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I think this is a core issue. And the issue is related to the sorts of jobs we have available. Our country fared the best when income inequality was lower. There were well paying jobs for many types of employees, and the benefits of productivity gains were passed along to the employees.
Income inequality has lots of consequences. It limits social mobility, so people do not have a chance or opportunity to move up. And the more people realize social mobility is impossible, the less likely they are to even consider working heard enough to escapes the bottom, taking a physiological toll on society.
A wide chasm, with no middle, also makes everything much more expensive and more difficult. We don't have the infrastructure to support a huge lower class.
or was the inequality lower when the country fared best? I'd suggest you have the cause and effect backwards. Still what should be done to make change, and by whom?
Extreme income inequality is the most threatening issue of our time. I can come up with a list of reasons why the government needs to act ASAP. Before I do, I must say that America's issue is the hyper-individualism preached by the ideological cults. Ignoring inequality just expedites the eventual collapse of capitalism.
To be clear, I don't believe everyone should be equal. Inequality is a natural form of any economy that uses capitalism.
1) Extreme inequality undermines the political process. This part is already happening. When the lords control all representation in democracy, we get the same tyranny we seek to prevent. The tyranny is no different than a dictatorship or tyranny of the masses.
2) Extreme inequality is bad for the economy. If the 1% control all the wealth and income, the demand for their products falters. They have no consumers!
3) Extreme inequality increases the tax burden on the rich. I often get berated for this one. People seem to forget that progressive taxation is an economic stabilizer. If the lower classes continue to lose income purchasing power, they contribute less tax revenue. Their tax revenue is just replaced by the angry elite taxpayers.
4) Extreme inequality leads to more welfare. Until we roll back all social safety nets (which won't happen because of point 5), more inequality just allows more citizens to slip into taxpayer assistance. Suppose we never raise the lower wages again. The cost of living will continue to erode the purchasing power of low wage workers. More and more "working poor" become eligible for taxpayer assistance. Could we fathom an economy where over half the people are on some form of welfare? 70%? 80%? 90%? Why would the few bother working?
The irony.... the 1% that complains about welfare and minimum wage hikes are creating their own problem by creating more poor workers!
5) Finally, extreme inequality leads to social unrest. This is most important and has a global aspect to it. We live in a world with finite resources. When the few control too much of these resources, we create a situation where the masses become desperate enough to lose morality. I'm talking about stealing and killing. The countries with high levels of violent crime have extreme wealth inequality. There is nearly a perfect correlation.
"The pitchforks are coming." Violent uprisings come when the "have nots" have no tolerance left for their overlords.
great examination of the problem - what's the solution?
As I moved up the economic ladder, I was shocked at the degree of tax inequality there is between the wage/labor class to the investor class. Government already has skewed values that favor the high asset owners.
Cutting back on welfares is a start. Corporate welfare defines which businesses will thrive, being carried by the other businesses that pay the freight. Individual welfare programs are gamed, too.
I am just as guilty, having to make weird plans on how to save, invest, and spend, so that I spend as little as legally feasible on taxes. I have paid as much as 50% in various taxes on good wage earning years. I don't plan on letting that happen again.
I have my beefs with executive pay, but have you considered that she/he also takes on greater responsibility and risk?
Are you kidding me? Risk? What risk? There's no risk when you can receive as much as a $57 million golden parachute even if the board axes you. There's no risk when you make out like a bandit even if you fail. Plus, you'll just be picked up by the same company (or a rival) and given a spot on their board of directors or perhaps a VP position. You'll -never- see a chief executive standing in the unemployment line next to bus drivers, factory workers, janitors, and welders.
Because there is literally no risk, the responsibility is no longer an issue. Sure, some do well at their jobs, but many do not. They just soak up the money until they get fired - and while they float to the bottom with their golden parachute, the average worker ends up taking pay cuts, getting laid off, having their pensions killed, etc. Nothing truly bad happens to the CEO or executive who ran the company into the ground except for a bruised ego.
Quote:
Originally Posted by Transplanted99
And, if one argues about CEO vs Joe, what about Sports/Movie/Rock Star vs Joe pay differential?
They're just as bad - BUT - it is far easier to refrain from buying tickets to sporting events and seeing movies at the theater than it is to refrain from buying things that make CEOs and senior execs very wealthy. It's not as though you can just stop buying food simply because the CEO of grocery store chains are getting rich while you struggle to buy a head of lettuce.
