The Rich And The Poor
Taxes are good. What isn't good is the fact that people get away with abusing them in their favor to extreme measures. The issue boils down to the market's constraint on the infrastructure and their ability to use the infrastructure as leverage to increase their wealth at the expense of decreasing the wealth of others.
It's the same thing that always happens. The system works until it's hacked and the wage gap spreads and the poor people get tired of being poor recycle rinse repeat. The question is where are we in that timeline now, and how do we make the next phase of transition in a manner that will benefit everyone and increase our survival, our happiness, and the future of our existence?
Does it really just equate to "us versus them"? Or is there a possibility in the scenario that can appease the poor man and the rich man without compromising the entirety of the system?
It's the same thing that always happens. The system works until it's hacked and the wage gap spreads and the poor people get tired of being poor recycle rinse repeat. The question is where are we in that timeline now, and how do we make the next phase of transition in a manner that will benefit everyone and increase our survival, our happiness, and the future of our existence?
Does it really just equate to "us versus them"? Or is there a possibility in the scenario that can appease the poor man and the rich man without compromising the entirety of the system?
Comments (65)
Structurally, I am in agreement that there's simply a structural advantage to being rich. It allows one to explore opportunities once unavailable to the common man. Wage gaps aren't an issue if you don't work in a corporate environment.
The thing about American democracy that you may or may not be getting at is the disproportionate amount of reward for taking risk. Europe and Asia don't really stand anywhere near this state of affairs as does America.
So, is that something you had in mind or am I making things up here?
The cycle that once may have existed in Europe, has been addressed and broken in a manner of speaking by encouraging entrepreneurship, credit to the poor, and lending. This sort of issue blew up or created the 2008 financial crisis. Booms and busts will continue to exist; but, there are ways to hedge against these tendencies in the market.
Inequality isn't necessarily a bad thing. The bad thing about it is when the rich decide to collude and form monopolies, oligopolies and are in the bed together with the government. The US is very vigilant about consumer protection. The majority of goods in the US are available to the common Joe.
Relatively speaking, we are enjoying a period of downright amazing economic prosperity, that, unfortunately, has increased the inequality between the rich and poor. If you want to talk about debt, that could be an issue worth mentioning.
There are two things in the US that stand out in my mind as barriers to the poor. It's universal healthcare and college tuition.
You remove those two barriers and most of the talking points of the left disappear.
But I feel like you also agree that there is a growing gap.
And I feel like you agree that this usually results in a transition.
But I feel like you disagree that this transition will take place in America because of how the system is designed.
Quoting Lif3r
What Capitalism did was lift people out of poverty. The gap between rich and poor might be there, but the “poor” as you call them are far from being as poor as they were.
It’s possible that Capitalism as we’ve known it may change, who knows how it may change, for better or worse, but the evidence of its success is there to see.
Second thoughts. What Capitalism has created, which is now a problem, is huge population growth. How do we deal with that?
Let me reassure, you, the US will never experience a "transition" in governance. Trump may seem as an outlier; but, apart from his estranged foreign policy towards the rest of the world, he's a pretty common politician for the right.
There's this sort of implicit conspiracy present within the left, that is overstated. I suppose it's a relic of treating the rich as villains by the far-left.
Just take a look at the HDI for the US: https://en.wikipedia.org/wiki/Human_Development_Index
It's an objective measure of your prospectus of living in the US and making or breaking it. If you want to play safe, just open a 401k or mutual fund/ETF from Vanguard or elsewhere, into an index fund. No need for active management on these sort of things. Just don't steal from yourself by pulling out money from the index fund, and all will be fine when you reach retirement.
Also, being rich doesn't mean that you can just live on some island and never care anymore about working. It's a very time-consuming thing to maintain your wealth, and expand it.
I can’t believe anyone would believe we need more people. Maybe better distribution but not more.
You asked what comes next to keep Capitalism from crumbling. But is it crumbling?
Or do you expect the poor to just be satisfied that they can afford the CEO another yacht this year because the CEO was lucky; born to the right people under the right circumstances.
Second thoughts again. This might sound extreme, but I suspect Capitalism to be an evolutionary stage of our development just as having an opposable thumb is.
Quoting Lif3r
23% does not seem that extreme to me. What do you think it should be?
