Highroller: agree entirely that decrying fascism while praising the soviets is odd at best. Just that they are equivalently bad not worse. Although "I'm only as bad as the nazi" is a pretty bad place to be.
I'm a little surprised by the number of people on this thread that seem to think (money/wealth) is the (best/only) motivation for human beings to try their best. Isn't money near the bottom of Maslow's hierarchy of needs? (Though, I'm sure people disagree with Maslow)
Regardless, all of the data I've seen shows that only a certain amount of money is necessarily for happiness. After that, the increase to well-being with increased wealth is marginal. I can only assume having a "super-wealthy" class is unnecessarily for the production value of a society. Why do we need large Wealth Inequality to motivate people? Some Wealth Inequality is fine, but why do people seem to think the difference between the have's and have-not's must be big for increased productivity? It doesn't seem to jive -psychologically- with how you'd best want to motivate people to their greatest potential, which seems to be the goal.
Besides, isn't there a certain nihilistic quality to desire wealth for its own sake?
I can only assume having a "super-wealthy" class is unnecessarily for the production value of a society. Why do we need large Wealth Inequality to motivate people? Some Wealth Inequality is fine, but why do people seem to think the difference between the have's and have-not's must be big for increased productivity?
Has anyone actually argued in favor of the notion that wealth inequality must be large? I can't find it in this thread, at any rate.
I would reverse the question: why is wealth inequality bad? I grew up in the 90s, where every single day, Bill Gates was making more money than I'll make in my entire life. The chasm of wealth inequality between us was growing at a staggering rate. And yet, I didn't understand myself as being any worse off for it. Never mind the fact that he wasn't actually taking any of that money from me unless I chose to buy from him -- it actually seemed I was vaguely better off, in the sense that I was able to benefit from all the positive externalities surrounding market activity in a rapidly growing comp sci and tech sector. As staggering as his personal wealth was, it seemed like he was only keeping a tiny sliver of the total economic value he'd generated, whereas the overwhelming majority of the economic activity taking place was actually accruing to the benefit of parties other than Gates and his shareholders.
Now, I don't mean to suggest that none of this would have been possible without one super-rich guy at the top being able to take a sliver of the pie. I only mean that I don't see any moral problem with it playing out that way, nor can I think of a replacement system that doesn't have severe moral problems.
So while I don't think it's true that wealth inequality must be large, I don't think it's evil that it is contingently large. When I see a person (in a free, capitalistic economy) who has made a substantial fortune for himself, I also see a person who has generated tremendous economic activity for others. You can't have one without the other.
Let me preface this: I'm a libertarian. I think socialism is bad policy because it fails to take into account the fact that human beings respond to economic incentives. You create bad incentives when you make it less profitable to work hard and take economic risks (by imposing high taxes) and you make it more profitable to work less or not at all (by providing more free and subsidized government services). This creates a one-two punch of bad results: (1) your country lags behind in innovation and economic growth because you have fewer entrepreneurs and fewer man-hours of labor available; and (2) this causes tax revenues to fall and makes your socialist system harder to sustain.
Other people have voiced the same mindset on this thread. But, I think bitterroot articulated it best, and I don't want to strawman the opposing view by quoting someone else.
I would reverse the question: why is wealth inequality bad?
I didn't say it's inherently bad. I'm just asking why people feel it's the go-to motivational tool to increase the productivity of a society or individual; and, I'm expressing the fact I don't think it's the best motivator of human behavior.
I would return the question: why is wealth inequality bad?
Psychologically, humans tend to evaluate their own well-being in relation to the rest of the community rather than in absolute terms. An modern American living at the poverty line has by most measures an objectively better quality of life than a Bronze-Age king - better healthcare, better nutrition, better sanitation, and so on - but probably does not feel nearly as good about himself, because he knows he's poor and the king knows he's a king. Obviously, we shouldn't blindly let this phenomenon dictate our public policy, but we do need to be aware of it and factor it into the balancing act. It may be strictly speaking irrational for a poor person to feel worse off because a richer person exists than he would otherwise, but it is nevertheless true, and that is not likely to change any time soon. (There's your a "human nature" argument, KBH.) And because morality can be briefly be characterized as a question of what makes people feel bad, we do have to say that wealth inequality has an indirect moral cost.
The counterpoint to this is, as you already mentioned, that radical equalization schemes have much higher moral costs. I don't think this psychology justifies them. What it does do, in my judgment, is tell us that if we have a choice between giving X objective utils to the rich or the same amount to the poor, we have a moral reason to prefer the poor over the rich, because the reduction in inequality creates subjective utils. (I'm using utilitarian terminology here because it's clearest and easiest, but I think my point is pretty moral-theory-agnostic.)
I'm just asking why people feel it's the go-to motivational tool to increase the productivity of a society or individual; and, I'm expressing the fact I don't think it's the best motivator of human behavior.
