Video about wealth inequality

[SKL]

Comparisons over time?  Are we considering the fact that most "poor" people in the USA have access to conveniences that were considered luxuries - or didn't even exist - a couple generations ago?  Given that these are so cheap nowadays, could an argument be made that the cutoff at which comparisons stop really mattering is a lower income / wealth level than it used to be?  (I know very few would accept that as it's simply not a popular position, but I think it is worth considering.)

 

Forget the obvious examples - cell phones, microwaves....  How about K-12 education?  How relatively well-off did you have to be to get a K-12 education 100 years ago?  Even when my parents were in high school, diplomas weren't that common among the working class.  Being able to stay in school full-time until age 18 is a relative luxury, and it's available to a lot more kids today than historically.

[LucyStoner]

One thing that has made it worse is the housing market collapse. While there have been large rebounds, many people are still underwater or lost their only asset or value on their asset because lots of their neighbors went into foreclosure. The resale of those properties by large banks represents a large wealth transfer from the bottom to the top. Forget trickle down- that's trickle UP for you.

Edited February 17, 2016 by LucyStoner

[LucyStoner]

The fact that I started in poverty as a child and scooted my way into the middle class says very little about where I, or more importantly, my sons, will end up financially. We lost money on our first house in a major way. It's not a huge problem in the grand scheme of things (it's money- not our health or family) but it does make me think that perhaps my family's foothold on the middle class is far less certain than it was 10 years ago. I'm concerned about the educational costs we will face for my sons and I do worry about the loss of income we have experienced trying to meet the needs of kids with special needs.

[Frances]

Comparisons over time? Are we considering the fact that most "poor" people in the USA have access to conveniences that were considered luxuries - or didn't even exist - a couple generations ago? Given that these are so cheap nowadays, could an argument be made that the cutoff at which comparisons stop really mattering is a lower income / wealth level than it used to be? (I know very few would accept that as it's simply not a popular position, but I think it is worth considering.)

 

Forget the obvious examples - cell phones, microwaves.... How about K-12 education? How relatively well-off did you have to be to get a K-12 education 100 years ago? Even when my parents were in high school, diplomas weren't that common among the working class. Being able to stay in school full-time until age 18 is a relative luxury, and it's available to a lot more kids today than historically.

But the necessity of having at least a high school diploma if not more is much more than it was even twenty years ago. There used to be many good blue collar jobs available for those available with a high school diploma or less. Today that is increasingly rare and thought to be one of the growing contributors to the shrinking middle class. It is absolutely true in my state with the almost complete disappearance of the timber industry. And while we may be doing a better job of educating almost everyone than we did 100 yeas ago, we are probably doing much worse than we did in the latter half or third of the 20th century, especially in terms of quality.

 

However, I don't disagree that all of us, including the poor, have access to luxuries that did not previously exist. But I guess I don't understand going from there to inequity doesn't really matter. Are you saying because the poor now have it better than the poor 100 hundred yeas ago, we don't need to worry about the growing inequality?

[idnib]

Comparisons over time?  Are we considering the fact that most "poor" people in the USA have access to conveniences that were considered luxuries - or didn't even exist - a couple generations ago?  Given that these are so cheap nowadays, could an argument be made that the cutoff at which comparisons stop really mattering is a lower income / wealth level than it used to be?  (I know very few would accept that as it's simply not a popular position, but I think it is worth considering.)

 

Forget the obvious examples - cell phones, microwaves....  How about K-12 education?  How relatively well-off did you have to be to get a K-12 education 100 years ago?  Even when my parents were in high school, diplomas weren't that common among the working class.  Being able to stay in school full-time until age 18 is a relative luxury, and it's available to a lot more kids today than historically.

 

I think it's possible for what you are saying to be true (a rising tide lifts all boats, people's standards of living are generally higher than 100 years ago) and it can also be true that all boats have not been lifted equally, and some have been lifted so high it becomes literally incomprehensible (and probably unsustainable).

Edited February 17, 2016 by idnib

[SKL]

However, I don't disagree that all of us, including the poor, have access to luxuries that did not previously exist. But I guess I don't understand going from there to inequity doesn't really matter. Are you saying because the poor now have it better than the poor 100 hundred yeas ago, we don't need to worry about the growing inequality?

 

I believe it is destructive to focus on comparisons instead of the integrity of one's own situation.

 

[Frances]

I believe it is destructive to focus on comparisons instead of the integrity of one's own situation.

 

For me at least, it's not at all about comparing my lot to others who have more and thinking it's unfair. I'm fortunate to be in a very comfortable position and have absolutely no desire to be in the top 1%. My concerns stem solely from the overall aggregate inequality in our country and the resulting detrimental effects on among other things the economy, economic mobility, and democracy.

[Tsuga]

Well I don't agree with your premise that the value of what one produces is relative to one's IQ.

 

I do think there are people who have the same IQ as their neighbor, work the same hours, and produce many times more value.  There are also some people who produce negative value and still get paid / supported.  Some of these people have no idea that they aren't net producers.