Quoting Lif3r
What countries and what era are you referencing?
I really don't think there has been a viable alternative to even entertain the notion of "transitioning" or even a "revolution". Just look, at the M2 money stream from FRED. I mean, where is that money going to go?
Quoting Lif3r
The facts point towards a pretty progressive tax code in the US. If you make less than the egregiously defined poverty line, you pay nothing in taxes.
Quoting Lif3r
CEO's have always seemed to me as an example done out of poor reasoning. Let's take the population of the US and compare it to the number of CEOs in the US. You end up with a really low number of the number of people actually being CEOs. Furthermore, if you're adamant about the issue, then you should strive to become your own boss.
Quoting Lif3r
Very few CEOs would be like that. Very few would succeed if they were.
Once you bridge the gap between poor and rich your money makes it's own money and your taxes are often times non existent, and if you do so happen to pay taxes it doesn't matter because you make enough money off of the backs of other people who never see a fraction of your wealth and are just supposed to accept that your life is more valuable than theirs because you came up with the idea and you had the connections, and usually the money to make it work in the first place.
I pay 23% and Amazon makes x0,000% more than me but doesn't pay 23%
Why not? That's enough to piss people off, and it does, and it's just an example of what has happened in the past but with extra steps.
A quick summary of Michael Bloomberg’s life from Wikipedia.
Bloomberg was born at St. Elizabeth's Hospital, in Brighton, a neighborhood of Boston, Massachusetts on February 14, 1942.[13] His family is Jewish. He is a prominent member of the Emanu-El Temple in Manhattan.[14] Bloomberg's father, William Henry Bloomberg (1906–1963), was born in Chelsea, Massachusetts, and worked as an accountant for a dairy company. He was the son of Alexander "Elick" Bloomberg, an immigrant from Russia.[1] The Bloomberg Center at the Harvard Business School was named in William Henry's honor.[15] His mother, Charlotte (Rubens) Bloomberg (January 2, 1909 – June 19, 2011) was a native of Jersey City, New Jersey.[16] Charlotte's father, Bloomberg's maternal grandfather, Max Rubens, was an immigrant from what is present-day Belarus.[17][18]
The top tax bracket as far as I can see is 37%. I’m guessing you’re not paying that.
The companies, which include tech giants such as Amazon and Netflix, should have paid a collective $16.4 billion in federal income taxes based on the Tax Cuts and Jobs Act's 21 percent corporate tax rate, according to the left-leaning Institute on Taxation and Economic Policy. Instead, these corporations received a net tax rebate of $4.3 billion. The analysis is based on the corporations' annual financial reports, which were filed earlier this year to report their 2018 results.
I know there is an extreme imbalance in wealth and that life is hard for many people. But I think the problem is more one of government than greedy CEOs. Governments seem to have stepped back from the responsibilities. Maybe they’re too influenced by big business or maybe they’re just not good enough for what the times demand. I don’t think there’s any benefit to targeting the riches of others or tearing down the system.
I don’t doubt your figures. However, bare in mind that 60 companies is not exactly a crumbling system. The government’s tax take comes from somewhere. Where is it?
Yeah, that is true, and hence why I am all for closing tax loopholes, and the means to entice tax evasion, like the tax havens, where it's estimated a hefty sum of some 15+ trillion bask away in the Bahamas.
Quoting Lif3r
But you have defined the enemy, and in a very general way.
Okay, so then would you agree this is a failure of government.
If all people’s living conditions were alleviated without stripping the rich of their money would you still be concerned about the income of the rich?
If the cast system were
Ultra wealthy
Secure
No poverty
I would be satisfied to know that everyone in society was taken care of by one another and by their contribution to their community.
Quoting Lif3r
Well this is how you do it. You have to define the problem first before you can fix it.
Quoting Lif3r
I hold that to be the responsibility of the government; how they spend money, what their priorities are, what they supply to the people and what the people pay for it: water, energy, health, education, rates, etc. people can refuse to buy consumer goods, a better car, more clothes, more furniture, they can cut back on that. But they can’t cut back on using energy, or paying rates, or government fees, or health costs. The responsibility of the government is the people.
You can’t keep increasing wages because there are so many knock on effects. But you can make their wages go further. The government can help with that. The tax rate is not just 23%, it’s all the other annual government fees added to it.