I don't know about "best", but I think world history has amply demonstrated that wealth is indeed a very good motivator of human behavior. As for wealth inequality, I'd be inclined to say that it is more a consequence of productive economic activity than a cause of it.
I don't know about "best", but I think world history has amply demonstrated that wealth is indeed a very good motivator of human behavior. As for wealth inequality, I'd be inclined to say that it is more a consequence of productive economic activity than a cause of it.
I hope I understand the different sides here, but it seems to me the difference between practical socialists and libertarians isn't "all or nothing" when it comes to wealth inequality. It's simply a matter of degrees.
But -if it's all about motivating people- the "disparity" (once you pass 'Safety Needs' on the pyramid) is simply a matter of perspective. I would think a 'small' gap would be all that's needed as a motivational tool, as long as the right lighting is used to illuminate the gap. As an aside: I've always thought "Raising the Level Cap" is a lazy way to motivate people in MMORPG. I understand it works, but it's not sustainable.
Personally, I do not feel that restaurants or retail jobs should be considered a career and people expect to live by working there.
Why not?
I think they're a good stepping stone to get in to a better job, biggest reason is you get some valuable experience in the realm of customer service. I would prefer to see people trying to improve themselves rather than stay at these places for many years. My opinion, but I'd rather improve myself instead of sitting around at the same gig if nothing is changing and I'd like to see others do that too. I wouldn't feel satisfied working at these places and I've known plenty of people that have not been satisfied working at them so I don't see them as long-term prospects.
Personally, I do not feel that restaurants or retail jobs should be considered a career and people expect to live by working there.
Why not?
I think they're a good stepping stone to get in to a better job, biggest reason is you get some valuable experience in the realm of customer service. I would prefer to see people trying to improve themselves rather than stay at these places for many years. My opinion, but I'd rather improve myself instead of sitting around at the same gig if nothing is changing and I'd like to see others do that too. I wouldn't feel satisfied working at these places and I've known plenty of people that have not been satisfied working at them so I don't see them as long-term prospects.
That is very pretentious of you to be claiming certain jobs inferior and the people who work them need to 'better themselves' (Whatever that means) Some people may just be happy enough to have a roof over there heads and a belly full of food. At the very least inferior jobs can provide that.
I think they're a good stepping stone to get in to a better job, biggest reason is you get some valuable experience in the realm of customer service. I would prefer to see people trying to improve themselves rather than stay at these places for many years. My opinion, but I'd rather improve myself instead of sitting around at the same gig if nothing is changing and I'd like to see others do that too. I wouldn't feel satisfied working at these places and I've known plenty of people that have not been satisfied working at them so I don't see them as long-term prospects.
But there are real careers to pursue in restaurant service and retail. People interested in these kinds of work don't just stay at the same entry-level positions. They move on to more demanding jobs in the same line - if you've ever been waited on at a fine dining establishment or talked to a salesperson at a luxury clothing store, you know those guys are pretty skilled and serious professionals.
And even if someone did just want to sling sandwiches at Subway their whole life for some reason, if they can make enough money doing it to get by then more power to them. There's no shame in honest work.
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I don't know about "best", but I think world history has amply demonstrated that wealth is indeed a very good motivator of human behavior. As for wealth inequality, I'd be inclined to say that it is more a consequence of productive economic activity than a cause of it.
I hope I understand the different sides here, but it seems to me the difference between practical socialists and libertarians isn't "all or nothing" when it comes to wealth inequality. It's simply a matter of degrees.
But -if it's all about motivating people- the "disparity" (once you pass 'Safety Needs' on the pyramid) is simply a matter of perspective. I would think a 'small' gap would be all that's needed as a motivational tool, as long as the right lighting is used to illuminate the gap. As an aside: I've always thought "Raising the Level Cap" is a lazy way to motivate people in MMORPG. I understand it works, but it's not sustainable.
First of all, when I was talking about economic incentives motivating people I wasn't directly talking about wealth inequality. I was talking about the day-to-day incentives associated with "earning" things rather than being provided with things. If I'm laying in bed on a cold, rainy morning and I hear my alarm go off, the thing that motivates me to actually get up and go to work is the fact that my job provides me with money to buy the things I need and want. If I live in an idealized socialist economy, I know I can just roll over and go back to bed yet my food, clothes, house, electricity, and healthcare will still be provided for me. It changes my incentives to work and to care about my job. On an economy-wide scale, this leads to much less productivity.
I think wealth inequality, per se, is more like a waste product or a side effect of a market economy. It's something we tolerate because it's necessary to make the system function. Some limited efforts to curb wealth inequality may be successful, but large-scale attempts to control wealth inequality require weakening property rights or centralizing some aspect of the economy, which runs us right back into the aforementioned incentive problems. So I see wealth inequality as something we tolerate rather than celebrate.
