I'd like Prof. Gordon to break down the skyrocketing 1% incomes by profession. Wasn't most of it due to high tech?
His chart shows the disparity dramatically widening starting in the mid-80s, which is precisely when the microcomputer revolution was accelerating. The 1990s saw a booming stock market and the minting of thousands of new millionaires and dozens of billionaires as well.
These stock-rich technology entrepreneurs should be seen not as an exploitative class to be feared and countered, but rather as a sign of successful capitalism at its finest, brilliant new ideas that have changed the world and vastly expanded the major Western economies with new modalities for doing our work, communicating, and nearly everything else.
Not really. Globalism allowed management to get rich without having to share much or any of the pie with anyone else by outsourcing and shipping manufacturing to low-cost no-regulation jurisdictions.
Massively lower taxes reduced the redistribution effect, accelerating the accumulation of capital to the top.
A global capitalist economy can't survive 90% crushed labor, 9% upper-middle, and 1% who own almost everything. Those conditions eventually lead to revolution. Or rather it would be more accurate to say those conditions have historically led to unrest, collapse, and/or revolution.
Why would future generations feel any loyalty to their nation or this system if they're barely making ends meet while they watch billionaires cut their own taxes to make themselves richer and shift more of the burden of maintaining society on the poor and shrinking middle class?
None of this is good for the startup ecosystem. Fewer consumers with money to spend means less customers and less advertising targets. That's the problem with capital accumulating at the top: without customers there are fewer and fewer legitimate investments that have any yield so capital is forced to make increasingly reckless investments or do the equivalent of stuffing the money under a mattress. None of that is putting capital to useful work.
Globalization did bring visible growth of wealth to the bottom-of-the-ladder guys like factory workers. Only it did so in places like China, Vietnam, and other manufacture outsourcing destinations.
One of the points Piketty makes in his book is that the rich generally aren't the heroic creative geniuses of Ayn Rand's imagination.
Most wealth is inherited. Wealth grows faster than the economy at large. The rich get richer. They spend their money lobbying for lower tax rates, and they get them. They lobby for privatization, and they get them. They lobby for monopolies and patents and bailouts, and they get them.
Interesting to note that half the population are no richer than they were almost 50 years ago.
One of the points Piketty makes in his book is that the rich generally aren't the heroic creative geniuses of Ayn Rand's imagination.
1. There are always going to be outliers, but most people are going to be closer to the middle of a normal distribution.
2. The examples you mention were all excellent entrepreneurs, but they were also a bit lucky with timing and social position; Jobs' adoptive parents were blue-collar workers but none of these future industrialists grew up in poverty. If we could reduce the latter a bit we might have even more of the former.
So the share of income going to the top 1% has increased to new heights during the Obama presidency, yet the election of Trump - as opposed to his rival who was expected to continue Obama's policies - is seen as irrational?
Yeah, well the problem is that while Trump campaigned on change, the actual changes he plans to implement will just centralize wealth at the top even more.
America had a chance with Bernie, but due to some combination of media attention, Clinton's ambition, DNC's corruption, Russian interference, increasingly-polarized news, and the generally anti-socialist slant of American political discourse, they threw it away.
Bernie was the "fuck this, change everything" candidate that actually had the disenfranchised's needs at heart. Trump claims the same but doesn't substantiate it.
EDIT: And honestly, I don't think Bernie would have been able to accomplish much, or that Obama has done much objectionable. I get the sense that Obama actually wants to improve things for the middle class, but is realistic about what he can accomplish with Republican houses shutting him down at every turn simply because any policy that helps the middle class appears anti-capitalist (i.e. socialist) when capitalism is increasingly synonymous with centralization of wealth as efficiency grows.
EDIT Again: This whole "campaign for the poor but systematically serve only large businesses, then tell everyone that the democrats -- who actually systematically care about humans a little bit -- are the devil" thing is kind of the GOP's M.O., and, as an outsider, I think it's disgusting. Trump is only an exceptionally bad example because he amplifies some of the standard GOP stances while mixing in his own crazy brand of narcissism.
> I get the sense that Obama actually wants to improve things for the middle class, but is realistic about what he can accomplish with Republican houses shutting him down at every turn
For the record, Democrats had total control of Congress when Obama first came into office.
Indeed, and it's curious that a lot of the more would-be-impactful things have come later in his term when he faces stronger opposition. I don't have any explanation for this.
Republicans controlled Congress during most of Obama's presidency. Congress controls taxes, spending, and most money-related policies. In fact Republicans have been in control for the majority of the past few decades. It was their policies of cutting taxes, gutting government safety nets, "reforming" welfare, gutting banking regulations, and so on that have helped accelerate these trends.
Democrats lost election after election to them and so shifted their policies to match, hoping to chase votes.
Now we don't really have any populist politicians or political parties left.
