The 1 Percent Solution - Soak the Rich

[Wu du Nord]

Income inequality has very little to do with economic health or the conditions under which the “poor” (however you want to define poor) live - just because country A has greater income inequality than country B doesn’t mean that country A’s poor are worse off than B’s.

Quite right, but also something of a red-herring.

The American social contract is heavily dependent upon shared notions of equality and a sense of freedom that has economic dimensions. Systemic increasing economic inequality is certainly cause for concern. The shift of well-paying manufacturing jobs to other countries is a concern. The continuing shift towards service industries is a concern. The degree to which 'maximized profits for the shareholder' serves as the dominant morality in boardrooms and offices are a concern.

Sometimes it makes good sense to stop, look around with a critical eye, and ask, "is this the sort of place and people we want to be." Lee Greenwood famously sang, "I'm proud to be an American where at least I know I'm free." Right or wrong, many folks equate personal wealth and income with freedom. Do we think the Chinese people working at Foxconn are free? It's a worthwhile debate. In a sense, freedom gets tied to the notion of being able to do something other than what you're compelled to do. This probably includes financially compelled.

Now, you can conclude that increasing income inequality is perfectly fine. It's certainly not that strange of an idea. I completely understand how it can be easy to think that having a 42 inch TV is prosperity. HDTV is awesome.

One thing that's been buzzing around my head lately is the extent to which modern societies depend on the notion that a dollar is a dollar... one equal to another. This expectation exists regardless of the method used to obtain it. It's really fascinating once you start to explore that dimension seriously.

[Wu du Nord]

It doesn't take a rocket scientist to solve the spending problem our nation has.

1) Stop spending what you don't have

Don't sell yourself short. That's a brilliant and elegant solution. You must be a genius.

2) If you do raise taxes, it has to be across the board. You can't just raise taxes on the 1%. That was the whole intent of the original story (oversimplified of course). It sound good, "we will just tax the millionaires and billionaires" - but there is not enough money there to make the difference. The truth is if you want to increase you revenue through taxes you have to go after the middle class and those who are not paying taxes.

I don't think I've heard anyone claiming a program of "we will just tax the millionaires and billionaires" will solve all of America's deficit woes. I don't think you've heard anyone claiming that either. The satirist set fire to a straw man. Now, you can certainly believe that the current applicable tax rates for various income brackets and types of income represent the 'fair share'. That slips into a moral argument of what constitutes 'fair'. That's a conversation between you and your gut.

Think about how much money is just being thrown away to pay interest on the debt each year? $454 billion last year (and growing) - that is just wasted.

You would rather have that monster Saddam Hussein in control of Iraq?

[Wu du Nord]

Did a few of your feathers get ruffled a wee bit?

I consider it a public service. ;-)

Not everyone has time to read and properly understand the material they post to public spaces. When I have time, I'm happy to lend a hand.

If anyone on this entire board is condescending with a vast air of false superiorty, you would win the contest, hands down.

Don't even try to tell me that I don't look good in a tiara. Cuz I do.

[Maggie]

Quite right, but also something of a red-herring.

The American social contract is heavily dependent upon shared notions of equality and a sense of freedom that has economic dimensions. Systemic increasing economic inequality is certainly cause for concern. The shift of well-paying manufacturing jobs to other countries is a concern. The continuing shift towards service industries is a concern. The degree to which 'maximized profits for the shareholder' serves as the dominant morality in boardrooms and offices are a concern.

Sometimes it makes good sense to stop, look around with a critical eye, and ask, "is this the sort of place and people we want to be." Lee Greenwood famously sang, "I'm proud to be an American where at least I know I'm free." Right or wrong, many folks equate personal wealth and income with freedom. Do we think the Chinese people working at Foxconn are free? It's a worthwhile debate. In a sense, freedom gets tied to the notion of being able to do something other than what you're compelled to do. This probably includes financially compelled.

Now, you can conclude that increasing income inequality is perfectly fine. It's certainly not that strange of an idea. I completely understand how it can be easy to think that having a 42 inch TV is prosperity. HDTV is awesome.

One thing that's been buzzing around my head lately is the extent to which modern societies depend on the notion that a dollar is a dollar... one equal to another. This expectation exists regardless of the method used to obtain it. It's really fascinating once you start to explore that dimension seriously.