I'm not 100% clear what this post is responding to, but it sounds like you're proposing a top marginal tax increase as an alternative to my statement that "weakening property rights or centralizing some aspect of the economy" is a side-effect of efforts to control wealth inequality.
I'd counter by noting that increasing taxes involves both weakening property rights and increasing economic centralization. So while top marginal tax increases may have some role to play in managing inequality, it's not in any way immune from the incentive problems I mentioned above.
It was, and I'd counter that increasing top marginal tax rates does nothing to weaken property rights. More difficult for monopolistic tendencies to express themselves in a limited number of actors engaging to the extent they do now, but that isn't actually about peoples rights regarding their property, but in the ease of acquiring excessive amounts for personal use.
As for whether it centralizes some aspect? That could go either way, depending on what its spent on and, even with some centralization, that's not a necessary mark for or against. Obama's education proposal, infrastructure repair, general grant funding for general research, and other things that are altogether unlike the spectre of Central Planning that famously failed in the USSR and that China has backed away from. This are things we already spend money on. All I'm saying is spend more money on them and get it from the kinds of people that can afford to spend hundreds of thousands of dollars on political campaigns.
1. Tax income progressively to prevent a small group from leveraging income for political favors to get even more income
2. Invest this money in public works style projects and programs that provide general support (the aforementioned things like education, roads, research)
3. Negative externalities are observable in societies with large wealth gaps.
4. Likewise, we have examples of current societies (as well as previous era's of America) that are successful with higher tax rates that report great satisfaction amongst their citizenry.
It was, and I'd counter that increasing top marginal tax rates does nothing to weaken property rights. More difficult for monopolistic tendencies to express themselves in a limited number of actors engaging, but that isn't actually about peoples rights regarding their property, but in the ease of acquiring excessive amounts for personal use.
Involuntarily taking property (money, in this case) away from its owner weakens property rights, by definition. The owner had a property right in that money before, now he or she does not. We can debate the pros and cons, but one can't deny that increased taxation necessarily weakens property rights.
As for whether it centralizes some aspect? That could go either way, depending on what its spent on and, even with some centralization, that's not a necessary mark for or against. Obama's education proposal, infrastructure repair, general grant funding for general research, and other things that are altogether unlike the spectre of Central Planning that famously failed in the USSR and that China has backed away from. This are things we already spend money on. All I'm saying is spend more money on them and get it from the kinds of people that can afford to spend hundreds of thousands of dollars on political campaigns.
I'm not talking about bogeyman scenarios like USSR/China-style centralization, I'm saying that any centralization of economic activity comes with certain unavoidable drawbacks.
One example of this is that you inherently create economic harms when you have a single buyer for a product. If the government (or a single monopolistic corporation) is responsible for buying all of a certain good (e.g. single-payer healthcare) you get a "monopsony" or buyer monopoly, which creates the same kinds of societal harms as a monopoly.
We as a society can and do tolerate some amount of this deadweight loss as a tradeoff for other benefits. But increasing centralization inevitably increases the magnitude of this loss. Your arguments need to address this and contend with it; simply ignoring it and acting like we can somehow avoid the losses from centralization is a fallacy. It's mathematically impossible.
1. Tax income progressively to prevent a small group from leveraging income for political favors to get even more income
Those who are rich enough to leverage political favors are the ones who can avoid the tax. You solve this plutocracy problem with campaign reform, not tax laws.
2. Invest this money in public works style projects and programs that provide general support (the aforementioned things like education, roads, research)
There are certain government investments that automatically make sense (e.g. roads) because they're addressing identifiable inefficiencies or externalities. But all centralized government spending creates deadweight losses, as discussed. You have to contend with these losses when formulating policy. Saying "let's throw money at some worthy causes" doesn't cut it as a coherent proposal.
3. Negative externalities are observable in societies with large wealth gaps.
Are you saying specific externalities are attributable to the mere presence of a wealth gap?
First, I'd like you to tell me about these and show they exist.
Second, assuming they do exist, I'm curious why your proposal is just "tax the rich more" rather than "let's measure the magnitude of these externalities, then tax the rich precisely the amount necessary to offset the externalities in a targeted way." The externalities from inequality (assuming they exist) should be the target of your proposal, not just a throw-in argument in a list.
4. Likewise, we have examples of current societies (as well as previous era's of America) that are successful with higher tax rates that report great satisfaction amongst their citizenry.
I'm the last person who would ever argue that America is doing everything right. But it's also incredibly simplistic to attribute the prosperity of certain places (e.g. Scandinavia) to their tax policies. Scandinavia shows that a (mildly) re-distributive system is workable, not that it's best. There are many factors at play in Scandanavia, including immense oil wealth, relative cultural homogeneity, and certain geopolitical advantages over their European neighbors as legacies of the first and second world wars. How can we know that these countries wouldn't be even more prosperous with a less progressive tax code? Anecdotes about people who smoked a pack a day and lived to be 100 would have limited usefulness in a debate about tobacco. I think Scandinavia is the same way here; interesting to consider and discuss, but not conclusive.
