CNN: Viral video shows how wealth is really distributed

[zoony]

This thread is about a problem that was outlined in a video that you dismissed for it's "snide commentary". We are discussing the problem. The fact that I don't claim to have the answers does not make the question you posed any more relevant.

Lucas sold extremely valuable intellectual property, in return he received a **** load of compensation. More power to him. He created it, he gave it value. he deserves it. But it has no more relevance to the conversation than the asking the value of a car.

And I think I will stop there. It never pays to argue with people who have power over something you care about. I've said my peace. I'll leave it at that.

You still haven't outlined your plan. I'm not interested in hearing that there is a problem. We all agree there is. I'm interested in what your solution is. Be specific.

And mike, it is possible to discuss these things without acting like a raging dick. You've gone. From 0 to 100 and now you're implying I might ban you. Christ, take a drink

[Lombardi's_kid_brother]

We could start by taxing earnings from work a bit less and taxing earnings from investments a bit more, for example.

I do feel like we have been conned in arguing over two or three percentage points in the income tax code when practically nobody outside of athletes and entertainers becomes wealthy via "income."

[alexey]

I was only jesting about how rampantly Progressive your views always are.

I'll assume you have a job. Your employer pays you based on what he perceives you bring into the company. Unless you are on commission then you are paid in relation to why you bring in. I invest in the total stock market and as the market for its entirety has trended upward, I can't say corporate leaders are doing too badly by me as a whole.

I am actually a realistic pragmatist. You're not going to have an easy time mapping my views to the political spectrum... so how about we stop the name calling altogether.

I see a mismatch between what you are saying and what a simple internet search shows on the topic of how wages are determined in a competitive labour market. Let me ask a simple yes/no question to clear things up:

Does compensation of employees necessarily reflect the value that they bring to the company?

[Zguy28]

Here's a question I've been thinking about: has there ever been a nation/culture etc. that has lasted more than a couple hundred years with such a large Middle Class like we have in the Western world?

[Ellis]

Here's a question I've been thinking about: has there ever been a nation/culture etc. that has lasted more than a couple hundred years with such a large Middle Class like we have in the Western world?

I think about that all the time!

I wonder often if we just have to regress a bit as a nation in order to enjoy prosperity again.

[alexey]

Here's a question I've been thinking about: has there ever been a nation/culture etc. that has lasted more than a couple hundred years with such a large Middle Class like we have in the Western world?

It would be interesting to learn that...

One thing that comes to mind is that things were way, way worse during the Gilded Age, etc. The pendulum swings back and forth and I think we are still pretty far from getting close to historical extremes. Plus there are so many interesting potentially game-changing trends in technology, demographics, climate, etc. Things are happening so fast.

[Larry]

Here's a question I've been thinking about: has there ever been a nation/culture etc. that has lasted more than a couple hundred years with such a large Middle Class like we have in the Western world?

On the subject of idle speculation and "what if"s . . .

I confess that I sometimes wonder.

We look at America, in the decades following WW2. And we observe strong unions, manufacturing, college education, and s prosperous middle class. And we see the American economy dominating the world.

And I reflect that correlation does not equal causation.

I believe that the strong middle class was part of the reason for the strong economy. But it's possible that it was the result.

Is it possible that middle class prosperity wasn;t the cause of The Golden Age, but it's result? After all, the fact that, after WW2, the US had the wartime economy which was literally arming not only the US war machine, but that of the Allies, combined. And that the rest of the industrialized world had smoking rubble.

Is it possible that what I think of as America's Golden Age was more of a bubble, than a formula for long-term success?

[/pessimism]

[mcsluggo]

Yeah, but what should the mechanism be when Sam Walton leaves his heirs his massive fortune? Even if you tax the heck out of it at 51%, it won't change the statistics in the video on wealth distribution by much.

.......

actually... that would make a tremendously HUGE difference.

---------- Post added March-11th-2013 at 04:36 PM ----------

What should Disney have paid George Lucas?

they should've paid him a huge kick in the shorts, obviously.

but that is neither here nor there for THIS conversation.

---------- Post added March-11th-2013 at 04:39 PM ----------

Well, what is this about exactly? Sounds like you have a specific plan. Lets hear it

Alex, I'll take "estate tax" for the win

[Predicto]

actually... that would make a tremendously HUGE difference.

---------- Post added March-11th-2013 at 04:36 PM ----------

they should've paid him a huge kick in the shorts, obviously.

but that is neither here nor there for THIS conversation.

---------- Post added March-11th-2013 at 04:39 PM ----------

Alex, I'll take "estate tax" for the win

Shut up you PhD economist. What the hell do you know about it?

