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Wealth Inequality in America

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http://ideas.ted.com/2014/06/03/the-4-biggest-reasons-why-inequality-is-bad-for-society/

 

 

 

THE 4 BIGGEST REASONS WHY INEQUALITY IS BAD FOR SOCIETY

 

It’s safe to say that economic inequality bothers us. But why? Harvard philosopher T. M. Scanlon offers four reasons we should tackle — and fix — the problem.

The great inequality of income and wealth in the world, and within the United States, is deeply troubling. It seems, even to many of us who benefit from this inequality, that something should be done to reduce or eliminate it. But why should we think this? What are the strongest reasons for trying to bring about greater equality of income and wealth?

One obvious reason for redistributing resources from the rich to the poor is simply that this is a way of making the poor better off. In his TED Talk on “effective altruism,” Peter Singeradvances powerful reasons of this kind for voluntary redistribution: Many people in the world are poor, and the improvement in their lives that richer people can bring about by giving money is enormous by comparison with the small sacrifice that this would involve.

A JUSTIFICATION FOR REDUCING INEQUALITY THROUGH NON-VOLUNTARY MEANS, SUCH AS TAXATION, NEEDS TO EXPLAIN WHY REDISTRIBUTION OF THIS KIND IS NOT JUST ROBBERY.

These reasons for redistribution are strongest when the poor are very badly off, as in the cases Singer describes. But there will always be some reason of this kind as long as redistributing assets increases the well-being of the poor more than it decreases that of the rich. These reasons for eliminating inequality are also based on an idea of equality, namely that, as Singer puts it, “every life is equally important.” This can be seen as a combination of two ideas: the general principle of universal moral equality, that everyone matters morally in the same way, and the idea that, because all people “matter morally,”  there’s a good reason to bring about increases in their well-being if we can.

It’s important to note, though, that there is another sense in which these reasons are not egalitarian: They are, fundamentally, reasons to increase the well-being of the poor rather than objections to inequality, that is to say, objections to the difference between what some have and what others have. The fact that other people are better off is relevant in Singer’s argument only for the reason Willie Sutton was said to have given when asked why he robbed banks: “That’s where the money is.”

The possibility of making the poor better off does not seem to be the only reason for seeking to reduce the world’s rising level of economic inequality. Many people in the United States seem to believe that our high and rising level of inequality is objectionable in itself, and it is worth inquiring into why this might be so. This inquiry is important for two reasons. The first is because a justification for redistribution needs to include some response to the claims of the rich that they are entitled to keep what they have earned. What Peter Singer argues for powerfully is voluntary redistribution. A justification for reducing inequality through non-voluntary means, such as taxation, needs to explain why redistribution of this kind is not just robbery, like the activities of Willie Sutton and Robin Hood.

Second, if inequality, in itself, is something to be concerned about, we need to explain why this is so. It is easy to understand why people want to be better off than they are, especially if their current condition is very bad. But why, apart from this, should anyone be concerned with the difference between what they have and what others have? Why isn’t such a concern mere envy? I will mention four reasons for objecting to inequality, and consider the responses they provide to the charge of mere envy and to the claims of entitlement. The first three:

1. Economic inequality can give wealthier people an unacceptable degree of control over the lives of others.

If wealth is very unevenly distributed in a society, wealthy people often end up in control of many aspects of the lives of poorer citizens: over where and how they can work, what they can buy, and in general what their lives will be like. As an example, ownership of a public media outlet, such as a newspaper or a television channel, can give control over how others in the society view themselves and their lives, and how they understand their society.

2. Economic inequality can undermine the fairness of political institutions.

If those who hold political offices must depend on large contributions for their campaigns, they will be more responsive to the interests and demands of wealthy contributors, and those who are not rich will not be fairly represented.

3. Economic inequality undermines the fairness of the economic system itself.

Economic inequality makes it difficult, if not impossible, to create equality of opportunity. Income inequality means that some children will enter the workforce much better prepared than others. And people with few assets find it harder to access the first small steps to larger opportunities, such as a loan to start a business or pay for an advanced degree.

None of these objections is an expression of mere envy. They are objections to inequality based on the effects of some being much better off than others. In principle, these effects could avoided, without reducing economic inequality, through such means as the public financing of political campaigns and making high-quality public education available to all children (however difficult this would be in practice).

A fourth kind of objection to inequality is more direct. In Paul Krugman’s review of Capital in the 21st Century by Thomas Piketty, he mentions these stats from the US Bureau of Labor Statistics: “Real wages for most U.S. workers have increased little if at all since the early 1970s, but wages for the top 1 percent of earners have risen 165 percent, and wages for the top 0.1 percent have risen 362 percent.” (Krugman calls those “supersalaries.”) Again, the idea that this is objectionable is not mere envy. It rests, I believe, on this idea, my fourth point:

4. Workers, as participants in a scheme of cooperation that produces national income, have a claim to a fair share of what they have helped to produce.