It seems we are resigned to lurching from panic to panic with anemic growth until we hit the wall of another Great Depression. Then the pain will be so monumental that the 1%'s influence will be swept aside. What form things will take on the other side of that transition no one can say. I also wouldn't hazard a guess on how long it takes; The Panics of 1873, 1893, and 1907 didn't seem to teach anyone any lessons because they repeated the same anti-regulation low-tax "rah rah rah capitalism!" mistakes in the 1920s and triggered the Great Depression. In some ways you could say our systems worked too well to counter-balance the 2007 crisis; they prevented things from getting really bad and forcing change.
Totally agree, we drastically overestimate the power of the President. Congress does most of the things Presidential candidates promise to do, and local government rules everyday quality of life issues like criminal justice and education.
People continue to focus on income inequality and ignore wealth inequality. Income is a terrible way understand inequality and also not a good way to compare how inequality is changing, since the really rich people increase their wealth in ways other than income.
The bizarre focus on income means that we set our sights on a weird slice of upper middle class professionals (doctors, lawyers, etc.) while ignoring totally the real rich people.
Capital without income is not particularly useful. The problem is we use the IRS definition of income ignoring unrealized gains which distorts the income perspective for the top 1% / 0.01%.
Yes, exactly. Rich people increase their wealth primarily through unrealized capital gains. It's very safe for Warren Buffet to proclaim he wants tax rates increased because this barely affects him at all.
I think Warren Buffet actually was talking about capital gains tax. Warren Buffet is old, famous and rich. He's basically won the material game. He doesn't care about taxes, I would guess.
Buffet realizes millions of dollars in income each year and gives much of it to charity. He gives billions more to charity not in the form of income.[0]
> “My 2015 return shows adjusted gross income of $11,563,931,” he revealed. “My deductions totaled $5,477,694.” About two-thirds of those represented charitable contributions, he said. Most of the rest were related to Mr. Buffett’s state income tax payments.
> As it turns out, the charitable contributions that Mr. Buffett did deduct from his income make up just a tiny portion of the more than $2.85 billion he donated to charity last year, he said.
He is also, along with Bill Gates, a founder of the Giving Pledge, "a campaign to encourage the wealthy people of the world to contribute their wealth to philanthropic causes."[0]
Like most of us I haven't actually read Capital in the 21st Century, but isn't his whole point that the capital gains of the ultra rich outstrip the income of any worker? Anecdotally I hear anger towards hedge fund managers and inherited fortunes, not doctors. And if they are earning a half million a year, I'd hardly call them any kind of middle class.
There were many points in that book, but one of them might be that looking at historical data on income can be a bit easier for data gathering if the civilization in place at the time requires filing of taxes. If those taxes are on income, you get a much better set of visibility for data points than trying to estimate wealth. (Usually it seems taxes are on income...)
One of the amazing things about the book, was separate from ones given beliefs about his recommendations regarding inequality, was that Picketty had painstakingly amassed all this data on income and wealth across a huge range of history, across multiple eras, from before the victorian age in many cases. That alone is a great accomplishment - and lets one start to quantitatively analyze fundamental economic questions of the modern day.
Picketty definitely does not ignore wealth inequality. Most of his book is devoted to explaining why the return on existing wealth is the most important factor in inequality. He proposes a global tax on wealth, not income, to help combat inequality.
In a country where 69% of the population has less than $1000 in savings[1], income inequality is more important than wealth inequality. You need excess income to accumulate wealth.
Yes, I've always thought it's odd how people tend to focus their ire on high-earning professionals like doctors, lawyers, consultants, etc. while ignoring the trust fund kid worth 200 million dollars. I'm guessing it's because most of us have never met someone worth that much money.
Really, it's the top 0.1% I'm concerned about. Most of the top 1% are basically upper middle class people who've met with significant professional success, and the only part of the middle class that done well the past two decades (and good for them).
I think focusing on the trust fund kid worth 200 million is also a red herring though. The focus should be on consumption inequality, not total amount of wealth. If someone is just sitting on a lot of cash then they're not hurting anyone, but if they're outspending everyone else then they are (in a sense) hurting them.
> If someone is just sitting on a lot of cash then they're not hurting anyone, but if they're outspending everyone else then they are (in a sense) hurting them.
I disagree strongly. That 200 million would be far, far better invested in some pie-in-the-sky social start-up than just sitting there. Spending should definitely not be taxed anymore than it already is, we want people to spend money.
When they spend the money, the goods they're consuming or moving around are displaced from where they would have been. Spending the money doesn't create goods out of thin air. So unless they are making an investment that is a good one that somehow no one else knows about, it doesn't really impoverish society for them to sit on it. This argument, of course, applies on the margin and does not apply to every bit of wealth in the system.