 

But another thing to remember is that the people who have a lot of income or wealth on paper usually put that money to use in ways that benefit others.  They may not actually end up living any more comfortably than the average person.  They may actually live less comfortably than average.  While they may not worry about what their health insurance will pay for, they may worry about how they can keep their employees working through economic downturns.  I've known "rich" people who went without pay so their employees wouldn't have to suffer.  I myself have had a series of years when my net take-home pay was negative because the tax man said I made a lot of money and I had to pay tax on money I never saw.  Why didn't I see that money?  Because it was going to build a business and create jobs for people who took home a lot more net pay than I did.  Yet those "wealth charts" don't tell any of that story.

 

That's a rhetorical premise, given to provide a basis for the thought experiment, "What would justify a 100 times difference in income inequality or 1,000 times difference in wealth inequality?" Maybe talent, effort and education? I do not actually believe that income is distributed anywhere near that fairly but life isn't fair.

 

I still think you are talking about the top 20%, the top 10%, the top 5%. But the scale is not linear. Those in the top .1%, i.e. who have more than 99% of people, don't have 99.9 times more. 

 

So doing the math, half the wealth in the US is owned by .1% of the people. Let's say we have $2000 among us. Two people have $500 each, and the other 980 each have about $1.00, a bit more. But that's not even what it's like. It's like one person has some insane amount, like $800 of that $2000, and the next guy $200, and then you get people like me and I've got $1.50 and I'm damn lucky.

 

Here are some summary graphs. As I have said, I have problems with income equity, but I recognize that we are by far not the worst off here in the US. The main issue that I find shocking is wealth inequality. 

 

http://www.theguardian.com/business/2014/nov/13/us-wealth-inequality-top-01-worth-as-much-as-the-bottom-90

Edited February 17, 2016 by Tsuga

[SKL]

That's a rhetorical premise, given to provide a basis for the thought experiment, "What would justify a 100 times difference in income inequality or 1,000 times difference in wealth inequality?" Maybe talent, effort and education? I do not actually believe that income is distributed anywhere near that fairly but life isn't fair.

 

I still think you are talking about the top 20%, the top 10%, the top 5%. But the scale is not linear. Those in the top .1%, i.e. who have more than 99% of people, don't have 99.9 times more. 

 

So doing the math, half the wealth in the US is owned by .1% of the people. Let's say we have $2000 among us. Two people have $500 each, and the other 980 each have about $1.00, a bit more. But that's not even what it's like. It's like one person has some insane amount, like $800 of that $2000, and the next guy $200, and then you get people like me and I've got $1.50 and I'm damn lucky.

 

Here are some summary graphs. As I have said, I have problems with income equity, but I recognize that we are by far not the worst off here in the US. The main issue that I find shocking is wealth inequality. 

 

http://www.theguardian.com/business/2014/nov/13/us-wealth-inequality-top-01-worth-as-much-as-the-bottom-90

 

Your math is wrong.  Half of the wealth in the US is not owned by 0.1% of the people.

 

And again, what does that even mean - wealth?  I think it means your owned assets minus your debt.  It does not say anything about whether you have a comfortable life or not. It doesn't say anything about how you got to a position where your debt is __% of your assets at this moment in time.

 

I really don't care if there are a few people who have a crapload more wealth than I have.  What does it really have to do with me or any of my neighbors?  There is still enough to go around.  Way more than enough (in the US).

 

[Tsuga]

I didn't do that math, I took it from the Guardian.

 

 

 

I really don't care if there are a few people who have a crapload more wealth than I have.

 

Yeah, because you don't have a kid who doesn't have insulin because you can't pay the copay. If you had that problem, you'd care.

 

The point is that there is enough to go around but it's not actually going around.

Edited February 17, 2016 by Tsuga

[Scarlett]

Your math is wrong. Half of the wealth in the US is not owned by 0.1% of the people.

 

And again, what does that even mean - wealth? I think it means your owned assets minus your debt. It does not say anything about whether you have a comfortable life or not. It doesn't say anything about how you got to a position where your debt is __% of your assets at this moment in time.

 

I really don't care if there are a few people who have a crapload more wealth than I have. What does it really have to do with me or any of my neighbors? There is still enough to go around. Way more than enough (in the US).

 

But that is just the point. Why isn't it going around?

[SKL]

But that is just the point. Why isn't it going around?

 

Well, it is going around, but maybe not as much as it should.

 

Why?  Good question.  Maybe because too many people who are doing OK think they poor and need to accumulate more money and stuff before they can part with any of it.  Because of messages like the linked videos, implying that the majority of Americans are on the edge of ruin and starvation, when we are not.  Also because the average American doesn't know how to share.

Edited February 17, 2016 by SKL

[SKL]

Most Americans honestly have too much stuff.  Getting more stuff isn't going to fix anything.

[Frances]

Most Americans honestly have too much stuff. Getting more stuff isn't going to fix anything.

It's not about stuff, I think you are missing the main points many of us are trying to make.

[SKL]

It's not about stuff. It's about access to stable, affordable, healthy housing, stable employment, decent education, decent health care. That's what people care about when they talk about inequality - that many people lack access to the basics needed to live a productive life, and it seems, in the West, to be a problem for more and more people. 