I think it doesn't look so bad when we look at the system in its entirety. Good systems ensure equal opportunity. At least that's what they claim. If equality of opportunity to climb up the wealth ladder is a reality then certain features become necessary which probably have some unpalatable consequences. For instance to ensure the possibility of rags to riches we may need to allow for the rich to get super-rich. Putting a ceiling on wealth may dampen enthusiasm for creativity and labor which will have longterm negative consequences on the economy. Look what happened to the USSR where people weren't allowed to benefit from their own abilities.
Another way of looking at the wage gap would be to examine how exactly it's increasing which I believe is your concern. Imagine 3 people. A gets $ 1 and B gets $ 2 and C gets $ 3. The wage gap C - A = 3 - 1 = $ 2. As you can see the wage gap can increase in two ways viz. A gets less than $ 1 or C gets more than $ 3. If it's the former something terrible is going on but if it's the latter then it's a nonissue isn't it.
The idea of a static rich and poor is quite mistaken. In free market countries people move between different income brackets over the course of their lives. The majority of Americans, for example, will experience at least one year of affluence at some point during their working careers (the same is true of poverty). Nearly all Americans who reach the “1%” will enjoy it for only a single year. So, we shouldn’t look at these groups as static, us vs. them, but as abstract categories and thus not real.
The structural advantages you reference greatly assist the rich in obtaining their status in the first place.
The "great cycle" of economic expansion is very long. The Roman Empire was one period of economic expansion, wealth getting, and building. The stretch between the Romans and the Industrial Revolution was around 1200 years, during which there was little economic growth. The comparatively trivial waves of the "business cycle" are maybe a decade or two long. In the business cycle there is rapid expansion, saturation, then contraction. Rinse and repeat.
Wealth is built from the bottom up, the poor being on the bottom, the rich being on top. The principle that separates the two is accumulation. For most of the "modern" human history (the last 10,000 years) accumulation was relatively limited. The best way to accumulate was through force: seizing wealth (military campaigns) or peonage--forcing the peasants to work for the resident lords
It has been suggested by some archeologists - anthropologists that agriculture was invented as a way of making people work for somebody else, but that is speculative. If so, it worked. The poor clod hoppers gathered in the grain which made the local elite rich.
The capitalist/industrial revolution was and is accumulation and exploitation on steroids--hell on wheels for the poor, a gravy train for the rich.
What that means is manufactures try to avoid class action lawsuits. IF the US was "very vigilant" about consumer protection, we would be moving heaven and earth to lower our CO2 output. Global heating will kill the consumer and producer together.
Exactly.
Do you mean that it assists them in manner of speaking in maintaining their wealth or getting there in the first place?
The legal system is organized to support private property and entrepreneurial activity. For instance, one can organize a corporation, borrow money from an investment banker, do business, go broke, and have no personal liability. At every step of business, rules governing business elements like depreciation, capital investment, and so on are in place. It isn't just the final tax on income or estate taxes that aids the rich getting richer.
If Joe Blow, factory worker, borrows money to fix his car so he can keep getting to work, and the car is still unreliable, he'll lose his job and will still be fully liable for the loan. True, he could file bankruptcy, but that might not help him.
Now, it is true that the ability to get rich and stay rich is one of the reasons remarkable innovation and aggressive expansion occurs. Michael Bloomberg made his huge fortune by supplying financial operators with something they very much needed: up to date financial information in ready-to-use forms through the Bloomberg Terminal. It was a high end financial data delivery service.
He didn't just become worth $58 billion dollars by delivering newspapers. He was a partner at Salomon Investment Banking, and as a partner accumulated $10,000,000 which he used to start his new business.
Fortunes require a foundation of money, from somewhere. You might be broke, but if you have a simply fabulous idea that will turn a profit, some investment banker might risk a few million bucks om you, and if everything goes well, you end up quite well off. If it doesn't go well, you don't. It went really well for Bloomberg.
Bill Gates didn't become the richest mortal to walk the earth on the basis of how wonderful his Disk Operating System (DOS) was. Dos and several other Microsoft products were rammed down the throats of consumers by highly anti-completive methods. I don't know if you remember this, but once upon a time when you bought a PC it would ALWAYS have Microsoft software on it, pre-installed. Later, it would have Windows, then Internet Explorer, something you couldn't get rid of for love or money. It was crappy software, but that's whaat was in the bundle.
