Top 0.1% to pass bottom 90% of Americans in combined wealth

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ucim
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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby ucim » Tue Dec 09, 2014 3:27 am UTC

Zcorp wrote:we are still simply trying to get you to recognize that there is a problem with the wealth distribution. That some people have too much money.
Saying it again doesn't convince me. If there's a problem, it's what some people are doing with their money. The ability to do evil is not the same thing as actually doing evil.

Do you disagree with that statement? If so, we can stop here. If not, it's what I mean by saying "they have too mucn money" is not the problem.

Zcorp wrote:You aren't ok with taking the rich guys money, say through paying their at least their proportional share of taxes, but are ok with taking their company over?
(&@sardia) I'm fine with that. I'm not opposed to taxes. The rich benefit disproportionally from society, they should pay into it too. For that reason.

Zcorp wrote:Are you unfamiliar with individual contributions to influence politics via super pacs and the like? Or do you honestly believe that isn't a problem?
I'm quite familiar with this. The problem is that politics is susceptible to money.

Zcorp wrote:Seriously? Your concerned that the rich guy is going to purchase a nuke?
I'm not concerned that the Zuckerberg or Gates is going to buy one. I'm concerned that some independent religious fanatic is going to. I don't know that there are any wealthy enough at this point, but perhaps in the future. It would have an adverse effect on society.

LaserGuy wrote:What does that have to do with fairness?
Why does it matter? It's not fair that I have a son, and she doesn't. If I have two sons, does she get to take one from me, "to be fair"?

sardia wrote:Taxation is legal and very important principle of any government or society.
Agreed. And laws are important too. But not just any taxes, and not just any laws.

Jose
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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby Thesh » Tue Dec 09, 2014 3:51 am UTC

The notion that our system is anything resembling a meritocracy is just plain silly. If I inherited 100 million dollars, and I put my money in mutual funds, I could easily make a million a year (adjusted for inflation), doing absolutely nothing but keeping that money in funds. With a good funds manager, I could sit on my ass averaging 10 million a year or more. Am I doing more to provide for this country than someone bagging groceries just because I have money? I would say absolutely not. In fact, in the past decade, I would say that the people who earned the most did so by using technology to replace labor and off-shoring to increase their cut, rather than by bringing anything new to the table.

This is annualized GDP growth by decade for the 1950s-2000s:

1950s: 4.20%
1960s: 4.51%
1970s: 3.21%
1980s: 3.11%
1990s: 3.22%
2000s: 2.65% (Excluding 2008 & 2009)
2000s: 1.80%
2010s: 2.17%
(data from here)

So basically, we saw our worst growth in the 2000s. As has been shown, growth in wages have been abysmal for that same period. Now, let;s look at corporate profits as a percent of GDP:

1950s: 6.02%
1960s: 6.16%
1970s: 6.86
1980s: 4.72%
1990s: 5.42%
2000s: 7.48%
2010s: 10.00%
(corporate profit data from here)

So corporations have been more profitable than ever, yet wages have been stagnating. Now, some of the GDP growth should be explained away by baby boomers retiring, but there is something we should have seen if that was the case: wages going up. Essentially, as baby boomers retire and the employment:population ratio declines, supply of labor should decrease, making the labor market more competitive. However, what have we actually seen? Stagnating wages (as shown above), and people working fewer hours. This indicates that even with baby boomers retiring, and with corporate profits skyrocketing, demand for labor has been declining. Why is this? Because we are able to send jobs overseas and replace jobs with technology faster than the baby boomers can actually retire.

Essentially the game is this: if you are at the top, if you had money at the start of the 2000s, you did really well not because you were doing anything innovative, but because you could offshore jobs and use readily available technologies that anyone in the world can realize it will boost your efficiency. The game is essentially stacked at the top. There's no merit involved, just power and luck.

You may call taxes theft, but using your power and influence to increase your share of income at the expense of the workers, at the expense of most of the population isn't any different, except that it's not democratic.
Summum ius, summa iniuria.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby Zcorp » Tue Dec 09, 2014 4:31 am UTC

ucim wrote:
Zcorp wrote:You aren't ok with taking the rich guys money, say through paying their at least their proportional share of taxes, but are ok with taking their company over?
(&@sardia) I'm fine with that. I'm not opposed to taxes. The rich benefit disproportionally from society, they should pay into it too. For that reason.

So, you are ok with taxing the rich more, and taking their companies over but don't believe they have 'too much money.' I just don't understand what you are even trying to say.

Zcorp wrote:Are you unfamiliar with individual contributions to influence politics via super pacs and the like? Or do you honestly believe that isn't a problem?
I'm quite familiar with this. The problem is that politics is susceptible to money.

Politics, in the US, is more susceptible to money now than it has ever been. It is so because some people have too much money. The average person can not afford to spend money to have their voice heard in campaigns. This is because the portion of the total money they have, let alone income can choose to put toward things other than basics, is not great enough to have a voice. This again relates to the idea that the economy is in fact a near zero-sum game. Since you don't understand and can't accept that you will never understand the impact if our inequality. Until you understand this reality you won't understand that saying the 'the rich have too much money' is the same thing as saying 'everyone else has not enough money.'

ucim wrote:
Zcorp wrote:we are still simply trying to get you to recognize that there is a problem with the wealth distribution. That some people have too much money.
Saying it again doesn't convince me. If there's a problem, it's what some people are doing with their money.

I guess I'll be done with you after this post.

I didn't say it again to convince you...I said it again because you were changing the focus on the discussion. We haven't even moved on to how to solve it yet, as you haven't even admitted there is a problem. Yet for some reason when asked to actually have an explanation on why you think it isn't a problem you say something about you personally not having a solution.

You can't even focus enough to stay on point, let alone give explanation to why you believe something.

sardia seems unfortunately to have the right idea. You've displayed you aren't willing to inform yourself before forming an opinion, can't express why you have an opinion, contradict yourself and state other people are wrong but can't give any argument on why someone else's explanation is wrong. As you don't display understanding of the basic concepts underlying what we mean when we say 'they have to much money' and are even willing to make shit up to prevent yourself from learning, you simply don't seem to be worth even trying to convince or teach.

Good luck, hopefully in the future people like you are rare enough that we can have actually strive toward equal opportunity again.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby ucim » Tue Dec 09, 2014 4:40 am UTC

Zcorp wrote:So, you are ok with taxing the rich more, and taking their companies over but don't believe they have 'too much money.' I just don't understand what you are even trying to say.

I am trying to say that the reason I am ok with this is not that "they have too much money so we should take some away".

Jose
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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby morriswalters » Tue Dec 09, 2014 4:50 am UTC

ucim wrote:
LaserGuy wrote:Why is it fair that you should be able to give him your money?
Because it's my money. That's what "my" means.

There are things I can't do with my money, but those are things that I can't do with somebody else's money either. They are not a function of the money being mine.

GIving to one's children is one of the most fundamental rights one can have. If that right is to be taken away, we are going to need a bigger can.

Jose
Why? That is to say the act of having wealth is itself a multiplier. Harvard instead of State College. Better health, access to resources unavailable to everyone. The old boys network and so on. Which is not to say that is all that is bad. But how much is enough? You earned it but they just hit the genetic lottery. If skill is involved in acquiring wealth than it would seem that it could be taught. And if it can, a father who is wealthy seems to be a prime candidate to teach those skills. Why shouldn't they be required to make their own way? They have a head start.

