit history (1)

THis is extreme Wealth Inequality.




What policy/policies are needed to "fix" this? What does the "fix" look like? What is the endstate for wealth distribution?

[Jackpine Radical]

1. A modest suggestion...

[The Magistrate]

3. Hear Hear, Sir...

Traditional remedies are to be preferred....

[Art_from_Ark]

48. Why would that remedy be preferred?

The French Revolution begat the Reign of Terror which begat the Rise of Napoleon which begat the defeat of Napoleon which begat the return of the Bourbon Monarchy, all within the course of 25 years.

[BrentWil]

4. The French Revolution sucked for all involved..

And the poor especially. Start with a revolution and you end dying in the snow in Russia.

[Jackpine Radical]

21. Yes, you're right, and I would never actually advocate a violent revolution.

Are you familiar with the Chenoweth & Stephan book on nonviolent resistance movements?

They make the point that violent revolutions always go bad.

[BrentWil]

26. No, I haven't...

I wouldn't make the argument that it never works. Just that usually it doesn't benefit the poor, for sure.

I would be interested in reading that, however.

[Jackpine Radical]

34. Here from Amazon (I'm trying to make everyone be aware of this book)

http://www.amazon.com/Why-Civil-Resistance-Works-Nonviolent/dp/0231156820/ref=sr_1_1?s=books&ie=UTF8&qid=1328241497&sr=1-1

For more than a century, from 1900 to 2006, campaigns of nonviolent resistance were more than twice as effective as their violent counterparts in achieving their stated goals. By attracting impressive support from citizens, whose activism takes the form of protests, boycotts, civil disobedience, and other forms of nonviolent noncooperation, these efforts help separate regimes from their main sources of power and produce remarkable results, even in Iran, Burma, the Philippines, and the Palestinian Territories.

Combining statistical analysis with case studies of specific countries and territories, Erica Chenoweth and Maria J. Stephan detail the factors enabling such campaigns to succeed and, sometimes, causing them to fail. They find that nonviolent resistance presents fewer obstacles to moral and physical involvement and commitment, and that higher levels of participation contribute to enhanced resilience, greater opportunities for tactical innovation and civic disruption (and therefore less incentive for a regime to maintain its status quo), and shifts in loyalty among opponents' erstwhile supporters, including members of the military establishment.

Chenoweth and Stephan conclude that successful nonviolent resistance ushers in more durable and internally peaceful democracies, which are less likely to regress into civil war. Presenting a rich, evidentiary argument, they originally and systematically compare violent and nonviolent outcomes in different historical periods and geographical contexts, debunking the myth that violence occurs because of structural and environmental factors and that it is necessary to achieve certain political goals. Instead, the authors discover, violent insurgency is rarely justifiable on strategic grounds.

[BrentWil]

50. THanks..

It does seem to offer a much better transition.

[Zalatix]

38. The poor are going to 'die in the snow' as it is.

That's the whole point of these economic changes - mass Social Darwinism.

[BrentWil]

43. Don't think you can compare what is going on now to the march on Moscow..

BY Napoleon. I mean, what I posted was is a problem. What the French Revolution ended in as awful, for everyone involved.

[Angry Dragon]

8. The French Solution

Roll, roll, roll your head

[Guy Whitey Corngood]

12. That is barbaric!

I mean make sure you dab that thing with some rubbing alcohol at least, before pulling the lever.

[Zalatix]

44. LOL!!!

[BrentWil]

2. I would suggest the reverse income tax... an idea from Friedman might work

There are two basic arguments against social welfare/safety net programs. The first is that it creates less economic incentive to work because one starts to lose their benefits once they find employment. Why work a person take a minimum wage job when your economic benefits remain the same? The second is efficiency. We as a nation have multiple agencies directing checks to a lot of different people. In some cases, they aren't really "checks" but means to pay for things with lots of regulation on the individual. For example, the society wants to control what a person can buy with food stamps. The problem is, all that control comes with administration costs. For example, 14 percent of all money that goes towards food stamps goes towards administration costs.

WIth these two arguments in mind, let me suggest a radical solution. It is the reverse income tax. If you make up to 50K a year, the government would simply credit you with 30K a year on your pay check. Once you make over 50K, the government starts to take this money back until your income reaches over 125K. Over that amount, you are taxed on all your income at the same rate. This would be a simple tax on all income and replace all other federal taxes. I imagine that money over 125K would be taxed higher rate then it is taxed today. For retirements, one could simply increase the payout to 50K a year once a person reaches 65 age.