Deals were made with equipment manufacturers. That why people had to put up with generally crappy Microsoft products (some of which, like Word and Excel, were good). If you didn't want Microsoft, you pretty much had to buy an Apple, which was more expensive.
If that were true, then supposedly this leaves us with two conclusions...
1) Getting there by any amount of effort is futile because the game is rigged in "their" favor.
2) You have to be really special to attain that status.
Neither of these conclusions is supported by evidence, so one must disregard the premise?
Not necessarily. Patents are a great example of something available in access even to "Joe Blow". There are even companies that assist you in developing your idea. This is where I diverge from the material aspect of viewing value or profit. Since, Bloomberg saught through investing in making high-quality information available to the masses (originally, to the rich only), then it seems to me that the material aspect of viewing an ROI is defunct or outdated?
Quoting Bitter Crank
Your smarter than that Bitter Creek, throwing in a quote from someone else as if that sums up the problem and answers it at the same time, and paraphrasing it in a different era.
Yes, some corruption, no doubt, and tilting in favour of big business, well probably all business, big and small. But in reality a balancing act that can only just be maintained in the dynamics of a global economy. Of course Marx could have had no idea that governments would go on to introduce social benefits like unemployment and retirement pensions. I guess the great fear of governments is rising unemployment, which is a bit like a gun to your head.
So let’s keep the idea of government in perspective.
Maybe not, but I think the quote is quite apropos.
Any society has to decide how it will do business ("business" not automatically capitalism), and when nations form (as they have been doing for a while now) it is "the government's task" to decide how business will be conducted. There are major differences from nation to nation.
China's ground rules for doing business were and are quite different than South Korea's and Japan's. Saudi Arabia's rules for doing business are not the same as Nigeria's. The USSR's methods of doing business were different than China's. The American way of doing business is different than both China's, the USSR's, and Russia. In different ways, entrepreneurship has been favored by China, the US, and Russia. Different ground rules = different results.
But the quote suggests that government favours business over people, that it betrays people in the interests of big business, that it serves big business.
I had thought this discussion was about the rich and poor in a democratic society in which our governments generally operate under the same expectations. So I don’t get the reference to other nations who obviously operate on radically different notions about what purpose governments serve.
Quoting Bitter Crank
Yes, and because of that many were able to enter the computer age without having to pay for the top end. Business is quite a savage arena. Most of us get by without having to enter the ring. All we have to do is wait for the benefits to come our way without any risk at all.
While I would not personify government with intention or a sinister nature, surely history shows that government has served big business - and this seems like a "can't have two masters" situation to me. Who gets what they want first? To be fair, big business is much easier to please.
Quoting Brett
Sounds like I owe them :roll: We should set up a church where we can go and donate to these gods of human progress. Surely they can do more with the money than I can? And in the end, I reap the benefits with no risk at all :grin:
But hey, what's losing your home compared to the risk you might lose someone else's money and then declare yourself bankrupt with no liability at all for any losses you made - oh, the savagery!
It’s always fun to be flippant.
Why brand all business men as those who declare bankruptcy and move on? What about the person who built the house, borrowed money from the bank, started a business from scratch, worked the long hours, developed a reliable product, a trusted company that hired skilled people to build houses, that used their wages to pay off their own mortgages? Then from those profits enlarged the business and hired more people. Think about where that company bought all their timber from, the transaction that then enabled the timber company to pay its own employees. Think about the plantations where all that timber came from, who hired people to mill the timber and paid there wages. Now think about those companies competing against other companies in the same line of work who might be moving in on your market, taking some of your business, but your loan with the bank still has to be paid, the wages have to be covered. So now you’re in a battle for survival. Who’s going to help you? The loan is yours, not the employees, your house is mortgaged, interest rates go up, global fluctuations affect the cost of materials, overseas companies enter the market. Then the banks increase loan rates so less people enter the home market, or they tighten lending procedures, or the government lets overseas companies import cheap, pre-fabs to help people get into their own home.