And when I said arbitrary I meant in terms of the size we would wish the middle class to be. As in what will keep society healthy and provide the greatest benefit to everyone including the rich, in terms of social stability.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby mat.tia » Tue Dec 09, 2014 9:21 am UTC

Tyndmyr wrote:
mat.tia wrote:I thought one's wealth would be measured by the proportion of goods in the market he's able to buy. [edit: or, simply, owns]

It is

If it is, than this means that everytime one gets richer, the rest gets poorer.
So saying the problem with people having too much money is simply that they can use it to do evil or to buy influence is only a side of the issue.
If rich people keep getting richer the problem is also that other people will inevitabily get poorer.

ucim wrote:
mat.tia wrote:
ucim wrote:How would you determine what the ideal distribution of wealth ought to be?
What would you say?
I'm not convinced there is one. Sure, a situation where one person has all the money is non-ideal, but so is a situation where one person has all the power. And the problem is that concentrated money buys power, not that it buys goods. But concentrated money (as well as concentrated power) is necessary to society.

In any case, a distribution of wealth is a result, not a target. I would say it needs to be the result of a healthy process of production and trade. If there is too much of an imbalance, this could be seen as a symptom of an underlying problem. But if so, the thing to address is the underlying problem. If a canary dies, you don't just buy a new bird.


And what is the underlying problem in your opinion, if not that regulations are made so that this spread between poor and rich keeps growing?
If you don't regulate things it is obvious that "the rich" will be the one in charge of deciding almost everything about how much of a company earnings go to paychecks, how much to personal wealth etc.

Now THIS is why money is power. Because there is no other power opposing it.


CorruptUser wrote:Thought experiment. The economy is pies.

So if wages were somehow "democratically" fixed, would the farmhands get the most pie?
If so, would there not be any farmhands wanting to become a miller, or a baker?

Are the above questions really THAT stupid? I would be curious to hear some opinions about them.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby elasto » Tue Dec 09, 2014 9:52 am UTC

OECD wrote:Income inequality has a "statistically significant impact" on economic growth, according to research by the Organisation for Economic Co-operation and Development (OECD).

In the UK, rising inequality cost the economy almost nine percentage points of GDP growth between 1990 and 2010, the think tank said. The US lost almost seven points.

The OECD also found that redistribution of wealth via taxes and benefits does not hamper economic growth: "This compelling evidence proves that addressing high and growing inequality is critical to promote strong and sustained growth and needs to be at the centre of the policy debate," said OECD's secretary general, Angel Gurría: "Countries that promote equal opportunity for all from an early age are those that will grow and prosper."

...


link

And it's not just the OECD advancing income equality on economic grounds; Other advocates now include, of all bodies, the IMF...

IMF wrote:Some 15 years ago, even after Labour won office in 1997, there was a consensus in the Treasury - which was shared by Tony Blair and other New Labour ministers - that promoting equality meant sacrificing economic growth. So the thrust of government policy was to stimulate the economy, and never mind if the gap between rich and poor widened - so long as the poor became richer too.

But do we have to choose between equality and expanding the cake? Are more equal societies inevitably societies with proportionately smaller national incomes than less equal societies, all other things being equal?

Strikingly, the new orthodoxy at that most establishment and conservative of financial institutions, the International Monetary Fund, is that the reverse is true - namely that inequality is not the friend of faster growth, of a bigger cake, but can be its nemesis.

What is more, another binned view is that of Thatcher/Reagan - for years taken as a truth of Mosaic status - to the effect that government efforts to reduce the gap between rich and poor end up impoverishing us all.

...


link

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby leady » Tue Dec 09, 2014 1:12 pm UTC

mat.tia wrote:If it is, than this means that everytime one gets richer, the rest gets poorer.
So saying the problem with people having too much money is simply that they can use it to do evil or to buy influence is only a side of the issue.
If rich people keep getting richer the problem is also that other people will inevitabily get poorer.


There are scenarios that are zero sum but they are fairly rare. By and large all government redistribution is negative sum in the moment (redistribution requires civil service and police) and private gains by and large are positive sum even when warped (e.g. the creation of new hybrid cars). Naturally its easy to create examples where neither of these are true (war, famine) or arbritrage gains from a takeover. I think generally the super rich will have grown the pie more than the slice they take. But this is naturally impossible to prove and still doesn't answer whether the slice is fair.

what you can be fairly sure of is that the rich getting richer outside of state control doesn't make the poor poorer but it might them comparatively worse.

Thesh wrote:So corporations have been more profitable than ever, yet wages have been stagnating. Now, some of the GDP growth should be explained away by baby boomers retiring, but there is something we should have seen if that was the case: wages going up. Essentially, as baby boomers retire and the employment:population ratio declines, supply of labor should decrease, making the labor market more competitive. However, what have we actually seen? Stagnating wages (as shown above), and people working fewer hours. This indicates that even with baby boomers retiring, and with corporate profits skyrocketing, demand for labor has been declining. Why is this? Because we are able to send jobs overseas and replace jobs with technology faster than the baby boomers can actually retire.


I think you've answered your own quesiton - corporate profits are going up faster than the US GDP because they are globalised industries and similarly i suspect CEO renumeration. I think this is the main cause of both the widing wealth and income gaps. This is also why I think ill conceived actions to correct it are likely to do more harm than good, particularly when all governments target income rather than wealth.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby mat.tia » Tue Dec 09, 2014 2:29 pm UTC

leady wrote:I think generally the super rich will have grown the pie more than the slice they take.

Isn't this obvious? If it weren't so, if the rich took more pie than what they contributed to create (saying they alone created it is nonsense), would that not make the rest worse off - meaning actually owning less than what they owned before the rich-man made the pie rise by n and took more than n from it?
What would be the point of rewarding these rich than? To incentive them making society worse off not only in a relative way, but also in an absolute way?

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby KrytenKoro » Tue Dec 09, 2014 2:44 pm UTC

mat.tia wrote:
leady wrote:I think generally the super rich will have grown the pie more than the slice they take.

Isn't this obvious? If it weren't so, if the rich took more pie than what they contributed to create (saying they alone created it is nonsense), would that not make the rest worse off - meaning actually owning less than what they owned before the rich-man made the pie rise by n and took more than n from it?
What would be the point of rewarding these rich than? To incentive them making society worse off not only in a relative way, but also in an absolute way?

Mostly the belief that any of that is true, inculculated through a long-running propaganda campaign about trickle-down economics, lies about the estate tax, and anecdotes about the "lazy poor and thieving welfare queens".

In other cases, outright bribery and buying of the politicians who pass the relevant laws, and funding for campaigns against their rivals.
From the elegant yelling of this compelling dispute comes the ghastly suspicion my opposition's a fruit.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby LaserGuy » Tue Dec 09, 2014 3:29 pm UTC

leady wrote:
mat.tia wrote:If it is, than this means that everytime one gets richer, the rest gets poorer.
So saying the problem with people having too much money is simply that they can use it to do evil or to buy influence is only a side of the issue.
If rich people keep getting richer the problem is also that other people will inevitabily get poorer.


There are scenarios that are zero sum but they are fairly rare. By and large all government redistribution is negative sum in the moment (redistribution requires civil service and police) and private gains by and large are positive sum even when warped (e.g. the creation of new hybrid cars). Naturally its easy to create examples where neither of these are true (war, famine) or arbritrage gains from a takeover. I think generally the super rich will have grown the pie more than the slice they take. But this is naturally impossible to prove and still doesn't answer whether the slice is fair.

what you can be fairly sure of is that the rich getting richer outside of state control doesn't make the poor poorer but it might them comparatively worse.