Yet sports like baseball, the so-called "American Pastime" are becoming so expensive that the middle class, where the big fans are located, can't afford to go see the games. This is largely due to idiotically high salaries for athletes. And when I see them going on strike - it turns my stomach. A starting New York Yankee** earns more in one season than a teacher* makes during his entire career ... and his child's career ... and his child's career ... and his child's career. Yeah, that's right. It would take 3.7 generations of teachers to equal the money a starting Yankee receives in just one season.
*Using the state pay scale for teachers in Pennsylvania in 2010; every state is diffferent, but PA does pay teachers a good, solid wage.
**Using financial information from the New York Yankees, also from 2010.
Quote:
Originally Posted by Transplanted99
This line of argument quickly devolves down to the notion that there should be some kind of cap on what people earn. Once we go there, we are essentially at "...to each according to their needs...".
Why shouldn't there be? We simply cannot maintain this kind of capitalism if America is going to survive as a First World nation. Naked greed and avarice is allowed run rampant; the business model of squeezing every last drop of potential profit out of a company is lowering our standard of living, causing everything from unnecessary price increases to artificial scarcity of badly needed medicine. It is sucking the consumer base dry while more and more of America's financial assets are being sold off to foreign investors or simply whisked away to offshore tax havens (a conservative estimate says there is over $27 trillion sitting idle in places like the Cayman Islands).
When almost half of the American people are receiving government assisstance and a good chuck more making such a low salary that they are tax exempt, the government no longer has the funds to maintain our infrastructure - and THAT is what makes us a part of the First World. Surely you have heard the reports of how our infrastructure is failing; our interstates are so terrible now that traffic is just as bad as if there were no interstates. Dams are crumbling. Bridges are falling down. The electrical grid goes dark every time there's a storm.
And that's to say nothing of our public schools, our police forces, our fire stations, our museums, our libraries, hell, even rest areas on the interstate are being locked up and left to rot due to lack of funds. Now, we could keep taxing the middle class, even the rich, until they're as destitute as the poor. OR, we could start taking steps that wealth within a company really -is- spread around much better than it is. This is the -only- way that I can see which will avert a slow and painful decline into destitution.
The signs are already present. I know people think that as long as we're not experiencing another Black Tuesday of 1929, we're doing okay. But the collapse I'm warning of won't happen in a single day. It's going to be a process - one so slow that many won't even be aware of it until that process catches up with them and suddenly they're having to make sacrifices to their standard of living just to keep food on the table.
Now, I've heard the inane arguments that say capping salaries will destroy the incentive to work. What rubbish. Tens of millions of people already work in professions with a salary cap, some of them quite modest, and yet people still went to college and endured the hassle of becoming a member of that profession. Teachers, for example, have to get a 4 year degree and then take enough classes in the first five years to earn a masters - and in PA, you have to work 30 years before seeing $50,000/year, which is the cap.
WHY should it be different for high ranking employees? The power and prestige will be enough of an incentive, never mind the money. And I'm not even suggesting that we make the cap for the upper echelon to be some ridiculously low number, either. Is earning a couple of million per year that much of a hardship? Seriously? Do they really need tens of millions, even billions of dollars before it's worth getting up off the couch and going to work every day?
Whatever the case, you know precisely what happens when you try to balance a pyramid on its apex. Yep, it falls right over.
Plop.
And that's what is happening here - with the top 15% or so trying to keep our economy from imploding as the pyramid teeters this way and that. Everyone else has their heads down in a constant financial struggle, concerned mostly with feeding their kids, keeping their house, saving for retirement (Lord knows, there aren't any pensions anymore) and paying off debt.
This is a short sighted argument that is destroying the modern world.
The reality is this; our society is basically controlled by the 1%. They have all the power. Those in power will use any means available to them to preserve that power. And brother, they have more power than everyone else. Therefore, the "motivation" of the 99% becomes completely irrelevant. There will come a point where hard work won't get the 99% into the aristocracy. The elites can do anything to prevent that... like changing the laws, the tax code, buying competition, etc. That is why we have so many regulations against corporations today. We already lived through a Gilded Age and crafted legislation to prevent it from happening again.
Unfortunately, the 1% are cunning enough to find ways around the system. Propaganda, lobbying, "special interest" foundations, etc.
