History US tax rate history - A return to the glory days

[Zarqon]

I disagree. I'm all for letting the wealthy be wealthy.

I just don't get this mentality. The cost of letting the wealthy be wealthy is that the poor remain poor, and this creates a general state of inequality between people, which seems clearly sub-optimal. I'm pretty sure the poorest people are the ones most responsible to crimes/social problems, so fixing that/helping them, will benefit the whole country, including the rich.

 

[Al68]

I just don't get this mentality. The cost of letting the wealthy be wealthy is that the poor remain poor, and this creates a general state of inequality between people, which seems clearly sub-optimal.

No, it doesn't create the inequality, it merely allows it. Huge conceptual difference. As far as the "mentality" that allows such a thing, it's identical to the mentality of one who chooses not to steal a candy bar from a kid who has two in order to give it to the kid next door who has none: because theft is wrong. Yes, even theft for the purpose of reducing inequality is wrong. And no, theft doesn't become right instead of wrong just because government is used to do it.

Such a "mentality" is not as difficult to comprehend as you suggest, http://bastiat.org/en/the_law.html" written by Fredric Bastiat in 1850 explains it quite clearly. And it's a short read and free online.

 

[mege]

I just don't get this mentality. The cost of letting the wealthy be wealthy is that the poor remain poor, and this creates a general state of inequality between people, which seems clearly sub-optimal. I'm pretty sure the poorest people are the ones most responsible to crimes/social problems, so fixing that/helping them, will benefit the whole country, including the rich.

To the contrary - how can one justify taxing the wealthy more than their share? This country already has a percentage based tax (not an absolute tax). That means that the wealthy are putting their share in the pot. Tax debates often forget that the government could just send everyone a $5,000 bill each year regardless of income. A percentage based tax is already slightly progressive in that manner where individuals are putting forth according to their earnings. In the skewed hyper-progressive marginal taxes high earners pay far more than their 'fair share'.

How does the poor remain poor? Also, how does the wealthy remain wealthy (or get wealthy in the first place)? There are dozens of opportunities available for 'poor' to become rich. Is every hard working person going to strike it rich? No, there is a bit of luck involved - but in the same manner, the rich don't neccessarilly stay rich. The 'richness' of the top15 richest Americans (according to http://en.wikipedia.org/wiki/List_of_members_of_the_Forbes_400_(2010)" ) goes back at most 1 generation - if at all (basically - non-Walton and Koch are 'new money' in the top 15 list). So, again, how are the rich 'staying rich'? None of those individual's family's had money prior to 1900. Several of them only gained their fortune since 1980 (Gates, LarEl, google guys).

Why do the poor commit crimes? Or maybe they're poor because they have a tendency to commit crime? I can't really think of many crimes that are done out of 'neccessity' but instead, laziness. I don't think anyone here is arguing against temporary safety nets for individuals that fall victim to bad fortune. Again I go to the 'plenty of opportunity' - if someone didn't do well in school, bounces between jobs, drinks/drugs/etc, and the government is still carrying them? Why?

Lastly, who says there is a finite amount of 'wealthy' individuals and that their wealth is at the expense of the poor? To the contrary, I'd think that the wealthy are more apt to feed off of each other in a proper market environment. Why take a penny from everyone in the US when you can play big stakes games with other fat cats?

 

[Char. Limit]

I just don't get this mentality. The cost of letting the wealthy be wealthy is that the poor remain poor, and this creates a general state of inequality between people, which seems clearly sub-optimal. I'm pretty sure the poorest people are the ones most responsible to crimes/social problems, so fixing that/helping them, will benefit the whole country, including the rich.

I would defend my point, but Al68 and mege are actually doing a pretty good job themselves defending it, and I don't want to screw it up.

 

[SixNein]

Here is an interesting read on the topic from Kurgman posted in 2002:

http://spot.colorado.edu/~kaplan/econ3080/Krugman-middle.html

 

[mege]

Nearly all of Krugman's shallow arguements have been already addressed in the thread in one form or another. One thing he says in particular hasn't:

Over the past 30 years most people have seen only modest salary increases: the average annual salary in America, expressed in 1998 dollars (that is, adjusted for inflation), rose from $32,522 in 1970 to $35,864 in 1999. That's about a 10 percent increase over 29 years -- progress, but not much. Over the same period, however, according to Fortune magazine, the average real annual compensation of the top 100 C.E.O.'s went from $1.3 million -- 39 times the pay of an average worker -- to $37.5 million, more than 1,000 times the pay of ordinary workers.