Except that the evidence suggests that although the pie has gotten larger (recession aside), the real wages of the working class and middle class have stagnated or declined. The pie is getting bigger, but the bottom 90% are actually worse off now than they were in the 70s. This isn't impossible to prove; the data was quoted in this very thread.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby leady » Tue Dec 09, 2014 4:30 pm UTC

Maybe but I can't find any true earnings type information only income, which hides the underlying reality.

I suspect a combination of

working women
globalisation
increased tax take
immigration
age demographics
increased cost of health benefits
increased cost of work pensions

all screw the income infomation - bar for the super rich who essentially can ignore all these things. I think you'd get an economics phd for separating out all the effects through

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby Tyndmyr » Tue Dec 09, 2014 9:04 pm UTC

Thesh wrote:The notion that our system is anything resembling a meritocracy is just plain silly. If I inherited 100 million dollars, and I put my money in mutual funds, I could easily make a million a year (adjusted for inflation), doing absolutely nothing but keeping that money in funds. With a good funds manager, I could sit on my ass averaging 10 million a year or more. Am I doing more to provide for this country than someone bagging groceries just because I have money? I would say absolutely not. In fact, in the past decade, I would say that the people who earned the most did so by using technology to replace labor and off-shoring to increase their cut, rather than by bringing anything new to the table.


I dare say that the number of people who inherit 100 mil is fairly small, and that the number who then do that is far, far smaller. Plus, the stock market is not guaranteed to always rise, nor are you guaranteed to have a good funds manager.

But there is an inherent truth here, which is that it's easier to produce wealth if you already have wealth. This is nigh-universal, from such trivial examples as having tools vs making something by hand, all the way up to such grandiose examples as this.

Also, using technology to replace labor IS bringing something new to the table.

Essentially the game is this: if you are at the top, if you had money at the start of the 2000s, you did really well not because you were doing anything innovative, but because you could offshore jobs and use readily available technologies that anyone in the world can realize it will boost your efficiency. The game is essentially stacked at the top. There's no merit involved, just power and luck.


If it were solely a matter of luck, one would expect winners and losers to be selected at random. This is ESPECIALLY not the case at the top.

People keep saying "it's just luck" as if this is something that doesn't require evidence without thinking about what ascribing something to luck really means.

leady wrote:Maybe but I can't find any true earnings type information only income, which hides the underlying reality.

I suspect a combination of

working women
globalisation
increased tax take
immigration
age demographics
increased cost of health benefits
increased cost of work pensions

all screw the income infomation - bar for the super rich who essentially can ignore all these things. I think you'd get an economics phd for separating out all the effects through


Accurate. All of those are known effects. I can give fairly good breakdowns for any one of those, but none of those are exactly simple things. Fully breaking out each is a fairly significant undertaking.

Note that many of them will skew averages despite being a positive effect. Consider globalization, working women, and immigration. All of these represent an increase in available labor to the US market. More resources is a good thing, with a growth in overall production, but obviously, this will depress prices for that resource. Therefore, we can expect average wages to fall as a result of outsourcing, etc. The same effect is easily observable with any other resource as supply spikes rapidly. Labor isn't special in terms of resources. We've just been trained to think that it is.

sardia wrote:
No, I want justification for limiting freedoms - in this case the freedom to keep my money. "He has too much money" is not justification by itself.

Taxation is legal and very important principle of any government or society. Justification given. Technically, I don't even have to convince you, I just have to convince 51% of the country that it's ok to raise taxes to pay for program xyz. That's all the justification I need. And no, the freedom to keep your money is not a legitimate excuse to not say... pay to prevent families from freezing.


I think he's looking for a moral justification, not a legal one. After all, you don't seem to accept a 51% majority as a moral justification for letting people freeze to death, do you? Thus, it is obvious that a majority vote is not the moral basis you're using, and it is indeed possible for a majority to vote for something they shouldn't.

I do not oppose all taxes on a moral basis, but your specific argument here appears broken.

Zcorp wrote:
ucim wrote:
Zcorp wrote:Don't just tell me it is the wrong way to look at it. [....]Given my explanation, why is this the wrong way to look at it? What is a better way to look at it?
I don't have a solution. But that doesn't make any other solution better than leaving it alone. And the right problem has to be the one addressed, or we end up in the "drug problem" miasma; a similar feedback loop where the wrong problem is typically addressed.

We aren't even to the point if talking about a solution...we are still simply trying to get you to recognize that there is a problem with the wealth distribution. That some people have too much money.

You didn't tell me how 'my way of looking at it' is wrong.


Looking at this as "someone has too much money" is backward. The problem should be framed as "someone does not have enough money". This may seem similar, but it's an important difference. If you simply removed wealth from the system at the top, that is obviously an undesirable solution, though it would "fix" the first problem. If you could somehow magically introduce wealth and give it to everyone, that'd be fantastic for the second.

It is reasonably to be concerned about shortages. It is not reasonable to hate wealth.

Zcorp wrote:
When a corporation becomes "too big to fail", then it has jackknifed, and has transferred the risk (of failure) to the general public. Perhaps at this point the public should become a stockholder.

You aren't ok with taking the rich guys money, say through paying their at least their proportional share of taxes, but are ok with taking their company over?


"Too big to fail" is a misnomer. The point of anti-monopoly laws is that they are supposed to prevent any one company from getting a stranglehold and being entirely irreplacable. The problem does not arise when they ask for a bailout. The problem existed before that. Bailouts are simply a horrible band-aid over an underlying issue. Even if you bail them out, what if, down the road, they end up in trouble again? Single points of failure are bad.

sardia wrote:I disagree. The rich may not require spending, but it doesn't mean they don't ask and get spending.

I disagree, subsidies to the rich come at expense to the poor and the middle class. For example, sequestration bit everyone, but then we passed a few bills to refund the faa because rich people were complaint. That's the rich getting subsidized at the expense of the poor. The same thing happens when our taxes have all these loopholes. The ones who can afford to take advantage of them results in either a higher rate or less services for everyone else.

There's also weirder scenarios that are hard to categorized. If a successful steel and casting company gets taken apart by large shareholders ( eg pensioners mutual fund) for the overfunded retirement accounts inside, then is it the rich robbing the rich to pay pensioners? Meanwhile, the workers get their retirement money siphoned off.


"subsidies" to the rich almost invariably take the form of tax reductions. Not direct payments. These are inherently different from those given to the poor. I mean, you contradict me, then immediately jump to talking about tax loopholes. That's EXACTLY the difference I'm talking about.

Now, obviously, direct payments to the rich, where they exist, should be removed on general economic principles, but that is almost irrelevant to income inequality as a whole.

Fun fact: Germany is debating removing their inheritence tax exemptions. Corporations would usually be passed down family lines almost entirely untaxed. Just something to keep in mind as people go on and on about how the US is so ridiculously unfair with inheritence and corporations being all corporationy and what not.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby sardia » Tue Dec 09, 2014 9:38 pm UTC

Tyndmyr, I get the rich pay more in taxes because they're rich, but how was sequestration a bad example? Both spending on rich and poor went down, but the rich lobbied to get their spending up. Now the rich have a higher percentage of the budget then before sequestration.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby mat.tia » Tue Dec 09, 2014 9:55 pm UTC

Tyndmyr wrote:Looking at this as "someone has too much money" is backward. The problem should be framed as "someone does not have enough money". This may seem similar, but it's an important difference. If you simply removed wealth from the system at the top, that is obviously an undesirable solution, though it would "fix" the first problem. If you could somehow magically introduce wealth and give it to everyone, that'd be fantastic for the second.

true in theory; but unless you can create wealth from nothing and for free, magically as you say; unless you want to destroy half of the planet, I don't see how one side of the problem can be considered indipendent by the opposite one.