Interesting you should say that.
A wise man once observed that there comes a time when the wealthy and the privileged become so rich and so powerful that they begin to think of themselves as gods, and the rest of us as slaves. At that point there will be slaves who will try to ally themselves as house slaves, and will defend their masters at all instances.
I am just as guilty, having to make weird plans on how to save, invest, and spend, so that I spend as little as legally feasible on taxes. I have paid as much as 50% in various taxes on good wage earning years. I don't plan on letting that happen again.
You're the victim of precisely what I'm talking about in my previous post. You end up paying 50% in taxes because -someone- has to pay them, and the bottom 150 million are too poor to contribute despite working full time.
If the wealth and income in this country is not more egalitarian and "spread around" as a socialist might say, then the expenses cannot be more egalitarian and "spread around," either.
This is the price of greed. Not you, personally, but the upper classes in general. I really don't know what these people are thinking. Perhaps they just realize they'll be dead and gone before any of the problems they create really come back to nail them, so they're just essentially raping and pillaging America knowing they'll die happy and rich - it'll be their grand kids or great grand kids that will have to pay the piper. Is that it? Because I cannot see another reason.
But someone has to pay taxes to maintain our infrastructure and our military. If they strong arm the poor with incessant price increases and excessive fees to the point where they have no disposable income, and if the middle class is rendered all but extinct for the same reasons, and the upper class avoid taxes by voting in politicians who favor the rich while stashing their cash in tax havens, WHO, then, will pay for our country? The wealthy are the only ones really capable of doing so.
Yet, as I said, their insistance in raising prices and accumulating ever-increasing stacks of cash (which converts to power and influence) means that they are the ones who will get slammed with high taxation. It can be no other way. If income was more egalitarian, so too would be the taxation.
Our most prosperous time was when even a high school drop-out could mosey down to the local factory and earn a comfortable, if modest, living for himself. He could afford to raise a couple of kids, buy a house, even a car, on his salary alone and -still- have money left over to put back into the economy.
Today, nope. Even though minimum wage is over six times what it was then, spending power has not kept up at all. At all. A person making $1.00/hour in 1960 had more spending power than a person making $7.15 today.
In 1960, the nominal minimum wage was $1.00, but that is equal to nearly $8.00 in today's dollars. In fact, the real minimum wage peaked in 1968 at $10.74 an hour (2013 dollars). Since then, the purchasing power of the minimum wage has slowly fallen over time.
Keep in mind that economics is not a hard science. The laws of economics are contrived and not absolute. Economics is a SOCIAL science, like psychology and sociology. No, believe it or not, prices do NOT have to increase based on supply and demand. We simply say it does ... so it does. Prices do not have to easily increase but be sticky when lowering. Nope. We do that to ourselves. There is no immutable physical or mathematical law that says it -must- be that way.
We're going to have to completely rethink our economic model if we're going to survive this mess. Mark my words.
Before we start debating if we should "address the problem" I think we should make sure the "problem" is indeed a problem.
Good point.
Last year the top one percent earned 19 percent of the income in the United States. Much of this money isn't circulating in the economy. The top ten percent earned 48.2 percent of the income and again, much of it isn't circulating. This is the widest gap since 1927.
Now recall that, during the Great Depression which began in 1929, there was no lack of money; it just wasn't circulating.
Money is our economy's life-blood. If the blood in our bodies isn't circulating, we sicken and die. If the money isn't circulating, the economy sickens and dies.
I want to address this a little bit.. The jobs of yesteryear that were here in the US that someone with basically a grade school education could get and could support their family on are gone. They've been outsourced.
It's much easier to pay someone in Mexico $2.00 an hour and ship the product in than to pay an American worker $12.00 an hour (as an example) to do the same job. Since they both have the same education level... Where's the incentive to keep that job in the US?
So, this goes back to my point about if you address it, you have to address it globally.
What is more apt to happen.. We're going to have to raise the education standards in this country so that the top-tier jobs are all here. What that means is an even greater separation between the haves and have nots. Because.. That 20% or so of people who don't or can't graduate from high school are going to be competing for the only jobs left that can't be outsourced.
But those jobs are being taken by illegal immigrants. Moderator cut: Against forum guidelines
Moderator cut: .
I think we're moving towards a "citizens salary".
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