You'll also note that most of the tax revenue in the Scandanavian system is directly given to localities to spend as they please with few if any restrictions. In other words, they bend over backwards to avoid the centralization problems I'm talking about above. If the proposal in the U.S. was to give this new federal tax revenue directly to counties and municipalities, no strings attached, I'd be much more likely to support it. But we never do that kind of thing in the U.S.
I think wealth inequality, per se, is more like a waste product or a side effect of a market economy. It's something we tolerate because it's necessary to make the system function. Some limited efforts to curb wealth inequality may be successful, but large-scale attempts to control wealth inequality require weakening property rights or centralizing some aspect of the economy, which runs us right back into the aforementioned incentive problems. So I see wealth inequality as something we tolerate rather than celebrate.
Ok, sure, but how do you alleviate the issue when this 'by product' builds up? Generally speaking, the rich become richer. They use their money to make more money and then give that money to their children who -on average- do the same. 'r > g' and all that.
So, if your not "taxing" or "stealing" or whatever you want to call it, how do you stop this positive feedback loop? Or do you just let it go indefinitely?
So, if your not "taxing" or "stealing" or whatever you want to call it, how do you stop this positive feedback loop? Or do you just let it go indefinitely?
I want to be perfectly clear that I'm not opposed to all taxation nor am I one of those tax = theft wackos. Taxes are necessary to get certain things done.
What I'm saying is: when your solution to the drawbacks of capitalism is to ratchet up the taxes, you're inherently diluting away many of the advantages of capitalism. You can't justify increased marginal tax rates by just saying "it decreases wealth inequality, therefore it's good." You have to go the extra mile and establish that the societal harms from the extra taxation are lower than whatever societal benefits come from reducing inequality.
I think wealth inequality, per se, is more like a waste product or a side effect of a market economy. It's something we tolerate because it's necessary to make the system function. Some limited efforts to curb wealth inequality may be successful, but large-scale attempts to control wealth inequality require weakening property rights or centralizing some aspect of the economy, which runs us right back into the aforementioned incentive problems. So I see wealth inequality as something we tolerate rather than celebrate.
Ok, sure, but how do you alleviate the issue when this 'by product' builds up? Generally speaking, the rich become richer. They use their money to make more money and then give that money to their children who -on average- do the same. 'r > g' and all that.
First of all, we need to establish whether wealth inequality is actually bad. No one's done that yet in this thread, and most arguments I've seen on this topic are lukewarm at best. If the problems of wealth inequality don't exist or are minor, then we don't necessarily need to do anything about it. So far, what I've seen is people saying "look at all this inequality, we should get rid of it." Why?
I guess this makes intuitive sense if you see wealth as a zero sum game, but it doesn't work like that. Imagine scenario A, a rich person invests their capital wisely and makes a return. Scenario B, the rich person hides his money in a cave and doesn't attempt to invest it or grow it. In which scenario are poor people economically better off? The answer is (generally) scenario A. Those investment dollars are building jobs, infrastructure, and other useful things that benefit society. So the rich guy isn't getting richer by sucking society's blood, he's getting richer in a "rising tide lifts all ships" kind of way.
(Side note: there are exceptions to this. For example buying slave labor is a r>g investment that makes society worse off. Building a heavily-polluting manufacturing plant is r>g investment that can make society worse. But that's why we outlaw or regulate these types of investments. In other words, the problems in these examples stem from things like slavery and pollution, not from wealth inequality.)
Second, wealth inequality does tend to "fix" itself over time. I won't launch into one of the many excellent critiques of Picketty out there; I'll take him at his word for now. However it must, mathematically, be the case that Sum(r) <= Sum(g) in the long run, assuming we control for things like inflation. In other words, the aggregate return on capital cannot exceed the aggregate growth of the economy in the long run; you physically can't generate more total return than total value. So we can be certain that the effect cannot last indefinitely. It's a short-run effect. We should tend to see the r>g effect persist for a few generations, with unforseen large risks dominating the long run calculus. War, huge market shifts, political upheaval, currency collapse, and similar long-run effects tend to make r>g unsustainable for any individual or family. No one alive today can trace their family's wealth to Alexander the Great or Ghengis Khan. (And that was back in the day when rich people had the ultimate r>>g weapon in their arsenal - wars of conquest).
