Is economic inequality a problem?

[bluefrog]

The Economist

Federal Reserve Chairman Ben Bernanke on income disparity :

It's a very bad development. It's creating two societies. And it's based very much, I think, on educational differences. The unemployment rate we've been talking about. If you're a college graduate, unemployment is 5 percent. If you're a high school graduate, it's 10 percent or more. It's a very big difference. It leads to an unequal society, and a society which doesn't have the cohesion that we'd like to see."

I agree agree with him on the income gap but there are a lot more issues included in the economic disparity in America. One is wealthy individuals and corporations using their money to stack the cards in their favor.

James Fallows rightly observes that not only is the revolving door between Washington and Wall Street unseemly, its frictionless gliding action suggests corruption is built right into the interface between our government and our great profit-seeking institutions

I know a lot of people are upset with the tax cuts but instead of trying to bring the rich down, let concentrate on bringing the poor up. And taxing the rich is not the answer. Redistribution is merely treating a symptom, not the cause.

 

[EL PRESIDENTE]

Flat tax and no tax deductions. Its so easy..

x

 

[maxiep]

It's the problem with technological advancement. A strong back is becoming less and less valuable as you move from an agrarian- to industrial- to service- to knowledge-based economy.

I'd like to see our educational system change to have a trades-based track as well as a college-based one. Everyone should get the basic reading, writing, arithmetic, but you should have a choice starting sometime in high school as to whether you're going to go to college or you're going to enter a trade. There's plenty of skilled work that needs to be done with hands (electrician, plumber, mechanic, etc.) and good livings can be made in the trades.

That being said, there's little the government can or should do in regards to income inequality. It's not so much the robbing people of their wealth, it's the robbing of those people of their incentive to become wealthy. And it's the process of hundreds of millions of individuals trying to become wealthy that advances society as a whole.

 

[EL PRESIDENTE]

Yeah when the government just penalizes you for success then you kind of just want to be in a comfort zone and remain dependant.

x

 

[andalusian]

Yeah when the government just penalizes you for success then you kind of just want to be in a comfort zone and remain dependant.

It's not really as black and white as that, the antitrust act was, in this simplistic view, an act against those that had success, but in reality - it just spurred competition and advanced the economy all-around.

There has to be some kind of balance for a healthy society, because societies that do not have these balance will sooner or later lead to a revolution and bloodshed...

It is great to have success and to let people "reap what they sow" - but if you create a class chasm so big that many do not believe they have a fair chance to work hard and reap what they sow because the scales are stacked against them too much - you are going to have a top-heavy society that will crumble.

 

[MARIS61]

Flat tax and no tax deductions. Its so easy..

x

First of all, there's no such thing as no deductions, credits, exemptions...and there never will be.

Second, a flat tax is only workable if you exempt for everyone a base "survival" income (enough to provide for food, clothing, shelter and medical needs).

This would result in a higher true tax to the wealthy and middle class than they already have.

 

[EL PRESIDENTE]

First of all, there's no such thing as no deductions, credits, exemptions...and there never will be.

Second, a flat tax is only workable if you exempt for everyone a base "survival" income (enough to provide for food, clothing, shelter and medical needs).

This would result in a higher true tax to the wealthy and middle class than they already have.

Yes. Mo' Money. The higher true tax to the wealthy and middle class is fine with me, just as long as everyone is contributing.

 

[MARIS61]

That being said, there's little the government can or should do in regards to income inequality. It's not so much the robbing people of their wealth, it's the robbing of those people of their incentive to become wealthy. And it's the process of hundreds of millions of individuals trying to become wealthy that advances society as a whole.

You crack me up.

The day average Americans are taxed so high that they feel no incentive to become wealthy will never come.

If a few filthy rich morons incapable of simple math think it's not worth their while to continue accumulating and hoarding riches, there's no shortage of middle-class and poor ready to climb right over them to get the prize.

It would probably be the best thing ever for this country if everyone worth 100 million or more, and every current politician, were put out to pasture today.

 

[MARIS61]

Yeah when the government just penalizes you for success then you kind of just want to be in a comfort zone and remain dependant.

x

Must be a California attitude. I know nobody remotely like that.

 

[EL PRESIDENTE]

Must be a California attitude. I know nobody remotely like that.

that's because you live in isolation in beautiful central oregon. come out to the real world some time and there are millions of zombies who just expect the government to take care of them.

Its their money and they need it now!

 

[MARIS61]

that's because you live in isolation in beautiful central oregon. come out to the real world some time and there are millions of zombies who just expect the government to take care of them.

Its their money and they need it now!

Born and raised in Lake Oswego, worked in downtown Portland for 20 years, raised my boys in Milwaukie, moved here 10 years ago. Lived in N. Hollywood for a year back in our title year.

Again, never met anyone like that.

 

[EL PRESIDENTE]

You've never met someone who values comfort and "being taken care of" instead of making the risks to get wealthy? You've never met someone who aims to depend on social security benefits? Basically anyone who wants to raise taxes on the rich, who pay the most taxes ARE these people. They want to penalize success so they can get the benefits from the wealthy.

strange.

