Corner of Berkshire & Fairfax Message Board

General Category => Politics => Topic started by: DTEJD1997 on January 22, 2019, 10:49:24 AM

Title: Causes of wealth inequality?
Post by: DTEJD1997 on January 22, 2019, 10:49:24 AM
Hey all:

I'm going to suggest that ONE of the biggest causes of wealth inequality in the USA is due to education and "educators".

In that, there are 2 things that are causing problems.

1). A dearth of business/finance/economics in grade school/high school.  This perhaps even the case at some colleges?  I generally went to good primary/high schools and received ALMOST no education in regards to the stock market, banking, personal finance (balancing a check book, insurance, savings, investments, living within your means, etc.).  There was some discussion of differences in capitalism/socialism/communism and such, but not a lot.

90% of what a person needs to know regarding personal finance can be taught reasonably well in 1 semester to anybody with a 6th grade understanding.

This is generally not being done. 

So if people don't know/understand how the system works/operates, then is it any wonder that they have limited opportunities and financial problems?

2). A lot of educators are engaged in "scams" to get money and funding for their class/program/school.  This is endemic and going on all over the place.

Look at the problems with Detroit Public Schools.  Simply shocking and a disgrace.  Generations of children are sold down the river, but the teachers/admins make out like bandits (which they literally are a shocking percentage of the time).

Then you've got colleges putting out false/distorted employment statistics trying to induce young people to take out mortgage levels of debt to get an education.

I would posit that if the education system were corrected, opportunity in America would increase quite a bit.  It certainly would not solve everything, but it would be a great way to get started!
Title: Re: Causes of wealth inequality?
Post by: MarkS on January 22, 2019, 11:03:25 AM
I would add that the last three decades of falling and or artificially low rates have benefited the wealthy and those in finance far more than those in main street.
Title: Re: Causes of wealth inequality?
Post by: rb on January 22, 2019, 11:08:56 AM
One problem with your theory DTEJD is that when wealth inequality was lower they still didn't teach business/finance/economics in grade school/high school.
Title: Re: Causes of wealth inequality?
Post by: stahleyp on January 22, 2019, 11:21:25 AM
I agree with that low rates plays a huge factor. I'll also say that globalization plays a big piece too.
Title: Re: Causes of wealth inequality?
Post by: DTEJD1997 on January 22, 2019, 11:23:54 AM
One problem with your theory DTEJD is that when wealth inequality was lower they still didn't teach business/finance/economics in grade school/high school.

That very well may be...BUT not teaching certainly does not help.

Conversely, where would we be if it were taught starting in 6th grade?  A little at first, then more every year.  When you graduate high school, you then have a very basic knowledge of economics, finance, and ESPECIALLY personal finance.

You would have a lot more business start ups...more people saving/investing for their retirement, less credit card debt, less vehicle leasing, less student loans, better health care insurance, and on down the line.

Heck, I would go so far as to further suggest that you would have MUCH better tax rates and even government policies!

Maybe I'm just KRAZY though...
Title: Re: Causes of wealth inequality?
Post by: DTEJD1997 on January 22, 2019, 11:25:42 AM
I agree with that low rates plays a huge factor. I'll also say that globalization plays a big piece too.

Yes, offshoring of industry/business certainly plays a part.

Education reform is simply on BIG component.  Fix that and you solve/make better a bunch of things/outcomes...but it is not the ONLY part of the solution. 

A solid start to fixing things though.
Title: Re: Causes of wealth inequality?
Post by: Gregmal on January 22, 2019, 11:48:07 AM
Offshoring is a big deal. But how do you fix it? Well, for starters, you'd have to give companies an incentive to pay more to keep workers here. But when you do that, the deadbeat liberals just whine about handouts for big, wealthy corporations... Can't win.
Title: Re: Causes of wealth inequality?
Post by: Ross812 on January 22, 2019, 12:55:35 PM
Wealth inequality goes far far beyond school curriculum. Right now we are kind of observing a combination of 1) the transition from a industrial to an information/service economy and 2) the effects of decades of failed government policy.

Offshoring is a big deal. But how do you fix it? Well, for starters, you'd have to give companies an incentive to pay more to keep workers here. But when you do that, the deadbeat liberals just whine about handouts for big, wealthy corporations... Can't win.

Capitalism, in its purest form, is naturally going to optimize labor and equipment to make the corporation as efficient as possible. It seems like both sides of the aisle agree that unchecked capitalism is not going to work for the country. Both sides are essentially calling for some form of intervention on the capitalist machine. Examples:

- "give incentives to companies" (from above)
- mandate benefits (time off, minimum wage etc.)
- Tariffs (current administration) 
- Regulation (environment, financial etc.)
- Tax rate

In the 1930's the country reacted to the financial depression by creating a social safety net. Rather than mandating the benefits provided by corporations, the government took on the roll of taxing and paying for the "layer of protection".

In order to protect the interests of US capitalism and individual citizens the country spends money on defense and infrastructure.

The left and right are arguing about where to spend money and intervene in order to optimize our capitalist economy:

The Right: the dream is to grow the economy to the point where the individuals at the bottom have an acceptable quality of life. One aspect of this is to limit the number of individuals at the bottom to make it easier to bring the quintile along (ie cut immigration). Cut regulation and tax rates to make the machine grow faster. This sounds like a good strategy, but the system has been set up to reward those in the upper two quintiles at a higher rate than the bottom three quintiles of the population, so wealth inequality continues to increase.   

The Left:  wants to help the individuals at the bottom by mandating the corporation provide a certain level of pay and benefits. If all else fails, they want to maintain the social safety net. This is all paid for by taxing the corporation and the individuals with money in the top quintiles. This sounds alright as well except for it slow the growth of the machine. Those with means protect their wealth to slow transfer to those at a lower rung and we see stagnation.   

If the country wants to reduce the wealth gap, our capitalist system has to be allowed to grow while at the same time allowing those in the lower quintiles of the economy to gain at a higher rate than those at the top. It is going to be some tough medicine for those making 100k+ and it's going to take some ideas from both sides of the aisle because neither has a proven solution.

 
Title: Re: Causes of wealth inequality?
Post by: SharperDingaan on January 22, 2019, 01:09:49 PM
The person in the homeless shelter doesn't understand basic finance? The women hooking for crack doesn't understand finance?
Or is it more that if your kid doesn't understand basic finance - it's because you (& not someone else) didn't teach it to them?
And if this education wasn't occurring, you still chose to do nothing about it?
Rags to rags in 3 generations is still alive and well.

The same thing occurrs around anti-vacination.
Until you've seen someone die, or become crippled, from the disease that you are protesting about; you really have no idea.
Too much bubble-wrap.

SD

Title: Re: Causes of wealth inequality?
Post by: rkbabang on January 22, 2019, 06:04:01 PM
If everyone is doing better, what does it matter that some people have much much more. <yawn> this is a big non-issue. Don't spend your life filled with greed and envy worrying about what someone else has.
Title: Re: Causes of wealth inequality?
Post by: Rasputin on January 22, 2019, 08:11:45 PM
In my experience, the answer is choice.  Life is the sum of all your choices said Albert Camus.