Second, wealth inequality does tend to "fix" itself over time. I won't launch into one of the many excellent critiques of Picketty out there; I'll take him at his word for now. However it must, mathematically, be the case that Sum(r) <= Sum(g) in the long run, assuming we control for things like inflation. In other words, the aggregate return on capital cannot exceed the aggregate growth of the economy in the long run; you physically can't generate more total return than total value. So we can be certain that the effect cannot last indefinitely. It's a short-run effect. We should tend to see the r>g effect persist for a few generations, with unforseen large risks dominating the long run calculus. War, huge market shifts, political upheaval, currency collapse, and similar long-run effects tend to make r>g unsustainable for any individual or family. No one alive today can trace their family's wealth to Alexander the Great or Ghengis Khan. (And that was back in the day when rich people had the ultimate r>>g weapon in their arsenal - wars of conquest).
It does? I'm not going to pretend to be a historian or economist, but I thought the most common way of 'fixing' built up wealth inequality was revolution, either through an actually civil war or large-scale social upheaval. I didn't know there was data supporting it just "went away" on its own.
And, does your "Sum(r) <= Sum(g)" take into account debt, or negative wealth, of individuals or societies?
I would certainly agree that wealth inequality isn't inherently bad. And, some amount of it is healthy for a society.
However, you don't feel there is some point where it becomes toxic to a society? And, if you let the feedback loop go...
I feel many things on many topics, and I'm sure you do too. The question is whether there's reasoning to back up our feelings.
I think there are likely problems associated with wealth equality reaching certain levels. The questions are: (1) what are these problems? (2) what are the most effective and targeted ways to fix them? (3) is the cure worse than the disease?
Whenever someone has an "easy" fix for inequality, like "tax the rich," I typically find that they haven't thought deeply about these questions.
It does? I'm not going to pretend to be a historian or economist, but I thought the most common way of 'fixing' built up wealth inequality was revolution, either through an actually civil war or large-scale social upheaval. I didn't know there was data supporting it just "went away" on its own.
War (of which revolutions are a subset) was one of my examples for how inequality tends to "fix" itself in the long run. This includes not only wars directed at "fixing" inequalities, such as revolutions. Sometimes ordinary wars will do this as a side-effect, such as the effect of WWI on the old fortunes of Europe. It can also fix itself in more peaceful upeahvals as I described, including where new businesses or new technologies arise that effectively destroy the old-money-backed status quo in a particular sector. Look at all the new money gained and old money lost in the rise of Silicon Valley.
Basically, the fortunes are lost in what Taleb would call "Black Swans" a.k.a. highly unforeseeable "tail" events that are essentially impossible for investors to hedge against.
That said, I'm not arguing letting inequality fix itself is necessarily the best option. I'm just saying it is, in fact, an option to consider.
And, does your "Sum(r) <= Sum(g)" take into account debt, or negative wealth, of individuals or societies?
Yes, it's just a tautology in the long run.
Sum(g)= total value of all economic output over a given time period. In the long run (as t->infinity), then sum(g)->the total value of all wealth in the economy. Sum(r) = total return on capital investments over a given time period. Since the total return on capital investments cannot (by definition) exceed the total value of all wealth in the economy, then Sum(r)<=Sum(g) in the long-run.
And, does your "Sum(r) <= Sum(g)" take into account debt, or negative wealth, of individuals or societies?
Yes, it's just a tautology in the long run.
Sum(g)= total value of all economic output over a given time period. In the long run (as t->infinity), then sum(g)->the total value of all wealth in the economy. Sum(r) = total return on capital investments over a given time period. Since the total return on capital investments cannot (by definition) exceed the total value of all wealth in the economy, then Sum(r)<=Sum(g) in the long-run.
Based on that logic, I understand.
But, I thought "return on capital" didn't take into account all capital. So, given a system that only has 2 participants, Jimmy and Timmy. If Jimmy makes +$3 by investing and Timmy makes -$3 by doing nothing, then the overall growth of the system is 0, but the "return on capital" is +3.... Or am I just being silly?
Or hell, look at hunger strikes. The fact that they exist at all totally contradicts Maslow.
Hunger strikes aren't a contradiction of Maslow, but really a perfect example of self-actualization that can only happen once Safety and Physiological needs are met. What makes it a "hunger strike" instead of just "hunger" is that the participants can expect to eat afterwards.
Or hell, look at hunger strikes. The fact that they exist at all totally contradicts Maslow.
Hunger strikes aren't a contradiction of Maslow, but really a perfect example of self-actualization that can only happen once Safety and Physiological needs are met. What makes it a "hunger strike" instead of just "hunger" is that the participants can expect to eat afterwards.
Does that include people who hunger strike themselves to death? (which has happened).
Hunger strikes aren't a contradiction of Maslow, but really a perfect example of self-actualization that can only happen once Safety and Physiological needs are met.
Erm, except for the part where the person is denying himself food. Which is a physiological need.
Anyway, let's not derail this thread with Maslow. If you want to create a separate discussion, that's fine. It's Maslow, so he's really not worth the effort, but if you want to, go for it.
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I'm a little surprised by the number of people on this thread that seem to think (money/wealth) is the (best/only) motivation for human beings to try their best.