I am a fan of the once popular ideas of Henry George. From Wikipedia:
Georgism is an economic philosophy holding that, while people should own the value they produce themselves, economic value derived from land (including natural resources and natural opportunities) should belong equally to all members of society. Developed from the writings of Henry George, the Georgist paradigm offers solutions to social and ecological problems, relying on principles of land rights and public finance which attempt to integrate economic efficiency with social justice.
I would add that today, other common capital could be taxed in the same manner, be it the electromagnetic spectrum, the human audio spectrum, the visual spectrum as well as other so called externalities.
Oddly enough the policy closest to this that I've seen in the US was purposed by Sarah Palin.
"Lt. Gov. Sean Parnell announced Friday that every eligible man, woman and child will receive $2,069, thanks to dividend payments from the state's oil royalty investment program distributed annually. On top of that, the checks will include another $1,200 from the state treasury to help offset soaring fuel prices.
The one-time energy boost was proposed by Gov. Sarah Palin and approved by state lawmakers last month. Palin has since been tapped as the running mate of Republican presidential hopeful John McCain.
"The royalty dollars that flow through the state are the people's wealth," said Parnell. "The $1,200 resource rebate goes to that philosophy.""
Perhaps it is not so odd. Georgism seems to be an idea that aligns with interests among both left and right. In particular, it would seem to appeal to both laborers and professionals.
Also, anybody in an urban, flourishing area such as San Francisco, New York, London or my native Stockholm would no doubt resonate with this, I quote further from the linked Wikipedia article, emphasis mine:
> George emphasized ground-rent because basic locations were more valuable than other monopolies and everybody needed locations to survive, which he contrasted with the less significant streetcar and telegraph monopolies, which George also criticized. George likened the problem to a laborer traveling home who is waylaid by a series of highway robbers along the way, each who demand a small portion of the traveler's wages, and finally at the very end of the road waits a robber who demands all that the traveler has left. George reasoned that it made little difference to challenge the series of small robbers when the final robber remained to demand all that the common laborer had left. George predicted that over time technological advancements would increase the frequency and importance of lesser monopolies, yet he expected that ground rent would remain dominant. George even predicted that ground-rents would rise faster than wages and income to capital, a prediction that modern analysis has shown to be plausible, since the supply of land is fixed.
We like to think things are so different from 50 years ago, let alone a few hundred. When I talk to people my age, they puff out their chests and tell me I'm a fool for buying a house. "If you had that money in the market you'd make 7%" they tell me, "What's that house get you 4?" they guffaw. What they miss is nothing has really changed, rent strangles the laborer and professional alike. Sharecropping is alive and well the only difference is we added a commute and called it progress.
I'm not exactly sure what you're attributing to Palin. The base dividend comes from the Alaska Permanent Fund, established in 1976 under Gov Jay Hammond, and started paying dividends in 1982. The $1200 boost maybe comes from Palin? But if that's coming from the treasury, that doesn't seem like the greater part of the "Georgism-like" policy (that part actually feels like poor budgetary policy if it's funded from the state budget as opposed to getting the best dollar for fuel prices for the Permanent fund in the first place...)
They don't ignore wealth inequality. Wealth is harder to measure and because many people's wealth has already been taxed once there's little political support to be had for proposals to tax it again. Of course that leads to runaway inequality, but 'x has too much money and should just have to give up some of it' is not a winning political platform unless you live in a communist country where there's some sort of sociopolitical consensus in favor of that idea (and even communist countries struggle with this in practice and usually end up with corruption instead).
A thought experiment: what would a world look like where wealth caps exist instead of universal basic income? Say, total individual wealth is capped at say, 1000 times the national median per capita wealth? Anything higher and your income is taxed at a very high rate.
A much worse problem is the focus on inequality of incomes at a snapshot in time.
A doctor may go much of their life with low income, and make it up in their mid and late career. But a 22 year old doctor isn't what we thing of as "poor".
We need to follow people over time and use other indicators to see how poor they actually are. Consumption might be a much better measure in many ways.
How can we keep people from creating an online business and reaching 2 billion Internet-connected people - if you make it legal to pay for a Google adwords campaign, dirty capitalists can start with just $100 - even if you take all of their money and jail them for being capitalists, when they're out if prison they can save up that much money working at a McDonald's - and roll it up from there. They can keep reinvesting it and growing wealth.
Then they can raise VC money at a valuation of $10 million.
Even if you tax it at 90% to try to put an end to it, you will only slow it down.
Should people engaged in capitalism be murdered by the state?
I don't see any other solution to inequality.
(obviously this is not a serious comment, but please respond as though it were - or address my point. It is literally possible to spin up online businesses from $100 and consistent reinvestment. This creates inequality between the people doing it and the people not doing it. solution?)
You may be overoptimistic about the outcomes of folks saving up from working at McDonalds, but maybe you're not 'srs' about that thought.
Being entrepreneurial in itself is not Capitalism, which relies on arranging a system so that private ownership production of production leads to the private ownership of profits generated by laborers.