He doesn't take into account the size of businseses between that period. Far more companies are now global instead of just national companies. I would be interested to see CEO salaries compared to the total employment of those companies compared? I'd wager that the ratio there is the same, esspecially since far more americans are employed by large corporations than in the past (which indicates corporations are larger as well).

This type of reasoning is the flaw in much of Krugman's arguements in that piece and others he's written. He seems to forget that the US has taken on the leadership (economically, in this case) of much of the world. We have some of the richest individuals because of their global mindset. If our economic policies change to punish the wealthy, they will just go elsewhere - where it's a more friendly atmosphere. Sure, some may stay - but if 'hoarding money' is all the rich are good for (in the eyes of a collectivist), then why wouldn't they make the smart choice (for themselves) and move elsewhere in the face of their wealth being stolen?

Nothing in Krugman's articles even come close to answering the question: how are the wealthy 'keeping down' the poor? His only analysis in the article SixNein linked is the 'superstar analogy' - rather than 1000 'ok' comedians running around making average wages, there's 10 superstar comedians taking all the gigs and 990 trying to be like the top 10. That just doesn't work with the non-entertainment industry, and he never proves a link to apply it to economics as a whole. It's a nice story, and probably true of thesbians/athletes, but I fail to see it's application in individual wages as a whole. There may be some argument made in terms of small business not being able to compete with large businesses, but is that a wealth distribution problem? No. That's just called 'efficiency' of the market. A good business idea that cannot be done efficiently at large scale will succeed as a small business. Someone trying to make and sell custom home-made cell phones out of their garage will not succeed, and nor should they.

 

[russ_watters]

1. He fails to provide statistical evidence to support his starting premises:

The vast income and wealth inequalities of the Gilded Age had disappeared.

2. He argues that income inequality was high, then dropped during the great depression, then started rising again. Isn't that an argument against his point? The time of "best" income inequality was the worst economic period we've ever had! That implies to me that rising income inequality is a positive sign, not a negative one! Perhaps if we hadn't eaten the rich in the 1930s, there would have been rich people available to create jobs...?

3. He points out that we are not at the top of the development heap, but fails to account for the effect of immigration. Unlike Europe, which has a pretty stagnant population, the US is continuously fed, and largely from the bottom. The fact that our poverty rate has historically been falling despite the fact that we are continuously adding poor people to our population is pretty impressive to me.

4. He, like many of his political persuasion assumes even if just implicitly that wealth is a zero sum game. The implication here is that if the rich had less money, the middle class would have more [of that money]. The premise is wrong and the logic connected to would be faulty even if it wasn't! He hasn't established a causal relationship. A graph of incomes by bracket since just after WWII shows relatively linear rises in income (though the lines did flatten a bit after 1970): http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg
If there is a group above the 5%tile that is rising in a rate that is not linear, so what? Smells like jealousy to me.

5. I also don't like his argument style. It's easy to find people who have misconceptions about economic facts and citing them doesn't imply that everyone who believes the opposite of what you believe falls under the same misconceptions. It's a weak style: if you can't argue against the best the other side has to offer, your argument is probably pretty weak itself.

 

[daveb]

In the skewed hyper-progressive marginal taxes high earners pay far more than their 'fair share'.

I'm glad you put "fair share" in quotes. This, to me, is the crux of the whole debate over redistribution of wealth/taxing the wealthy. What is fair? Those on one side would proabbly say fair is the same rate as everyone else. Others would say the same amount as everyone else. Others would say a proportion based upon how much they enjoy the services/benefits of the government. Others would still have a different criteria about what is "fair". But it all boils down to opinions, and it's rare that a person goes from one side to the other (though it does happen).