I personally know at least 4 households who have heard me preach about the importance of saving money, underspending income grossly for many many years (9+), but they continue to carry massive amount of debt while living paycheck to paycheck.  1 household have additional refrigerator for all their beers, all 4 lease cars, etc. 

If we can legislate away dumb choices, we can reduce wealth inequality immensely without robbing Peter to pay Paul. 

some people decided to have babies early, even after being told how tough it's gonna be.  some people decided to be waiter/waitresses or bartender/bartenders instead of going to college...

knowing the right thing to do vs actually doing it...
Title: Re: Causes of wealth inequality?
Post by: Cigarbutt on January 22, 2019, 08:17:36 PM
Discussing inequality with a European once, I was told that a typical American will not feel envy when seeing a luxury car passing by because he can visualize himself in that car.
I guess that's true up to a certain degree of inequality and given a certain mobility.
At some point though, one may end up hating the driver in a populist kind of way, especially if there is both relative and absolute stagnation.

Here's a mostly visual summary that seems relevant and balanced and lists inequality drivers on page 3.
https://www.db.com/newsroom_news/Inequality_Jan2018.pdf
Title: Re: Causes of wealth inequality?
Post by: meiroy on January 22, 2019, 08:19:05 PM
If everyone is doing better, what does it matter that some people have much much more. <yawn> this is a big non-issue. Don't spend your life filled with greed and envy worrying about what someone else has.

Because:
1. Not everyone is doing better. Trump would not be president if everyone was doing better.
2. Even if they were, at a certain point inequality impacts the real economy.  I will give a simple [extreme] example: if you make the minimum wage, you will be spending 100% of your income. It will go 100% back to the real economy. If, on the other hand, you just made another billion yesterday, on top of your gazillion billions that you already have, it is unlikely to go into the real economy.  At a certain point, this becomes an issue.
3. In a democracy, people can vote.  They can vote for someone that would screw them even more just because this person knows what to say, happens. So, you don't want too many people being unhappy it will get worse even for the rich.
Title: Re: Causes of wealth inequality?
Post by: meiroy on January 22, 2019, 08:28:26 PM
In my experience, the answer is choice.  Life is the sum of all your choices said Albert Camus.

I personally know at least 4 households who have heard me preach about the importance of saving money, underspending income grossly for many many years (9+), but they continue to carry massive amount of debt while living paycheck to paycheck.  1 household have additional refrigerator for all their beers, all 4 lease cars, etc. 

If we can legislate away dumb choices, we can reduce wealth inequality immensely without robbing Peter to pay Paul. 

some people decided to have babies early, even after being told how tough it's gonna be.  some people decided to be waiter/waitresses or bartender/bartenders instead of going to college...

knowing the right thing to do vs actually doing it...

I know quite a few households where the kids are doing well not because of any bright choices but because the parents have significant wealth.  I'm not even talking about better health care, better education and the *choice* to take risks, the freedom to take risks, because they have nothing to fear if they fail.  I'm talking about having easy and ready access to supply chains because the dad has leverage or how they get large chains to hold their products because they make money off the dad's products and so on. Significant wealth brings competitive advantages that can pass through the generations.  This can be easily seen in Europe, where some families maintain their wealth over several centuries.  A rich kid can make plenty of dumb choices but still end up on top because of their family's wealth.
Title: Re: Causes of wealth inequality?
Post by: rb on January 22, 2019, 08:54:04 PM
In my experience, the answer is choice.  Life is the sum of all your choices said Albert Camus.

I personally know at least 4 households who have heard me preach about the importance of saving money, underspending income grossly for many many years (9+), but they continue to carry massive amount of debt while living paycheck to paycheck.  1 household have additional refrigerator for all their beers, all 4 lease cars, etc. 

If we can legislate away dumb choices, we can reduce wealth inequality immensely without robbing Peter to pay Paul. 

some people decided to have babies early, even after being told how tough it's gonna be.  some people decided to be waiter/waitresses or bartender/bartenders instead of going to college...

knowing the right thing to do vs actually doing it...
Rasputin, I generally agree with what you're saying. Except the part about legislating away dumb choices... we won't be able to do that.

Some wealth and income inequality is good and it should be that way. People that make bad choices should obviously have a worse life than the ones that make good choices. In my opinion that's not in dispute.

What I think is in dispute is the degree on the disparity. People have been making bad choices regarding money since the world was young. It's not that it's a recent phenomenon. But making bad decisions should not be a capital sentence. As you say, some people decide to be a waitress or bartender. But it is obvious that the world needs waitress, bartenders, janitors, etc. Since they are a requirement they should still be able to live a life. That means earn enough to pay rent, eat, and raise their kids. Furthermore their kids should have a good to decent chance to make a better life for themselves. Otherwise what you have created is a feudal class system of aristocracy and serfdom.

I'm also not entirely sure that the economy would work if everyone were to make good decisions. For example: Buying a used car is a good decision. But someone would have to buy/lease that new car so you can buy it used.
Title: Re: Causes of wealth inequality?
Post by: Jurgis on January 22, 2019, 09:52:50 PM
In my experience, the answer is choice.  Life is the sum of all your choices said Albert Camus.

I personally know at least 4 households who have heard me preach about the importance of saving money, underspending income grossly for many many years (9+), but they continue to carry massive amount of debt while living paycheck to paycheck.  1 household have additional refrigerator for all their beers, all 4 lease cars, etc. 

If we can legislate away dumb choices, we can reduce wealth inequality immensely without robbing Peter to pay Paul. 

some people decided to have babies early, even after being told how tough it's gonna be.  some people decided to be waiter/waitresses or bartender/bartenders instead of going to college...

knowing the right thing to do vs actually doing it...
Rasputin, I generally agree with what you're saying. Except the part about legislating away dumb choices... we won't be able to do that.

Some wealth and income inequality is good and it should be that way. People that make bad choices should obviously have a worse life than the ones that make good choices. In my opinion that's not in dispute.

What I think is in dispute is the degree on the disparity. People have been making bad choices regarding money since the world was young. It's not that it's a recent phenomenon. But making bad decisions should not be a capital sentence. As you say, some people decide to be a waitress or bartender. But it is obvious that the world needs waitress, bartenders, janitors, etc. Since they are a requirement they should still be able to live a life. That means earn enough to pay rent, eat, and raise their kids. Furthermore their kids should have a good to decent chance to make a better life for themselves. Otherwise what you have created is a feudal class system of aristocracy and serfdom.

I'm also not entirely sure that the economy would work if everyone were to make good decisions. For example: Buying a used car is a good decision. But someone would have to buy/lease that new car so you can buy it used.

Great post.  8)
Title: Re: Causes of wealth inequality?
Post by: DTEJD1997 on January 22, 2019, 10:19:30 PM
In my experience, the answer is choice.  Life is the sum of all your choices said Albert Camus.

I personally know at least 4 households who have heard me preach about the importance of saving money, underspending income grossly for many many years (9+), but they continue to carry massive amount of debt while living paycheck to paycheck.  1 household have additional refrigerator for all their beers, all 4 lease cars, etc. 