On the face of it, though, making it difficult for private groups to have enough cash to make $10M bets on small enterprises is not impossible for a state. I'm not advocating it, but to take your statment 'srsly' you're overlooking that aspect of the situation.
Yes I'm serious. (*EDIT: obviously I'm not serious that we should jail people for engaging in capitalism, or take away everyone's money, that is sarcasm.) If we were to take away people's money and put them in prison to teach them a lesson about "engaging in capitalism", they can serve their term; then they can go on Hacker News, open a blog, announce a new project, raise funds for it, and become rich. This is almost literally the process by which huge, vast swathes of inequity are created. Mark Cuban's parents immigrated from Russia with the name Chabenisky. Sergei Brin is literally a Soviet-born engineer. How do you stop him from accumulating his current net worth of $39.2 billion -- which literally means he has $5.00 for every man, woman, and child on Earth, of any age, anywhere. That is inequality in action. It's dynastic inequality. How do you stop it? Shut down the Internet?
I don't want to shut down all inequality, but you're bullshitting when you handwave away all the other factors to business success. It's kind of insulting, to put it mildly.
Business does not require monopoly in the real world. Competition laws exist in almost all countries, and even in the United States, they are still on the books waiting to be enforced. The instant we enforce them and break up monopolists, inequality will go down.
Neither monopoly nor inequality has been shown by data to arise from economic efficiency, nor to create economic efficiency. Quite the opposite.
Inequality of outcome (wealth/income/etc) is less of an issue than inequality of opportunity. if we make the statement "anyone can make a business and become rich" true (assume as axiomatically true; the quoted statement becomes literally true), then it will literally increase inequality: perhaps anyone can do it, but not everyone will.
so inequality is a bad metric. If you start trying to tackle a bad metric, you will not do well.
Nearly everyone you know has less than 1/10,000th the wealth that Sergei Brin does. I am stating it is a problem if you or anyone else has any problem with this state of affairs. And if you allow less dramatic examples than Sergei Brin, you will find thousands of people starting businesses and thereby increasing inequality.
equality of outcome is not a noble or worthwhile goal.
I'm not sure what your point is here, I didn't say anything about equality of outcome, I just pointed out that existing policies probably impact inequality and may not be the most desirable set of tradeoffs to make.
For instance, very high tax rates on very high income won't come anywhere close to ensuring equality of outcome. For example, a hypothetical 75% tax on $10 million of income still leaves $2.5 million of after tax income. Please note very carefully that I'm not arguing that would be a sensible policy, I'm pointing out that even such a dramatic departure from current policy would leave lots of room for inequal outcomes.
But the issue is that $2.5 million of after tax income isn't bad. Even though it's unequal. Even though not everyone will make it.
I don't know how else to put this. Suppose people said "fat inequality is a huge problem - some men have lean, fit bodies with 10%-12% body fat whereas other men have 40% body fat."
In point of fact, while it is not desirable for everyone to have 40% or more body fat, there is no problem with the inequality itself: some people will always devote more of their lives to fitness, eating on strict diets and a lot of exercise; which is what it takes to achieve 10-12% bodyfat.
THE INEQUALITY IS NOT AN ISSUE. Obesity is an issue NOT because of the inequality, but because of the direct effects of obesity.
Poverty is an issue NOT because of inequality (NOT because of the fact that Brin has $39,000,000,000) but directly because of the direct effects of poverty.
In short, inequality of wealth or income is a red herring. It is like trying to make America healthier by fighting "inequality of fitness" and fighting against some people having 12% bodyfat while others have 40%.
(In this case you have to read in the opposite direction -- a 40% bodyfat is objectively worse -- but you understand what I'm saying. It's not the inequality that's bad. Not everyone will get to 8% bodyfat even if this is possible or somehow desirous.)
I hope you see, and don't misinterpret the distinction that I'm pointing out. If you have questions follow up and I will clarify what I mean.
It's possible to spin up an online business from $100, but it sure as heck isn't that obvious to most people how to do so without a bunch of technical skills and a decent social network or willingness to engage in ethically questionable kinds of business like spamming. It's possible that you have a much better grasp of US business culture than most people, or have skills that it took you a long time to acquite and whose lack would be a big barrier to some else trying to do this.
Do please share your secret on this. I have a spare $100 right now which is unusual and I'm not even in a hurry to get rich, just have a reliable income. Caveat - I shouldn't have to entirely reorient my life around this before I see any return, in much the same way that most people can't afford to quit their jobs and stop eating etc. in order to start with nothing as dramatically as possible.
Alternatively, buy a painting from me so I can make some money doing something I'm already invested in instead of what you would choose to do with your time. Because I don't really want to be a sales person or run an elaborate business, I just want some options to plug the gap between working myself to death at something I hate or grinding poverty.
Am I the only one a little frustrated by the groupings here? I'd prefer that it was in raw percentiles rather than something like average of percentiles. Seems like the very lowest incomes drag the bottom 50% down and the highest incomes inflate the averages of the upper percentiles.