Isn't money near the bottom of Maslow's hierarchy of needs? (Though, I'm sure people disagree with Maslow)
Regardless, all of the data I've seen shows that only a certain amount of money is necessarily for happiness. After that, the increase to well-being with increased wealth is marginal. I can only assume having a "super-wealthy" class is unnecessarily for the production value of a society. Why do we need large Wealth Inequality to motivate people? Some Wealth Inequality is fine, but why do people seem to think the difference between the have's and have-not's must be big for increased productivity? It doesn't seem to jive -psychologically- with how you'd best want to motivate people to their greatest potential, which seems to be the goal.
Besides, isn't there a certain nihilistic quality to desire wealth for its own sake?
Has anyone actually argued in favor of the notion that wealth inequality must be large? I can't find it in this thread, at any rate.
I would reverse the question: why is wealth inequality bad? I grew up in the 90s, where every single day, Bill Gates was making more money than I'll make in my entire life. The chasm of wealth inequality between us was growing at a staggering rate. And yet, I didn't understand myself as being any worse off for it. Never mind the fact that he wasn't actually taking any of that money from me unless I chose to buy from him -- it actually seemed I was vaguely better off, in the sense that I was able to benefit from all the positive externalities surrounding market activity in a rapidly growing comp sci and tech sector. As staggering as his personal wealth was, it seemed like he was only keeping a tiny sliver of the total economic value he'd generated, whereas the overwhelming majority of the economic activity taking place was actually accruing to the benefit of parties other than Gates and his shareholders.
Now, I don't mean to suggest that none of this would have been possible without one super-rich guy at the top being able to take a sliver of the pie. I only mean that I don't see any moral problem with it playing out that way, nor can I think of a replacement system that doesn't have severe moral problems.
So while I don't think it's true that wealth inequality must be large, I don't think it's evil that it is contingently large. When I see a person (in a free, capitalistic economy) who has made a substantial fortune for himself, I also see a person who has generated tremendous economic activity for others. You can't have one without the other.
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I didn't say it's inherently bad. I'm just asking why people feel it's the go-to motivational tool to increase the productivity of a society or individual; and, I'm expressing the fact I don't think it's the best motivator of human behavior.
The counterpoint to this is, as you already mentioned, that radical equalization schemes have much higher moral costs. I don't think this psychology justifies them. What it does do, in my judgment, is tell us that if we have a choice between giving X objective utils to the rich or the same amount to the poor, we have a moral reason to prefer the poor over the rich, because the reduction in inequality creates subjective utils. (I'm using utilitarian terminology here because it's clearest and easiest, but I think my point is pretty moral-theory-agnostic.)
I don't know about "best", but I think world history has amply demonstrated that wealth is indeed a very good motivator of human behavior. As for wealth inequality, I'd be inclined to say that it is more a consequence of productive economic activity than a cause of it.
candidus inperti; si nil, his utere mecum.
But -if it's all about motivating people- the "disparity" (once you pass 'Safety Needs' on the pyramid) is simply a matter of perspective. I would think a 'small' gap would be all that's needed as a motivational tool, as long as the right lighting is used to illuminate the gap. As an aside: I've always thought "Raising the Level Cap" is a lazy way to motivate people in MMORPG. I understand it works, but it's not sustainable.
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I think they're a good stepping stone to get in to a better job, biggest reason is you get some valuable experience in the realm of customer service. I would prefer to see people trying to improve themselves rather than stay at these places for many years. My opinion, but I'd rather improve myself instead of sitting around at the same gig if nothing is changing and I'd like to see others do that too. I wouldn't feel satisfied working at these places and I've known plenty of people that have not been satisfied working at them so I don't see them as long-term prospects.
That is very pretentious of you to be claiming certain jobs inferior and the people who work them need to 'better themselves' (Whatever that means) Some people may just be happy enough to have a roof over there heads and a belly full of food. At the very least inferior jobs can provide that.
And even if someone did just want to sling sandwiches at Subway their whole life for some reason, if they can make enough money doing it to get by then more power to them. There's no shame in honest work.
candidus inperti; si nil, his utere mecum.
First of all, when I was talking about economic incentives motivating people I wasn't directly talking about wealth inequality. I was talking about the day-to-day incentives associated with "earning" things rather than being provided with things. If I'm laying in bed on a cold, rainy morning and I hear my alarm go off, the thing that motivates me to actually get up and go to work is the fact that my job provides me with money to buy the things I need and want. If I live in an idealized socialist economy, I know I can just roll over and go back to bed yet my food, clothes, house, electricity, and healthcare will still be provided for me. It changes my incentives to work and to care about my job. On an economy-wide scale, this leads to much less productivity.