Tyndmyr wrote:Labor isn't special in terms of resources. We've just been trained to think that it is.

Sure it's not the opposite? If you ask an untrained kid if he sees them different I bet he says yes.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby LaserGuy » Wed Dec 10, 2014 4:17 am UTC

leady wrote:Maybe but I can't find any true earnings type information only income, which hides the underlying reality.

I suspect a combination of

working women
globalisation
increased tax take
immigration
age demographics
increased cost of health benefits
increased cost of work pensions

all screw the income infomation - bar for the super rich who essentially can ignore all these things. I think you'd get an economics phd for separating out all the effects through


We don't need to separate out the effects though. The net result of all such economic activity is that the rich are getting a larger share of the economic pie, and, despite the fact that the pie is growing, the share belonging to the rest of us is not.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby Zcorp » Wed Dec 10, 2014 4:19 am UTC

Tyndmyr wrote:Looking at this as "someone has too much money" is backward.

No it isn't, and that is half the point.

The problem should be framed as "someone does not have enough money". This may seem similar, but it's an important difference. If you simply removed wealth from the system at the top, that is obviously an undesirable solution, though it would "fix" the first problem. If you could somehow magically introduce wealth and give it to everyone, that'd be fantastic for the second.

It is reasonably to be concerned about shortages. It is not reasonable to hate wealth.

No one is hating wealth, we are just aware of the impact of extreme wealth.

I've said this like 5 times now, but not to you I guess.

The significance of 'framing' it as 'someone has too much money' is the impact having that money has on influence rather than just stating that some people are struggling. If you understand that the economy is a near zero-sum game stating it as 'some people have too much money' is equivalent to 'some people don't have enough money' but adds the weight on the influence. Although I doubt anyone here was trying to 'frame' the message.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby Tyndmyr » Wed Dec 10, 2014 8:39 pm UTC

sardia wrote:Tyndmyr, I get the rich pay more in taxes because they're rich, but how was sequestration a bad example? Both spending on rich and poor went down, but the rich lobbied to get their spending up. Now the rich have a higher percentage of the budget then before sequestration.


The FAA is not just a rich-person service. A pretty large segment of america flies. Yeah, rich people fly more often, but...rich people consume more of a LOT of things. That doesn't make the FAA solely, or even primarily a rich person concern.

quote="mat.tia"]
Tyndmyr wrote:Looking at this as "someone has too much money" is backward. The problem should be framed as "someone does not have enough money". This may seem similar, but it's an important difference. If you simply removed wealth from the system at the top, that is obviously an undesirable solution, though it would "fix" the first problem. If you could somehow magically introduce wealth and give it to everyone, that'd be fantastic for the second.

true in theory; but unless you can create wealth from nothing and for free, magically as you say; unless you want to destroy half of the planet, I don't see how one side of the problem can be considered indipendent by the opposite one.[/quote]

That particular action exists only in theory, but it serves to illustrate that you are framing the question incorrectly, and describing a problem that is not the actual problem. If you try to solve the wrong problem, it is unlikely that you will arrive at a correct solution.

Tyndmyr wrote:Labor isn't special in terms of resources. We've just been trained to think that it is.

Sure it's not the opposite? If you ask an untrained kid if he sees them different I bet he says yes.


You probably shouldn't rely on untrained children for economic theory.

But historically, yes, human labor has been viewed as a resource for essentially forever. The distinction of the labor from the human is perhaps an element of modern thought, as many cultures used to simply view humans as assets no different from any other. But...I digress. The economy isn't something with a soul, that works differently with different things merely because you want it to. Resources are simply resources.

Zcorp wrote:
Tyndmyr wrote:Looking at this as "someone has too much money" is backward.

No it isn't, and that is half the point.


Why not? If you could, at a stroke, destroy half the wealth of everyone in the top 1%, and leave everyone else's untouched, would you do it? Do you think the effects of this would be positive, or negative, and why?

Zcorp wrote:If you understand that the economy is a near zero-sum game stating it as 'some people have too much money' is equivalent to 'some people don't have enough money' but adds the weight on the influence. Although I doubt anyone here was trying to 'frame' the message.


The economy is not a zero sum game. Nor is it close enough for it to make a good approximation over any appreciable length of time. The idea that you can arbitrarily change the distribution without affecting the total is not supported by economics. You are asking me to "understand" something akin to the earth being flat. Yes, your belief may be self-consistent, if you accept nonsense as fact. That is irrelevant.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby Zcorp » Wed Dec 10, 2014 8:46 pm UTC

Tyndmyr wrote:The economy is not a zero sum game. Nor is it close enough for it to make a good approximation over any appreciable length of time. The idea that you can arbitrarily change the distribution without affecting the total is not supported by economics. You are asking me to "understand" something akin to the earth being flat. Yes, your belief may be self-consistent, if you accept nonsense as fact. That is irrelevant.


How is it that all your side of this can do is straw-man?

Who is proposing any arbitrary changes? Who has proposed as change at all? This discussion has largely been trying to get people to realize the harm of this inequality as some people don't understand the that the harm even exists.

The economy is very nearly a zero-sum game. But instead of trying to convince you, as you can't seem to read what is being written anyway, how about you try to convince me that it isn't. Go head.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby Tyndmyr » Wed Dec 10, 2014 8:49 pm UTC

Zcorp wrote:
Tyndmyr wrote:The economy is not a zero sum game. Nor is it close enough for it to make a good approximation over any appreciable length of time. The idea that you can arbitrarily change the distribution without affecting the total is not supported by economics. You are asking me to "understand" something akin to the earth being flat. Yes, your belief may be self-consistent, if you accept nonsense as fact. That is irrelevant.


How is it that all your side of this can do is straw-man?

Who is proposing any arbitrary changes? Who has proposed as change at all? This discussion has largely been trying to get people to realize the harm of this inequality as some people don't understand the that the harm even exists.

The economy is very nearly a zero-sum game. But instead of trying to convince you, as you can't seem to read what is being written anyway, how about you try to convince me that it isn't. Go head.


The size of the economy has changedover human history. Over time, it has grown significantly. Therefore, it is a positive sum game by definition. Done.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby Zcorp » Wed Dec 10, 2014 10:41 pm UTC

Tyndmyr wrote:The size of the economy has changedover human history. Over time, it has grown significantly. Therefore, it is a positive sum game by definition. Done.

Yeah..that's not the definition of a positive sum game.

A zero-sum game is where no one can advance without taking it from someone else.

A positive sum game is where one can advance without taking it from someone else.

A near zero-sum game is where one can advance only slightly without taking it from someone else. (If we wanted to go further on the technical details in game theory we would next examine the relative difficulty of where to get gains, which would make us look more zero-sum)

The money supply is increasing, but not as fast as wealth is being accrued by the rich, and nearly all of the new money supply is being accrued by the rich. Not only are the not rich getting not more, they are often getting less. There is not an endless money supply. Having a billionaire make 5 billion more dollars does not some how magically appear out of no where. Most of that money comes from reducing jobs, paying employees less or raising costs to consumers.