If we can legislate away dumb choices, we can reduce wealth inequality immensely without robbing Peter to pay Paul. 

some people decided to have babies early, even after being told how tough it's gonna be.  some people decided to be waiter/waitresses or bartender/bartenders instead of going to college...

knowing the right thing to do vs actually doing it...
Rasputin, I generally agree with what you're saying. Except the part about legislating away dumb choices... we won't be able to do that.

Some wealth and income inequality is good and it should be that way. People that make bad choices should obviously have a worse life than the ones that make good choices. In my opinion that's not in dispute.

What I think is in dispute is the degree on the disparity. People have been making bad choices regarding money since the world was young. It's not that it's a recent phenomenon. But making bad decisions should not be a capital sentence. As you say, some people decide to be a waitress or bartender. But it is obvious that the world needs waitress, bartenders, janitors, etc. Since they are a requirement they should still be able to live a life. That means earn enough to pay rent, eat, and raise their kids. Furthermore their kids should have a good to decent chance to make a better life for themselves. Otherwise what you have created is a feudal class system of aristocracy and serfdom.

I'm also not entirely sure that the economy would work if everyone were to make good decisions. For example: Buying a used car is a good decision. But someone would have to buy/lease that new car so you can buy it used.

Different choices may be the right choice for people at different times and stages of their lives.

For example, I almost always buy used cars/vehicles. The one time I bought a new vehicle it was a work vehicle, used exclusively for business.

For the foreseeable future, I will continue to buy used vehicles. 

If I were to ever to get a wife/child.  I very well might buy a NEW vehicle for them.

OR perhaps 20 years in the future, when I am finally a big success...I very well might buy a NEW vehicle simply because I just don't want to fiddle around and want what I want.  If you are worth $3 or $4 MM+, why fiddle fart around with a $50k vehicle?  If you really want it, just buy it and move on.  Enjoy your life/time.

To have much better outcomes in society...you don't need 100% participation and better behavior.

I've heard that something like 75% of households are operating pay check to pay check.  What if in 5 years, that figure drops down to 25%?

Or what of retirement savings?  Fidelity reports that the MEDIAN retirement savings of people in their 40's is only $63k.  What if in 5 years that were to go up to $100k?  Wouldn't make the problem solved, but American society would be in a BETTER position than it is today.

If American society can improve through better education/values, it would be a good thing.
Title: Re: Causes of wealth inequality?
Post by: petec on January 23, 2019, 01:35:27 AM
I'll also say that globalization plays a big piece too.

Globalisation temporarily causes inequality within countries, because entire areas can see jobs flood overseas. However in a free market this shouldn't be a permanent effect because either lower wages should attract investment or people should move. When that doesn't happen it's usually because of unions or government benefits, IMHO.

However globalisation is a driver of wealth equality between countries. It's often forgotten that inequality between countries has dropped fast over the last 30-odd years as the developing world has caught up with the developed, and a lot of that is down to globalisation driven by the developing world opening their economies and embracing free markets.

To put it another way: for every job lost in the developed world, it seems to me that 3 or 4 have been created in the developing world.
Title: Re: Causes of wealth inequality?
Post by: rkbabang on January 23, 2019, 05:54:14 AM
In my experience, the answer is choice.  Life is the sum of all your choices said Albert Camus.

I personally know at least 4 households who have heard me preach about the importance of saving money, underspending income grossly for many many years (9+), but they continue to carry massive amount of debt while living paycheck to paycheck.  1 household have additional refrigerator for all their beers, all 4 lease cars, etc. 

If we can legislate away dumb choices, we can reduce wealth inequality immensely without robbing Peter to pay Paul. 

some people decided to have babies early, even after being told how tough it's gonna be.  some people decided to be waiter/waitresses or bartender/bartenders instead of going to college...

knowing the right thing to do vs actually doing it...

I know quite a few households where the kids are doing well not because of any bright choices but because the parents have significant wealth.  I'm not even talking about better health care, better education and the *choice* to take risks, the freedom to take risks, because they have nothing to fear if they fail.  I'm talking about having easy and ready access to supply chains because the dad has leverage or how they get large chains to hold their products because they make money off the dad's products and so on. Significant wealth brings competitive advantages that can pass through the generations.  This can be easily seen in Europe, where some families maintain their wealth over several centuries.  A rich kid can make plenty of dumb choices but still end up on top because of their family's wealth.

And how does that make you feel? Envious?  Like you deserve to take what they have?   How is any of what someone does for their children your business? 
Title: Re: Causes of wealth inequality?
Post by: rkbabang on January 23, 2019, 05:54:54 AM
Discussing inequality with a European once, I was told that a typical American will not feel envy when seeing a luxury car passing by because he can visualize himself in that car.
I guess that's true up to a certain degree of inequality and given a certain mobility.
At some point though, one may end up hating the driver in a populist kind of way, especially if there is both relative and absolute stagnation.

Here's a mostly visual summary that seems relevant and balanced and lists inequality drivers on page 3.
https://www.db.com/newsroom_news/Inequality_Jan2018.pdf

Ha, I only hate him if he cuts me off or tailgates me.
Title: Re: Causes of wealth inequality?
Post by: Schwab711 on January 23, 2019, 06:50:29 AM
I'm going to suggest that ONE of the biggest causes of wealth inequality in the USA is due to:

It's stock compensation being favored by the US tax code.
Title: Re: Causes of wealth inequality?
Post by: Ross812 on January 23, 2019, 11:27:44 AM
In my experience, the answer is choice.  Life is the sum of all your choices said Albert Camus.

I personally know at least 4 households who have heard me preach about the importance of saving money, underspending income grossly for many many years (9+), but they continue to carry massive amount of debt while living paycheck to paycheck.  1 household have additional refrigerator for all their beers, all 4 lease cars, etc. 

If we can legislate away dumb choices, we can reduce wealth inequality immensely without robbing Peter to pay Paul. 

some people decided to have babies early, even after being told how tough it's gonna be.  some people decided to be waiter/waitresses or bartender/bartenders instead of going to college...

knowing the right thing to do vs actually doing it...

I know quite a few households where the kids are doing well not because of any bright choices but because the parents have significant wealth.  I'm not even talking about better health care, better education and the *choice* to take risks, the freedom to take risks, because they have nothing to fear if they fail.  I'm talking about having easy and ready access to supply chains because the dad has leverage or how they get large chains to hold their products because they make money off the dad's products and so on. Significant wealth brings competitive advantages that can pass through the generations.  This can be easily seen in Europe, where some families maintain their wealth over several centuries.  A rich kid can make plenty of dumb choices but still end up on top because of their family's wealth.

And how does that make you feel? Envious?  Like you deserve to take what they have?   How is any of what someone does for their children your business?

I am fine with rich children getting advantages from their parents. A successful parent should be able to do whatever they want with their money, including giving their children a safety net, sending them to the best schools etc.

I would like to see the playing field leveled though. Let's just ignore all the lower tax brackets and look at the top 2 and look at marginal tax rates for families:

200k: 15%
400k: 21% (+40%)
600k: 26% (+24%)
1.2M: 32% (+23%)
2.4M: 35% (+9%)
4.8M: 36% (+3%)
6.5M+: 37% (+3%)

The numbers above are for wage earners, and some posters would say they are fair (definitely not RK though!). I mean, by the time the government is taking more than a third of my paycheck they can leave the rest alone regardless of how much I make right?