 

When standards of living are increasing for the few, and falling for the many, there's a problem. 

 

But a wealth comparison says nothing about any of that.  A wealth comparison is a comparison of stuff.  Net assets = stuff.

 

People with no wealth and no income have access to health care, housing, and education in the USA.  The subsidized house, the insurance, the education do not figure in the wealth comparison at all.  Nor does steady employment figure in a wealth comparison.

Edited February 17, 2016 by SKL

[Frances]

But a wealth comparison says nothing about any of that. A wealth comparison is a comparison of stuff. Net assets = stuff.

 

People with no wealth and no income have access to health care, housing, and education in the USA. The subsidized house, the insurance, the education do not figure in the wealth comparison at all. Nor does steady employment figure in a wealth comparison.

You're not seriously trying to claim that everyone in the US has affordable healthcare, access to high quality education, and safe, affordable housing? Wealth inequality feeds other types of inequality due to its effects on the economy, economic mobility, and politics.

[Ausmumof3]

Well, it is going around, but maybe not as much as it should.

 

Why? Good question. Maybe because too many people who are doing OK think they poor and need to accumulate more money and stuff before they can part with any of it. Because of messages like the linked videos, implying that the majority of Americans are on the edge of ruin and starvation, when we are not. Also because the average American doesn't know how to share.

I thought the video did a better job of showing that the very wealthy don't know how to share.

[Ausmumof3]

Most Americans honestly have too much stuff. Getting more stuff isn't going to fix anything.

But it's not all about stuff. We live in a world where you can easily afford the dishwasher but struggle to pay the rent or the power bill. Because this consumerist stuff costs so little but the basics cost so much.

 

We have stuff our parents didn't have. A dishwasher. More new clothes. But we don't have a dryer because the power to run it is too much, and although we have lots of clothes they don't look very nice because they stretch out so quickly. We can buy plenty of food but fruit and veg as fresh as they ate costs crazy amounts of money.

 

The advocates for those on benefits etc here point out how even though the inflation rate is low it disproportionately affects those on low incomes because of the specific things that are going up are the essentials. Price of housing, food and electricity goes up whereas consumer goods goes down. So those who can afford the consumer goods are better off whereas those who couldn't afford them anyway can't afford the basics anymore. And not only that but they may have two people working instead of one to afford those basics which previously came from one income. So there's less time to make and mend.

 

While education itself is free (relatively - school supplies and transport still have to be provided) families are still required to support the kids that are in education for longer where previously they would have started contributing to the family income.

[MSNative]

I thought the video did a better job of showing that the very wealthy don't know how to share.

This shows a different view.

http://www.cnbc.com/2014/10/05/how-much-do-the-ultra-rich-give-to-charity.html

[MSNative]

But the necessity of having at least a high school diploma if not more is much more than it was even twenty years ago. There used to be many good blue collar jobs available for those available with a high school diploma or less. Today that is increasingly rare and thought to be one of the growing contributors to the shrinking middle class. It is absolutely true in my state with the almost complete disappearance of the timber industry. And while we may be doing a better job of educating almost everyone than we did 100 yeas ago, we are probably doing much worse than we did in the latter half or third of the 20th century, especially in terms of quality.

 

However, I don't disagree that all of us, including the poor, have access to luxuries that did not previously exist. But I guess I don't understand going from there to inequity doesn't really matter. Are you saying because the poor now have it better than the poor 100 hundred yeas ago, we don't need to worry about the growing inequality?

In my area blue collar jobs are hard to fill. There are lots of opening for trained workers and not enough workers to fill them. And most of these jobs can't be outsourced-plumbing, hvac, electrical, welding, etc. Happily there is also talk of bringing back some vo-tech in our high schools.

[Pam in CT]

re philanthropic giving by Ultra High Net Worth individuals

This shows a different view.
http://www.cnbc.com/2014/10/05/how-much-do-the-ultra-rich-give-to-charity.html

 

Yes, giving 10% of net worth to charitable causes sounds like a lot, doesn't it? (from the linked article)

 

The typical ultra-high net worth (UHNW) philanthropist donates $25 million over the course of their lifetime, according to a new study, more than 10 percent of their net worth.

 

 

Actually, a while back Warren Buffett pioneered the "Giving Pledge," under which billionaires pledge to give away half their net worth over the course of their lifetimes.  So far more than a hundred billionaires (not all American) have signed up.  Some of the associated foundations (Gates, Bronfman) have been fairly public about what causes and initiatives the funding is going to; others have done more on an anonymous basis and/or directed much of it to individual universities such that the impact is less newsworthy.

 

Undoubtedly this has made a critical impact to the affected initiatives.  I am consistently impressed with the Gates Foundation in all sorts of respects.

 

But here's the thing: the wealth inequality in the OP still exists despite those charitable efforts.  Even despite Bill Gates and a sizable club of his ilk giving away more than half their fortunes, it still hasn't moved the mark.  In fact, inequality is still increasing.  

[HomeAgain]

My only problem is government-subsidized wealth.