Not to say that I don't think the current state of income and wealth inequality aren't troublesome, it's just that in this case when they say, e.g., "top 10%", what they really mean is something closer to "95th percentile".
It makes the results much more striking, even more at the top than the bottom, but not necessarily in a bad way. Raw percentiles aren't representative (e.g, knowing that the bottom 50% makes $50K and lower doesn't tell the full picture). I do think that using "median" rather than "average" would be better (though a bit trivial, median of "top 10%" is the raw 95th percentile). Also, by using "average" it is possible to match them directly to the "share of total wealth" numbers.
I also thought that "average of the bottom 50%" was a weird metric. Seems like using the 25th percentile would make more sense. And there could be a significant difference between that and the mean-of-the-lower-half.
Please stop using means when describing percentile data. I understand the desire to demonize a catchy sounding demographic, but the vast majority of the "top 1%" don't have an annual income anywhere approaching 1m/yr.
The question articles like this never get around to asking is: What would "fair" look like?
The data is never going to be flat. That would mean the top earners and the lowest earners had identical incomes. Call that what you want but that's not a free economy.
Picketty's book does at least attempt to address this. He proposes a switch from income tax to wealth tax. He shows that most inequality is a result of the growth of existing wealth (most of which was inherited). Taxing wealth instead of income can help reverse, or at least stop the increasing levels of inequality. A very small percentage of wealth would need to be taxed to accomplish this.
Such a wealth tax existed in Nordic countries in the late 20th century, at least.
Wealth taxes in Sweden and Finland were eliminated around 2005 because capital gains tax was considered more equitable to various wealth classes and more easily administrated. The wealth tax laws had become a nest of loopholes that brought in relatively little income in the end.
It would be interesting to see a new wealth tax designed for the digital era.
There are still a few countries with wealth taxes[0]. I'm not sure if they work well or not for these countries. Picketty doesn't spend to much time on the subject of existing wealth taxes. He is more focused on a global wealth tax, which is much more ambitious. Something that would need to be designed for the digital era indeed.
Amusing find from the linked article: Back in 1999 Trump proposed a one time wealth tax of 14.25% for individuals worth more than 10 million.
Haha, identical incomes is what Scott Winship would call Denmark.
I've recently got exposed to someone questioning whether or not we should even care about inequality, a provocative idea for sure. Hillsdale college had a worthy lecture posted earlier this month.
Scott Winship talks about Intergenerational mobility as an interesting orthogonal concept (https://youtu.be/vDUhpaO1YCE?t=305)
William Watson says in the same lecture "The question I was assigned 'Do we want income inequality', just so it's clear I don't care about inequality. What I want is fairness, or equity." (https://youtu.be/vDUhpaO1YCE?t=3131).
A classic one I like on the topic is Sowell's manna from heaven slant on income and its distribution...
Peter Robinson: Intellectuals and Society once again, “The very phrase income distribution is tendentious. Wealth can be created only after capital and labor have reconciled their competing claims and agreed to terms on which they can operate together in the production of wealth”. Income distribution, the very phrase is tendentious how come?
Thomas Sowell: Income is not distributed, and newspapers are distributed. Social security checks are distributed and one time milk was distributed. Income is not distributed, people earn it directly from those for whom they provide some good or service. And, the argument made by many people you see, is that the, it’s a question of capital and labor have conflicting interests and dividing up the income. No, no, there is no income to divide up before they first reconcile their conflicting interest and decide on what terms they’re going to produce that income. There is no preexisting, there’s no manna from heaven for them to fight over.
Heard for the first time in a while, the other day: "Health is wealth."
The U.S. economy has far more wealth than needed to provide everyone in the country (at least, everyone who elects to participate) basic, quality healthcare. Not necessarily advanced-age end-of-life spendorama experiences, but far enhanced opportunity to remain or regain health and related quality of life during the majority of living years.
There could still be plenty of economic inequality. But we could vastly diminish an unnecessary suffering as well as the economic stress of health burdens.
If we can't go that far. If we can't, in action, live up to the basic morals most of us claim to have...
These people do not need nor, in my opinion, deserve to get any richer, until we've solved this.
We don't all have to be billionaires, to have quality of life. But we do need health. And THAT is something we can fix, right now. If we have the will.
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[ 5.0 ms ] story [ 191 ms ] threadHis chart shows the disparity dramatically widening starting in the mid-80s, which is precisely when the microcomputer revolution was accelerating. The 1990s saw a booming stock market and the minting of thousands of new millionaires and dozens of billionaires as well.
These stock-rich technology entrepreneurs should be seen not as an exploitative class to be feared and countered, but rather as a sign of successful capitalism at its finest, brilliant new ideas that have changed the world and vastly expanded the major Western economies with new modalities for doing our work, communicating, and nearly everything else.