This breaks down though when you consider most individuals earning 1M+ are taking advantage of the favorable treatment of capital gains and/or dividends where those making 425k+ are taxed max rate of 20% effectively pegging them at the same marginal tax rate as a family bringing in 350K a year.

What you end up with is a marginal tax rate curve starting at 0 and peaking around 30% for successful professionals, sole proprietors etc. then heading back down to level off around 22% for executives who can use the tax code to their advantage. The system exists in its current form, because the individuals at the top of the income scale can write (tax deductible) checks to politicians to make sure a favorable tax code is implemented/maintained.

I would imagine this example captures a lot of the members on this forum; many members are probably paying a higher effective tax rate than someone earning 2-3x their income.






Title: Re: Causes of wealth inequality?
Post by: rkbabang on January 23, 2019, 12:33:53 PM
What you end up with is a marginal tax rate curve starting at 0 and peaking around 30% for successful professionals, sole proprietors etc. then heading back down to level off around 22% for executives who can use the tax code to their advantage. The system exists in its current form, because the individuals at the top of the income scale can write (tax deductible) checks to politicians to make sure a favorable tax code is implemented/maintained.

I agree with you there.
One group shouldn't be paying 22% while others pay 30% it is confiscatory to the extreme, we should be advocating bringing those who pay more than 22% down to the levels the rich pay.  Then focus on bringing everyone down to <10%.
No individual, family, or business of any type should ever pay more than 10%.  Preferably 5%.  In a perfect world 0%.  And by that I mean all taxes to Fed+state+local governments combined should be <= 10%.

A 10% tithe is more than enough, even god never asked for more than that.
Title: Re: Causes of wealth inequality?
Post by: Ross812 on January 23, 2019, 12:53:58 PM
What you end up with is a marginal tax rate curve starting at 0 and peaking around 30% for successful professionals, sole proprietors etc. then heading back down to level off around 22% for executives who can use the tax code to their advantage. The system exists in its current form, because the individuals at the top of the income scale can write (tax deductible) checks to politicians to make sure a favorable tax code is implemented/maintained.

I agree with you there.
One group shouldn't be paying 22% while others pay 30% it is confiscatory to the extreme, we should be advocating bringing those who pay more than 22% down to the levels the rich pay.  Then focus on bringing everyone down to <10%.
No individual, family, or business of any type should ever pay more than 10%.  Preferably 5%.  In a perfect world 0%.  And by that I mean all taxes to Fed+state+local governments combined should be <= 10%.

A 10% tithe is more than enough, even god never asked for more than that.

I have read your opinion about pure anarcho capitalism. I would be a little worried that capitalism in its purest form results in serfdom at best and slavery at worst. I don't want nuclear power plants dumping waste in rivers etc, so there has to be some sort of central authority right? Paying for a professional military is probably still a good idea right? I'd hate to see Buffett buy a dozen F22s and take over the central midwest, let alone an invasion by the Canadians ;-) 
Title: Re: Causes of wealth inequality?
Post by: rkbabang on January 23, 2019, 01:04:36 PM
What you end up with is a marginal tax rate curve starting at 0 and peaking around 30% for successful professionals, sole proprietors etc. then heading back down to level off around 22% for executives who can use the tax code to their advantage. The system exists in its current form, because the individuals at the top of the income scale can write (tax deductible) checks to politicians to make sure a favorable tax code is implemented/maintained.

I agree with you there.
One group shouldn't be paying 22% while others pay 30% it is confiscatory to the extreme, we should be advocating bringing those who pay more than 22% down to the levels the rich pay.  Then focus on bringing everyone down to <10%.
No individual, family, or business of any type should ever pay more than 10%.  Preferably 5%.  In a perfect world 0%.  And by that I mean all taxes to Fed+state+local governments combined should be <= 10%.

A 10% tithe is more than enough, even god never asked for more than that.

I have read your opinion about pure anarcho capitalism. I would be a little worried that capitalism in its purest form results in serfdom at best and slavery at worst. I don't want nuclear power plants dumping waste in rivers etc, so there has to be some sort of central authority right? Paying for a professional military is probably still a good idea right? I'd hate to see Buffett buy a dozen F22s and take over the central midwest, let alone an invasion by the Canadians ;-) 

I can see the arguments for some government, especially at the local/city level.  I think there are good arguments against it, but I'd be willing to admit I could be wrong.  But there is no question in my mind that 95+% of what the federal government does is unnecessary/harmful.  Spending should be cut 95% and taxes of all types cut 80% until the debt is paid off, along with selling all federal lands/buildings outside of D.C. to help pay off the debt, then taxes cut to allow for a balanced budget.  We have nuclear weapons, there is no need for 900 military bases in 153 countries.  I don't know how many military bases is sufficient, but they should all be in 1 country.  If the Canadian military crosses the border on horseback or whatever it is they do, I think many Americans would be happy to grab their rifles and help stop them.
Title: Re: Causes of wealth inequality?
Post by: rb on January 23, 2019, 01:26:29 PM
We have nuclear weapons, there is no need for 900 military bases in 153 countries.

Then when something like 9/11 happens what do you do? Drop a nuke on Afganistan?
Title: Re: Causes of wealth inequality?
Post by: SHDL on January 23, 2019, 03:48:04 PM
If the question is why wealth inequality has been increasing over time (as opposed to, say, why it exists in the first place, or what the government can/should do about it), there’s an extremely dry answer: it is just the way the math works.

Here's why, for those who are interested:

Let W(i, t) denote the wealth of family i in generation t, and let r(i, t) denote the net return on wealth, after taxes and spending, that family i obtains between generation t and t+1.  Then for each i and t:

W(i, t+1) = (1 + r(i, t)) * W(i, t).

Suppose also that r(i, t) is independently and identically distributed across families i and generations t (and that the distribution from which it is drawn has positive variance).

Then it follows mathematically that the variance of log wealth W across families i increases linearly with generation t and therefore does not converge as t goes to infinity.  In other words, wealth inequality keeps increasing forever without ever reaching a limit.
Title: Re: Causes of wealth inequality?
Post by: Cigarbutt on January 23, 2019, 05:39:01 PM
If the question is why wealth inequality has been increasing over time (as opposed to, say, why it exists in the first place, or what the government can/should do about it), there’s an extremely dry answer: it is just the way the math works.

Here's why, for those who are interested:

Let W(i, t) denote the wealth of family i in generation t, and let r(i, t) denote the net return on wealth, after taxes and spending, that family i obtains between generation t and t+1.  Then for each i and t:

W(i, t+1) = (1 + r(i, t)) * W(i, t).

Suppose also that r(i, t) is independently and identically distributed across families i and generations t (and that the distribution from which it is drawn has positive variance).