 

Say you have a CEO of a company making a TON.  Yet the ordinary workers at the company don't make a living wage, they're paid minimum wage, which at 40 hours a week is still not enough to pay for a home, medical care, transportation, and food, forget any extras.  The company can pay this wage because the government will pay the difference in the form of food stamps, section 8 housing, medicaid. This is not okay.  A company shouldn't be allowed to get away with paying their people so little so they can step on their backs.  40 hours a week in any job should be a living wage, and companies should be held to it.

[ktgrok]

That's correct, payments are not based only upon skill, talent, or effort, but value, real or perceived. I'm not saying things are not terribly lopsided right now, and shouldn't be fixed. I'm just saying we often pay based on value to us, and we should include that in our calculations.

 

Right, but why would a CEO or Wall Street Banker be valued more now than 40 years ago? Especially, why would one be valued 100 times MORE than they were valued in the 50s? Not a bit more, not twice as much, but exponentially more. I'm not saying CEOs should make as much as a factory worker. But the fact that the wealth gap between those two has increased at an almost incomprehensible rate is what we are talking bout. 

[ktgrok]

I'm thinking at least one person in this thread didn't actually watch the whole video. 

[Carrie12345]

I don't think equality of either wealth or income is an ideal worth striving for.

 

If we spent less energy comparing we'd have more energy for finding true happiness.

 

When my newly single mom worked full time plus part time plus special events, received no child support, accepted charitable boxes of food, relied on carpooling because car repairs were out of reach for several months, boiled bath water on a stove because a hot water heater was a thing of dreams, and took care of 3 kids, I don't think she had any energy left for comparing.  I know I was busier hurting for her than comparing.  Having watched her carefully, I'm pretty sure true happiness was nowhere near on her radar while she was consumed with maintaining secure housing, getting the electricity turned back on, and putting food in the fridge.  On the plus side, her full time job provided reasonable health insurance.

 

If this had happened to our family in 2016 instead of the '90s (which were by no means easy, but I've run the comparisons,) if she didn't just happen to have a coworker who lived nearby, if I had been too young to babysit, if we didn't have any family within a reasonable distance, we could have been so much worse off.

 

A modest amount of wealth and a fair income is most definitely an ideal worth striving for when it means better odds of remaining safe, healthy, and fed through difficult times.

[Pam in CT]

re political resistance to personal transfers vs. corporate subsidies:

 

 

My only problem is government-subsidized wealth.

 

Say you have a CEO of a company making a TON.  Yet the ordinary workers at the company don't make a living wage, they're paid minimum wage, which at 40 hours a week is still not enough to pay for a home, medical care, transportation, and food, forget any extras.  The company can pay this wage because the government will pay the difference in the form of food stamps, section 8 housing, medicaid. This is not okay.  A company shouldn't be allowed to get away with paying their people so little so they can step on their backs.  40 hours a week in any job should be a living wage, and companies should be held to it.

Yes, this is a major factor driving inequality.

 

Here is an article in Forbes (again, a generally business-friendly venue) that addresses corporate subsidies and our bipartisan comfort level with them (there are few other issues on which the two parties are so closely aligned): Where is the Outrage over Corporate Subsidies?  The author dishes out in all directions, including at the above-mentioned philanthropist billionaire Warren Buffett, and concludes:

 

 

I don’t blame the corporations. They act rationally. If someone gives you $1 billion, you take it. The blame lies with us. The sheer size of the corporate welfare system should spark outrage whether we are conservatives, liberals, or libertarians. And that outrage should be reflected in how we vote.

 

It does appear, though, that government transfers to business is viewed through quite a different lens than transfers to people.

 

[Guest]

I haven't watched the video. Does it offer a solution? Those CEO's are paid by someone, right? Obviously someone one thinks they are worth eleventy billion dollars a year. Should there be caps on pay? Mandatory giving for billionaire?

[ktgrok]

I haven't watched the video. Does it offer a solution? Those CEO's are paid by someone, right? Obviously someone one thinks they are worth eleventy billion dollars a year. Should there be caps on pay? Mandatory giving for billionaire?

 

No, but one solution or partial solution is to change our tax structure. Right now wealth that comes from investments is taxed very differently than wealth from wages. This could be changed. But really, finding a solution comes after acknowledging the severity of the problem. I'd advise watching the video, you may be surprised. 

[Bluegoat]

I don't think equality of either wealth or income is an ideal worth striving for.

 

If we spent less energy comparing we'd have more energy for finding true happiness.

 

It isn't an ideal that gets pulled out of someone's behind, it's an ideal of fair pay for work, and fair democratic process.

 

Let's say you have a widget company.  It, along with the economy in general, is more profitable than it was 50 or 70 years ago.  But how is that spread out over the company?

 

Well, the salary of the actual workers has declined, as has benefits and job security.  THey have less resilience in bad times, they have less purchasing power, they are unlikely to be able to make choices to better their position because they are living closer to the edge.

 

On the other hand, the salary of executives has increased significantly.  That is to say - all the extra profits the company is making are flowing to the executive class.