I think wealth inequality, per se, is more like a waste product or a side effect of a market economy. It's something we tolerate because it's necessary to make the system function. Some limited efforts to curb wealth inequality may be successful, but large-scale attempts to control wealth inequality require weakening property rights or centralizing some aspect of the economy, which runs us right back into the aforementioned incentive problems. So I see wealth inequality as something we tolerate rather than celebrate.
I'm not 100% clear what this post is responding to, but it sounds like you're proposing a top marginal tax increase as an alternative to my statement that "weakening property rights or centralizing some aspect of the economy" is a side-effect of efforts to control wealth inequality.
I'd counter by noting that increasing taxes involves both weakening property rights and increasing economic centralization. So while top marginal tax increases may have some role to play in managing inequality, it's not in any way immune from the incentive problems I mentioned above.
As for whether it centralizes some aspect? That could go either way, depending on what its spent on and, even with some centralization, that's not a necessary mark for or against. Obama's education proposal, infrastructure repair, general grant funding for general research, and other things that are altogether unlike the spectre of Central Planning that famously failed in the USSR and that China has backed away from. This are things we already spend money on. All I'm saying is spend more money on them and get it from the kinds of people that can afford to spend hundreds of thousands of dollars on political campaigns.
1. Tax income progressively to prevent a small group from leveraging income for political favors to get even more income
2. Invest this money in public works style projects and programs that provide general support (the aforementioned things like education, roads, research)
3. Negative externalities are observable in societies with large wealth gaps.
4. Likewise, we have examples of current societies (as well as previous era's of America) that are successful with higher tax rates that report great satisfaction amongst their citizenry.
Involuntarily taking property (money, in this case) away from its owner weakens property rights, by definition. The owner had a property right in that money before, now he or she does not. We can debate the pros and cons, but one can't deny that increased taxation necessarily weakens property rights.
I'm not talking about bogeyman scenarios like USSR/China-style centralization, I'm saying that any centralization of economic activity comes with certain unavoidable drawbacks.
One example of this is that you inherently create economic harms when you have a single buyer for a product. If the government (or a single monopolistic corporation) is responsible for buying all of a certain good (e.g. single-payer healthcare) you get a "monopsony" or buyer monopoly, which creates the same kinds of societal harms as a monopoly.
We as a society can and do tolerate some amount of this deadweight loss as a tradeoff for other benefits. But increasing centralization inevitably increases the magnitude of this loss. Your arguments need to address this and contend with it; simply ignoring it and acting like we can somehow avoid the losses from centralization is a fallacy. It's mathematically impossible.
Those who are rich enough to leverage political favors are the ones who can avoid the tax. You solve this plutocracy problem with campaign reform, not tax laws.
There are certain government investments that automatically make sense (e.g. roads) because they're addressing identifiable inefficiencies or externalities. But all centralized government spending creates deadweight losses, as discussed. You have to contend with these losses when formulating policy. Saying "let's throw money at some worthy causes" doesn't cut it as a coherent proposal.
Are you saying specific externalities are attributable to the mere presence of a wealth gap?
First, I'd like you to tell me about these and show they exist.
Second, assuming they do exist, I'm curious why your proposal is just "tax the rich more" rather than "let's measure the magnitude of these externalities, then tax the rich precisely the amount necessary to offset the externalities in a targeted way." The externalities from inequality (assuming they exist) should be the target of your proposal, not just a throw-in argument in a list.
I'm the last person who would ever argue that America is doing everything right. But it's also incredibly simplistic to attribute the prosperity of certain places (e.g. Scandinavia) to their tax policies. Scandinavia shows that a (mildly) re-distributive system is workable, not that it's best. There are many factors at play in Scandanavia, including immense oil wealth, relative cultural homogeneity, and certain geopolitical advantages over their European neighbors as legacies of the first and second world wars. How can we know that these countries wouldn't be even more prosperous with a less progressive tax code? Anecdotes about people who smoked a pack a day and lived to be 100 would have limited usefulness in a debate about tobacco. I think Scandinavia is the same way here; interesting to consider and discuss, but not conclusive.
You'll also note that most of the tax revenue in the Scandanavian system is directly given to localities to spend as they please with few if any restrictions. In other words, they bend over backwards to avoid the centralization problems I'm talking about above. If the proposal in the U.S. was to give this new federal tax revenue directly to counties and municipalities, no strings attached, I'd be much more likely to support it. But we never do that kind of thing in the U.S.
So, if your not "taxing" or "stealing" or whatever you want to call it, how do you stop this positive feedback loop? Or do you just let it go indefinitely?
I want to be perfectly clear that I'm not opposed to all taxation nor am I one of those tax = theft wackos. Taxes are necessary to get certain things done.
What I'm saying is: when your solution to the drawbacks of capitalism is to ratchet up the taxes, you're inherently diluting away many of the advantages of capitalism. You can't justify increased marginal tax rates by just saying "it decreases wealth inequality, therefore it's good." You have to go the extra mile and establish that the societal harms from the extra taxation are lower than whatever societal benefits come from reducing inequality.