Then it follows mathematically that the log variance of wealth W across families i increases linearly with generation t and therefore does not converge as t goes to infinity.  In other words, wealth inequality keeps increasing forever without ever reaching a limit.
Is this a Fed model? :)
Is there an option for reversion to the mean because, in centuries past, driving inequality used to result in chopped heads, but maybe we've learned how to manage and moderate the economy?
https://www.bourbonfm.com/blog/top-decile-income-share-1917-2012

Title: Re: Causes of wealth inequality?
Post by: rukawa on January 23, 2019, 05:44:51 PM
If the question is why wealth inequality has been increasing over time (as opposed to, say, why it exists in the first place, or what the government can/should do about it), there’s an extremely dry answer: it is just the way the math works.

Here's why, for those who are interested:

Let W(i, t) denote the wealth of family i in generation t, and let r(i, t) denote the net return on wealth, after taxes and spending, that family i obtains between generation t and t+1.  Then for each i and t:

W(i, t+1) = (1 + r(i, t)) * W(i, t).

Suppose also that r(i, t) is independently and identically distributed across families i and generations t (and that the distribution from which it is drawn has positive variance).

Then it follows mathematically that the log variance of wealth W across families i increases linearly with generation t and therefore does not converge as t goes to infinity.  In other words, wealth inequality keeps increasing forever without ever reaching a limit.

Then we would expect the richest people to come from very old money but that isn't what we see....the four richest people are all new money:
1) Bill Gates
2) Warren Buffet
3) Jeff Bezos
4) Amancio Ortega

And this is consistent with history...think of renown rich people:

Rockefeller...born to penniless single mother
Carnegie....poor immigrant
Vanderbilt....fourth of nine children born to relatively poor family
John Jacob Astor...son of a butcher

How many rich Astors or Vanderbilts or Carnegies do you know of today? Only the Rockefellers maintained their fortune to the present day. General aphorism is shirt sleaves to shirt sleaves in 3 generations. First generation builds wealth. Second preserves and even expands it. Third squanders it. So although its possible in theory for your equation to hold...in practice that isn't how human beings or the world works. You can understand why this is difficult...if you were the son of a billionaire would you really want your whole life to be devoted to maintaining the empire someone else built?

Title: Re: Causes of wealth inequality?
Post by: SHDL on January 23, 2019, 05:50:24 PM
If the question is why wealth inequality has been increasing over time (as opposed to, say, why it exists in the first place, or what the government can/should do about it), there’s an extremely dry answer: it is just the way the math works.

Here's why, for those who are interested:

Let W(i, t) denote the wealth of family i in generation t, and let r(i, t) denote the net return on wealth, after taxes and spending, that family i obtains between generation t and t+1.  Then for each i and t:

W(i, t+1) = (1 + r(i, t)) * W(i, t).

Suppose also that r(i, t) is independently and identically distributed across families i and generations t (and that the distribution from which it is drawn has positive variance).

Then it follows mathematically that the log variance of wealth W across families i increases linearly with generation t and therefore does not converge as t goes to infinity.  In other words, wealth inequality keeps increasing forever without ever reaching a limit.
Is this a Fed model? :)
Is there an option for reversion to the mean because, in centuries past, driving inequality used to result in chopped heads, but maybe we've learned how to manage and moderate the economy?
https://www.bourbonfm.com/blog/top-decile-income-share-1917-2012

Probably too elementary to impress the folks who work there... ;)

Speaking of mean reversion, what the above shows is that there’s basically no obvious reason to expect it to happen “naturally” — so if you want it you probably need to introduce it artificially via taxation or something.
Title: Re: Causes of wealth inequality?
Post by: SHDL on January 23, 2019, 06:10:12 PM
If the question is why wealth inequality has been increasing over time (as opposed to, say, why it exists in the first place, or what the government can/should do about it), there’s an extremely dry answer: it is just the way the math works.

Here's why, for those who are interested:

Let W(i, t) denote the wealth of family i in generation t, and let r(i, t) denote the net return on wealth, after taxes and spending, that family i obtains between generation t and t+1.  Then for each i and t:

W(i, t+1) = (1 + r(i, t)) * W(i, t).

Suppose also that r(i, t) is independently and identically distributed across families i and generations t (and that the distribution from which it is drawn has positive variance).

Then it follows mathematically that the log variance of wealth W across families i increases linearly with generation t and therefore does not converge as t goes to infinity.  In other words, wealth inequality keeps increasing forever without ever reaching a limit.

Then we would expect the richest people to come from very old money but that isn't what we see....the four richest people are all new money:
1) Bill Gates
2) Warren Buffet
3) Jeff Bezos
4) Amancio Ortega

And this is consistent with history...think of renown rich people:

Rockefeller...born to penniless single mother
Carnegie....poor immigrant
Vanderbilt....fourth of nine children born to relatively poor family
John Jacob Astor...son of a butcher

How many rich Astors or Vanderbilts or Carnegies do you know of today? Only the Rockefellers maintained their fortune to the present day. General aphorism is shirt sleaves to shirt sleaves in 3 generations. First generation builds wealth. Second preserves and even expands it. Third squanders it. So although its possible in theory for your equation to hold...in practice that isn't how human beings or the world works. You can understand why this is difficult...if you were the son of a billionaire would you really want your whole life to be devoted to maintaining the empire someone else built?

The way to think about this is that Gates, Buffett, and other self-made billionaires got (via hard work, frugality, luck, ...) very high r’s and the other dynasties that didn’t last got (via gifting, misfortune, stupidity, lavish spending, ...) very low r’s.

Now if there’s evidence that rich people are more likely than others to lose their wealth, I’d be interested in seeing it. The anecdotes you mentioned suggest that there may be some at the top end, but I’m not sure. Anyway, that would be a good reason to reconsider the i.i.d. assumption.
Title: Re: Causes of wealth inequality?
Post by: rkbabang on January 23, 2019, 06:30:00 PM
We have nuclear weapons, there is no need for 900 military bases in 153 countries.

Then when something like 9/11 happens what do you do? Drop a nuke on Afganistan?

The people who did it were dead. They were after one other guy. Put a price on his head sufficient to bring him in. We spent 7 trillion dollars on the war on terror, a $5B price would have been a bargain and his head would have been on the President's desk in a month. Ron Paul actually suggested this, but Americans were too busy beating the war drums like savages to hear.

EDIT: http://ronpaulquotes.com/chapters/2001-100.html
Title: Re: Causes of wealth inequality?
Post by: rukawa on January 23, 2019, 11:47:36 PM
The way to think about this is that Gates, Buffett, and other self-made billionaires got (via hard work, frugality, luck, ...) very high r’s and the other dynasties that didn’t last got (via gifting, misfortune, stupidity, lavish spending, ...) very low r’s.

Now if there’s evidence that rich people are more likely than others to lose their wealth, I’d be interested in seeing it. The anecdotes you mentioned suggest that there may be some at the top end, but I’m not sure. Anyway, that would be a good reason to reconsider the i.i.d. assumption.

The original model basically predict increasing wealth skew over time due to past generational history....but why do most huge fortunes accrue to men whose families are not rich and most often happen WITHIN one generation. It doesn't really makes sense according to your model. You would expect the reverse. In other words most of the top rich people should be more like Donald Trump and less like Warren Buffett. They should be people belonging to rich families that built wealth over multiple generations but that isn't what you see. Instead you see a large number of cases where huge fortunes were built in one life-time by someone of poor to middle class background.