[mcsluggo]

Almost everybody that has looked at has concluded that class mobility is decreased in the US and is lower than in many European countries now.

http://www.huffingtonpost.com/2011/11/07/income-mobility-us_n_1079501.html

---------- Post added March-10th-2013 at 09:16 PM ----------

1. A pre-1980s tax code in terms of progressiveness, but with more simplicity.

2. A tax on stock transactions that take into the account the volume of the trade that "punishes" people that buy and sell stocks (especially large volumes) at high regularity.

3. A robust inheretence tax.

4. Do soemthing about college tuition or student loans

I love 1, 3 and 4. 2 would just moving trading to offshore centers (basically London)

i PARTICULARLY love 3. (it is the one tax that could impact wealth accumualtion inthe largest way, AND it is economically efficient--- unless people learn how to "not die" to evade taxes.....)

[Tulane Skins Fan]

I wouldn't have minded if at some point they had lumped in govt as a contributing factor to our country's ills and it didn't help that the narrator spoke to the listener as if he was 10 years old. Envy politics will always sell to some degree.

I don't think they talked about the cause of the wealth inequality at all. I think the point was to show that we are not in a state of socialism that a lot of people think we are. It didn't talk about any cause and effect.

But, can you expound on how you think government is a contributing factor to this?

[deejaydana]

I don't think they talked about the cause of the wealth inequality at all. I think the point was to show that we are not in a state of socialism that a lot of people think we are. It didn't talk about any cause and effect.

But, can you expound on how you think government is a contributing factor to this?

I mentioned early on that QE has exacerbated inequalities instead of ameliorating them. In truth, the government is behind many injustices but that's probably fodder for another thread.

As an aside I don't get why people think we need to add more to the inheritance tax other than it's people who don't have anything to inherit from their forbears. I guess I don't resent the success of others, rather I'm inspired by it.

[Tulane Skins Fan]

I mentioned early on that QE has exacerbated inequalities instead of ameliorating them. In truth, the government is behind many injustices but that's probably fodder for another thread.

As an aside I don't get why people think we need to add more to the inheritance tax other than it's people who don't have anything to inherit from their forbears. I guess I don't resent the success of others, rather I'm inspired by it.

No one resents the success of others. Jeez.

Its one thing to say quantitative easing is making these more inequitable, but what is the basis for that?

[Mad Mike]

You still haven't outlined your plan. I'm not interested in hearing that there is a problem. We all agree there is. I'm interested in what your solution is. Be specific.

And mike, it is possible to discuss these things without acting like a raging dick. You've gone. From 0 to 100 and now you're implying I might ban you. Christ, take a drink

Please. Do tell. In what way have I been "acting like a raging dick".

In your first post you dismissed the video for it's "snide commentary". I found that disappointing because I consider you to be an intelligent, rational person and dismissing valuable information for a perceived tone (which I did not see at all) seemed out of character. Your second post was a question that I still fail to see the relevance of. (In all honesty - If I'm missing your point, please explain). I found that second post to be ironic because it seemed to me to be a snide comment in the form of a question that added nothing to the conversation. Again, something I viewed as out of character for you. My intent was to offer polite, constructive criticism. Clearly I failed.

I'll take the blame for not wording my last response better. But my reasoning was sound. As a general principle, it's never a good idea to criticize or argue with someone who has power over you unless it is absolutely necessary. Because no matter how hard you try to be polite and reasonable in your response, you may fail and/or the other person may perceive your response as "acting like a raging dick".

As for your insistence that I post "my solution", I'll pass. I have some general ideas, but I'm still searching for answers myself. My interest in this thread is in discussing the problem and listening to what others suggest. I don't think that's unreasonable. Do You?

[PeterMP]

I love 1, 3 and 4. 2 would just moving trading to offshore centers (basically London)

2 is already being done in much of the rest of the world, including the UK

http://blogs.reuters.com/felix-salmon/2013/01/30/europes-robust-financial-transactions-tax/

And even it applies in the UK if you are buying the stock in another country.

Also with gifting it is possible to at least avoid some of estate taxes.

---------- Post added March-11th-2013 at 01:06 PM ----------

I mentioned early on that QE has exacerbated inequalities instead of ameliorating them. In truth, the government is behind many injustices but that's probably fodder for another thread.

As an aside I don't get why people think we need to add more to the inheritance tax other than it's people who don't have anything to inherit from their forbears. I guess I don't resent the success of others, rather I'm inspired by it.