I don’t have a lot time so I am going to keep this brief. My point was it is not terribly helpful, if you are truly concerned about reducing poverty, to focus on inequalities of income. People that tend to focus on income inequality often fail to recognize that reducing poverty can sometimes conflict with reducing inequality. If one really interested in helping the poor (again - how “poor” is defined is important because the definition is ultimately subjective) the emphasis should be on how to create more wealth. Spreading existing wealth around, which seems perfectly acceptable to some folks, has its limitations.

Moreover, I don’t believe the American “social contract”, if you want to call it that, is rooted in equality – that is equality of outcome (which most people who harp on income inequality are really talking about). I find it interesting you mention “freedom” because equality of this nature and freedom are often in tension. The more a society emphasizes equality the less freedom it has and vice versa. Equality of opportunity is what is important.

As far as losing manufacturing jobs, etc. you have to ask yourself why this takes place.

[Kung Wu]

It really is this simple. Perhaps someone has said it better than Mrs. Thatcher, but this is pretty darn good:

Mr. Hughes

There is no doubt that the Prime Minister, in many ways, has achieved substantial success. There is one statistic, however, that I understand is not challenged, and that is that, during her 11 years as Prime Minister, the gap between the richest 10 per cent. and the poorest 10 per cent. in this country has widened substantially. At the end of her chapter of British politics, how can she say that she can justify the fact that many people in a constituency such as mine are relatively much poorer, much less well housed and much less well provided for than they were in 1979? Surely she accepts that that is not a record that she or any Prime Minister can be proud of.

The Prime Minister [Margaret Thatcher]

People on all levels of income are better off than they were in 1979. The hon. Gentleman is saying that he would rather that the poor were poorer, provided that the rich were less rich. That way one will never create the wealth for better social services, as we have. What a policy. Yes, he would rather have the poor poorer, provided that the rich were less rich. That is the Liberal policy.

Mr. Hughes

No.

The Prime Minister

Yes, it came out. The hon. Member did not intend it to, but it did.

The extraordinary transformation of the private sector has created the wealth for better social services and better pensions—it enables pensioners to have twice as much as they did 10 years ago to leave to their children.

We are no longer the sick man of Europe—our output and investment grew faster during the 1980s than that of any of our major competitors.

[Maggie]

It really is this simple. Perhaps someone has said it better than Mrs. Thatcher, but this is pretty darn good:

Here is the video….and no I don't believe anyone has said it better.

Thatcher

[Wu du Nord]

When Thatcher became Prime Minister people earning over 200k (today's dollars) had a basic tax rate of over 80 percent. Depending on the source of the income, additional tax liabilities were in play. When the Beatles sang, "there's one for me, nineteen for you" about the taxman, it was the tax policies of the British Labour Party to which they were objecting. Yes, some earnings were taxed at a 95% rate.

You may believe it well said, but you ought to mention it was said about a radically different situation. Radically different.

Edit: It's kinda late, so I'm going to bed. If I have time in the morning, I'll comment on the other thing. G'Night.

[Maggie]

When Thatcher became Prime Minister people earning over 200k (today's dollars) had a basic tax rate of over 80 percent. Depending on the source of the income, additional tax liabilities were in play. When the Beatles sang, "there's one for me, nineteen for you" about the taxman, it was the tax policies of the British Labour Party to which they were objecting. Yes, some earnings were taxed at a 95% rate.

You may believe it well said, but you ought to mention it was said about a radically different situation. Radically different.

Edit: It's kinda late, so I'm going to bed. If I have time in the morning, I'll comment on the other thing. G'Night.

Okay. Sleep tight. I will read later, good night. Don't let the bed-bugs bite.

Your turn, by the way. The aforementioned hardly counts.

[Wu du Nord]

Your turn, by the way. The aforementioned hardly counts.

Oh, baby, it counted. You must have been out cold and missed the referee. 8...9...10... OUT!

Winner in 3 rounds by KNOCK OUT, Wu du Nord!

Sorry, couldn't resist. ;-) Marginal utility is quite real. Ever hear of the widow's mite?

Ok, here's the bit I promised.

People that tend to focus on income inequality often fail to recognize that reducing poverty can sometimes conflict with reducing inequality.

I agree. Sometimes it does. Economics is not a mature science (in Kuhn's sense), and axiomatic one-size-fits-all silver bullet solutions (e.g., tax cuts are the ultimate social panacea) are good for getting heads bopping at campaign rallies, but they don't take into account pre-existing conditions that matter deeply. If tax rates are 80% for a few decades, lowering them to 60% (what Thatcher did) will likely spark a period of strong growth. If tax rates are 35% and you're country is running a massive deficit, well that's not the same situation. It's not.

