Author Topic: Causes of wealth inequality?  (Read 7090 times)

Rasputin

  • Full Member
  • ***
  • Posts: 234
Re: Causes of wealth inequality?
« Reply #10 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...


Cigarbutt

  • Hero Member
  • *****
  • Posts: 1682
Re: Causes of wealth inequality?
« Reply #11 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

meiroy

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 792
Re: Causes of wealth inequality?
« Reply #12 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.

meiroy

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 792
Re: Causes of wealth inequality?
« Reply #13 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.

rb

  • Hero Member
  • *****
  • Posts: 2922
Re: Causes of wealth inequality?
« Reply #14 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.

Jurgis

  • Hero Member
  • *****
  • Posts: 4540
    • Porfolio
Re: Causes of wealth inequality?
« Reply #15 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)
"Before you can be rich, you must be poor." - Nef Anyo
--------------------------------------------------------------------
"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"

DTEJD1997

  • Hero Member
  • *****
  • Posts: 1717
Re: Causes of wealth inequality?
« Reply #16 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.

petec

  • Hero Member
  • *****
  • Posts: 1824
Re: Causes of wealth inequality?
« Reply #17 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.

rkbabang

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 4319
Re: Causes of wealth inequality?
« Reply #18 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? 

rkbabang

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 4319
Re: Causes of wealth inequality?
« Reply #19 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.