 

[SixNein]

Nearly all of Krugman's shallow arguements have been already addressed in the thread in one form or another. One thing he says in particular hasn't:



He doesn't take into account the size of businseses between that period. Far more companies are now global instead of just national companies. I would be interested to see CEO salaries compared to the total employment of those companies compared? I'd wager that the ratio there is the same, esspecially since far more americans are employed by large corporations than in the past (which indicates corporations are larger as well).

This type of reasoning is the flaw in much of Krugman's arguements in that piece and others he's written. He seems to forget that the US has taken on the leadership (economically, in this case) of much of the world. We have some of the richest individuals because of their global mindset. If our economic policies change to punish the wealthy, they will just go elsewhere - where it's a more friendly atmosphere. Sure, some may stay - but if 'hoarding money' is all the rich are good for (in the eyes of a collectivist), then why wouldn't they make the smart choice (for themselves) and move elsewhere in the face of their wealth being stolen?

Nothing in Krugman's articles even come close to answering the question: how are the wealthy 'keeping down' the poor? His only analysis in the article SixNein linked is the 'superstar analogy' - rather than 1000 'ok' comedians running around making average wages, there's 10 superstar comedians taking all the gigs and 990 trying to be like the top 10. That just doesn't work with the non-entertainment industry, and he never proves a link to apply it to economics as a whole. It's a nice story, and probably true of thesbians/athletes, but I fail to see it's application in individual wages as a whole. There may be some argument made in terms of small business not being able to compete with large businesses, but is that a wealth distribution problem? No. That's just called 'efficiency' of the market. A good business idea that cannot be done efficiently at large scale will succeed as a small business. Someone trying to make and sell custom home-made cell phones out of their garage will not succeed, and nor should they.

Speaking of small business...

According to SBA.gov, small businesses account for:

*

Represent 99.7 percent of all employer firms.
*

Employ just over half of all private sector employees.
*

Pay 44 percent of total U.S. private payroll.
*

Have generated 64 percent of net new jobs over the past 15 years.
*

Create more than half of the nonfarm private gross domestic product (GDP).
*

Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
*

Are 52 percent home-based and 2 percent franchises.
*

Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
*

Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.


http://www.sba.gov/advocacy/7495/8420

Does small businesses enjoy the same treatment by the government as large business? How can legislation and policy effect small businesses ability compete with large businesses?

Can the super rich use legislation as a tool to gain unfair advantages?

 

[Vanadium 50]

Much of what I see in the people that surround me, is sort of what I would call a "Santa Claus" syndrome; "I'm really poor, but I want to be rich, and I know I will be rich some day.

In previous messages, I have pointed out who the "rich" are. If we want to tax our way to a balanced budget, the 91% bracket has to kick in at an income of about $70,000 a year. That's a perfectly valid choice, but we need to understand what that choice is.

I don't think aspiring to make $70,000 a year is "Santa Claus".

So screw this tax stuff. It's double taxation!"

The only thing I have every heard "double taxation" referred to is capital gains taxes. You seem like a reasonable guy, so let me explain the logic behind a low capital gains tax rate. I don't buy the "double taxation" argument - the government can tax the same dollar as many times as it likes. This explains it with the Law Of One Price, which is found on page 2 of most Econ 101 textbooks.

The present rate on 10-year Treasuries is 3.1%. If I want to buy a $100 10-year Treasury, how much should I pay for it? If you work it out, the answer is $74.41. If I am in the 31% bracket when I redeem it, I will pay $7.93 in taxes.

OK, now I believe I can sell a share of stock in XYZ Corp. in 10 years for $100. If the capital gains tax rate is 15%, how much should I be willing to pay for it today? The answer is $79.22. When I sell it, I will only pay $3.12 in taxes, so I am willing to pay more for a share of stock than the Treasury.

Now if the capital gains tax goes up to 31%, the stock is only worth $74.41. So raising the capital gains rate from 15% to 31% causes the stock price to fall 6%.

In 2009, the IRS collected $60B in capital gains tax. Assuming that it increases proportionally to rate (something any economist and even the budget forecasters at OMB will dispute - this is a strict upper limit), the IRS will collect at most an extra $64B for it. However, 6% of the market's wealth, or about $2.4T, would be wiped out in order to do this. To put this in perspective, this is 30 Hurricane Katrinas.