If you smash a dam, water will gush out... for a while.

If one really interested in helping the poor (again - how “poor” is defined is important because the definition is ultimately subjective) the emphasis should be on how to create more wealth. Spreading existing wealth around, which seems perfectly acceptable to some folks, has its limitations.

I think I mentioned earlier, these are moral questions. The thing that's really in play is how to constitute 'fair'. It's possible to imagine a world in which everyone pays 10k/year. The guy making 30k? 10k, please. The guy making 30m? 10k, please. Is that fair? In one sense it's absolutely fair. Everybody is equal. Everybody pays the same. Fair is something we make up as we go. It's something we recognize. We recognize it because it is familiar. It bears a family resemblance to other situations.

There's nothing intrinsically evil about income inequality; however, when it reaches a certain point, people frequently become restless and uncomfortable. Similarly, 'spreading wealth around'.

Moreover, I don’t believe the American “social contract”, if you want to call it that, is rooted in equality – that is equality of outcome (which most people who harp on income inequality are really talking about). I find it interesting you mention “freedom” because equality of this nature and freedom are often in tension. The more a society emphasizes equality the less freedom it has and vice versa. Equality of opportunity is what is important.

I'm not certain what you're after in this portion. Are you unlinking opportunity and outcomes? Surely, they are related and compound from one specific opportunity to the next.

As far as losing manufacturing jobs, etc. you have to ask yourself why this takes place.

Because it makes sense to the decision maker?

[Maggie]

Oh, baby, it counted. You must have been out cold and missed the referee. 8...9...10... OUT!

Winner in 3 rounds by KNOCK OUT, Wu du Nord!

Sorry, couldn't resist. ;-) Marginal utility is quite real. Ever hear of the widow's mite?

Ok, here's the bit I promised.

I agree. Sometimes it does. Economics is not a mature science (in Kuhn's sense), and axiomatic one-size-fits-all silver bullet solutions (e.g., tax cuts are the ultimate social panacea) are good for getting heads bopping at campaign rallies, but they don't take into account pre-existing conditions that matter deeply. If tax rates are 80% for a few decades, lowering them to 60% (what Thatcher did) will likely spark a period of strong growth. If tax rates are 35% and you're country is running a massive deficit, well that's not the same situation. It's not.

If you smash a dam, water will gush out... for a while.

I think I mentioned earlier, these are moral questions. The thing that's really in play is how to constitute 'fair'. It's possible to imagine a world in which everyone pays 10k/year. The guy making 30k? 10k, please. The guy making 30m? 10k, please. Is that fair? In one sense it's absolutely fair. Everybody is equal. Everybody pays the same. Fair is something we make up as we go. It's something we recognize. We recognize it because it is familiar. It bears a family resemblance to other situations.

There's nothing intrinsically evil about income inequality; however, when it reaches a certain point, people frequently become restless and uncomfortable. Similarly, 'spreading wealth around'.

I'm not certain what you're after in this portion. Are you unlinking opportunity and outcomes? Surely, they are related and compound from one specific opportunity to the next.


Because it makes sense to the decision maker?

I am typing this on my blackberry so please pardon the occasional typo.

I was joking – and now I will pick myself up off the floor. (;

I agree economics is not a science; but many economists seem to treat it as such - on both sides. For example, I happen to believe the effects on growth as related to tax cuts gets over hyped by political leaders. Every tax cut does not pay for itself. I also believe the negative effects of tax increases are largely ignored by a certain politicians because their analysis has only a single step – we will “raise taxes on the ‘rich’” in the interest of “fairness” – “see how much I care?”

Again, to truly help the poor you need to create additional wealth. A country like India is good example of this theory. Transferring existing wealth will often lead to stagnation.

And no I don’t believe outcome and opportunity are necessarily related – at least not to the extent that some do. The point is to foster an environment where opportunity exists; however, just because you have that freedom shouldn’t guarantee equal outcome. Policies and/or ideologies that are designed to pursue equality of outcome are ultimately destructive.

[Kung Wu]

Policies and/or ideologies that are designed to pursue equality of outcome are ultimately destructive.

It's worse than that. They are impossible.

[Maggie]

It's worse than that. They are impossible.

True. You cannot immanentize the eschaton.

[Kung Wu]

True. You cannot immanentize the eschaton.

OK, I had to look that up.

[ShockTalk]

True. You cannot immanentize the eschaton.

OK, I had to look that up.

Whew. That makes me feel better.

[pinstripers]

OH YEAH????? WELL F**K YOU !!!!!!!