First of all, we need to establish whether wealth inequality is actually bad. No one's done that yet in this thread, and most arguments I've seen on this topic are lukewarm at best. If the problems of wealth inequality don't exist or are minor, then we don't necessarily need to do anything about it. So far, what I've seen is people saying "look at all this inequality, we should get rid of it." Why?
I guess this makes intuitive sense if you see wealth as a zero sum game, but it doesn't work like that. Imagine scenario A, a rich person invests their capital wisely and makes a return. Scenario B, the rich person hides his money in a cave and doesn't attempt to invest it or grow it. In which scenario are poor people economically better off? The answer is (generally) scenario A. Those investment dollars are building jobs, infrastructure, and other useful things that benefit society. So the rich guy isn't getting richer by sucking society's blood, he's getting richer in a "rising tide lifts all ships" kind of way.
(Side note: there are exceptions to this. For example buying slave labor is a r>g investment that makes society worse off. Building a heavily-polluting manufacturing plant is r>g investment that can make society worse. But that's why we outlaw or regulate these types of investments. In other words, the problems in these examples stem from things like slavery and pollution, not from wealth inequality.)
Second, wealth inequality does tend to "fix" itself over time. I won't launch into one of the many excellent critiques of Picketty out there; I'll take him at his word for now. However it must, mathematically, be the case that Sum(r) <= Sum(g) in the long run, assuming we control for things like inflation. In other words, the aggregate return on capital cannot exceed the aggregate growth of the economy in the long run; you physically can't generate more total return than total value. So we can be certain that the effect cannot last indefinitely. It's a short-run effect. We should tend to see the r>g effect persist for a few generations, with unforseen large risks dominating the long run calculus. War, huge market shifts, political upheaval, currency collapse, and similar long-run effects tend to make r>g unsustainable for any individual or family. No one alive today can trace their family's wealth to Alexander the Great or Ghengis Khan. (And that was back in the day when rich people had the ultimate r>>g weapon in their arsenal - wars of conquest).
However, you don't feel there is some point where it becomes toxic to a society? And, if you let the feedback loop go... It does? I'm not going to pretend to be a historian or economist, but I thought the most common way of 'fixing' built up wealth inequality was revolution, either through an actually civil war or large-scale social upheaval. I didn't know there was data supporting it just "went away" on its own.
And, does your "Sum(r) <= Sum(g)" take into account debt, or negative wealth, of individuals or societies?
I feel many things on many topics, and I'm sure you do too. The question is whether there's reasoning to back up our feelings.
I think there are likely problems associated with wealth equality reaching certain levels. The questions are: (1) what are these problems? (2) what are the most effective and targeted ways to fix them? (3) is the cure worse than the disease?
Whenever someone has an "easy" fix for inequality, like "tax the rich," I typically find that they haven't thought deeply about these questions.
War (of which revolutions are a subset) was one of my examples for how inequality tends to "fix" itself in the long run. This includes not only wars directed at "fixing" inequalities, such as revolutions. Sometimes ordinary wars will do this as a side-effect, such as the effect of WWI on the old fortunes of Europe. It can also fix itself in more peaceful upeahvals as I described, including where new businesses or new technologies arise that effectively destroy the old-money-backed status quo in a particular sector. Look at all the new money gained and old money lost in the rise of Silicon Valley.
Basically, the fortunes are lost in what Taleb would call "Black Swans" a.k.a. highly unforeseeable "tail" events that are essentially impossible for investors to hedge against.
That said, I'm not arguing letting inequality fix itself is necessarily the best option. I'm just saying it is, in fact, an option to consider.
Yes, it's just a tautology in the long run.
Sum(g)= total value of all economic output over a given time period. In the long run (as t->infinity), then sum(g)->the total value of all wealth in the economy. Sum(r) = total return on capital investments over a given time period. Since the total return on capital investments cannot (by definition) exceed the total value of all wealth in the economy, then Sum(r)<=Sum(g) in the long-run.
Based on that logic, I understand.
But, I thought "return on capital" didn't take into account all capital. So, given a system that only has 2 participants, Jimmy and Timmy. If Jimmy makes +$3 by investing and Timmy makes -$3 by doing nothing, then the overall growth of the system is 0, but the "return on capital" is +3.... Or am I just being silly?
Or hell, look at hunger strikes. The fact that they exist at all totally contradicts Maslow.
Hunger strikes aren't a contradiction of Maslow, but really a perfect example of self-actualization that can only happen once Safety and Physiological needs are met. What makes it a "hunger strike" instead of just "hunger" is that the participants can expect to eat afterwards.
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Does that include people who hunger strike themselves to death? (which has happened).
Anyway, let's not derail this thread with Maslow. If you want to create a separate discussion, that's fine. It's Maslow, so he's really not worth the effort, but if you want to, go for it.