What constitutes a fair share is of course controversial. One answer is provided by John Rawls’ Difference Principle, according to which inequalities in wealth and income are permissible if and only if these inequalities could not be reduced without worsening the position of those who are worst-off. You don’t have to accept this exact principle, though, in order to believe that if an economy is producing an increasing level of goods and services, then all those who participate in producing these benefits — workers as well as others — should share in the result.

NO ONE HAS REASON TO ACCEPT A SCHEME OF COOPERATION THAT PLACES THEIR LIVES UNDER THE CONTROL OF OTHERS.

Peter Singer’s powerful argument for altruistic giving draws on one moral relation we can stand in to others: the relation of being able to benefit them in some important way. With respect to this relation, to “matter morally” is to be someone whose welfare there is reason to increase.

But the objections to inequality that I have listed rest on a different moral relation. It’s the relation between individuals who are participants in a cooperative scheme. Those who are related to us in this way matter morally in a further sense: they are fellow participants to whom the terms of our cooperation must be justifiable.

In our current environment of growing inequality, can such a justification be given? No one has reason to accept a scheme of cooperation that places their lives under the control of others, that deprives them of meaningful political participation, that deprives their children of the opportunity to qualify for better jobs, and that deprives them of a share in the wealth they help to produce.

These are not just objections to inequality and its consequences: they are at the same time challenges to the legitimacy of the system itself. The holdings of the rich are not legitimate if they are acquired through competition from which others are excluded, and made possible by laws that are shaped by the rich for the benefit of the rich. In these ways, economic inequality can undermine the conditions of its own legitimacy.

As Singer shows, the possibility of improving the lot of the poor is a powerful reason for redistribution. But it is important to see that the case for equality is powerful in a different way.

 

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Just for sake of an argument....

Isn't what this proposal is, is nothing more than a hand out not a hand up ? Creating jobs for those that can work is awesome. Giving money to those that can work but choose not to is pitiful. IMHO
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For sake of arguing with myself...

Wouldn't a wealth equality create a safer environment to live in and at the same time reduce police presence ?

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Self, go fuck yourself, you really are a clueless bastard who has no concept of economics. Try reading a book or something before posting here.
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OFFICIAL WARNING!!!

 

Numbers, if you continue to personally attack Numbers, I will be forced to suspend/ban/napalm/slap your wrist/annihilate/LMFAO...

 

 

Do we have an understanding?

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OFFICIAL WARNING!!!
 
Numbers, if you continue to personally attack Numbers, I will be forced to suspend/ban/napalm/slap your wrist/annihilate/LMFAO...
 
Do we have an understanding?


Yes sir. My bad. Won't happen again boss.

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Just for sake of an argument....

Isn't what this proposal is, is nothing more than a hand out not a hand up ? Creating jobs for those that can work is awesome. Giving money to those that can work but choose not to is pitiful. IMHO

 

 

I think the argument can be made that the reduction in inequality can be done not just in taxes on the rich, which should happen, but in increased wages for everyone else. Thus wages = working but the taxes portion in creating programs to help get people working again. 
 

Also the unemployment programs have vastly changed, you have to prove you're looking for work to be on them.

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Yes sir. My bad. Won't happen again boss.

 

That's racist.

 

Try reading the economic philosophies of Andrew Mellon.

And their impact.

 

And, Numbers, how about lightening up on Numbers.

He is actually a pretty good guy and one of the best,

most insightful posters on here and certainly does not

deserve the crapola he is getting from Numbers.

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Hey Numbers, has that asshole Numbers quit bothering you?


No, that asshole has now resorted to pm'ing me nasty messages. Somebody better do something soon or I'm going to punch him in the throat.

Harry, mind your own business and stay out of this family dispute. ...and Numbers and Numbers are both assholes that need some time off.
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I think the argument can be made that the reduction in inequality can be done not just in taxes on the rich, which should happen, but in increased wages for everyone else. Thus wages = working but the taxes portion in creating programs to help get people working again. 
 
Also the unemployment programs have vastly changed, you have to prove you're looking for work to be on them.


I was only speaking to the article you posted. Yes. More than taxes should be employed. Disability is overly abused from my perspective. People on disability that go out and do everything a normal functioning person does but still qualifies for disability is a person who needs to be reevaluated on their disability. IMHO.