 

What we should expect is that increasing profits would be spread fairly evenly over the whole of the company - everyone there is contributing to the extra productivity and is necessary to do the work.  The workers are not working less and the executives more than in the past.  But somehow, the increase in profits are all being funneled into the pockets of the executives.  What is going on with that?

 

Well, it is pretty simple - those are the people who have the power in the relationship.  They decide about remuneration, they make the decisions about who gets paid what.  Workers are increasingly powerless as their wages and benefits and security have been chipped away, and as the power of unions to protect them have been chipped away.  Other industries are the same, so they sit tight and hope they don't lose their jobs and health insurance.  And as the power of the workers decreases and the executive class increases, it also impacts their respective ability to influence government..

 

There are two reasons why this is bad.  The first is that it is immoral - it is stealing the labour of the employees.  And we know historically that this type of management tends to lead to really disgusting employment practices, poverty, and really a kind of tyranny that we would never tolerate from government

 

The second is that it is ultimately bad for the economy as a whole.  It makes for an unstable economy prone to crisis after crisis, and if it's followed to its conclusion you end up with a wealthy class and an impoverished class, who has no purchasing power to drive the economy.  There is a reason that a large middle class is part of a healthy economy. 

[leeannpal]

Annoying video.

I know too many people who came into the game with $0 wealth (or negative) and are doing just fine.

And I know too many people that, at one time, did have some money, and now are not doing just fine.

[Bluegoat]

Well, it is going around, but maybe not as much as it should.

 

Why?  Good question.  Maybe because too many people who are doing OK think they poor and need to accumulate more money and stuff before they can part with any of it.  Because of messages like the linked videos, implying that the majority of Americans are on the edge of ruin and starvation, when we are not.  Also because the average American doesn't know how to share.

 

I am not sure how this applies to the "average" American but not the ones at the top. 

[Bluegoat]

re philanthropic giving by Ultra High Net Worth individuals

 

Yes, giving 10% of net worth to charitable causes sounds like a lot, doesn't it? (from the linked article)

 

 

Actually, a while back Warren Buffett pioneered the "Giving Pledge," under which billionaires pledge to give away half their net worth over the course of their lifetimes.  So far more than a hundred billionaires (not all American) have signed up.  Some of the associated foundations (Gates, Bronfman) have been fairly public about what causes and initiatives the funding is going to; others have done more on an anonymous basis and/or directed much of it to individual universities such that the impact is less newsworthy.

 

Undoubtedly this has made a critical impact to the affected initiatives.  I am consistently impressed with the Gates Foundation in all sorts of respects.

 

But here's the thing: the wealth inequality in the OP still exists despite those charitable efforts.  Even despite Bill Gates and a sizable club of his ilk giving away more than half their fortunes, it still hasn't moved the mark.  In fact, inequality is still increasing.  

 

 

I think one of the things being glossed over here is the means of production.

 

The people who own the majority of it are the ones in teh very high wealth percentiles.  That is totally different than owning consumer goods, or even a home you live in but which makes you no money.  The middle classes and poor are dependant on wages.  The higher groups are not dependant on what they personally can make - they have the power, through money, to harness other people's work as well.  Not only through owning things like factories either, because increasingly with modern banking  money itself is the means of production. (Something which I think it is no mere chance that every major religion forbids.)  There is no way for someone like me, despite living comfortably, to increase my wealth substantially by just moving money around, but for the super-wealthy it is possible for them to do so at astonishing rates. 

[Pam in CT]

re why current levels of inequality are "bad"

It isn't an ideal that gets pulled out of someone's behind, it's an ideal of fair pay for work, and fair democratic process.

 

......

 

There are two reasons why this is bad.  The first is that it is immoral - it is stealing the labour of the employees.  And we know historically that this type of management tends to lead to really disgusting employment practices, poverty, and really a kind of tyranny that we would never tolerate from government

 

The second is that it is ultimately bad for the economy as a whole.  It makes for an unstable economy prone to crisis after crisis, and if it's followed to its conclusion you end up with a wealthy class and an impoverished class, who has no purchasing power to drive the economy.  There is a reason that a large middle class is part of a healthy economy. 

 

Yes to both.

 

It is the second reason -- that in the US we have reached levels of inequality that are unsustainable in business and macroeconomic terms, that is driving interest in inequality coming from places like Harvard Business School and Forbes.  They are not approaching the issue from a moral lens (not to suggest the people in such organizations lack morals; just that morality isn't their analytical lens).

 

But our economy is now driven, overwhelmingly, by consumer demand.  And the direct consequence of sustained and increasing inequality over 30 years is that more and more people have less and less purchasing power.  It's a sluggish sink to the bottom: New businesses flounder because too many people can't afford what they're trying to sell.  

 

Aggressive credit card, sub-prime lending, "interest-free!" auto loans etc can mask the fundamentals for a while at the cost of rising mountains of personal debt, but increasingly leaders in the business community are recognizing what Henry Ford observed way back when: if we want people to buy the things we are trying to sell, they need to earn a living wage.