Massively lower taxes reduced the redistribution effect, accelerating the accumulation of capital to the top.
A global capitalist economy can't survive 90% crushed labor, 9% upper-middle, and 1% who own almost everything. Those conditions eventually lead to revolution. Or rather it would be more accurate to say those conditions have historically led to unrest, collapse, and/or revolution.
Why would future generations feel any loyalty to their nation or this system if they're barely making ends meet while they watch billionaires cut their own taxes to make themselves richer and shift more of the burden of maintaining society on the poor and shrinking middle class?
None of this is good for the startup ecosystem. Fewer consumers with money to spend means less customers and less advertising targets. That's the problem with capital accumulating at the top: without customers there are fewer and fewer legitimate investments that have any yield so capital is forced to make increasingly reckless investments or do the equivalent of stuffing the money under a mattress. None of that is putting capital to useful work.
Most wealth is inherited. Wealth grows faster than the economy at large. The rich get richer. They spend their money lobbying for lower tax rates, and they get them. They lobby for privatization, and they get them. They lobby for monopolies and patents and bailouts, and they get them.
Interesting to note that half the population are no richer than they were almost 50 years ago.
Going from $1M to $2M? Nearly inevitable.
1. There are always going to be outliers, but most people are going to be closer to the middle of a normal distribution.
2. The examples you mention were all excellent entrepreneurs, but they were also a bit lucky with timing and social position; Jobs' adoptive parents were blue-collar workers but none of these future industrialists grew up in poverty. If we could reduce the latter a bit we might have even more of the former.
Most of them had an above average hand to start with.
http://gabriel-zucman.eu/files/PSZ2016.pdf
I'd like to see coverage of it from a more neutral source.
Clinton planned to raise taxes moderately for the wealthy, but supported globalization policies which created that wealth in the first place.
http://www.clark.com/tax-calculator-clinton-trump
America had a chance with Bernie, but due to some combination of media attention, Clinton's ambition, DNC's corruption, Russian interference, increasingly-polarized news, and the generally anti-socialist slant of American political discourse, they threw it away.
Bernie was the "fuck this, change everything" candidate that actually had the disenfranchised's needs at heart. Trump claims the same but doesn't substantiate it.
EDIT: And honestly, I don't think Bernie would have been able to accomplish much, or that Obama has done much objectionable. I get the sense that Obama actually wants to improve things for the middle class, but is realistic about what he can accomplish with Republican houses shutting him down at every turn simply because any policy that helps the middle class appears anti-capitalist (i.e. socialist) when capitalism is increasingly synonymous with centralization of wealth as efficiency grows.
EDIT Again: This whole "campaign for the poor but systematically serve only large businesses, then tell everyone that the democrats -- who actually systematically care about humans a little bit -- are the devil" thing is kind of the GOP's M.O., and, as an outsider, I think it's disgusting. Trump is only an exceptionally bad example because he amplifies some of the standard GOP stances while mixing in his own crazy brand of narcissism.
For the record, Democrats had total control of Congress when Obama first came into office.
Democrats lost election after election to them and so shifted their policies to match, hoping to chase votes.
Now we don't really have any populist politicians or political parties left.
It seems we are resigned to lurching from panic to panic with anemic growth until we hit the wall of another Great Depression. Then the pain will be so monumental that the 1%'s influence will be swept aside. What form things will take on the other side of that transition no one can say. I also wouldn't hazard a guess on how long it takes; The Panics of 1873, 1893, and 1907 didn't seem to teach anyone any lessons because they repeated the same anti-regulation low-tax "rah rah rah capitalism!" mistakes in the 1920s and triggered the Great Depression. In some ways you could say our systems worked too well to counter-balance the 2007 crisis; they prevented things from getting really bad and forcing change.
The bizarre focus on income means that we set our sights on a weird slice of upper middle class professionals (doctors, lawyers, etc.) while ignoring totally the real rich people.
http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-...
> “My 2015 return shows adjusted gross income of $11,563,931,” he revealed. “My deductions totaled $5,477,694.” About two-thirds of those represented charitable contributions, he said. Most of the rest were related to Mr. Buffett’s state income tax payments.
> As it turns out, the charitable contributions that Mr. Buffett did deduct from his income make up just a tiny portion of the more than $2.85 billion he donated to charity last year, he said.
[0]: http://www.nytimes.com/2016/10/11/business/buffett-calls-tru...
[0] https://en.wikipedia.org/wiki/The_Giving_Pledge
Even without an income stream from this land, it makes other land even more scarce, and leads to general unaffordability.
One of the amazing things about the book, was separate from ones given beliefs about his recommendations regarding inequality, was that Picketty had painstakingly amassed all this data on income and wealth across a huge range of history, across multiple eras, from before the victorian age in many cases. That alone is a great accomplishment - and lets one start to quantitatively analyze fundamental economic questions of the modern day.