Now to increase our money supply faster, so that we pull further away from a zero-sum game, we need to have a strong middle class. A large group of people who want to spend money on purchasing non-basic goods. As we are destroying our middle class we are bringing the game closer to zero-sum. As an experienced economist would understand and as elasto's post gives citation for.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby CorruptUser » Thu Dec 11, 2014 4:48 am UTC

Imagine there is a town with two neighbors, one with a fridge full of Sam Addams beer, the other with a fridge full of Blue Moon. Each neighbor would rather have equal amounts of Blue Moon and Sam Addams. These neighbors trade their beers. Both gain. No one else loses.

Ergo, economics is not a zero sum game.

It's very important to understand that money does not equal value. Money is a decent measure of value, but it isn't perfect. If you were to give everyone $50m dollars out of thin air, you know what would be added to the economy? Jack shit. If you were to give everyone a steak out of thin air, the economy improves by exactly that many steaks.

It's perfectly possible to add to the economy. We live in a world with plenty of horrible diseases. Imagine AIDS is cured. The sum total of the world improves exactly as much as what the value of 'everyone not having AIDS' would be worth. Assume that's worth "$500B". The person that discovers the cure could sell for $50B, and the rest of the world would benefit by $450B. The money supply would need to be adjusted to prevent deflation, which is the entire point of having a federal reserve, but the world is still 'worth' more.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby Zcorp » Thu Dec 11, 2014 5:43 am UTC

CorruptUser wrote:Imagine there is a town with two neighbors, one with a fridge full of Sam Addams beer, the other with a fridge full of Blue Moon. Each neighbor would rather have equal amounts of Blue Moon and Sam Addams. These neighbors trade their beers. Both gain. No one else loses.

Ergo, economics is not a zero sum game.

That's....not how the economy works.

It's very important to understand that money does not equal value. Money is a decent measure of value, but it isn't perfect. If you were to give everyone $50m dollars out of thin air, you know what would be added to the economy? Jack shit. If you were to give everyone a steak out of thin air, the economy improves by exactly that many steaks.

Something would be 'added' to the economy. 50 million dollars per person would. This would of course end up with huge hyper-inflation and quick actors would become very well off in the chaos.

It's perfectly possible to add to the economy. We live in a world with plenty of horrible diseases. Imagine AIDS is cured. The sum total of the world improves exactly as much as what the value of 'everyone not having AIDS' would be worth. Assume that's worth "$500B". The person that discovers the cure could sell for $50B, and the rest of the world would benefit by $450B. The money supply would need to be adjusted to prevent deflation, which is the entire point of having a federal reserve, but the world is still 'worth' more.

No one said you can't add to the economy, in fact I said in the the post you are talking about and multiple times prior...

Nothing you said in your post is a reasonable statement toward, nor an argument for why the economy is not a near zero-sum game.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby elasto » Thu Dec 11, 2014 7:36 am UTC

CorruptUser wrote:Imagine there is a town with two neighbors, one with a fridge full of Sam Addams beer, the other with a fridge full of Blue Moon. Each neighbor would rather have equal amounts of Blue Moon and Sam Addams. These neighbors trade their beers. Both gain. No one else loses.

I disagree with Zcorp. I think that is a valid example of everyone becoming richer.

One could further imagine a third party trader: Let's say that these two people each own 100 beers and are separated by a large distance. The trader offers to take 50 beers from each to transfer to the other - keeping 1 beer from each for himself - and all involved being happy with the arrangement.

However this sense of wealth being about 'added value' can get pretty nebulous the further and further you get from real goods and resources being traded.

Let's say that Fred has 100 apples and Tony has none. Tony will die if he doesn't eat an apple today. Fred says he will give Tony an apple if Tony promises to give him back two tomorrow. (Think payday loan)

Now, if Tony agrees to this trade, in some sense the economy has grown - because both parties are 'happier' with the world post-trade than pre. Indeed, how much do you value 'not dying'? Greatly presumably. So the total value of the 'economy' has allegedly grown hugely with this trade.

Except of course it hasn't really: Far less exploitative would be for a third party (the government) to pay Fred a 'fair' rate for an apple - say, to promise to give back 1.01 apples tomorrow - and then go and hand Tony the apple for free.

Value/wealth has still been created but not at the cost of an increase in exploitation/future-unhappiness - or to put it another way - not at the cost of a runaway rise in wealth and income inequality.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby mat.tia » Thu Dec 11, 2014 9:09 am UTC

Tyndmyr wrote:But historically, yes, human labor has been viewed as a resource for essentially forever. The distinction of the labor from the human is perhaps an element of modern thought, as many cultures used to simply view humans as assets no different from any other. But...I digress. The economy isn't something with a soul, that works differently with different things merely because you want it to. Resources are simply resources.

In the past not only people's wealth, but people's lives were owned by the king or whoever. Would this justify us being in the same situation today?
Also, I'd say what you say is incorrect. Humans became resources since modern Economics came to be.

It's a matter of means and goals. What does one study economy for? For the sake of it? Or in order to understand how to use its mechanism to make human life better? To my understanding, you go for the former; in that scenario humans are equivalent to labour and therefore a mean to the faceless and divine Economic Development.
I, not being Economics but a human, would consider the Economy as a mean to improve humans' life.
Actually, one of the biggest goals of Economics and Technology in my view should be to reduce the amount of working hours. Something you will never get to do if you consider them a resource that needs to be exploited.


CorruptUser wrote:Imagine there is a town with two neighbors, one with a fridge full of Sam Addams beer, the other with a fridge full of Blue Moon. Each neighbor would rather have equal amounts of Blue Moon and Sam Addams. These neighbors trade their beers. Both gain. No one else loses.

They gain in term of what? They are better off. Their life quality is better. What if they drank them together? They might have enjoyed them even more. But they are not wealthier.
At least not by the definition of wealth that has been given here, which is: the proportion of the market one owns.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby addams » Thu Dec 11, 2014 9:37 am UTC

Jeeze.
Are you Posters going to start discussing Durable Goods and Pig Futures?
That's where the Real Financial Experts lost me.

That's where I'll peel off and look for something easier to understand this time, too.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby jseah » Thu Dec 11, 2014 12:53 pm UTC

mat.tia wrote:They gain in term of what? They are better off. Their life quality is better. What if they drank them together? They might have enjoyed them even more. But they are not wealthier.
At least not by the definition of wealth that has been given here, which is: the proportion of the market one owns.

I think here is why we've been talking past each other. Defining wealth as a proportion of the market is obviously going to be zero sum. I can see that yes.

On the other hand, the definition CorruptUser, Elasto, Tyndmyr and I implicitly used is something more like "total utility". (in a more concrete form, "ability to satisfy needs/wants" is a good substitute but has some subtle traps)


Perhaps we can now talk about why defining wealth this way is important? You (and others) have made the argument that inequality (which is essentially a description of uneven proportion of market ownership) is intrinsically bad.

I'm still thinking that it's at most a proximate cause of certain classes of social problems, maybe even that it's a symptom of an underlying problem (eg. regulatory capture / inherent corruptibility of governments).