 

 

re tilt of current tax structure

Just how long do you think Joe Six Pack is going to last? His home is taxed heavily to pay for pensioners who dont even work 25 years, he has no help for college costs for his child, and you want to tax his investments, which are likely company stock? No point in being a skilled middle class worker in your economy.

The thing is, the actual effective tax rate of the Ultra High Net Worth individuals is substantially lower than poor Joe Six Pack's.  Because loopholes and tax havens and use of trusts and the diligent efforts of (highly paid themselves!) financial planners.  

 

 

 

Again, for me the most striking thing about the OP video and the underlying data is the gap between what respondents believed to be current inequality levels, and actual inequality levels.  That suggests that the electorate is forming views based on a significantly inaccurate understanding of the magnitude and nature of the issue.

[Bluegoat]

I haven't watched the video. Does it offer a solution? Those CEO's are paid by someone, right? Obviously someone one thinks they are worth eleventy billion dollars a year. Should there be caps on pay? Mandatory giving for billionaire?

 

There are quite a few possibilities that have been offered in other places.

 

Some are straightforward - in some places there are laws that give a proportion of wage differential allowed in a company.  They usually say something like the highest paid worker can only be paid such a % more than the lowest paid.

 

You can also look at it more indirectly, saying, what is the cause of this disparity.  The way the money system works at a basic level is often seen as a serious contributor of the problem.  So for example people who have a lot of money can make more simply by trading it, or stocks, with no intention of actually building or producing anything  - they are just moving money around. This is why some have suggested that a tiny tax on transactions is a solution - enough that it is worthwhile for someone who is really investing, but not just to move money from place to place to make it seem to grow artificially. 

 

Falling union membership and weakening of unions is usually seen as related. Others have suggested changing laws around corporations which enable them to grow very big, or even further creating an economy where far fewer people are employees and more work for themselves.  These things all are directed toward reducing or eliminating the ability of those who own the means of production siphoning off the labour of their employees.

 

Limiting the ability of money to influence government is huge, though it is in many ways a chicken and egg problem, and some argue that in the US it would require a constitutional overhaul that is unlikely.

 

What is scary is that this kind of wealth and power inequality tends, historically, to lead to social breakdown and revolution.

[EKS]

From things I am seeing, smaller government would make it easier for the little guy to make it!! I have friends in different areas trying to make a go of small businesses and it is hard because of all the red tape.

 

Small business don't fail due to governmental red tape.  They fail because for whatever reason they are unable to secure customers.  It is as simple as that.

[Bluegoat]

re why current levels of inequality are "bad"

 

Yes to both.

 

It is the second reason -- that in the US we have reached levels of inequality that are unsustainable in business and macroeconomic terms, that is driving interest in inequality coming from places like Harvard Business School and Forbes.  They are not approaching the issue from a moral lens (not to suggest the people in such organizations lack morals; just that morality isn't their analytical lens).

 

But our economy is now driven, overwhelmingly, by consumer demand.  And the direct consequence of sustained and increasing inequality over 30 years is that more and more people have less and less purchasing power.  It's a sluggish sink to the bottom: New businesses flounder because too many people can't afford what they're trying to sell.  

 

Aggressive credit card, sub-prime lending, "interest-free!" auto loans etc can mask the fundamentals for a while at the cost of rising mountains of personal debt, but increasingly leaders in the business community are recognizing what Henry Ford observed way back when: if we want people to buy the things we are trying to sell, they need to earn a living wage.

 

 

re tilt of current tax structure

The thing is, the actual effective tax rate of the Ultra High Net Worth individuals is substantially lower than poor Joe Six Pack's.  Because loopholes and tax havens and use of trusts and the diligent efforts of (highly paid themselves!) financial planners.  

 

 

 

Again, for me the most striking thing about the OP video and the underlying data is the gap between what respondents believed to be current inequality levels, and actual inequality levels.  That suggests that the electorate is forming views based on a significantly inaccurate understanding of the magnitude and nature of the issue.

 

With regard to personal debt - here in Canada we avoided the worst of the financial crises that individuals in the US did - we had no housing crash.  But I just heard on the radio today that there have been significantly increasing defaults on car loans.  People have been encouraged and encouraged to keep up using low interest debt, but in the end it still becomes sustainable to maintain a particular lifestyle.

[Pam in CT]

re difficulties faced by small businesses:

 

 

Small business don't fail due to governmental red tape.  They fail because for whatever reason they are unable to secure customers.  It is as simple as that.

 

And increasingly, it is coming to the attention of leaders in the business community, approaching the question from business terms, that among those reasons is that too many people are earning too little or living too precariously to afford much beyond the bare basics.  

 

That is the business concern that our current levels of inequality are unsustainable. 

 

 

[Bluegoat]

Small business don't fail due to governmental red tape.  They fail because for whatever reason they are unable to secure customers.  It is as simple as that.

 

Well, maybe.  In fact I think I agree with you to a large extent - red tape in and of itself doesn't stop people. But I can think of examples where it has an impact.

 

There was a fellow for example who opened a business in my dad's litle town, a cafe.  He bought a small place that had been a cafe before and was still set up for it.  But - he was required to significantly alter things - like the bathrooms, to mmet the new regulations.