[1] http://www.forbes.com/sites/niallmccarthy/2016/09/23/survey-...
Really, it's the top 0.1% I'm concerned about. Most of the top 1% are basically upper middle class people who've met with significant professional success, and the only part of the middle class that done well the past two decades (and good for them).
I disagree strongly. That 200 million would be far, far better invested in some pie-in-the-sky social start-up than just sitting there. Spending should definitely not be taxed anymore than it already is, we want people to spend money.
Georgism is an economic philosophy holding that, while people should own the value they produce themselves, economic value derived from land (including natural resources and natural opportunities) should belong equally to all members of society. Developed from the writings of Henry George, the Georgist paradigm offers solutions to social and ecological problems, relying on principles of land rights and public finance which attempt to integrate economic efficiency with social justice.
I would add that today, other common capital could be taxed in the same manner, be it the electromagnetic spectrum, the human audio spectrum, the visual spectrum as well as other so called externalities.
https://en.wikipedia.org/wiki/Georgism
"Lt. Gov. Sean Parnell announced Friday that every eligible man, woman and child will receive $2,069, thanks to dividend payments from the state's oil royalty investment program distributed annually. On top of that, the checks will include another $1,200 from the state treasury to help offset soaring fuel prices.
The one-time energy boost was proposed by Gov. Sarah Palin and approved by state lawmakers last month. Palin has since been tapped as the running mate of Republican presidential hopeful John McCain.
"The royalty dollars that flow through the state are the people's wealth," said Parnell. "The $1,200 resource rebate goes to that philosophy.""
http://www.nbcnews.com/id/26564403/ns/us_news-life/t/alaska-...
Also, anybody in an urban, flourishing area such as San Francisco, New York, London or my native Stockholm would no doubt resonate with this, I quote further from the linked Wikipedia article, emphasis mine:
> George emphasized ground-rent because basic locations were more valuable than other monopolies and everybody needed locations to survive, which he contrasted with the less significant streetcar and telegraph monopolies, which George also criticized. George likened the problem to a laborer traveling home who is waylaid by a series of highway robbers along the way, each who demand a small portion of the traveler's wages, and finally at the very end of the road waits a robber who demands all that the traveler has left. George reasoned that it made little difference to challenge the series of small robbers when the final robber remained to demand all that the common laborer had left. George predicted that over time technological advancements would increase the frequency and importance of lesser monopolies, yet he expected that ground rent would remain dominant. George even predicted that ground-rents would rise faster than wages and income to capital, a prediction that modern analysis has shown to be plausible, since the supply of land is fixed.
https://en.wikipedia.org/wiki/Alaska_Permanent_Fund
A doctor may go much of their life with low income, and make it up in their mid and late career. But a 22 year old doctor isn't what we thing of as "poor".
We need to follow people over time and use other indicators to see how poor they actually are. Consumption might be a much better measure in many ways.
Not sure if that gets you what you are looking for.
Even if you tax it at 90% to try to put an end to it, you will only slow it down.
Should people engaged in capitalism be murdered by the state?
I don't see any other solution to inequality.
(obviously this is not a serious comment, but please respond as though it were - or address my point. It is literally possible to spin up online businesses from $100 and consistent reinvestment. This creates inequality between the people doing it and the people not doing it. solution?)
Being entrepreneurial in itself is not Capitalism, which relies on arranging a system so that private ownership production of production leads to the private ownership of profits generated by laborers.
On the face of it, though, making it difficult for private groups to have enough cash to make $10M bets on small enterprises is not impossible for a state. I'm not advocating it, but to take your statment 'srsly' you're overlooking that aspect of the situation.
Yes I'm serious
Pick one, please.
they can go on Hacker News, open a blog, announce a new project, raise funds for it, and become rich.
I think you should be more explicit here in step two. https://3.bp.blogspot.com/-Vs3uuPUiQXM/VzRg9MDf2kI/AAAAAAAAJ...
I don't want to shut down all inequality, but you're bullshitting when you handwave away all the other factors to business success. It's kind of insulting, to put it mildly.
Neither monopoly nor inequality has been shown by data to arise from economic efficiency, nor to create economic efficiency. Quite the opposite.
The idea is to assess the status quo as one possible outcome rather than as an inevitability.
so inequality is a bad metric. If you start trying to tackle a bad metric, you will not do well.
Nearly everyone you know has less than 1/10,000th the wealth that Sergei Brin does. I am stating it is a problem if you or anyone else has any problem with this state of affairs. And if you allow less dramatic examples than Sergei Brin, you will find thousands of people starting businesses and thereby increasing inequality.
equality of outcome is not a noble or worthwhile goal.
For instance, very high tax rates on very high income won't come anywhere close to ensuring equality of outcome. For example, a hypothetical 75% tax on $10 million of income still leaves $2.5 million of after tax income. Please note very carefully that I'm not arguing that would be a sensible policy, I'm pointing out that even such a dramatic departure from current policy would leave lots of room for inequal outcomes.