 

[SixNein]

1. He fails to provide statistical evidence to support his starting premises:

Perhaps he was offering a qualitative analysis. His audience was the NY Times.

2. He argues that income inequality was high, then dropped during the great depression, then started rising again. Isn't that an argument against his point? The time of "best" income inequality was the worst economic period we've ever had! That implies to me that rising income inequality is a positive sign, not a negative one! Perhaps if we hadn't eaten the rich in the 1930s, there would have been rich people available to create jobs...?

"Incomes then stayed fairly equally distributed until the 1970's"

3. He points out that we are not at the top of the development heap, but fails to account for the effect of immigration. Unlike Europe, which has a pretty stagnant population, the US is continuously fed, and largely from the bottom. The fact that our poverty rate has historically been falling despite the fact that we are continuously adding poor people to our population is pretty impressive to me.

I think the European nations might disagree.

http://en.wikipedia.org/wiki/Immigration_to_Europe

4. He, like many of his political persuasion assumes even if just implicitly that wealth is a zero sum game. The implication here is that if the rich had less money, the middle class would have more [of that money]. The premise is wrong and the logic connected to would be faulty even if it wasn't! He hasn't established a causal relationship. A graph of incomes by bracket since just after WWII shows relatively linear rises in income (though the lines did flatten a bit after 1970): http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg
If there is a group above the 5%tile that is rising in a rate that is not linear, so what? Smells like jealousy to me.

I personally thought he was making a social argument as much or more than an economic argument.

5. I also don't like his argument style. It's easy to find people who have misconceptions about economic facts and citing them doesn't imply that everyone who believes the opposite of what you believe falls under the same misconceptions. It's a weak style: if you can't argue against the best the other side has to offer, your argument is probably pretty weak itself.

I don't know I would accuse Krugman of having misconceptions about economic facts. He's won the noble piece prize in economics, and he's one of the highest cited economists in the world.

 

[russ_watters]

I have a more direct, ethics-based argument that many may find simply offensive, but I think the logic is pretty strong if people are willing to set their emotions and sense of entitlement aside for a minute and fairly consider the logic in this thesis:

The rich are worth it, the poor are not.

Now that's not universally true, but by and large, I think that's the principle driver of economic inequality in the US. People get paid what they are worth. Of course in a capitalist system, it is true by definition that absent manipulation of market forces, the market determines what jobs and products are worth, but I think there is a real logic/ethics to it (which is why I'm a capitalist):

It is taken as a given by an arguer against income inequality that incomes for everyone should be increasing by a similar rate. But why? Why assume everyone is worth equally more? Are they doing the same amount more work? The same amount harder work? Have the qualifications increased by equal fractions? Aside from the secondary supply and demand driver, it is illogical to think that people should get more money for the same job just because other people are getting richer. The fundamental problem behind it is this: Jobs at the bottom are not getting more demanding, therefore they aren't worth more money than they used to be. Examples:

Does a janitor today do more work than a janitor 30 years ago? So why does he deserve to get paid more? (both rhetorical: he doesn't).

I highly respect police officers. It is a thankless, difficult and dangerous job, but has the job of a beat cop changed much in the past 30 years? In some cases, use of technology may increase the breadth of the skillset, but beyond that, I doubt much has changed. So there shouldn't be much of a difference in pay.

A carpenter today is vastly more productive than a carpenter 30 years ago, so he should get vastly paid more, right? Wrong: the carpenter outputs more work, but inputs less effort than was required 30 years ago. If anything, he should be paid less, not more. The people who should be rewarded for the output of the carpenter are the ones who invented, produced, and bought the power tools that enable the carpenter to be more productive. The rich people.

A machinist. Depends on the type, but the industry has been revolutionized over the past 30 years or so with computers controlling them. A machinist with modern skills? Should probably get paid a lot more than a machinist 30 years ago.

Random office drone. Like the carpenter, they output a lot more than 30 years ago, but they do it because technology has made their job easier. Wow, you can use MS word?! So can my 12-year old (caveat: I don't have kids). So they aren't worth any more than 30 years ago. An awful lot of middle class, college educated people have such jobs, but they require no special skills or growth. They don't deserve more money. Short anecdote: I worked as a temp doing that kind of job while in high school and college - one company even fired their resident stoner and tried to hire me full time. Hell. No.