EDIT:
Also, someone made a point earlier that the 2x rise in the real income of the bottom 20% is mostly due to it being accounted as household income which doubles due to two working parents.
Is there a per-capita version of the same graph of real income against time of the various income quintiles/quartiles?
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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby mat.tia » Thu Dec 11, 2014 1:27 pm UTC

jseah wrote:[about "wealth"]
On the other hand, the definition CorruptUser, Elasto, Tyndmyr and I implicitly used is something more like "total utility". (in a more concrete form, "ability to satisfy needs/wants" is a good substitute but has some subtle traps)

I asked for a definition, but wasn't given one other than the one I proposed. To me, you guys are using "wealth" to simply mean "the bright sides of the outcomes of a transaction".
You are talking more about "quality of life", but only in ways that sustain your argument.

Going by the definition "ability to satisfy needs/wants": Tom is stressed because of work. He needs to reduce his stress level, otherwise his life will be miserable. He quits a job. He earns less money, but he is healthy, happy and relaxed. Is he more wealthy?

Also, going by your definition advertisment makes people poorer and advertised products just bring them back to their original wealth. If you consider consumers also need to pay extra money to satisfy their induced needs you would end up concluding that modern economics is a losing game.

If you want to talk about wealth as quality of life you need to address all other aspects related to money incentive driven production: pollution, health, induced needs/desires, happiness, culture...

jseah wrote:Perhaps we can now talk about why defining wealth this way is important? You (and others) have made the argument that inequality (which is essentially a description of uneven proportion of market ownership) is intrinsically bad.

I'm still thinking that it's at most a proximate cause of certain classes of social problems, maybe even that it's a symptom of an underlying problem (eg. regulatory capture / inherent corruptibility of governments)

I can't speak for others, but I never said inequality is intrinsically bad. I dread a world in which all are equal.
I am just saying that, in a context in which everything is driven by money, an inequality of THIS proportions has all the downsides that have been pointed out and I am not going to bore repeating.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby CorruptUser » Thu Dec 11, 2014 1:31 pm UTC

mat.tia wrote:
CorruptUser wrote:Imagine there is a town with two neighbors, one with a fridge full of Sam Addams beer, the other with a fridge full of Blue Moon. Each neighbor would rather have equal amounts of Blue Moon and Sam Addams. These neighbors trade their beers. Both gain. No one else loses.

They gain in term of what? They are better off. Their life quality is better. What if they drank them together? They might have enjoyed them even more. But they are not wealthier.
At least not by the definition of wealth that has been given here, which is: the proportion of the market one owns.



Uhh... no one defines wealth as "proportion of the market one owns". The be all end all of economic measurement is utility, and each actor in the market is (theoretically) trying to maximize their own utility. How much money someone has is a proxy for this, because nearly everything in this world really comes down to money. If I value my arm at "$5m", and the courts award me $2m after losing it in a tragic accident, absolutely no economist will say I am "wealthier" because now I have $2m that I didn't have before.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby mat.tia » Thu Dec 11, 2014 1:41 pm UTC

CorruptUser wrote: If I value my arm at "$5m", and the courts award me $2m after losing it in a tragic accident, absolutely no economist will say I am "wealthier" because now I have $2m that I didn't have before.

Of course, they'll say you're just as wealthy since your arm was valued $2m.
Then please define utility. Or address how your definition would solve the problems I posed in my previous post.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby CorruptUser » Thu Dec 11, 2014 1:55 pm UTC

Here is a useful definition of Utility.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby jseah » Thu Dec 11, 2014 2:00 pm UTC

mat.tia wrote:Going by the definition "ability to satisfy needs/wants": Tom is stressed because of work. He needs to reduce his stress level, otherwise his life will be miserable. He quits a job. He earns less money, but he is healthy, happy and relaxed. Is he more wealthy?

This is why I said there were subtle traps in it. Which is why economics tends to use the concept of utility, instead of ability to get stuff you want.

mat.tia wrote:I can't speak for others, but I never said inequality is intrinsically bad. I dread a world in which all are equal.

Um, just because something is intrinsically bad does not mean it has to be eliminated if the cost is too high. Polluting the atmosphere is about as close to intrinsically bad as you can get (without stepping into weird moral situations), but some level of pollution in exchange for shiny stuff seems to be a tradeoff we've made.

But the difference here is that if you can reduce pollution without reducing the amount of shiny stuff, usually by new technology / ways of doing things, then you'd do it. (ie. not moving along the old tradeoff curve of pollution vs shiny stuff, that's just changing priorities) Because pollution reduction is good in and of itself, external of the "want of shiny stuff".

So, with this understanding, I will ask again: Do you consider inequality intrinsically bad? Would you eliminate inequality with a magic wand (no external cost) if you could?

(FYI, in such a case, I might just use that magic wand. And just to make it less abstract, AI and automation could be that magic wand, in the sense of reducing the amount of work needed to the point where a Basic Income is possible)
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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby mat.tia » Thu Dec 11, 2014 2:15 pm UTC

From the wiki page CorruptUser linked:
Marshall, Alfred wrote:Utility is taken to be correlative to Desire or Want. It has been already argued that desires cannot be measured directly, but only indirectly, by the outward phenomena to which they give rise: and that in those cases with which economics is chiefly concerned the measure is found in the price which a person is willing to pay for the fulfilment or satisfaction of his desire.

Well than advertisment reduces people's wealth, creating a need. It then brings it back up to zero when satisfying the need with an utility. And lowers it some more asking for the money.

jseah, I haven't understood your post honestly. I said I don't think inequality is intrinsically bad.
I said several (probably too many) times why I think this kind of (meaning this much) inequality, in this context, is bad.

I would not eliminate all inequality with a magic wand. If I had a magic wand I would use it to make people aware that there's better things to do in life than consuming stuff. But I do not have one.
So what I do is discuss on these fora, trying to understand why people I do not think are super rich (no offense, just a matter of probability) are defending a system in which super rich get richer and super poor get poorer.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby Tyndmyr » Thu Dec 11, 2014 3:36 pm UTC

mat.tia wrote:
Tyndmyr wrote:But historically, yes, human labor has been viewed as a resource for essentially forever. The distinction of the labor from the human is perhaps an element of modern thought, as many cultures used to simply view humans as assets no different from any other. But...I digress. The economy isn't something with a soul, that works differently with different things merely because you want it to. Resources are simply resources.

In the past not only people's wealth, but people's lives were owned by the king or whoever. Would this justify us being in the same situation today?
Also, I'd say what you say is incorrect. Humans became resources since modern Economics came to be.


Nonsense. People have been viewed as resources since long before the arrival of anything describable as modern economics. Mercantilism didn't even really get popular until the 16th century, and we're kind of a long ways past that. The history of viewing and using people as resources is a far, far older thing.

As for who properly owns the people in a moral sense, well...whatever. That's a moral question, not an economic one. I can certainly make a case that self-ownership produces better net outcomes than slavery does, though. Just because you don't like moral implications of an equation doesn't mean you need to deny the concept of math. Same, same economics. You're objecting to something that is pretty well settled history. Do you have evidence that people in days past did NOT view other humans as resources ever? If so, I'm sure many, many people are interested in seeing this.

It's a matter of means and goals. What does one study economy for? For the sake of it? Or in order to understand how to use its mechanism to make human life better? To my understanding, you go for the former; in that scenario humans are equivalent to labour and therefore a mean to the faceless and divine Economic Development.
I, not being Economics but a human, would consider the Economy as a mean to improve humans' life.
Actually, one of the biggest goals of Economics and Technology in my view should be to reduce the amount of working hours. Something you will never get to do if you consider them a resource that needs to be exploited.