The changes in income disparity and decreased wealth mobility pre-date QE, though I do think that they potentially have added to it.

I for one support a robust inheretence tax and while will get nothing from my side of the family have already inhereted from my wife's great grandfather and strongly suspect that we will inheret from my wife's parents.

I am for it because I believe wealth disparity and low income mobility are bad for the country. I think that wealthy people have a lot of impact on the laws of this country because of their ability to access politicians, and I think mostly people (not just rich people and not all people rich or otherwise) are interested in their own self-interest, which includes keeping their money in their family.

I think this has the possiblity of creating essentially a "noble" class on a generational level.

[deejaydana]

No one resents the success of others. Jeez.

Its one thing to say quantitative easing is making these more inequitable, but what is the basis for that?

Of course people resent others' success. Obama uses this as a keystone idea in many of his mindless speeches. It's unfortunate but many people fall into this line of thinking. And it's easy to preach this to the dispossessed. Why focus on your own shortcomings, real or imagined, when you can focus instead on the successes of others and think what they've achieved has been reached by a zero sum set up ?

On the second point, QE was most likely needed at the time (2008) but at what price to all? It's caused distortion of labor markets and has caused companies to horde cash. It hasn't been complete ruin because other countries have followed suit thus somewhat masking inflation for us. It's unintentionally made the rich richer but of course, it's always evil capitalists fault. It has to be.

[Tulane Skins Fan]

Of course people resent others' success. Obama uses this as a keystone idea in many of his mindless speeches. It's unfortunate but many people fall into this line of thinking. And it's easy to preach this to the dispossessed. Why focus on your own shortcomings, real or imagined, when you can focus instead on the successes of others and think what they've achieved has been reached by a zero sum set up ?

I think you are a little too focused on reading the minds of others. When people talk about wealth inequality, its not because they are jealous of other people's success. Its because people see a real unfairness in the breaks that people with money are able to take advantage of.

When you say things like this, it sounds like you have no idea how an average person perceives these economic problems.

On the second point, QE was most likely needed at the time (2008) but at what price to all? It's caused distortion of labor markets and has caused companies to horde cash. It hasn't been complete ruin because other countries have followed suit thus somewhat masking inflation for us. It's unintentionally made the rich richer but of course, it's always evil capitalists fault. It has to be.

What's the basis for saying this... is this just your thoughts on the issue? I don't understand how QE makes "the rich richer" either. All of our money is being inflated at the same rate. QE is not giving more money to the rich... is it?

[Mad Mike]

Which explains why CEOs get golden parachutes even when they fail miserably. :doh:

And I noticed how you framed your argument and your bias is on display...

I wouldn't say all but tell me that I'm wrong that the majority of the middle class: overspends, doesn't invest enough, doesn't save enough, and carries too much debt?

All of which is a hindrance to building wealth.

"Nearly 44 percent of Americans don't have enough savings or other liquid assets to stay out of poverty for more than three months if they lose their income, according to Wednesday's report by the Corporation for Enterprise Development. Almost a third have no savings accounts at all."

from: http://www.npr.org/2013/01/30/170561872/study-nearly-half-in-u-s-lack-financial-safety-net

Also, I heard recently on Marketplace Money a statistic that 50% of Americans do not own a single stock.

It seems silly to fault CEOs for negotiating a golden parachute when, in the same situation, with the same leverage, any of us would do the same. If Stephen Strasburg sucks does he give back his money? John Wall? OJ Mayo isn't offering the Grizz his money back.

The frugal wealthy people comment wasn't meant as a jab, but wealth doesn't have to be overt. It's not always jets and mansions and sports cars. It's about driving a beat up pickup truck, living in the same house you bought when you were 25, keeping personal overhead low, etc. But lest you think I just come from a place where I look down upon poor people, my wife feeds the homeless once a week for over a decade and we do mission work from time to time and she counsels people in the lower strata on a daily basis and there is a common thread. Particularly with the poor (not necessarily the homeless that's more of a mental illness issue), they don't have the skills and know how to create a budget much less come up with a plan to save and build wealth. Some will argue that they don't even have enough to get ahead, maybe in some cases that's true but for the most part if they just played "defense" more that they could start to gain some traction.

So while some see the income inequality issue as the rich doing something nefarious to increase the gap, I see it as much as the lower and middle class not knowing how to keep up.

I dont fault CEO's for trying to get as much as possible in compensation. I blame the corporations for not telling them to go **** themselves and continuing to reward failure. :evilg:

There will always be those who are not as good at saving or managing money than others. Yes, many people spend more than they should. But the flip side is that the spending is what drives profits, and those profits are what drive the economy. If people spend less as you suggest, we have a slower economy. And while that may make sense to you and I, it's not what wall street wants and it's not going to help pay down our national debt. It's a nasty catch 22 and just part of the reason this issue is so complex.