I don't know how else to put this. Suppose people said "fat inequality is a huge problem - some men have lean, fit bodies with 10%-12% body fat whereas other men have 40% body fat."
In point of fact, while it is not desirable for everyone to have 40% or more body fat, there is no problem with the inequality itself: some people will always devote more of their lives to fitness, eating on strict diets and a lot of exercise; which is what it takes to achieve 10-12% bodyfat.
THE INEQUALITY IS NOT AN ISSUE. Obesity is an issue NOT because of the inequality, but because of the direct effects of obesity.
Poverty is an issue NOT because of inequality (NOT because of the fact that Brin has $39,000,000,000) but directly because of the direct effects of poverty.
In short, inequality of wealth or income is a red herring. It is like trying to make America healthier by fighting "inequality of fitness" and fighting against some people having 12% bodyfat while others have 40%.
(In this case you have to read in the opposite direction -- a 40% bodyfat is objectively worse -- but you understand what I'm saying. It's not the inequality that's bad. Not everyone will get to 8% bodyfat even if this is possible or somehow desirous.)
I hope you see, and don't misinterpret the distinction that I'm pointing out. If you have questions follow up and I will clarify what I mean.
Do please share your secret on this. I have a spare $100 right now which is unusual and I'm not even in a hurry to get rich, just have a reliable income. Caveat - I shouldn't have to entirely reorient my life around this before I see any return, in much the same way that most people can't afford to quit their jobs and stop eating etc. in order to start with nothing as dramatically as possible.
Alternatively, buy a painting from me so I can make some money doing something I'm already invested in instead of what you would choose to do with your time. Because I don't really want to be a sales person or run an elaborate business, I just want some options to plug the gap between working myself to death at something I hate or grinding poverty.
Not to say that I don't think the current state of income and wealth inequality aren't troublesome, it's just that in this case when they say, e.g., "top 10%", what they really mean is something closer to "95th percentile".
Kinda ironic.
The data is never going to be flat. That would mean the top earners and the lowest earners had identical incomes. Call that what you want but that's not a free economy.
Wealth taxes in Sweden and Finland were eliminated around 2005 because capital gains tax was considered more equitable to various wealth classes and more easily administrated. The wealth tax laws had become a nest of loopholes that brought in relatively little income in the end.
It would be interesting to see a new wealth tax designed for the digital era.
Amusing find from the linked article: Back in 1999 Trump proposed a one time wealth tax of 14.25% for individuals worth more than 10 million.
[0] https://en.wikipedia.org/wiki/Wealth_tax
and 1%-2% for the top .01%
graphs of % of income by 1% and .01%
https://youtu.be/d-6PusM9aks?t=32
graph of US gpd adjusted for inflation
http://www.multpl.com/us-gdp-inflation-adjusted/
I've recently got exposed to someone questioning whether or not we should even care about inequality, a provocative idea for sure. Hillsdale college had a worthy lecture posted earlier this month. Scott Winship talks about Intergenerational mobility as an interesting orthogonal concept (https://youtu.be/vDUhpaO1YCE?t=305) William Watson says in the same lecture "The question I was assigned 'Do we want income inequality', just so it's clear I don't care about inequality. What I want is fairness, or equity." (https://youtu.be/vDUhpaO1YCE?t=3131).
A classic one I like on the topic is Sowell's manna from heaven slant on income and its distribution...
Peter Robinson: Intellectuals and Society once again, “The very phrase income distribution is tendentious. Wealth can be created only after capital and labor have reconciled their competing claims and agreed to terms on which they can operate together in the production of wealth”. Income distribution, the very phrase is tendentious how come? Thomas Sowell: Income is not distributed, and newspapers are distributed. Social security checks are distributed and one time milk was distributed. Income is not distributed, people earn it directly from those for whom they provide some good or service. And, the argument made by many people you see, is that the, it’s a question of capital and labor have conflicting interests and dividing up the income. No, no, there is no income to divide up before they first reconcile their conflicting interest and decide on what terms they’re going to produce that income. There is no preexisting, there’s no manna from heaven for them to fight over.
The U.S. economy has far more wealth than needed to provide everyone in the country (at least, everyone who elects to participate) basic, quality healthcare. Not necessarily advanced-age end-of-life spendorama experiences, but far enhanced opportunity to remain or regain health and related quality of life during the majority of living years.
There could still be plenty of economic inequality. But we could vastly diminish an unnecessary suffering as well as the economic stress of health burdens.
If we can't go that far. If we can't, in action, live up to the basic morals most of us claim to have...
These people do not need nor, in my opinion, deserve to get any richer, until we've solved this.
We don't all have to be billionaires, to have quality of life. But we do need health. And THAT is something we can fix, right now. If we have the will.