Many reasons. Like math, it doesn't matter why you want to learn it, precisely. That doesn't make the laws of mathmatics more or less valid.

And the very concept of economic development IS an abstract measurement of making human life better, at least with regard to the component of it that is economic. Which...is a non-trivial portion. Money may not solely define happiness, but rather a lot of things require money, production, and all that jazz. Having a healthy economy matters to real people.

CorruptUser wrote:Imagine there is a town with two neighbors, one with a fridge full of Sam Addams beer, the other with a fridge full of Blue Moon. Each neighbor would rather have equal amounts of Blue Moon and Sam Addams. These neighbors trade their beers. Both gain. No one else loses.

They gain in term of what? They are better off. Their life quality is better. What if they drank them together? They might have enjoyed them even more. But they are not wealthier.
At least not by the definition of wealth that has been given here, which is: the proportion of the market one owns.


The same quantity of goods still exists, but both now have a greater variety. To continue the trade example...can you imagine personally making everything you ever use? Sewing your own clothes, growing your own food, and so forth? It's possible, sure, but the time investment to master all these skills is not trivial. It is FAR easier for you to grow food, your neighbor to sew clothes, and for you to swap. This reduces the amount of tools, skills, time, etc needed to produce the same end state. Bam. Better lives.

elasto wrote:Except of course it hasn't really: Far less exploitative would be for a third party (the government) to pay Fred a 'fair' rate for an apple - say, to promise to give back 1.01 apples tomorrow - and then go and hand Tony the apple for free.

Value/wealth has still been created but not at the cost of an increase in exploitation/future-unhappiness - or to put it another way - not at the cost of a runaway rise in wealth and income inequality.


Why? What objectively separates 2 apples from 1.01 apples? Why does the introduction of a third party necessarily matter? Regardless of the government or Tony is paying back the apple and interest, the apples have to come from somewhere. The unhappiness incurred will surely depend on the source.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby mat.tia » Thu Dec 11, 2014 4:11 pm UTC

Tyndmyr wrote:Nonsense. People have been viewed as resources since long before the arrival of anything describable as modern economics.

Nonsense. Who is the subject of the verb "viewed"? In the past often the powerful have used people as resources. But generally people didn't see themselves as resources. They saw themselves as people being unfairly exploted by the powerful as resources.
Even in past cultures with slaves (see the Romans with the Greeks), these were not seen merely as resources.
Today, in economics schools people are trained to see themselves as resources. The terms "consumers" (in current sense) and "human resources" belong to the very recent times.

Many reasons. Like math, it doesn't matter why you want to learn it, precisely. That doesn't make the laws of mathmatics more or less valid.

well and so? Never said anything like it. I said that when one does something one needs to have the goal clear.
Math: If you want to make a message hard to decrypt you will choose a product of two primes that, thanks to laws of mathematics, you know is hard to factor.
Econ: If you want to have an economic situation of ___[what's you goal?]____ then you will chose policies that, thank to laws of economics, you know will get you there.
If the goal is to make lives better, a subgoal is to work less.

Bam. Better lives.

Regarding the issue of wealth, I have already stated my objections to an opportunistic definition used solely when convenient to defend one's view.
If you want to talk about how to make lives better, let us do it. But I don't think it has anything to do with wealth.
It might have to do with desires and needs, but I'd argue that one is happy when has a few or no needs, nor when he keeps trying to compulsively satisfy the new ones that keep arising. But that's another topic.

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby ucim » Thu Dec 11, 2014 5:04 pm UTC

elasto wrote:Indeed, how much do you value 'not dying'? Greatly presumably. So the total value of the 'economy' has allegedly grown hugely with this trade.
Not a good example, otherwise I could grow the economy by simply not shooting people. Now if Tony were a producer (for example), then the economy would shrink when Tony dies. We've just prevented the economy from shrinking. That's not the same as making it grow.

mat.tia wrote:So what I do is discuss on these fora, trying to understand why people I do not think are super rich (no offense, just a matter of probability) are defending a system in which super rich get richer and super poor get poorer.
Because there's more to it than being rich or poor.

I am not (for example) defending such a society (as if that kind of society were better than others), even though some jump on me as if I were. Rather, I am defending against what I think is a misplaced focus on cause.

The statement "(super-)rich people have too much money" reads as if that were a problem in and of itself, a statement with which I disagree. I look further.

"(Super-)rich people have too much power (which their money lets them purchase)" is closer. But it can be generalized: "{These people} have too much power", which seems to be the actual problem some have with the super-rich.

And it is the attainment of power that should be the focus... how money is turned into power. Because sometimes it's appropriate, and sometimes not.

Tyndmyr wrote:"Too big to fail" is a misnomer. The point of anti-monopoly laws is...
"Too big to fail" is not about monopoly. It is about the economic impact of the failure of a company. If a company is big enough, its failure puts too many people out of work and can plunge entire cities into depression. "Too big to fail" addresses the vulnerability (or lack of it) of the economy to one company's success. It's about the tradeoff between efficiency and robustness; between risk and reward. Monopoly really has nothing whatsoever to do with it. When a company is "too big to fail", it means that it has passed its risks on to us, holding society hostage to its whims. Nobody cares if Fred's Grocer goes under, but were GM to go under, there would be widespread disruption, so GM can credibly go begging to the government; it's not begging, it's really a threat.

When a company gets that big, and relies on society to take on its risks in that manner, society needs to also be a beneficiary (which tends to reduce the reward to the company of taking on those unbacked risks in the first place). That is the sense in which I said the public should become a shareholder in proportion. I'm not "taking the company away from its owner", as somebody accused me of saying.

Zcorp wrote:A positive sum game is where one can advance without taking it from someone else.
... and the economy is such a game. In fact, the economy is positive sum because wealth is created by the economy in many ways. People turn dirt into goods. Whenever they do that, they advance without taking it from someone else. Now, other transactions are still possible - within our economy it is still possible to destroy value. But it's by no means required.

Also, I take issue with the idea that wealth is the proportion of the market one owns. It's more like the amount of the market one owns. The market can grow, just like corn does. My quick definition: Wealth is a measure of the ability to trade for things one wants.

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CorruptUser
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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby CorruptUser » Thu Dec 11, 2014 5:33 pm UTC

Who here has any background in economics or a related field?

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby LaserGuy » Thu Dec 11, 2014 7:04 pm UTC

jseah wrote:
mat.tia wrote:Going by the definition "ability to satisfy needs/wants": Tom is stressed because of work. He needs to reduce his stress level, otherwise his life will be miserable. He quits a job. He earns less money, but he is healthy, happy and relaxed. Is he more wealthy?

This is why I said there were subtle traps in it. Which is why economics tends to use the concept of utility, instead of ability to get stuff you want.

mat.tia wrote:I can't speak for others, but I never said inequality is intrinsically bad. I dread a world in which all are equal.

Um, just because something is intrinsically bad does not mean it has to be eliminated if the cost is too high. Polluting the atmosphere is about as close to intrinsically bad as you can get (without stepping into weird moral situations), but some level of pollution in exchange for shiny stuff seems to be a tradeoff we've made.

But the difference here is that if you can reduce pollution without reducing the amount of shiny stuff, usually by new technology / ways of doing things, then you'd do it. (ie. not moving along the old tradeoff curve of pollution vs shiny stuff, that's just changing priorities) Because pollution reduction is good in and of itself, external of the "want of shiny stuff".