---------- Post added March-11th-2013 at 05:40 PM ----------

Of course people resent others' success. Obama uses this as a keystone idea in many of his mindless speeches. It's unfortunate but many people fall into this line of thinking. And it's easy to preach this to the dispossessed. Why focus on your own shortcomings, real or imagined, when you can focus instead on the successes of others and think what they've achieved has been reached by a zero sum set up ?

On the second point, QE was most likely needed at the time (2008) but at what price to all? It's caused distortion of labor markets and has caused companies to horde cash. It hasn't been complete ruin because other countries have followed suit thus somewhat masking inflation for us. It's unintentionally made the rich richer but of course, it's always evil capitalists fault. It has to be.

One more time. It's not class warfare to point out that the rich are getting richer and the poor are getting poorer. It's self defense.

And capitalism is no more evil than socialism. We need to stop making them a religion. They both have positive and negative qualities. They are the yin and yang that we must balance in order to achieve a stable, sustainable society.

BTW I saw an Aston Martin Virage convertible yesterday. *Base* price $220,000. One of the most beautiful cars I have ever seen. Do I want one? Hell yes. More than I can possibly express. Do I resent the owner for having one? Not one single bit. Supercars are a passion for me even if I may never own one and without the rich people who can afford to buy them, they wouldn't exist.

[mcsluggo]

Of course people resent others' success. Obama uses this as a keystone idea in many of his mindless speeches. It's unfortunate but many people fall into this line of thinking. And it's easy to preach this to the dispossessed. Why focus on your own shortcomings, real or imagined, when you can focus instead on the successes of others and think what they've achieved has been reached by a zero sum set up ?

On the second point, QE was most likely needed at the time (2008) but at what price to all? It's caused distortion of labor markets and has caused companies to horde cash. It hasn't been complete ruin because other countries have followed suit thus somewhat masking inflation for us. It's unintentionally made the rich richer but of course, it's always evil capitalists fault. It has to be.

and, of course, its always really cheap and convenient to dismiss discussion with a faint whiff of disdain at class envy, and move on...

quite cheap.

who in this discussion do you think is sitting in the gutters looking hungrily at the fat cats? I think its fair to say that most of the people here are relatively prosperous and self sufficient. no? In any case its a fairly basic and irritating strategy.... but what could we expect from the fox-fed dittohead end of the political spectrum? (see how eay that blanket disimissal is? and how useful?)

Inheritance taxes are about as economically efficient as taxation can be:

people can not alter their behavior (much!) to avoid the tax.

it doesn't tax productive behavior, and instead taxes a straight wealth transfer to individuals.

it increased the incentives for those that we can logically think have benefitted greatly from knowledge transfer to actually put that knowledge to use to create wealth in a NEW generation

there really is very little economic justification (if any at all) for attacking the inheritance tax, relative to all other taxes... which is, of course, why the pocket soundbites that are disdainfully dropped, and gleefully parroted, all deal with "class warfare", "envy" and other related meaningless scholck. ....but, if we HAVE to go into the class warfare discussion, it is pretty clear who has been invoking class warfare tactics, and which class has been winning the class war for the last 40 years.

and before anyone gets started about my envy... i am in nuetral territory here. neither in the top 1% (or top .01%), nor the botom 4/5s (80%)

[Larry]

One more time. It's not class warfare to point out that the rich are getting richer and the poor are getting poorer. It's self defense.

But haven't you heard? The marching orders have been in place for decades: Whenever people point out that the ultra-rich have been engaging (successfully) in class warfare, for decades, to claim that the losing side in the class warfare are just jealous thieves, trying to steal all of the riches from rich people, all of whom earned every single bit of their wealth, in fact, they're the most oppressed class in the world.

Just like anybody who criticizes Israel is anti-Semitic, anybody who criticizes the NAACP is a racist, and anybody who wants to raise taxes is a Communist.

[Elessar78]

I dont fault CEO's for trying to get as much as possible in compensation. I blame the corporations for not telling them to go **** themselves and continuing to reward failure. :evilg:

There will always be those who are not as good at saving or managing money than others. Yes, many people spend more than they should. But the flip side is that the spending is what drives profits, and those profits are what drive the economy. If people spend less as you suggest, we have a slower economy. And while that may make sense to you and I, it's not what wall street wants and it's not going to help pay down our national debt. It's a nasty catch 22 and just part of the reason this issue is so complex.

