Wealth distribution

[Myth]

I was pleasantly surprised by the OP and the responses on the first page. If everyone (well, most anyway) recognizes the problem, can we point a solution? Has there even been one in the past? The human desire to dominate and exert control over others is ever present, and the abuses of power and influence become more and more severe the more one gains.

If it's a capitalist western "democracy" faceless corporations will pollute, sue, extort, bribe, spread lies and propaganda and basically do anything for those few who own them. Those few then are above the law and regular folk. They can own politicians, media, patents, whatever. They are untouchable and further increasing their wealth is only a means to obtaining more power.

If it's some sort of totalitarian/autocratic government the same things happen but are done by the ruling party and the secret police.

The only difference is that in the first scenario the people are being given the illusion of freedom (you are free to buy a 2.6 million dollar house. No one is stopping you.) and in the second one you get some social benefits like health care, school and security, but at the cost of total control, indoctrination and the secret police labeling "enemies within".

Overall both systems suck hard. The flaw with today's society is that the whole currency system and the way we conceptualize economics is flawed. If all we ever had in the world were goods and services produced and exchanged between people, then each man would be worth as much as the value they provide to their community. But now we make money from money: loans, mortgages, forex, stock market and a thousand other tricks that make money out of nothing. We no longer see currency as a convenient means of exchanging goods or services, it is now its own demon that ran away with our lives.

And since the ones who manufacture money out of nothing also say how much it is worth and how much we get, it's easy to see how working hard and voting doesn't mean jack in today's world.

I am no expert on economics though. I'd still go back to gold standard, but hey, Qaddafi tried it and he got killed so... Actually, what is the official reason for removing the gold standard and allowing privately held central banks? Because the world bank said so?

[Husar]

I was pleasantly surprised by the OP and the responses on the first page. If everyone (well, most anyway) recognizes the problem, can we point a solution?

https://forums.totalwar.org/vb/showt...post2053575453

?

[Lemur]

The noted Commie pinkos from Google explain why stagnating and falling incomes for the middle-and-lower tier people are a bad thing all around.

The stagnation in middle-class wages is not just a middle-class problem. It's an economic problem. And it's one of the main reasons that global economic growth is so lousy.

Why do stagnant middle-class wages hurt the economy?

Because the middle-class folks whose wages are stagnant are the global economy's biggest spenders.

And when they don't have money to spend, their lack of spending hurts not just them but all the companies that depend on them for revenue.

Including, Schmidt pointed out, Google.

Put differently, one company's expenses (wages) are another company's revenues. So, collectively, when companies are cutting wages, they're also cutting their own future revenue growth.

Right now, companies are so focused on cutting wages — by paying their employees as little as possible and replacing them with technology whenever possible — that wages as a percent of the economy are now near an all-time low (see chart below). And this weakness in wages is the big reason demand in the economy is so weak.

Looked at from this perspective, ruthless cost-cutting with employees is just another variant of the Tragedy of the Commons.

The tragedy of the commons is an economics theory [...] according to which the depletion of a shared resource by individuals, acting independently and rationally according to each one's self-interest, act contrary to the group's long-term best interests by depleting the common resource.

Or to put it even more bluntly, when a Walmart executive complains that his customers have no money, he is whining about a mess he helped create.

[HoreTore]

I'd still go back to gold standard

Going back to the gold standard makes no sense at all. Sure, you gain a thin layer of additional artificial stability, but at the expense of a severe lack of available money. The market is naturally flowing with ups and downs. Going back to the gold standard will do nothing to reduce the down periods, but it will do wonders at eliminating the periods of high growth we get. All around a very bad idea.

The noted Commie pinkos from Google explain why stagnating and falling incomes for the middle-and-lower tier people are a bad thing all around.

The stagnation in middle-class wages is not just a middle-class problem. It's an economic problem. And it's one of the main reasons that global economic growth is so lousy.

Why do stagnant middle-class wages hurt the economy?

Because the middle-class folks whose wages are stagnant are the global economy's biggest spenders.

And when they don't have money to spend, their lack of spending hurts not just them but all the companies that depend on them for revenue.

Including, Schmidt pointed out, Google.

Put differently, one company's expenses (wages) are another company's revenues. So, collectively, when companies are cutting wages, they're also cutting their own future revenue growth.

Right now, companies are so focused on cutting wages — by paying their employees as little as possible and replacing them with technology whenever possible — that wages as a percent of the economy are now near an all-time low (see chart below). And this weakness in wages is the big reason demand in the economy is so weak.

Looked at from this perspective, ruthless cost-cutting with employees is just another variant of the Tragedy of the Commons.

The tragedy of the commons is an economics theory [...] according to which the depletion of a shared resource by individuals, acting independently and rationally according to each one's self-interest, act contrary to the group's long-term best interests by depleting the common resource.