 

Now, these were pretty silly things - the place was perfectly fine before, people had no problems having a pee, it met the standards that had been set earlier.  And while I don't doubt that there were reasons for the new standards, I have doubts about how they really improved things concretely in that setting.  But he had to go significantly into debt to do a number of renovations on a building that had been fine for the last owner, and it was impossible for him to get out of that.

 

Now, I think we could say he should have known that before and not gone in without more money, but that still means that there would have been no new business there.  As an individual who wants to set up a business, a greater amount of cash is necessary, a larger cash flow once the business is set up.  Fewer regular people are able to set up such a business.  And that has an effect on the kind of economy we have - it means for example in that small town it is hard to have a local run café and so they have a cheap chain coffee  joint instead.

[ktgrok]

I think if anyone is commenting without watching the video, they probably should watch it. The title of the video refers to the fact that 90 percent of us don't know what the actual inequality looks like. So commenting on something when more than likely you don't know what the actual figures are may be just muddying the matter. I mean, you can still comment, I'm not queen of the thread or anything, lol, but you might want to make sure you are talking about what you think you are talking about as far as the extreme we have gotten to. 

[Serenade]

 40 hours a week in any job should be a living wage, and companies should be held to it.

 

 

Even jobs that were never meant to be full-time jobs, like fast food restaurant jobs?  

[Bluegoat]

Even jobs that were never meant to be full-time jobs, like fast food restaurant jobs?  

 

Many people work in fast food full time, but yes.  Living wage is calculated per hour. People should get a living wage for the number of hours they work.  They are not working less than someone else who works an hour at another's job. 

 

If they work part time it will only cover a portion of their needs - they will need another means of support like parents or a second job.  Which is fair enough.

 

If the job is not productive enough to pay a living wage, than that is on the employer - he has created an unsustainable business.  An employee should not pay for his lack of business ability - she is doing an hours work and should get what her labour is worth.

 

There may be some jobs in society that are very important, but not financially sustainable, and then we as a society need to look at somehow funding those in another way.  Teachers are an example of that - we publicly fund education because it is so important, but most people could not afford to privately pay a teacher.  So - we supplement that.  Here in Canada we do something similar with health care.  We might also choose to support particular persons with limitations.

 

Some places also have special wages for very young people or apprentices, which is perhaps worth considering though there are also good arguments against it.

 

But in many cases, as with fast food, if it is not financially sustainable, maybe we don't really need people doing those things.

[ChocolateReignRemix]

Even jobs that were never meant to be full-time jobs, like fast food restaurant jobs?  

 

Who are we counting on to work those jobs if they don't pay a wage someone can survive on? 

 

We currently have an issue with underemployment (those qualified for higher skilled jobs but cannot find one) who are forced into those types of jobs.  Do we simply continue to subsidize the cost of a Big Mac by using tax dollars to provide assistance to people in those jobs?

[ktgrok]

Even jobs that were never meant to be full-time jobs, like fast food restaurant jobs?  

 

I often hear people say those jobs are just for high school kids and such, just after school jobs. So how come they are open all freaking day? Seems they are actually full time jobs for people after all. 

[PineFarmMom]

Small business don't fail due to governmental red tape. They fail because for whatever reason they are unable to secure customers. It is as simple as that.

Really? Always? You are sure of this because....

 

I've had discussions with my self-made father who ended a business that was paying two employees because of all the red tape. It was just too time consuming to keep up with. No, not buying your "simple as that."

 

My father has done well financially but has done better in businesses that don't take on employees.

 

We are small business owners and have purposed to have a business model that will not have employees so we won't have to deal with the mess of it all!

Edited February 17, 2016 by Texas T

[ChocolateReignRemix]

Really? Always? You are sure of this because....

 

I've had discussions with my self-made father who ended a business that was paying two employees because of all the red tape. It was just too time consuming to keep up with. No, not buying your "simple as that." We are small business owners and have purposed to have a business model that will not have employees so we won't have to deal with the mess of it all!

 

Can your provide evidence other than vague anecdotes that "red tape" is what is stifling small business growth?

 

I am also curious as to what "red tape" was so harmful to a two employee business.

[HomeAgain]

Even jobs that were never meant to be full-time jobs, like fast food restaurant jobs?  

 

Yes.  A thousand times yes.

 

Say you work 20 hours a week at a fast food job.  That 20 hours of your life should not be DONATED to a company, but should pay for half of life's basic requirements that week.  Work 20 hours somewhere else, and you have the ability to pay for your life.  My hours are worth more than poverty.  I should be able to do without government handouts if I work 40 hours a week.  Why should McD's get the ability to deny that? 

 

Kids who only work 15-20 hours a week are not working to support themselves, but should have the dignity of getting a real wage for their work instead of capitalizing on the fact that they're not supporting themselves yet and basing wages off of that.

[goldberry]

I believe it is destructive to focus on comparisons instead of the integrity of one's own situation.

 

Well, it is going around, but maybe not as much as it should.

 

Why?  Good question.  