If your model really held true than the Astors, Vanderbilts, Rockefellers and Carnegies should still have gargantuan fortunes...in fact once a person like Bill Gates emerges...assuming iid r(i,t) his family should remain rich for many many generations. That isn't observed.

Title: Re: Causes of wealth inequality?
Post by: Cardboard on January 24, 2019, 05:23:47 AM
"If your model really held true than the Astors, Vanderbilts, Rockefellers and Carnegies should still have gargantuan fortunes...in fact once a person like Bill Gates emerges...assuming iid r(i,t) his family should remain rich for many many generations. That isn't observed. "

Agree. The equation also does not explain what happened between the 20's and 70's when top 1% income share of U.S. went from 23.9% down to 8.9% (courtesy of LC chart)?

Cardboard
Title: Re: Causes of wealth inequality?
Post by: SHDL on January 24, 2019, 06:36:18 AM
If your model really held true than the Astors, Vanderbilts, Rockefellers and Carnegies should still have gargantuan fortunes...in fact once a person like Bill Gates emerges...assuming iid r(i,t) his family should remain rich for many many generations.

I'd be interested in learning more about what happened to these dynasties.  Do you know how these guys lost their fortunes?

That said though, there's technically nothing in the model that directly contradicts these stories.  If you start with a 10 billion fortune and pay 2 billion in taxes, give away 3 billion to charity, spend 1 billion yourself, and lose 3 billion due to bad investing, you're down to 1 billion in one generation.  r=-0.9 in that case.  Split it between multiple siblings and each one is no longer even a billionaire.  I.i.d. per se doesn't rule that out.
Title: Re: Causes of wealth inequality?
Post by: rkbabang on January 24, 2019, 06:46:57 AM
"If your model really held true than the Astors, Vanderbilts, Rockefellers and Carnegies should still have gargantuan fortunes...in fact once a person like Bill Gates emerges...assuming iid r(i,t) his family should remain rich for many many generations. That isn't observed. "

Agree. The equation also does not explain what happened between the 20's and 70's when top 1% income share of U.S. went from 23.9% down to 8.9% (courtesy of LC chart)?

Cardboard

The top one percent is gaining more and more wealth, but the top 1% isn't made up of the same people/families from generation to generation.  New people creating new wealth are able to create more of it than in past generations.   Individuals move up and down the wealth categories.  I made more at 25 years old than my Dad ever made in one year in his life, whereas it isn't clear that my children will make as much as I do (time will tell).
The same goes for really rich people.  A Billion dollar fortune is spread between all of the children in generation 1, then all of their children in generation 2, then whatever is left of it after gen2 squanders it is being spread out among even more heirs in gen 3 and so on.  It only grows when an heir is talented enough to grow it, which is more of the exception rather than the rule.  So self-made men are able to amass larger fortunes than was possible in the past, maybe because our economy is so much larger, but it is always different people cycling in, not some kind of aristocracy as the charts make it seem.
 
Title: Re: Causes of wealth inequality?
Post by: Cigarbutt on January 24, 2019, 07:12:58 AM
If your model really held true than the Astors, Vanderbilts, Rockefellers and Carnegies should still have gargantuan fortunes...in fact once a person like Bill Gates emerges...assuming iid r(i,t) his family should remain rich for many many generations.

I'd be interested in learning more about what happened to these dynasties.  Do you know how these guys lost their fortunes?

That said though, there's technically nothing in the model that directly contradicts these stories.  If you start with a 10 billion fortune and pay 2 billion in taxes, give away 3 billion to charity, spend 1 billion yourself, and lose 3 billion due to bad investing, you're down to 1 billion in one generation.  r=-0.9 in that case.  Split it between multiple siblings and each one is no longer even a billionaire.  I.i.d. per se doesn't rule that out.
You may then be interested in reading the following (p.24 to end):
http://www.theboxisthereforareason.com/wp-content/uploads/2016/05/cj-v35n3-1_0.pdf

Mr. Piketty has written a lot about the topic but his work is not flawless and the above link is a good rebuttal.

An aspect that is not covered well by the link is the growing inequality, reaching very high levels and its classic association with decreased inter-generational mobility (the Great Gatsby curve) and the convincing data showing how mobility has been decreasing steadily and significantly in many developed countries, including in the US.

When we analyze companies, in some cases, as value investors, we have to decide how temporary difficulties will be resolved. Sometimes, firms can reform from within but when managers become entitled and maintained by an ossified Board, the stickiness may require a form of activism. When societies move towards plutocraty and poor governance, if reform cannot be achieved from within, a form of populism may be required.
Title: Re: Causes of wealth inequality?
Post by: SHDL on January 24, 2019, 07:15:44 AM
Thanks, Cigarbutt!
Title: Re: Causes of wealth inequality?
Post by: meiroy on January 25, 2019, 12:35:16 AM
In my experience, the answer is choice.  Life is the sum of all your choices said Albert Camus.

I personally know at least 4 households who have heard me preach about the importance of saving money, underspending income grossly for many many years (9+), but they continue to carry massive amount of debt while living paycheck to paycheck.  1 household have additional refrigerator for all their beers, all 4 lease cars, etc. 

If we can legislate away dumb choices, we can reduce wealth inequality immensely without robbing Peter to pay Paul. 

some people decided to have babies early, even after being told how tough it's gonna be.  some people decided to be waiter/waitresses or bartender/bartenders instead of going to college...

knowing the right thing to do vs actually doing it...

I know quite a few households where the kids are doing well not because of any bright choices but because the parents have significant wealth.  I'm not even talking about better health care, better education and the *choice* to take risks, the freedom to take risks, because they have nothing to fear if they fail.  I'm talking about having easy and ready access to supply chains because the dad has leverage or how they get large chains to hold their products because they make money off the dad's products and so on. Significant wealth brings competitive advantages that can pass through the generations.  This can be easily seen in Europe, where some families maintain their wealth over several centuries.  A rich kid can make plenty of dumb choices but still end up on top because of their family's wealth.

And how does that make you feel? Envious?  Like you deserve to take what they have?   How is any of what someone does for their children your business?

So, just to pretend that you actually talked about the argument instead of your ad hominem. 

My comment was a reply to the argument that somehow poor people are poor because of their choices and rich people are rich because of their choices. I provided examples of how that is not necessarily the case.

On the macro, as I have noted, high inequality distorts competition, on the extreme can destroy the markets and lead to unfavorable political choices, i.e. Trump or a mirror candidate from the left suggesting high taxes (same cause).   

It's not a hypothetical discussion and that's why I care, I want my kids to have a better world and it's not going in the right direction.
Title: Re: Causes of wealth inequality?
Post by: rkbabang on January 25, 2019, 07:31:55 AM
In my experience, the answer is choice.  Life is the sum of all your choices said Albert Camus.

I personally know at least 4 households who have heard me preach about the importance of saving money, underspending income grossly for many many years (9+), but they continue to carry massive amount of debt while living paycheck to paycheck.  1 household have additional refrigerator for all their beers, all 4 lease cars, etc. 