Engineers (me). The job has gotten more demanding as the demands on the industry and demand for the services have increased. The easiest way to demonstrate this is via the gradually (but continually) increasing requirements for aquiring a PE license. In addition, the job changes - perhaps not the complexity, but there is always innovation and therefore always more to learn. This job is worth more to society than 30 years ago. Not vastly more, but more.

Bill Gates, Steve Jobs, Jeff Bezos, whatever Walton was in charge, and a thousand others like them: These are some of the super-rich that people hate. They are fabulously wealthy, but seeing as how they revolutionized most of what we do in our daily lives over the past 30 years, I think they've earned it.

Oil tycoons. The original and reincarnated "robber barons". Except that the Sherman Act prevents the type of monopolistic abuses that made the original robber barons robber barons. So why do we hate the oil tycoons today? Because they're rich. Because we pay them a lot of money for their product. That's it. Waa. It is unfair and illogical that we fantasize and nostalgize the 49ers, but hate the guys who actually found the gold. Wait, maybe that's it: few of the 49ers actually got rich, so there's nothing to be jealous about! Waa. It's childish. These guys are lottery winners. Yeah, some luck goes into that, but sometimes getting rich takes some luck. It doesn't make sense to hate someone because they are lucky.

Money managers. These are the guys I have a problem with. And it isn't really even about being super-rich: many of the "just rich" got that way via the same business model. They've found a way to get paid based on taking a percentage of the medium that is the raw material/product that flows through their industry. That medium happens to be money. That would be like me getting paid in therms of gas or kWh of electricity that the systems I design use. It doesn't make sense to me. A mutual fund gets "loaded" at a percentage of the money in it, but that's not their product. The product is the investment strategy. The amount of money in a fund has no bearing whatsoever on the difficulty of an investment manager's job. That's a business model I'd like to see changed, but it is hard for me to hate people who for the most part just joined a flawed industry and didn't create it (this is why physicists are joining the industry). That said, the same attitude of entitlement that brought up this issue also motivates some to think they deserve what they get paid. Short anecdote: my sister is a financial analyst and had to listen to the traders whine over their lower bonuses in '08 and '09. They felt they deserved bonuses even though their funds lost money. I disagree.

Lawers. See: Money managers - the same logic applies. If you look, though, you can probably find a lawyer willing to work by the hour instead of on contingency.

I think I've rambled a bit here, but I'd like to see someone address the basic point: why should people who haven't substantially increased the skills or effort of a job be paid much more than their predicessors? Better yet, besides a little bit just for loyalty, why should someone who does exactly the same job they did 30 years ago (a 50 year old carpenter, for example) get paid more than they did 30 years ago? Their productivity (input) probably peaked 20 years ago!

 

[mheslep]

I don't know I would accuse Krugman of having misconceptions about economic facts. He's won the noble piece prize in economics, and he's one of the highest cited economists in the world.

Well there are Nobel laureates in physics out there lending support to cold fusion, thus the reason for the peer review publication process to vet serious scholarship versus appeals to plaques on the wall or even NYT bylines. I don't see anyone here challenging arguments in one of Krugman's peer reviewed papers, which he doesn't publish anymore, but rather the unsourced http://krugman.blogs.nytimes.com/2011/06/23/a-fit-of-peaks/" BTW, Krugman is noted for trade theory, not macro.

 

[russ_watters]

SixNein, fyi you misread #5. I didnt say he had misconceptions I said he argued against them. I'll respond in more detail later.

 

[SixNein]

I think I've rambled a bit here, but I'd like to see someone address the basic point: why should people who haven't substantially increased the skills or effort of a job be paid much more than their predicessors? Better yet, besides a little bit just for loyalty, why should someone who does exactly the same job they did 30 years ago (a 50 year old carpenter, for example) get paid more than they did 30 years ago? Their productivity (input) probably peaked 20 years ago!