 

Our system is set up to allow the very wealthy to have more political influence than the less wealthy.  Focusing on your own solution is admirable, but does not address the problem of the very wealthy using their dollars to create more and more laws and regulation that favor them and increase their wealth even more.  Increased wealth = more political influence = further increased wealth.  That is why the problem is growing exponentially.

 

For those that think government regulation is the problem....  it is interesting that sure isn't hurting those at the top too much.  They are able to use their political influence (aka money) to influence those things in their favor.  They don't care about what happens further down the line.

 

Focusing on your own solution does not address the problem of the entire system being increasingly "stacked" in favor of the already wealthy.  The only thing that will change that is more people asking "Why?"  But I don't think even that will change much, because those at the top of the system are very good at putting out propaganda that hides the real issues.  

Edited February 17, 2016 by goldberry

[EKS]

Really? Always? You are sure of this because....

 

Because it all comes down to money.  If a business has enough customers, it has enough money to deal with paying someone to deal with red tape.  That would be part of the cost of doing business.

[Frances]

Most Americans honestly have too much stuff. Getting more stuff isn't going to fix anything.

Given your profession, I think you know wealth is not measured by how many cell phones, computers, or other stuff someone has. Unless you really believe most Americans have too many stocks, bonds, real estate and business investments, savings, etc, you can't argue they have too much of the kind of "stuff" the graph is portraying.

[Pam in CT]

re concept of "living wage"

 

Even jobs that were never meant to be full-time jobs, like fast food restaurant jobs?  

This is a good question, that loops back to very long term, structural changes in our economy, one of which has been a (very long, structural) shift away from the making-of-goods towards the providing-of-services.

 

 

There are different ways to look at the issue.  One is rooted in ethics (Bluegoat covered several different points here; I'm clipping just to feature this one):

Many people work in fast food full time, but yes.  Living wage is calculated per hour. People should get a living wage for the number of hours they work.  They are not working less than someone else who works an hour at another's job. 

 

...

 

There may be some jobs in society that are very important, but not financially sustainable, and then we as a society need to look at somehow funding those in another way.  Teachers are an example of that - we publicly fund education because it is so important, but most people could not afford to privately pay a teacher.  So - we supplement that.  Here in Canada we do something similar with health care.  We might also choose to support particular persons with limitations.

 

Some places also have special wages for very young people or apprentices, which is perhaps worth considering though there are also good arguments against it.

 

But in many cases, as with fast food, if it is not financially sustainable, maybe we don't really need people doing those things.

The idea of a "living wage" is that for people who do work full time hours, it's enough to live on.  If some people work full time and others part time at the same place doing the same work at the same level of competence, then (says ethics) their hourly wage should be comparable.

 

Some occupations don't in a free market generate enough resources to pay a "living wage" (Bluegoat noted broad based-education).  Then (says ethics) society may have an interest in stepping in to subsidize.

 

Some populations (people with disabilities, very young adults just entering the job market) may not have the capacity to do the same work at the same level of competence.  Then (says ethics) society may have an interest in stepping in to subsidize.

 

 

 

Another way to look at the issue is to recognize the "Walmart Welfare" subsidies that enable low-wage chains to pay less than a "living wage":

Who are we counting on to work those jobs if they don't pay a wage someone can survive on? 

 

We currently have an issue with underemployment (those qualified for higher skilled jobs but cannot find one) who are forced into those types of jobs.  Do we simply continue to subsidize the cost of a Big Mac by using tax dollars to provide assistance to people in those jobs?

We tend think of "public assistance including food stamps, Medicaid and subsidized housing" as benefitting individuals, not companies like Walmart (in the linked article, though the same principle applies equally to low-wage fast food outlets).  But it is those programs that enable low-wage chains to pay so little.

 

And also that enable us, as consumers, to "benefit" from low prices,  (Except, we pay in other ways -- through taxes to support the enabling corporate and indirect corporate subsidies, and also through the slow sink to the bottom that inequality and spiraling debt loads and suppressed purchasing power associated with NOT having "living wages" all fuel...)

 

 

And yet another way to look at the "living wage" issue is how explicit strategies on the part of businesses have created a double-the-size, half-the-hours workforce

I often hear people say those jobs are just for high school kids and such, just after school jobs. So how come they are open all freaking day? Seems they are actually full time jobs for people after all. 

Many low wage chains are open all day and into the night -- hours that certainly could sustain full-time employees -- but  intentionally manage full time hours with multiple shifts of part time employees, rather than a smaller number of full time employees.  To say such jobs were "never meant" to be full time is to accept this practice -- with all its implications on underemployment and ineligibility for medical insurance and inefficiencies of transportation costs and time and income precariousness for hardworking people who often want more hours, as Normal.

 

The idea of a "living wage" is -- it's not normal.  It's a self-defeating spiral that is undermining the health of our society.

 

The Harvard Business School study linked upthread raised what it calls business’ “aversion to full time hires†(p. 22) as a factor driving inequality.  Again: they are, reflexively, by orientation, all about business flexibility to reduce costs and manage "nimbly."  Yet even they see it as a growing problem.