Extrapolate that into larger and larger more complex companies involving millions of dollars, thousand of employees. So that you can drive to your local mall and buy the latest smart phone.
You said
Quoting Brett
It was that to which I was responding. The business entrepreneur risks bankruptcy if things don't work out, the employee risks losing their home if things don't work out. The only person who is in the position you claim where we take no risk at all for the benefits we reap, is the person for whom the loss of investment is not a materially damaging matter, ie the very wealthy.
Notwithstanding the above, to address your ludicrously fantastical notion of how business works...
1. People don't have any incentive to develop 'reliable products'. Well-marketed products which need regular repair or replacement are more profitable.
2. The idea that the investor is helping the workers pay for their house by providing work is absurd. House prices have risen 14 times faster than wages driven entirely by property speculation carried out by those same investors. They have, on the one hand raised property prices to an unaffordable level, then created jobs which, no matter how demeaning, no one can afford not to take because of the aforementioned price increase, and you try to make out they're doing us a favour!
3. If there are sufficient companies in the market to create competition, then a new entry into the market is not creating any more jobs are they? They are just transferring jobs from their competition whom they are now outperforming. The entrepreneur benefits, but the workers just swap jobs, probably to a less well paid one (hence the competitive advantage).
4. None of this actually happens to an entrepreneur (except in extremely rare cases) because the moment a company is doing well it is floated on the stock market and owned by its investors.
Quoting Isaac
First of all my example is not an investor. They’re the owner of a business.
This is the definition of an investor:
An investor is any person or other entity (such as a firm or mutual fund) who commits capital with the expectation of receiving financial returns. investopedia.com
Quoting Isaac
What do you mean by ‘None of this happens to an entrepreneur’? None of what?
That’s just plain silly. Not all companies go on the stock market.
Quoting Isaac
This is the problem with a lot of the anti capitalist posts on this site. You seem to have no idea who the enemy is. I’m not happy with what a lot of big business does, but at least try and understand what you’re up against. And understand that not everyone in business is the same.
There’s nothing ludicrous about what I said about how business works. But you do display your ignorance by saying so.
You said...
Quoting Brett
Which is what my initial comment to you was aimed at. That some material risk was being taken by businessmen, like those who built Microsoft, that is greater than the risks known by the mere consumers of the product. That is your claim.
I responded by saying that the ordinary consumer has to work long hours too and if that work is not successful (they get fired) they put their house at risk. So the idea that the entrepreneur know some kind of risk that the ordinary consumer is protected from is utter nonsense.
You responded with some fantasy about a proprietor-owned building company. I charitably presumed it had at least something to do with my counter argument, otherwise I'd be left with absolutely no clue at all what on earth you were going on about.
The comment I responded to was about material risk and your claim that the entrepreneur takes some material risk that the consumer does not. Unless you've got anything further to actually support your claim, I don't much see the benefit of quoting parables from the Randian bible that have nothing to do with the issue at hand.
What is the risk that an entrepreneur, like the developers of Microsoft, take that is so outside of the scale of the ordinary worker that by comparison their contribution is "without any risk at all"? That's all I want to know.
Quoting Brett
The top ten building companies in the US close close to 200,000 projects a year, the very largest privately owned company closes just 3,000. I didn't say all companies go on the stock market, I said that except in rare cases, when a company is doing really well, it will be floated. The figures bear this out.
Quoting Brett
The homogeneity or otherwise of people in business is irrelevant to any opposition to the system set up to support it. Business could be constituted of 49% angels who do nothing but slave for the public good, it would still mean that a system set up to support it was primarily benefiting the 51% who are not. This is a common straw-man of the capitalist apologist - finding one lone example of the tyke who made it big, the rags-to-riches holy grail. One-offs are irrelevant to policy, it's the overall trend that matters.
The overall trend is that investors(who may also be business owners) speculate on commodities, services and property, all of which makes them very rich because...
1. They are protected from the harm of their losses to a greater extent than they are taxed for the benefit of their gains.
2. They are able to manipulate markets to create false demand for the commodity, service, or property they are gambling on.
It makes non-investors poorer because some of the commodities, services and property that the investors are speculating on are essential for living and the speculation drives the prices up faster than wages compensate.
Quoting Isaac
I’ve never been called that before. Thank you so much for the new and unexpected experience.