This basic concept would replace all social safety net programs, including welfare, food stamps, unemployment and other non nonmedical programs. The benefits would be twofold. One, it is efficiency. The government isn't trying to control the money or regulate it. It is simply giving it to lower income and middle class Americans. One could eliminate the Social Security administration, for example. I imagine the administration cost could be lowed to 1 or two cents for every tax dollar. The program could be administered simply through the IRS and done so in the same way they take a monthly tax from workers. Second, there is no reason for a person not to take a low paying job and get into the American work force. If someone is living off of the 30K from this program, getting a 20K a year job would simply give them an income of 50K. That would provide a decent livelihood for them.

The other aspect is that this would create a huge middle class that could buy stuff and keep the economy going.

Thoughts?

[ProSense]

9. Imagine

There are two basic arguments against social welfare/safety net programs. The first is that it creates less economic incentive to work because one starts to lose their benefits once they find employment....This basic concept would replace all social safety net programs, including welfare, food stamps, unemployment and other non nonmedical programs. The benefits would be twofold. One, it is efficiency. The government isn't trying to control the money or regulate it.

...more RW arguments.

To Beat Back Poverty, Pay the Poor

By TINA ROSENBERG

<...>

Today, however, Brazil’s level of economic inequality is dropping at a faster rate than that of almost any other country. Between 2003 and 2009, the income of poor Brazilians has grown seven times as much as the income of rich Brazilians. Poverty has fallen during that time from 22 percent of the population to 7 percent.

Contrast this with the United States, where from 1980 to 2005, more than four-fifths of the increase in Americans’ income went to the top 1 percent of earners. (see this great series in Slate by Timothy Noah on American inequality) Productivity among low and middle-income American workers increased, but their incomes did not. If current trends continue, the United States may soon be more unequal than Brazil.

Several factors contribute to Brazil’s astounding feat. But a major part of Brazil’s achievement is due to a single social program that is now transforming how countries all over the world help their poor.

The program, called Bolsa Familia (Family Grant) in Brazil, goes by different names in different places. In Mexico, where it first began on a national scale and has been equally successful at reducing poverty, it is Oportunidades. The generic term for the program is conditional cash transfers. The idea is to give regular payments to poor families, in the form of cash or electronic transfers into their bank accounts, if they meet certain requirements. The requirements vary, but many countries employ those used by Mexico: families must keep their children in school and go for regular medical checkups, and mom must attend workshops on subjects like nutrition or disease prevention. The payments almost always go to women, as they are the most likely to spend the money on their families. The elegant idea behind conditional cash transfers is to combat poverty today while breaking the cycle of poverty for tomorrow.

- more -

http://opinionator.blogs.nytimes.com/2011/01/03/to-beat-back-poverty-pay-the-poor/

More suggested reading: Jared Berstein: Inequality, the Middle Class, and Growth
http://www.democraticunderground.com/1002251130

[BrentWil]

14. Paul Krugman is a Conservative?

http://economistsview.typepad.com/economistsview/2006/11/milton_friedman_1.html

As always, Mr. Friedman’s policy prescriptions were shaped by his desire to minimize adverse economic incentives, a feature that architects of earlier welfare programs had largely ignored. Those programs ... typically reduced a family’s benefits ...[with] each increment in earned income. ...[A] family ... might see its total benefits fall by $2 for each extra dollar it earned. ...[N]o formal training in economics was necessary to see that working didn’t pay. In contrast, someone who worked additional hours under Mr. Friedman’s plan would always take home additional after-tax income.

[ProSense]

16. ?

Why do I get the impression there is some flailing going on here?

[BrentWil]

19. Just read the top quote.

I thought you were suggesting that my argument for a reverse income tax was RW. I agree, the simplest means to solve this is to pay the poor. I rather simply pay them then try to figure out behavior they need to follow in order for them to get paid.

[ProSense]

20. Hint:

The article you linked to has nothing to do with Krugman.

I thought you were suggesting that my argument for a reverse income tax was RW. I agree, the simplest means to solve this is to pay the poor. I rather simply pay them then try to figure out behavior they need to follow in order for them to get paid.

I was!

[BrentWil]

24. Sorry Robert Frank.. who isn't conservative

Messed up because Krugman posts on that blog often.

With that said, I don't think I will take that idea to the GOP convention this year.

[ProSense]

27. Well

"With that said, I don't think I will take that idea to the GOP convention this year."

...you wouldn't have any problem taking this idea:

There are two basic arguments against social welfare/safety net programs. The first is that it creates less economic incentive to work because one starts to lose their benefits once they find employment....This basic concept would replace all social safety net programs, including welfare, food stamps, unemployment and other non nonmedical programs. The benefits would be twofold. One, it is efficiency. The government isn't trying to control the money or regulate it.

[BrentWil]

28. I there anything actually wrong with that argument and how I follow it up?

If you simply paid people in the middle class and poor, rather they worked or didn't work, there is no economic incentive not to work.

Moreover, if you take all the social welfare programs, and simply make it a simplistic payment to the poor and middle class, it would be cost less overhead because of economy of scale and less regulation on who is getting it.