If we can legislate away dumb choices, we can reduce wealth inequality immensely without robbing Peter to pay Paul. 

some people decided to have babies early, even after being told how tough it's gonna be.  some people decided to be waiter/waitresses or bartender/bartenders instead of going to college...

knowing the right thing to do vs actually doing it...

I know quite a few households where the kids are doing well not because of any bright choices but because the parents have significant wealth.  I'm not even talking about better health care, better education and the *choice* to take risks, the freedom to take risks, because they have nothing to fear if they fail.  I'm talking about having easy and ready access to supply chains because the dad has leverage or how they get large chains to hold their products because they make money off the dad's products and so on. Significant wealth brings competitive advantages that can pass through the generations.  This can be easily seen in Europe, where some families maintain their wealth over several centuries.  A rich kid can make plenty of dumb choices but still end up on top because of their family's wealth.

And how does that make you feel? Envious?  Like you deserve to take what they have?   How is any of what someone does for their children your business?

So, just to pretend that you actually talked about the argument instead of your ad hominem. 

My comment was a reply to the argument that somehow poor people are poor because of their choices and rich people are rich because of their choices. I provided examples of how that is not necessarily the case.

On the macro, as I have noted, high inequality distorts competition, on the extreme can destroy the markets and lead to unfavorable political choices, i.e. Trump or a mirror candidate from the left suggesting high taxes (same cause).   

It's not a hypothetical discussion and that's why I care, I want my kids to have a better world and it's not going in the right direction.


We all want a better world for our children.  A better world includes a much larger economy with an increase in total wealth.  The populism isn't a result of wealth inequality, it is a result of voter ignorance on topics such as wealth inequality.  Trump was elected (putting aside how awful Hilary is) due to the vast majority of people not understanding the theory of comparative advantage and thus "thinking" with their emotions/prejudices about free trade and immigration.  Likewise the support for people like Bernie or Alexandria Ocasio-Cortez is a result of complete economic ignorance on the part of the electorate who do not realize that wealth is created, not just moved around in a zero-sum game, and have no idea how markets work.  I hope someone out there right now is starting a company that will  increase our standard of living so much, create so many jobs, and expand our economy so much that he builds a Trillion Dollar fortune for himself.  In fact I hope there are 50 or 100 such people. A better world includes massive income inequality, a better standard of living, and more wealth and opportunities for all.   Reducing wealth inequality is actually making a future that is worse off for both your children and mine.  Giving into voter ignorance/envy isn't helping anyone.
Title: Re: Causes of wealth inequality?
Post by: SharperDingaan on January 25, 2019, 08:16:39 AM
You might want to re-think ....

Every year your friendly central bank expands the money-supply 1-2%, to support 'growth'. Assume 1.5%.
The more money SPENT in circulation = more activity = more taxes = better standing of living, etc. Hard to argue against.

Problem is ..

More money chasing the same quantity of assets, just inflates the nominal value of those assets; the $1,000,000 nominal asset now values at $1,015,000. It also reduces liabilities by the same amount; the $1,000,000 loan is now repaid with a dollar worth $1.015, reducing the obligation to $985,000.

So if you had a $1,000,000 asset, with a $1,000,000 loan against it; that 1.5% increase in the money supply will literally give you an additional $30,000 ($1,015,000 - 985,000) of wealth, for doing absolutely SQUAT. Guaranteed helicopter wealth that ONLY accrues to those who already have wealth (the $1M) - and not those living hand-to-mouth. The rich get richer, the poor get poorer, and  the higher the target growth rate (1.5%), the faster the rich get wealthier.

There is a reason why the Chineese wealthy are SO wealthy (5%+ growth rates, versus 1.5%), why the 'property ladder' is seen as a 'road to wealth'; and it has NOTHING to do with hard work.

If you want to make 'real money' from taxation, tax inflation

SD





Title: Re: Causes of wealth inequality?
Post by: Cigarbutt on January 26, 2019, 05:25:29 AM
In my experience, the answer is choice.  Life is the sum of all your choices said Albert Camus.

I personally know at least 4 households who have heard me preach about the importance of saving money, underspending income grossly for many many years (9+), but they continue to carry massive amount of debt while living paycheck to paycheck.  1 household have additional refrigerator for all their beers, all 4 lease cars, etc. 

If we can legislate away dumb choices, we can reduce wealth inequality immensely without robbing Peter to pay Paul. 

some people decided to have babies early, even after being told how tough it's gonna be.  some people decided to be waiter/waitresses or bartender/bartenders instead of going to college...

knowing the right thing to do vs actually doing it...
I know quite a few households where the kids are doing well not because of any bright choices but because the parents have significant wealth.  I'm not even talking about better health care, better education and the *choice* to take risks, the freedom to take risks, because they have nothing to fear if they fail.  I'm talking about having easy and ready access to supply chains because the dad has leverage or how they get large chains to hold their products because they make money off the dad's products and so on. Significant wealth brings competitive advantages that can pass through the generations.  This can be easily seen in Europe, where some families maintain their wealth over several centuries.  A rich kid can make plenty of dumb choices but still end up on top because of their family's wealth.
And how does that make you feel? Envious?  Like you deserve to take what they have?   How is any of what someone does for their children your business?
So, just to pretend that you actually talked about the argument instead of your ad hominem. 

My comment was a reply to the argument that somehow poor people are poor because of their choices and rich people are rich because of their choices. I provided examples of how that is not necessarily the case.

On the macro, as I have noted, high inequality distorts competition, on the extreme can destroy the markets and lead to unfavorable political choices, i.e. Trump or a mirror candidate from the left suggesting high taxes (same cause).   

It's not a hypothetical discussion and that's why I care, I want my kids to have a better world and it's not going in the right direction.
We all want a better world for our children.  A better world includes a much larger economy with an increase in total wealth.  The populism isn't a result of wealth inequality, it is a result of voter ignorance on topics such as wealth inequality.  Trump was elected (putting aside how awful Hilary is) due to the vast majority of people not understanding the theory of comparative advantage and thus "thinking" with their emotions/prejudices about free trade and immigration.  Likewise the support for people like Bernie or Alexandria Ocasio-Cortez is a result of complete economic ignorance on the part of the electorate who do not realize that wealth is created, not just moved around in a zero-sum game, and have no idea how markets work.  I hope someone out there right now is starting a company that will  increase our standard of living so much, create so many jobs, and expand our economy so much that he builds a Trillion Dollar fortune for himself.  In fact I hope there are 50 or 100 such people. A better world includes massive income inequality, a better standard of living, and more wealth and opportunities for all.   Reducing wealth inequality is actually making a future that is worse off for both your children and mine.  Giving into voter ignorance/envy isn't helping anyone.
Sidenote:
This is an investment Board and I often wonder about the relevance on my posts in the politics section and the above Camus quote has been a guiding light but, for the first time in 52 years, there's this ominous feeling that simply won't go away.
-----
There is an implicit assumption about linearity or quasi-linearity in the argument above.

By raising tax on the "rich", for those who support it, there is the assumption that revenue from taxes will raise linearly, in correlation to the tax increase, which is a flawed assumption (common sense, analysis and historical evidence).