So, with this understanding, I will ask again: Do you consider inequality intrinsically bad? Would you eliminate inequality with a magic wand (no external cost) if you could?

(FYI, in such a case, I might just use that magic wand. And just to make it less abstract, AI and automation could be that magic wand, in the sense of reducing the amount of work needed to the point where a Basic Income is possible)


Well, inequality, especially extreme inequality is not maximal for optimizing utility. If utility is what you care about, then transferring wealth from rich to poor makes perfect sense. For example, suppose you were to confiscate half of Warren Buffett's fortune (some $30 billion), and create trust funds so that the 10000 poorest people in the nation could get $60,000 per year for the next 50 years. Warren Buffett falls from the 2nd richest American to the 9th richest. Does this in any way result in a loss of quality of life or utility for him? Is the loss for him greater than lifting 10000 people out of extreme poverty for the rest of their lives?

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby CorruptUser » Thu Dec 11, 2014 7:42 pm UTC

That is the entire argument behind the Utilitarian school of thought. No one is arguing with you on this.

The first problem with the wealth redistribution is deadweight losses; taking 50% of the wealth of the rich will result in many of them working less by some amount, reducing wealth by more than you take. The flip side is that depending how it's done, social programs can add more than they cost, possibly even more than is lost in total by taxing the rich. In some cases, the rich can benefit more than they lose; eg, a 10% extra tax to fund programs that reduces the chance of a rich person being mugged by 50%. Economics is weird that way.

The second problem is the question of morality; a pure utilitarian will insist that since two people with 1 kidney each is superior to a person with a healthy pair and another person on dialysis, the best course of action should be to force people to donate kidneys. Taking what someone earned to give to someone who didn't is mostly 'wrong', while people on either side of the welfare debate will shoehorn reality into their beliefs; "the rich didn't earn any of it, it was all stolen from the backs of the poor!" Versus "those poor people are poor because they didn't pull their bootstraps hard enough!".

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Re: Top 0.1% to pass bottom 90% of Americans in combined wea

Postby Tyndmyr » Thu Dec 11, 2014 8:24 pm UTC

mat.tia wrote:I would not eliminate all inequality with a magic wand. If I had a magic wand I would use it to make people aware that there's better things to do in life than consuming stuff. But I do not have one.
So what I do is discuss on these fora, trying to understand why people I do not think are super rich (no offense, just a matter of probability) are defending a system in which super rich get richer and super poor get poorer.


Capitalism is improving the lives of the poor. That's why the whole immigration issue exists. They want to upgrade to what we have. And people really, really seem to like consuming stuff. If you don't, that's perfectly fine, but consumerism is STRONGER among the poor, relatively speaking. They are less likely to save and invest, and instead, expend money on consumption. This isn't necessarily even bad, but folks are, as a rule, aware of the possibility of not consuming, but really just prefer to consume.

And, if you don't care about consuming more, why do you care about getting richer, or others getting richer? Note that consumption is incredibly broad, and applies to services, power...quite a lot of stuff. You've got some negative view of the rich, while still viewing poverty as undesirable. And yet, you say you don't want everyone to be the same. What, exactly, do you want, and why?

mat.tia wrote:
Tyndmyr wrote:Nonsense. People have been viewed as resources since long before the arrival of anything describable as modern economics.

Nonsense. Who is the subject of the verb "viewed"? In the past often the powerful have used people as resources. But generally people didn't see themselves as resources. They saw themselves as people being unfairly exploted by the powerful as resources.


People, not self. Yes, yes, everyone tends to view themselves as special snowflakes, and somehow more deserving/differing from everyone else. That's great. It's also not relevant to the point you're trying to apply it to in order to dodge your clearly incorrect statement. Look back on that chain of discussion. It is a discussion of human labor. Not "just my own personal labor".

mat.tia wrote:Even in past cultures with slaves (see the Romans with the Greeks), these were not seen merely as resources.
Today, in economics schools people are trained to see themselves as resources. The terms "consumers" (in current sense) and "human resources" belong to the very recent times.


Just? Why the just. Did I say just? No, I did not.

But they WERE viewed as resources. Maybe other things too, but slaves were totally listed among other property as resources. Hell, even non-slaves often were. This was ridiculously routine. Not all of history viewed all of humanity as special, and deserving of rights and status and what not. Their labor was, indeed, viewed as a resource.

mat.tia wrote:
Bam. Better lives.

Regarding the issue of wealth, I have already stated my objections to an opportunistic definition used solely when convenient to defend one's view.
If you want to talk about how to make lives better, let us do it. But I don't think it has anything to do with wealth.
It might have to do with desires and needs, but I'd argue that one is happy when has a few or no needs, nor when he keeps trying to compulsively satisfy the new ones that keep arising. But that's another topic.


What you are quote sniping simply follows a fairly standard example of how trade and specialization enable a net economic gain. It would be difficult to take any economics course without encountering this idea. Simply dismissing basic concepts with talk of goals is ridiculous.

You don't think that wealth has anything to do with better lives? Really? How do you define better lives? Longer? Healthier? Less punctuated by starvation, disease? More education? Social status? Because ALL of those things correlate with wealth significantly. You want to talk about those things, sooner or later, dollars are going to matter to the conversation.

ucim wrote:
Tyndmyr wrote:"Too big to fail" is a misnomer. The point of anti-monopoly laws is...
"Too big to fail" is not about monopoly. It is about the economic impact of the failure of a company. If a company is big enough, its failure puts too many people out of work and can plunge entire cities into depression. "Too big to fail" addresses the vulnerability (or lack of it) of the economy to one company's success. It's about the tradeoff between efficiency and robustness; between risk and reward. Monopoly really has nothing whatsoever to do with it. When a company is "too big to fail", it means that it has passed its risks on to us, holding society hostage to its whims. Nobody cares if Fred's Grocer goes under, but were GM to go under, there would be widespread disruption, so GM can credibly go begging to the government; it's not begging, it's really a threat.


And if you have a healthy, competitive industry, GM dying should mean that other car companies take up the slack. Not having a healthy, competitive industry in the first place allows such conditions to emerge.

And yes, you ARE taking the company away from it's owners. Giving shares to the "public" necessarily dilutes all other shares issued. Shares are ownership. How could it be anything other than a transfer in ownership?

CorruptUser wrote:Who here has any background in economics or a related field?


I took a bunch of statistics and macroecon in college purely for fun. However, my sense of fun may be slightly different than most.

CorruptUser wrote:That is the entire argument behind the Utilitarian school of thought. No one is arguing with you on this.

The first problem with the wealth redistribution is deadweight losses; taking 50% of the wealth of the rich will result in many of them working less by some amount, reducing wealth by more than you take. The flip side is that depending how it's done, social programs can add more than they cost, possibly even more than is lost in total by taxing the rich. In some cases, the rich can benefit more than they lose; eg, a 10% extra tax to fund programs that reduces the chance of a rich person being mugged by 50%. Economics is weird that way.


Agreed. I also note that there is a significant tendency for proponents of programs in general to over-estimate the benefits while under-estimating costs. In a lot of social areas, there's no attempt at making a proper test of a program before widespread rollout(and indeed, at certain levels of accuracy, this may not even be possible). This increases the chances for error.

However, two notable experiments have been performed on large scale redistribution within a culture, with a control group from the same nation and culture. These are, of course, East Germany and North Korea. I dare say that neither of these instances supports the idea that massive redistribution within a culture results in a net gain.


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