 

[MARIS61]

Big Ben throws out some numbers but I find no support for them. I think he made them up.

He confuses education with schools and economic comfort with high-paying jobs.

Either way, education has little to do with economic inequality. And whether someone has a college degree or not is no indication of education nor intelligence. Except it indicates the graduate felt he/she was lacking knowledge possibly, and had neither the learning skills nor the ambition to educate their self, so they spent all those years getting a piece of paper that says they're educated so they can show it as "proof".

Most of the wealth in this country has been held and passed down by the same families for over a hundred years, and they control our government and economy to assure that never changes.

 

[EL PRESIDENTE]

the real problem is that the american worker, on the world stage has been getting more and more obsolete as other nations offer workforces at cheaper rates and provide a more aggressive educational system. It started with low-skilled manufacturing jobs, but its now going towards white collar, office and technical jobs. Its only going to get worse. The American worker will not adapt.

A bachelor's degree is now basically worth what a high school degree was a decade ago. Its just a piece of paper and is more often than not a terrible investment (if not now, in the future it will be).

As the wealth remains at the top, the people who own businesses and create wealth, they look at their bottom line and hiring americans just isn't a smart option anymore.

 

[MARIS61]

You've never met someone who values comfort and "being taken care of" instead of making the risks to get wealthy? You've never met someone who aims to depend on social security benefits? Basically anyone who wants to raise taxes on the rich, who pay the most taxes ARE these people. They want to penalize success so they can get the benefits from the wealthy.

strange.

No, I have never met anyone like that. I'd guess there are less than 100,000 of them in the entire country, and I'd guess they grew up in priviledged families, never having to work for a living.

It might surprise you to know that even billionaires feel no guilt in accepting their SS checks when they reach age. Literally nobody turns it down, which is fine as they've certainly earned it. You do know you have to work your ass off your entire life to get that puny check, don't you? The amount is figured on your exact wages, and it's not enough for most people to live on.

I'd say rich folks who want tax cuts are the ones looking for a free ride rather than support the system that made them rich.

 

[maxiep]

It seems the point I tried to make above was clearly misunderstood. I'm not arguing for no government regulation of the market; not even Gene Fama would make the argument of a nakedly capitalist system. My greater point was that there's little the government can do to solve the wage disparity problem without making everyone worse off.

The solution will have to come from the private sector and will come through the ingenuity of the American workforce.

One thing the government can do is to enforce our borders. The argument that illegal immigrants do work that Americans won't do is specious at best. Americans will do the work, just not at the wages that illegals will. If Americans doing the work illegals once did drives up the costs of goods and services, so be it. That's income redistribution done without direct government interference (other than enforcing the borders).

 

[MARIS61]

One thing the government can do is to enforce our borders. The argument that illegal immigrants do work that Americans won't do is specious at best. Americans will do the work, just not at the wages that illegals will. If Americans doing the work illegals once did drives up the costs of goods and services, so be it. That's income redistribution done without direct government interference (other than enforcing the borders).

The larger problem is easily controlled by the government, in fact was caused by the government, when they lifted restrictions on using foreign bases to replace manufacturing jobs in America. These companies should be taxed at a rate to negate any profit advantage they gain through paying lower wages and facing laxer environmental standards in foreign countries. The tax could pay for job retraining and unemployment for the workers displaced by these treasonous corporations. Or we could just tax and regulate them as we do foreign companies since that is esseentially what they have become.

 

[maxiep]

The larger problem is easily controlled by the government, in fact was caused by the government, when they lifted restrictions on using foreign bases to replace manufacturing jobs in America. These companies should be taxed at a rate to negate any profit advantage they gain through paying lower wages and facing laxer environmental standards in foreign countries. The tax could pay for job retraining and unemployment for the workers displaced by these treasonous corporations. Or we could just tax and regulate them as we do foreign companies since that is esseentially what they have become.

That's another reactive attempt to manage the economy, and it won't work. As I said before, manufacturing jobs are going the way of the buggy whip in this country. I have no doubt manufacturing will return to this country, but there won't be any employees coming along with it; the process will be automated. We've already seen some factories that used to employ hundreds or thousands that now employ a handful during each shift. Those people run the machines that actually do the assembly.

There is little government can do.

 

[EL PRESIDENTE]

http://www.cnbc.com/id/30582844/

This was on as I was leaving today.

Manufacturing led the United States to become the richest nation in the world and has been the foundation of the middle class. But times have changed and today's economy values innovation and design over manual labor -- emphasizing mind over matter. This sea of change has spurred many questions: Are the manufacturing jobs in the US gone forever? Does an economy that doesn't produce anything have any real value and has 'Made in the USA' died, taking with it the soul of our country? CNBC’s Maria Bartiromo gathers some of the most influential leaders in manufacturing for a Meeting of the Minds at Carnegie Mellon University to answer those questions and plan for the industry’s future.