A financially sound middle class would provide us with steady, predictable, sustainable growth and less of these boom/bust cycles we have every decade or so now. All the spending we have is unsustainable because most if it is built on debt. Steady growth and larger savings rates would make for a healthier economy and probably reduce wealth inequality over the long run.

The middle class, with its over consumption essentially sends their money to the wealthy who own all the goods and services they pay for. In whose pocket do you thinky the money the MC spends at malls, mortgage for their home, lowes, car dealerships, gas stations, whole foods, apple store, etc ultimately end up?

[TD_washingtonredskins]

There will always be those who are not as good at saving or managing money than others. Yes, many people spend more than they should. But the flip side is that the spending is what drives profits, and those profits are what drive the economy. If people spend less as you suggest, we have a slower economy. And while that may make sense to you and I, it's not what wall street wants and it's not going to help pay down our national debt. It's a nasty catch 22 and just part of the reason this issue is so complex.

Also, some people might not share the goal of becoming wealthy and might prefer to be well-off and comfortable. To some, living comfortably, giving kids things they didn't have, going on vacation, enjoying money in their 30s, 40s, and 50s, etc. might be more attractive than saving and investing in the hopes of being a wealthy old man.

My wife and I both make good money. We have 2 kids and none of the 4 of us want for anything. We could probably cut $3,000 from our month budget relatively easily with different spending habits, day care options, etc. But we like to go out to dinner instead of cooking pasta each night. We like to take the kids on vacation a few times per year.

I know that I'm never going to be a billionaire, and I'm comfortable with that. I do think that I might be able to live this life that I am and, with a little luck, retire a millionaire though. I'm OK with that.

[deejaydana]

and, of course, its always really cheap and convenient to dismiss discussion with a faint whiff of disdain at class envy, and move on...

quite cheap.

who in this discussion do you think is sitting in the gutters looking hungrily at the fat cats? I think its fair to say that most of the people here are relatively prosperous and self sufficient. no? In any case its a fairly basic and irritating strategy.... but what could we expect from the fox-fed dittohead end of the political spectrum? (see how eay that blanket disimissal is? and how useful?)

Inheritance taxes are about as economically efficient as taxation can be:

people can not alter their behavior (much!) to avoid the tax.

it doesn't tax productive behavior, and instead taxes a straight wealth transfer to individuals.

it increased the incentives for those that we can logically think have benefitted greatly from knowledge transfer to actually put that knowledge to use to create wealth in a NEW generation

there really is very little economic justification (if any at all) for attacking the inheritance tax, relative to all other taxes... which is, of course, why the pocket soundbites that are disdainfully dropped, and gleefully parroted, all deal with "class warfare", "envy" and other related meaningless scholck. ....but, if we HAVE to go into the class warfare discussion, it is pretty clear who has been invoking class warfare tactics, and which class has been winning the class war for the last 40 years.

and before anyone gets started about my envy... i am in nuetral territory here. neither in the top 1% (or top .01%), nor the botom 4/5s (80%)

I don't find giving that money back to the gov't to be efficient really. Those parties earned it, were taxed upon it once, and now the gov't gets more of it as it changes hands? I suppose I'd be more comfortable with it if it went to philanthropic ends and not the never satisfied maw of Uncle Sam. A legitimate alternative could be a consumption tax. You could tax air heads like the Kardashians for what they consume. It would still be progressive and could satisfy that crowd. Just a thought. Our gov't doesn't need more money than it already takes in and wastes, but that's just my take.

[Lombardi's_kid_brother]

I don't find giving that money back to the gov't to be efficient really. Those parties earned it, were taxed upon it once, and now the gov't gets more of it as it changes hands? I suppose I'd be more comfortable with it if it went to philanthropic ends and not the never satisfied maw of Uncle Sam. A legitimate alternative could be a consumption tax. You could tax air heads like the Kardashians for what they consume. It would still be progressive and could satisfy that crowd. Just a thought. Our gov't doesn't need more money than it already takes in and wastes, but that's just my take.

Consumption taxes are the least progressive taxes there are. They are the exact opposite of progressive.

[Predicto]

I don't find giving that money back to the gov't to be efficient really. Those parties earned it, were taxed upon it once, .

As we have noted before on this board, this statement is not true. A huge percentage of the wealth in decedent estates has never been taxed at all. It consists of capital gains that were never cashed in on property, stocks and the like. It was never, ever taxed. And if you pass it along without an estate tax, it will never be taxed because the heirs receive it at the new tax basis on the day the estate closes.