In short, there is alot of room for improvement on this matter that involves alot more than taxes as the article is leaning towards.
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I think the argument can be made that the reduction in inequality can be done not just in taxes on the rich, which should happen, but in increased wages for everyone else. Thus wages = working but the taxes portion in creating programs to help get people working again. 
 

Also the unemployment programs have vastly changed, you have to prove you're looking for work to be on them.

 

Taking money away from those who earn it to give it to those who don't has been going on for 50+ years.

 

Guess what, we still have poor people!

 

The government can only create so many jobs.  Most jobs come from the private sector, and if profits get sucked into taxes, there is less money to pay new wages.

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Taking money away from those who earn it to give it to those who don't has been going on for 50+ years.
 
Guess what, we still have poor people!
 
The government can only create so many jobs.  Most jobs come from the private sector, and if profits get sucked into taxes, there is less money to pay new wages.


So the dilemma is how to create jobs, keep taxes down, and pay more in wages. Simple. Now someone tell me how to accomplish all this...

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Taking money away from those who earn it to give it to those who don't has been going on for 50+ years.

 

Guess what, we still have poor people!

 

The government can only create so many jobs.  Most jobs come from the private sector, and if profits get sucked into taxes, there is less money to pay new wages.

 

Profits aren't being sucked into taxes.  Corporate tax rates are lower now than they were in the past.   

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Disability is absolutely being abused on a massive scale.  It's like a way of life for some people, handed down through their family over generations.  Seen it plenty of times.. I'd guess fibromyalgia would prevent someone from running a chainsaw in their yard for hours but hey I'm not a doctor.

 

:45:

 

 

Generally speaking though, I still find the whole "Blame the Poor" narrative being sold to the disaffected middle class ridiculous. 

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Taking money away from those who earn it to give it to those who don't has been going on for 50+ years.

 

Guess what, we still have poor people!

 

The government can only create so many jobs.  Most jobs come from the private sector, and if profits get sucked into taxes, there is less money to pay new wages.

 

 

Were always going to have poor people that isn't to say we cant do anything to create equal opportunity however, and it certainly doesnt mean we should employ policies like Reganomics that make people even more poor. Further taxes aren't the problem taxes aren't keeping corporations from hiring or increasing wages, greed is doing that.

 

Some statistics (from EPI)  

  • From 1978 to 2013, CEO compensation, inflation-adjusted, increased 937 percent, a rise more than double stock market growth and substantially greater than the painfully slow 10.2 percent growth in a typical worker’s compensation over the same period.
  • The CEO-to-worker compensation ratio was 20-to-1 in 1965 and 29.9-to-1 in 1978, grew to 122.6-to-1 in 1995, peaked at 383.4-to-1 in 2000, and was 295.9-to-1 in 2013, far higher than it was in the 1960s, 1970s, 1980s, or 1990s.
  • Over the last three decades, CEO compensation grew far faster than that of other highly paid workers, those earning more than 99.9 percent of other wage earners. CEO compensation in 2012 was 4.75 times greater than that of the top 0.1 percent of wage earners, a ratio 1.5 higher than the 3.25 ratio that prevailed over the 1947–1979 period (this wage gain is equivalent to the wages of 1.5 high wage earners).

Now I'm not going to suggest that I think workers should be making the same amount as CEO's that's crazy, however I absolutely believe that the percentages in increased wages should be a little closer than 937% to 10.2%, (which has nothing to do with taxes) after all its the employees that make the business function so perhaps they deserve to be compensated a little better.

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Profits aren't being sucked into taxes.  Corporate tax rates are lower now than they were in the past.   

 

 

yep

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So the dilemma is how to create jobs, keep taxes down, and pay more in wages. Simple. Now someone tell me how to accomplish all this...

 

 

Two words, collective bargaining.

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Question:  Where should the corporate profits go?

 

Shareholders?

Employees (not just d-bag executives)?

Reinvestment in the firm?

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Taking money away from those who earn it to give it to those who don't has been going on for 50+ years.

 

Guess what, we still have poor people!

 

The government can only create so many jobs.  Most jobs come from the private sector, and if profits get sucked into taxes, there is less money to pay new wages.

 

That argument isn't accurate. On the face of it, it seems true but companies and people have record profits and it doesn't trickle down. The economy is better in the us with higher taxes. I agree it seems against logic but when poor people have the money they use it and the economy swirls around.

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Question:  Where should the corporate profits go?

 

Shareholders?

Employees (not just d-bag executives)?

Reinvestment in the firm?

Where does it typically go?  

 

Some is used to buy back company stock which makes the value of outstanding stock to the large owners go up.

Some is squirreled away waiting to either use if for an acquisition or simply to have on hand.

Some is simply used for reinvestment.