Globally, it's been shown (convincing evidence) that rising inequality has a tendency, especially when certain levels are reached, to slow down or even reverse standards of living. Countries have responded in various ways to this incredibly complex and multi-variable situation and the global correlation is not perfect but, in the US, the evidence shows a much higher and rising inequality and a much higher correlation to levelling standards of living with many components of those standards declining for a large and growing swathe of Americans. This is not a linear correlation and, in fact, likely to be an inverse correlation with higher inequality, reaching the exclusive growth category when prosperity is no longer shared.

I just re-read The Economic Consequences of the Peace, written by Mr. Keynes, and what strikes me is not that he was right but that he was ignored among the growing divide.

I admire Mr. Seth Klarman because of the way he manages money and also because of his character. Some suggest that his motivations are self-serving. I would submit that he does not need to do what he does in the public sphere.

From a recent letter:

"We would also argue that social cohesion is essential for those who have capital to invest. Businesses need a long-term horizon to plan, and social unrest makes planning more difficult. It can't be business as usual amidst constant protests, riots, shutdowns, and escalating social tensions. It is not hard to imagine worsening social unrest among a generation that is falling behind economically and feels betrayed by a massive national debt that was incurred without any obvious benefit to them. If things get bad enough, we could see taxes once again raised to confiscatory levels. We should all be rooting for (and acting to support) social cohesion and a renewal of the American dream."

To the question: "Does this matter? We think it does." I do too.

I just hope we can come together on this but, today, I'm just a guy who needs to shovel snow and make a passageway in order to have propane gaz delivered to my house.

Have been reading on PG&E, VMD and even Mimedx and should be able to show some work soon.
Title: Re: Causes of wealth inequality?
Post by: SharperDingaan on January 26, 2019, 08:41:56 AM
It's useful to look at Western Europe by way of comparison.
Historically, their 'normal' state of affairs has been instability and war.

Country X invaded country Y, killed off a large portion of their combined 'younger' demographic (soldiers/civilians doing the dying), and raised to the ground a large part of their joint infrastructure in shellings, bombings, etc. A 'winner' is declared, war's over, capitalists get rich 'financing/rebuilding' the infrastructure, and labour gets rich as there's lot of work for the fewer able-bodied remaining. Works great for a time, the 'war' cycle repeats, and there is a new 'distribution of wealth'. Wealth through war/industrial revolution, 'redistributed' every 100 years or so, and the familiar 'rags-to-rags in 3 generations' repeating itself.

Stop/Slow-down the 'redistribution', and what happens?
The UK experience is social immobility, land held 'permanently' by the ruling class, and decay via in-breeding; modern-day feudalism.
- Best/brightest move 'outside' the core to manage the 'empire', as the best 'opportunities' are no longer 'at home'.
- Accumulation of disenfranchised who 'cannot/will not' move elsewhere, as their standard of living would be lower.
- Outlets for the disenfranchised to 'vent'; the 'classic' example being the 'Yobo', and the weekly violent football match.

Collectively we've dialed back the 'war thing', but the cost has been higher 'social immobility'
- The 'rich' have become progressively more 'entrenched', and disenfranchisement has risen accordingly.
- And the 'vent' outlet has become 'social media', violent protest ('Yobo's) - and the push for change (Brexit, Trump, etc).
Charming.

Peace is a great experience, but a fragile one.
Unfortunately, until we find something for the collective disenfranchised of the world to do, it's probably also temporary.

There is a reason why the folks raising the alarm are all 'old'.
They were 'there' the last time this happened, and survived it to tell the tale.

SD




Title: Re: Causes of wealth inequality?
Post by: meiroy on January 26, 2019, 04:49:13 PM
rkbabang,

I think we pretty much agree on everything, other than that I see high-inequality as anti-capitalistic in the real world due to its inherent market distortions and corruption.


I also think that Trump being elected at the same time that you get Brexit and populism in Europe is not a coincidence and not a result of "bad choices" or "ignorance".

There is a large section of the population that has been impacted for the past few decades for various economic reasons.

These people can vote. It has consequences.







Title: Re: Causes of wealth inequality?
Post by: Spekulatius on January 27, 2019, 07:24:14 AM
We have nuclear weapons, there is no need for 900 military bases in 153 countries.

Then when something like 9/11 happens what do you do? Drop a nuke on Afganistan?

The people who did it were dead. They were after one other guy. Put a price on his head sufficient to bring him in. We spent 7 trillion dollars on the war on terror, a $5B price would have been a bargain and his head would have been on the President's desk in a month. Ron Paul actually suggested this, but Americans were too busy beating the war drums like savages to hear.

EDIT: http://ronpaulquotes.com/chapters/2001-100.html

The war on terror was a huge mistake. You can fight terrorist with an army. Same with the war on drugs. Osama bin Laden was inconsequential after 9/11. If anything, he was a huge liability for Al Kaeda. Putting a price on his head or forming a Kidon unit like the Mossad would have been a more effective, albeit very un-American way to fight terrorists.
Title: Re: Causes of wealth inequality?
Post by: shalab on January 27, 2019, 09:03:09 AM
There are many reasons but it is instructive to see what is going on in Canada vs USA

Canada has higher median wealth and income than the median American. The median wealth is significantly higher in Canada compared to the United States. It is a very interesting case study.

https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult

Some of the reasons are as mentioned by DTEJD where people don't have or follow an investment plan.

Then we have the US system working against its own students:

https://www.nytimes.com/2019/01/24/technology/computer-science-courses-college.html

If there is more demand for CS as opposed to middle eastern history, there should be more focus on CS. However, the Universities have many quotas and don't want to invest to help the citizens. The interested candidate can't get to do what they are interested in.

Jamie Dimon also weighed in on it:
https://www.youtube.com/watch?v=BNY0syGEoyY
Title: Re: Causes of wealth inequality?
Post by: LC on January 28, 2019, 09:48:42 PM
Another symptom:

https://www.commondreams.org/news/2019/01/28/citing-750-million-tax-break-amazon-while-students-suffer-teachers-walk-out-virginia
Title: Re: Causes of wealth inequality?
Post by: rkbabang on January 29, 2019, 09:16:58 AM
We have nuclear weapons, there is no need for 900 military bases in 153 countries.

Then when something like 9/11 happens what do you do? Drop a nuke on Afganistan?

The people who did it were dead. They were after one other guy. Put a price on his head sufficient to bring him in. We spent 7 trillion dollars on the war on terror, a $5B price would have been a bargain and his head would have been on the President's desk in a month. Ron Paul actually suggested this, but Americans were too busy beating the war drums like savages to hear.

EDIT: http://ronpaulquotes.com/chapters/2001-100.html

The war on terror was a huge mistake. You can fight terrorist with an army. Same with the war on drugs. Osama bin Laden was inconsequential after 9/11. If anything, he was a huge liability for Al Kaeda. Putting a price on his head or forming a Kidon unit like the Mossad would have been a more effective, albeit very un-American way to fight terrorists.

It's un-modern-American, but it is very traditional American.  Unlike nation building and bombing countries we aren't even at war with, it is a power given to congress in the U.S. Constitution.  Madison used this tactic against the British Navy in 1812.

U.S. Constitution (Article I section 8): “The Congress shall have the power…to declare War, grant Letters of Marque and Reprisal.”