Or to put it even more bluntly, when a Walmart executive complains that his customers have no money, he is whining about a mess he helped create.

Again an excellent post, and I have to expand on it:

In addition to undercutting each others market, lower wages also means that technological progress is slowed.

When your wage costs are 10 million per year, you can easily buy a 500.000 dollar piece of machinery that will allow you to cut 10% of your wages through layoffs. You will end up making 500.000 from your 500.000 investment.

If your wages are half of that, you might not bother doing it, since you're not going to make anything on it, you are simply breaking even. With wage costs of 1 million, you are actually losing 400.000 if you try to increase your productivity through automation. This affects not only you, but also the technological progress, since that cannot occur without an end-user buying the stuff they invent(barring an active state).

This is part of the reason why African countries are piss-poor, yet cannot even compete on price.

And I love the mention of the tragedy of the commons: the mechanisms it describes is one of the main reasons I am a pinko-commie hippie. The free market simply has no mechanisms to counter the irrationality, so we have need of a strong and active state capable of regulating us from painting ourselves into a corner.

[Lemur]

The free market simply has no mechanisms to counter the irrationality, so we have need of a strong and active state capable of regulating us from painting ourselves into a corner.

Adam Smith would agree with you. So would Edmund Burke.

It's equal parts amusing and sad that the fathers of modern capitalism and conservatism, respectively, would be dirty RINO traitors by today's warped standards.

[Seamus Fermanagh]

The noted Commie pinkos from Google explain why stagnating and falling incomes for the middle-and-lower tier people are a bad thing all around.

The stagnation in middle-class wages is not just a middle-class problem. It's an economic problem. And it's one of the main reasons that global economic growth is so lousy.

Why do stagnant middle-class wages hurt the economy?

Because the middle-class folks whose wages are stagnant are the global economy's biggest spenders.

And when they don't have money to spend, their lack of spending hurts not just them but all the companies that depend on them for revenue.

Including, Schmidt pointed out, Google.

Put differently, one company's expenses (wages) are another company's revenues. So, collectively, when companies are cutting wages, they're also cutting their own future revenue growth.

Right now, companies are so focused on cutting wages — by paying their employees as little as possible and replacing them with technology whenever possible — that wages as a percent of the economy are now near an all-time low (see chart below). And this weakness in wages is the big reason demand in the economy is so weak.

Looked at from this perspective, ruthless cost-cutting with employees is just another variant of the Tragedy of the Commons.

The tragedy of the commons is an economics theory [...] according to which the depletion of a shared resource by individuals, acting independently and rationally according to each one's self-interest, act contrary to the group's long-term best interests by depleting the common resource.

Or to put it even more bluntly, when a Walmart executive complains that his customers have no money, he is whining about a mess he helped create.

Good points. The problem is that so many folks fixate on wealth distribution through taxation as THE answer to this, but it is a lousy choice -- too many ways to cheat existing tax systems exist and many such taxation schemes end up punishing innovation and success.

SO.....what are some concepts that MIGHT work?

[Seamus Fermanagh]

A stronger tax system, obviously.

That's sorta like saying "World peace would be better for all humanity." The HOW of it needs just a tad more in the way of detail.

[Strike For The South]

By putting ers in jail for tax evasion for starters. By raising taxes and refusing to bow to corporations that claim to be indispensable for seconds.

Its clear by now that a class war is going on, and the poor didn't start it. Raise taxes and crack heads until everyone can afford three decent meals a day and rent, and education is free and on par with the best European systems, and our infrastructure is repaired by Americans paid a living wage to repair it.

And if that scares some rich people away, fuck em. America is becoming a banana republic because of the people that oppose stronger tax enforcement and higher taxes.

This is the most hollow, sunshine pumping, populist pandering sentence I have ever heard.

Where do you propose we get this money?

[Husar]

But low corporate taxes are great, they draw all the industry and that's super beneficial for a country, ask Ireland or Luxembourg how great this works and how the taxpayers of other countries will gladly bail out your system of enabling higher corporate profits if it should fail horribly after you made a lot of their tax-paying companies migrate to your trollcountry.

[Fisherking]

By raising taxes. Its as easy as telling Norquist where he can shove it. But I guess that would threaten the entrenched system of corporate welfare so we can't do it.

It ain't populist, its what has to happen. The alternatives are all much worse.

No, raising taxes is just going to make more poor.

Your battle is not with the middle class or even the well off. It is the Ultra Rich and huge corporate interests.

You know, those guys the laws are written to favor. Just like the affordable care act. It will destroy some insurers but it will make the biggest of the big even wealthier in the end.

Taxing the corporations is only taxing the people that buy their goods or services. It will hurt the smaller businesses and benefit the Mega Corps. The little guy can’t compete.

The mom and pop businesses are gone. Chains are now swallowed by bigger chains. You are only concentrating all the wealth in the hands of few.