Instead of telling me that is RW, why not tell me why that is wrong?

[ProSense]

30. What

"If you simply paid people in the middle class and poor, rather they worked or didn't work, there is no economic incentive not to work."

...exactly gives you the impression that people "in the middle class and poor" don't want to work?

You're throwing out ideas involving paying people a lot of money for not working and ending the safety nets. Where exactly is this money coming from, and why do you emphasize ending every safety net program as part of the solution?

Here's a better idea, give them jobs that pay well.

This is real life, not a board game.

[BrentWil]

31. It isn't ending safety nets...

And I am just stating facts. If you get a job, some of you safety net disappears. That creates less of the economic rational to work. I am not saying "most don't want to" I am looking at this as an economics problem, which I think it is.

I am not ending safety nets. I am replacing it with a net that ensures no one is living in poverty. You get the money from the rich. Tax all money over 125K a person at a rate that would pay for this. Did you miss my chart or my post?

So, tell me again how taxing the rich to give to the poor is conservative?

[ProSense]

32. Let's

break it down.

RW argument about the effects of social programs.

There are two basic arguments against social welfare/safety net programs. The first is that it creates less economic incentive to work because one starts to lose their benefits once they find employment....

RW argument to substitute all social programs with a scheme.

This basic concept would replace all social safety net programs, including welfare, food stamps, unemployment and other non nonmedical programs. The benefits would be twofold. One, it is efficiency. The government isn't trying to control the money or regulate it.

[BrentWil]

35. How is simply giving money to people who need it a scheme?

And taxing the rich to pay for it conservative?

See what you want

[ProSense]

37. Your

"How is simply giving money to people who need it a scheme?

And taxing the rich to pay for it conservative? "

...argument makes no sense. Here's what you said, and my response: http://www.democraticunderground.com/?com=view_post&forum=1002&pid=260590

An easy solution: Higher taxes on the weathy (50% to 90%), a higher minimum wage ($15 to $20 per hour), more jobs and the problem corrects itself.

No need to touch the safety nets. Well, throw in single payer for an even stronger economy.

[Trajan]

5. I personally do NOT have a problem with people becoming rich ....

What I have a problem with is the rich DEMANDING that worker wages be reduced to the lowest possible level, with minimum benefits and the least workplaces rules and environmental regulations .... Workers MUST be able to enjoy a larger portion of the wealth they create with their own hands .... Workers MAKE things and FIX things and INSTALL things - REAL work that makes owners very rich .... It is imperative that the low and middle classes have a greater share of the overall pie.

NOT that rich people MUST get less, but that low and middle classes get more ....

Why does the economy need stimulus to thrive ? ..... It should thrive on it's own power, with regular joes and janes pumping their own disposable income into building the houses, the cars, the washing machines and other goods that helps increase employment AND allows the owners to amass even more wealth .....

You want a strong economy ? ..... PAY WORKERS HIGHER WAGES ....

[BrentWil]

7. I dont either. However,

All things in moderation. When the bottom 50% of people have 2.5% of the wealth, there is a problem. I agree, people should be rewarded for being successful. However, this system has gone well beyond that.

[freefaller62]

23. What about Me?

I worry about the lower classes making good money and living a good life; I don't care about the rich getting richer. Instead, I care about my friends, family and our society. Obsessing about the income of others is nothing more than jealousy.

I carry apples in my car to give to beggars. i must be different.

[gopiscrap]

6. R&R Riot and Revolution

[bhikkhu]

10. Three simple things would help a great deal

Increase the "death tax", which is a basic way to increase the opportunities for social mobility.

Fund universal healthcare, which would limit one large factor driving the middle class into poverty.

Tax capital gains and high-earners fairly and equally - there's no point in encouraging people to launder their incomes in capital gains, and a simple "flat tax for the wealthy" would be more realistic than the maze of loop holes and shelters that exist currently.

All three are on the president's agenda, in process or as items to push for, but whether they get done and how well they get done depends largely on what sort of congress we elect.

[BrentWil]

18. I think a simple tax on all income not matter the source..

Rather it is a gift, someone dies or it is a capital gain.

[Igel]

29. The inheritance tax both would and wouldn't increase social mobility.

Depends how you define "social mobility."

If you define it in terms of percentiles, sure. If you always remove the top 5% every 40 years, by definition you always get a new top 5% every 40 years.

If you define it in terms of household wealth, I'm not sure how getting rid of those with wealth over $10 million will suddenly allow that new 5% to have household wealth of over $10 million. I'm not sure how the current crop of households with net wealth over $10 million prevent new entrants to the "club."