TOO much is used to pay for executive stock option grants which should be outlawed. 

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This may be the most important case of how to overturn the tide of everyone but shareholders and board-members being the most important to the company...

 

Anyone else been following this Market Basket case?

 

http://robertreich.org/post/94260751620

 

 

The Rebirth of Stakeholder Capitalism?

SATURDAY, AUGUST 9, 2014

In recent weeks, the managers, employees, and customers of a New England chain of supermarkets called “Market Basket” have joined together to oppose the board of director’s decision earlier in the year to oust the chain’s popular chief executive, Arthur T. Demoulas.

Their demonstrations and boycotts have emptied most of the chain’s seventy stores.

 

What was so special about Arthur T., as he’s known? Mainly, his business model. He kept prices lower than his competitors, paid his employees more, and gave them and his managers more authority.

 

Late last year he offered customers an additional 4 percent discount, arguing they could use the money more than the shareholders.

In other words, Arthur T. viewed the company as a joint enterprise from which everyone should benefit, not just shareholders. Which is why the board fired him.

It’s far from clear who will win this battle. But, interestingly, we’re beginning to see the Arthur T. business model pop up all over the place.

 

Patagonia, a large apparel manufacturer based in Ventura, California, has organized itself as a “B-corporation.” That’s a for-profit company whose articles of incorporation require it to take into account the interests of workers, the community, and the environment, as well as shareholders.

 

The performance of B-corporations according to this measure is regularly reviewed and certified by a nonprofit entity called B Lab.

To date, over 500 companies in sixty industries have been certified as B-corporations, including the household products firm “Seventh Generation.”

 

In addition, 27 states have passed laws allowing companies to incorporate as “benefit corporations.” This gives directors legal protection to consider the interests of all stakeholders rather than just the shareholders who elected them.

 

We may be witnessing the beginning of a return to a form of capitalism that was taken for granted in America sixty years ago.

Then, most CEOs assumed they were responsible for all their stakeholders.

 

“The job of management,” proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in 1951, “is to maintain an equitable and working balance among the claims of the various directly interested groups … stockholders, employees, customers, and the public at large.”

 

Johnson & Johnson publicly stated that its “first responsibility” was to patients, doctors, and nurses, and not to investors.

 

What changed? In the 1980s, corporate raiders began mounting unfriendly takeovers of companies that could deliver higher returns to their shareholders – if they abandoned their other stakeholders.

 

The raiders figured profits would be higher if the companies fought unions, cut workers’ pay or fired them, automated as many jobs as possible or moved jobs abroad, shuttered factories, abandoned their communities, and squeezed their customers.  

 

Although the law didn’t require companies to maximize shareholder value, shareholders had the legal right to replace directors. The raiders pushed them to vote out directors who wouldn’t make these changes and vote in directors who would (or else sell their shares to the raiders, who’d do the dirty work).

 

Since then, shareholder capitalism has replaced stakeholder capitalism. Corporate raiders have morphed into private equity managers, and unfriendly takeovers are rare. But it’s now assumed corporations exist only to maximize shareholder returns.

 

Are we better off? Some argue shareholder capitalism has proven more efficient. It has moved economic resources to where they’re most productive, and thereby enabled the economy to grow faster.

 

By this view, stakeholder capitalism locked up resources in unproductive ways. CEOs were too complacent. Companies were too fat. They employed workers they didn’t need, and paid them too much. They were too tied to their communities.

 

But maybe, in retrospect, shareholder capitalism wasn’t all it was cracked up to be. Look at the flat or declining wages of most Americans, their growing economic insecurity, and the abandoned communities that litter the nation.

 

Then look at the record corporate profits, CEO pay that’s soared into the stratosphere, and Wall Street’s financial casino (along with its near meltdown in 2008 that imposed collateral damage on most Americans).

 

You might conclude we went a bit overboard with shareholder capitalism. 

 

The directors of “Market Basket” are now considering selling the company. Arthur T. has made a bid, but other bidders have offered more.

Reportedly, some prospective bidders think they can squeeze more profits out of the company than Arthur T. did. 

But Arthur T. may have known something about how to run a business that made it successful in a larger sense.

Only some of us are corporate shareholders, and shareholders have won big in America over the last three decades.

But we’re all stakeholders in the American economy, and many stakeholders have done miserably. 

Maybe a bit more stakeholder capitalism is in order. 

 

 

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Stakeholder vs Shareholder capitalism.. This pretty succinctly illustrates the paradigm shift in the American model that IMO is responsible for the deterioration of our economy/society.  I think this "Take what you can, when you can and don't worry about who you have to step on" mentality bleeds over into the rest of society.

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