 

[EL PRESIDENTE]

Its pretty funny though, I recently had about 6 relatives from the Philippines immigrate here to the US (legally) over the past six months. Every single one of them has already gotten work, they got manufacturing type jobs at pretty quickly. They got their jobs quick, within a month of moving here. So I don't believe that "there are no jobs out there". They vary in age from 20-60 too.... They may not pay the highest at first but its a start and they'll eventually get hired full time and possibly move up.

I really think a lot of the blame for economic equality is from the work ethic of the american worker. Its horrible. People are way too entitled thinking that they deserve the "american dream". What they forgot about is earning it through actual work.

 

[MARIS61]

That's another reactive attempt to manage the economy, and it won't work. As I said before, manufacturing jobs are going the way of the buggy whip in this country. I have no doubt manufacturing will return to this country, but there won't be any employees coming along with it; the process will be automated. We've already seen some factories that used to employ hundreds or thousands that now employ a handful during each shift. Those people run the machines that actually do the assembly.

There is little government can do.

Automation is perhaps the most overhyped non-factor regarding employment in manufacturing.

There has been very little job displacement in America in my lifetime that can be attributed to automation. The fact is machines need operators and they always will.

If you're talking 100 years from now then maybe robots will be a major factor but in the next 30-50 years the expense of automated workers will not be feasible when labor is so cheap. The wave of automation actually ground to a near halt when American companies started going overseas for their manufacturing to avoid paying decent wages and being hampered by environmental laws. Worldwide pollution has probably tripled simply due to the unconscionable acts of these American companies, a debt our children will have to deal with financially and healthwise. People like Phil Knight are in fact some of the most evil humans on the planet, leaving a legacy of death and disease for future generations to come.

 

[MARIS61]

Its pretty funny though, I recently had about 6 relatives from the Philippines immigrate here to the US (legally) over the past six months. Every single one of them has already gotten work, they got manufacturing type jobs at pretty quickly. They got their jobs quick, within a month of moving here. So I don't believe that "there are no jobs out there". They vary in age from 20-60 too.... They may not pay the highest at first but its a start and they'll eventually get hired full time and possibly move up.

I really think a lot of the blame for economic equality is from the work ethic of the american worker. Its horrible. People are way too entitled thinking that they deserve the "american dream". What they forgot about is earning it through actual work.

Again, I don't know where you get such a bad image of the typical American worker. You must live around a bunch of meth heads or something. In over 20 years of hiring and firing employees I never had to fire anyone for lack of production. Not once.

 

[EL PRESIDENTE]

Well, I'm a business process outsourcer so its my job to do so.

 

[bluefrog]

It seems the point I tried to make above was clearly misunderstood. I'm not arguing for no government regulation of the market; not even Gene Fama would make the argument of a nakedly capitalist system. My greater point was that there's little the government can do to solve the wage disparity problem without making everyone worse off.

The solution will have to come from the private sector and will come through the ingenuity of the American workforce.

It seems like the government has done plenty to make the rich richer. Bank bailouts, agricultural subsidies and other corporate welfare have lined the pockets of a lucky few. Couldn't the government do something for folks who aren't on a senator's speed dial?

Protecting the border is a start. Improving education would be a big help too.

 

[bluefrog]

Its pretty funny though, I recently had about 6 relatives from the Philippines immigrate here to the US (legally) over the past six months. Every single one of them has already gotten work, they got manufacturing type jobs at pretty quickly. They got their jobs quick, within a month of moving here. So I don't believe that "there are no jobs out there". They vary in age from 20-60 too.... They may not pay the highest at first but its a start and they'll eventually get hired full time and possibly move up.

I really think a lot of the blame for economic equality is from the work ethic of the american worker. Its horrible. People are way too entitled thinking that they deserve the "american dream". What they forgot about is earning it through actual work.

I think another issue is many American's aren't taught the dignity of labor. Manual laborers are often looked down upon in our society. A lot of people have an attitude that they would rather leech off relatives and the government than get their hands dirty or wash dishes.

My teachers often used the "you don't want to end up at McDonalds flippin' burgers" to motivate me in class. Yeah, these jobs suck but what happened to honor in putting in an honest day's work.

 

[maxiep]

It seems like the government has done plenty to make the rich richer. Bank bailouts, agricultural subsidies and other corporate welfare have lined the pockets of a lucky few. Couldn't the government do something for folks who aren't on a senator's speed dial?

Protecting the border is a start. Improving education would be a big help too.

You'll get no argument from me that the practice of crony capitalism has been detrimental to our market based system. Too often, profits are privitized while losses are socialized, especially in banking. It needs to end.

Your post reminded me of something else government can do, which is to re-enact the clause of Glass-Steagall that once again separates investment banking from commercial banking. Also, if a firm becomes "too big to fail", then it should be broken apart. Part of the capitalist cycle is the creative destruction that occurs from businesses failing and then parts of them rising from the ashes. Crony capitalism stops that natural process from occuring.

Putting an end to crony capitalism will, by definition, help the little person by creating a truly level playing field.