Oddly, I really don't care what percentile I'm in. Never have. Whether it's class rank, the SAT, GRE, LSAT or personal/household income or wealth, how I stack up against others has never really interested me. (It's only been of concern when *others* want to compare me to others--when applying to grad school or law school, for instance.) I could be in a destitute, hole-in-the-ground country with a pittance for wages and be in the top 15% or be in the US where being in the middle 5% gives me a tolerable house, entertainment, food, and lifestyle and I'd choose being in the 47.5-52.5% range instead of the top 15%.

[bhikkhu]

39. It is controversial

...and it only takes a few minutes with google to find strong arguments for both sides, but the basic concept is that wealth (as based on resources) is finite, that wealth attracts and creates more wealth, and that over time you get larger and larger concentrations of wealth in fewer and fewer hands.

I think currently that's a bit obvious, and the main mechanism of "redistribution" has been economic collapse - where an economy with all the wealth at the top is like a pyramid balanced precariously on its point, doomed to fall.

Taxing income is limited to the moment of the earning or creation of income, and once "income" becomes "asset" (wealth) then it is beyond reach and may be held onto for a lifetime and then passed freely on to the next generation. Its all a very slow process, but an estate tax provides a means to tax assets which are otherwise somewhat locked away, and a tool for leveling the playing field and reducing inequality where it is actually most fair - at least if one advocates a meritocracy, rather than a hard-stratified society where both wealth and poverty are determined by one's birth and persistent through life.

[pnorman]

11. Thanks!

[nadinbrzezinski]

13. Well 90% tax rates for the top

Worked wonders fr FDR and Ike.

That be a place to start.

[BrentWil]

15. To what end? What kind of tax? What will the revenue be used for? NT

[nadinbrzezinski]

22. Read on the great depression, your answers are there

But progressive tax rates used to be something democrats supported.

Though free hint, what do you think paid for the WPA? Later on the rate remained over the course of WWII and I might add the interstate highway system was not paid with fairy dust.

[pampango]

17. Study: 92 percent prefer Swedish model (of wealth distribution) to US model when given a choice

According to research (PDF) carried out by Michael I. Norton of Harvard Business School and Dan Ariely of Duke University, and flagged by Paul Kedrosky at the Infectious Greed blog, 92 percent of Americans would choose to live in a society with far less income disparity than the US, choosing Sweden’s model over that of the US.

What’s more, the study’s authors say that this applies to people of all income levels and all political leanings: The poor and the rich, Democrats and Republicans are all equally likely to choose the Swedish model.

http://www.rawstory.com/rs/2010/09/25/poll-wealth-distribution-similar-sweden/

?w=570&h=358&as=1



Of course to achieve a Swedish level of wealth distribution we would need progressive Swedish policies.

Sweden: Where tax goes up to 60 per cent, and everybody's happy paying it

Around seventy percent of the Swedish labour force is unionised

In many other ways Sweden's progressive policies add up to a much more equitable distribution of wealth and income.

[oldhippie]

36. Well, of course they would. Why wouln't they?

In fact, I kinda wonder why only 92%? It would seem that the 99% would want it. Only the upper 1%ers wouldn't.

[lonestarnot]

25. Eat the rich for starters.

[oldhippie]

33. Does anyone know of any such extreme inequality being remedied without violence?

I can't think of any off the top of my head. If history is any guide, it takes revolution to even make a dent in the distribution, and it is still not very satisfying for the lower income classes.

There may have been some "soft" revolutions, and maybe some lessening of wealth inequality, but it seems within a few generations it always starts to creep back up again. I'm not sure it isn't just human nature.

[bhikkhu]

40. Can you give any examples of violence creating equality?

Generally the pattern is, I think, violence creates both opportunities for profit and a climate of fear, leading to the acceptance of kleptocratic authoritarianism. It might not start out that way...

[BrentWil]

42. Some leve of inequality is always present...

In any Communist Society, is the leadership treated better then your average person?

I would say the question isn't inequality, it is the degree of inequality. This level of inequality is not healthy.

[bhikkhu]

47. Violence tends to perpetuate inequality

in a number of ways. It could easily be argued that violence is behind the current inequality, as war in general can be seen as a business that siphons wealth and lives from the majority and concentrates in in the hands of the minority. I just don't see how violence leads away from inequality, unless one imagines the wealthy to be helpless, without resources, incapable of planning, and incapable of winning a game they have been playing very skillfully for ages.

The best examples of equality we have are the result of good government - elect people dedicated to good government, demand good policies, and ignore most of the crap the media has to say about it. Of course, that requires a populace to act in its own best interests with intelligence as well.

[nadinbrzezinski]

41. The new deal

And even hard revolutions lead to this inequality.

[midnight]

45. Giving the working class money to spend.... That will create the jobs so badly needed.. And then

make sure the 1 percent pay their fair share...

[BrentWil]

46. I agree NT

[Zoeisright]

49. Tax the fuck out of the rich.