You need to find a way to make more people wealthy than more people poor. Taxes just make more people miserable.

[Strike For The South]

By raising taxes. Its as easy as telling Norquist where he can shove it. But I guess that would threaten the entrenched system of corporate welfare so we can't do it.

It ain't populist, its what has to happen. The alternatives are all much worse.

Raise taxes on whom, exactly? How would it threaten corporate welfare?

I mean, it's not this simple. You're just angry and spewing vitriol.

[Gaius Scribonius Curio]

The problem is that so many folks fixate on wealth distribution through taxation as THE answer to this, but it is a lousy choice -- too many ways to cheat existing tax systems exist and many such taxation schemes end up punishing innovation and success.

From my perspective, the tax system is the only viable mechanism of wealth redistribution, regardless of its (very real) problems.

If we acknowledge that wealth redistribution of some order is desirable, which I admit is far from given, then the alternatives, as I see them, are: (1) rely on the private initiatives of wealthy individuals and/or corporations; (2a) legislate in such a way as to compel private wealthy individuals and/or corporations to contribute, with little direction; (2b) use a third party (ie: the state) to manage the process.

If we were to go with (1) the likelihood of escaping the tragedy of the commons scenario is small. As in the current system, it is in the interest of individuals and companies to reduce costs/wages, even if they rely on increased wages in the long run.

If we acknowledge that private initiative would not supply a fit and efficient system of redistribution, because it would not be in the interests of private initiative to do so, then some kind of coercive force must be applied. In this case, the only possible coercive actor is the state: only the state has the means, resources and the interest to act in this role. If we agree with this point, then there are two options. (2a) Compel private individuals/corporations to divert some funds to supporting others directly. This would entail introducing a mandated, fair, minimum wage; supporting community programs; investing the local community infrastructure, etc. To a certain extent, this does happen, but sporadically, and not to the degree where it makes a noticeable difference in the grand scheme of things. The key problems here are twofold: a lack of central direction results in inequitable outcomes, and it relies on a degree of communal will. Under the present system, it is in the interests of large corporations to contribute to such schemes from concern regarding global image, but when the balance of opinion shifts, there is no guarantee that it will continue in the same vein.

(2b) Which leads us back to the state as the main driver and administrator of the redistributive process. A third, neutral, party taking funds from those companies/individuals who can afford it and giving it/investing it in the interests of those who require it (ie. taxation). The problem here arises when it is not in the interests of those who run the state to institute and administer a robust tax system. Once again, the tragedy of the commons argument would apply, if the legislative/executive body wished to prioritise austerity-type policies, or the legislators themselves were corrupt in some way. However, an elected official, in theory, representing a wider body of stakeholders, ought to be more likely than a CEO or group of directors of a private company to act in the public interest.

I think that Gelatinous Cube has the right idea: whether the political will is there, or whether it would work in practice, however, is an entirely different matter.

[HoreTore]

Good points. The problem is that so many folks fixate on wealth distribution through taxation as THE answer to this, but it is a lousy choice -- too many ways to cheat existing tax systems exist and many such taxation schemes end up punishing innovation and success.

SO.....what are some concepts that MIGHT work?

There is no answer that is THE answer.

Combating poverty is something requiring a wide range of answer. The most important is meaningful employment with a proper wage. I can list a few measures which will help deal with poverty:

- Government and commercial companies providing entry level jobs for those struggling(for various reasons) to enter the job market. The ideal solution is in the private sector, but state companies may be required if the private sector cannot provide what is needed.
- Education. Free.
- Free, early access healthcare intended to fix problems before they grow big, aiming at getting people back to work as quickly as possible.
- Lower housing prices. Government may be required to build housing to drive prices down.
- A functional drug/alcohol rehabilitation scheme, which doesn't involve sending addicts to jail.
- Switching focus in the justice system from revenge to rehabilitation.
- Fire/jail all academics who consider themselves post-modernists, or make positive references to Latoure or Bourdieu.
- Pump up child protective services.
- Increased wages.

Taxation won't do much to combat poverty, it's what you use those tax dollars for that matters.

[Tellos Athenaios]

Good points. The problem is that so many folks fixate on wealth distribution through taxation as THE answer to this, but it is a lousy choice -- too many ways to cheat existing tax systems exist and many such taxation schemes end up punishing innovation and success.

The alternative is the Athenian system: force wealthy citizens to pay for the cost of procurement, outfitting and manning of your navy. Force them to pay for the cost and supply of feeding the poor (temples). If they don't, then forcibly exclude them from social and political life, possibly ostracise them or set up a kangaroo court or two to confiscate property.

Another alternative is the medieval system of executing the rich on some pretext and seizing their property if it's more convenient.

On the whole taxing is not perfect but it is a whole lot more civilised, less troublesome and preferable to the alternatives.