In my opinion, worth is decided by the ability to bargain. Should a janitor have the ability to bargain for his or her best interest? From the perspective of a janitor, he or she observes that the company is a great deal more successful and higher positions in the company have seen continued wage increases while the janitor hasn't seen a raise in 30 years. On top of that, the Janitor has been working longer hours and has been assigned more duties. Would the janitor be wise to use every tool at his disposal to negotiate for a better raise? How about joining a union? Many seem to believe that unions are fundamentally evil. In some companies, one can get fired instantly for mentioning that blasphemous word.

http://www.prweb.com/releases/2011/4/prweb8301902.htm

To turn your question on its head, do corporate executives perform more today than 30 years ago?

I think you are viewing inequality in one dimensional terms. For example, a http://www.csmonitor.com/USA/Education/2011/0630/Civil-rights-survey-3-000-US-high-schools-don-t-have-math-beyond-Algebra-I" claims that nearly 3,000 high schools only teach mathematics up to algebra 1. Do these students have the same options as students who are taught up to a calculus level?

Inequality to me is about how many options one has in life and how well one is represented at the government level; however, inequality is not about conditions resulting from bad decisions. In other words, are people born equal in the United States?

 

[mege]

In my opinion, worth is decided by the ability to bargain. Should a janitor have the ability to bargain for his or her best interest? From the perspective of a janitor, he or she observes that the company is a great deal more successful and higher positions in the company have seen continued wage increases while the janitor hasn't seen a raise in 30 years. On top of that, the Janitor has been working longer hours and has been assigned more duties. Would the janitor be wise to use every tool at his disposal to negotiate for a better raise? How about joining a union? Many seem to believe that unions are fundamentally evil. In some companies, one can get fired instantly for mentioning that blasphemous word.

http://www.prweb.com/releases/2011/4/prweb8301902.htm

To turn your question on its head, do corporate executives perform more today than 30 years ago?

I think you are viewing inequality in one dimensional terms. For example, a http://www.csmonitor.com/USA/Education/2011/0630/Civil-rights-survey-3-000-US-high-schools-don-t-have-math-beyond-Algebra-I" claims that nearly 3,000 high schools only teach mathematics up to algebra 1. Do these students have the same options as students who are taught up to a calculus level?

Inequality to me is about how many options one has in life and how well one is represented at the government level; however, inequality is not about conditions resulting from bad decisions. In other words, are people born equal in the United States?

In the janitor's situation, in a large company, there would be room to move up to, say, head janitor or to a more skilled position such as maintainence. Aside from cost of living/inflation/market increases, why is he worth more after working at the company 10 years - if he contributes no more than he did on day 1 (training period not counted in this case)? Same goes for many other positions - other positions in the company are just a little more mutable.

Inequality is definitely about what options a person has. Even in the status quo, anyone can go to college. A 40 year old janitor can take out subsidized student loans and start at a community college from scratch and become an MD, if he has the capacity for it. Now, he may be limited by other factors of his decisions - kids, mortgage, etc - but the option is there. His outcome, though, is determined by his past decisions which may limit his options in the future. One thing I do conceed - parents do play a strong role in a childs life. Impoverished parents often fail to motivate their children properly, if a parent doesn't drive their child to 'escape' the poverty - they're probably not going to do it. If a parent is constantly down on themselves and their family, the child is going to have a hard time overcoming that. Handouts won't do anything to help with that mentality except reinforce it as a possible practice. It doesn't make anyone more 'equal' than another. If you really want a great equalizer - join the military. That's an opportunity that every young person has to escape their parent's predicament. My main point though - it's not government policy that's limiting choices, it's parental involvement for most children. While it sucks, yes, there's a lot of idiot parents out there making bad choices for their family - and their children have it a little harder because of it. The kids opportunities aren't gone, but their will to go for it may be.

 

[SixNein]

Well there are Nobel laureates in physics out there lending support to cold fusion, thus the reason for the peer review publication process to vet serious scholarship versus appeals to plaques on the wall or even NYT bylines. I don't see anyone here challenging arguments in one of Krugman's peer reviewed papers, which he doesn't publish anymore, but rather the unsourced http://krugman.blogs.nytimes.com/2011/06/23/a-fit-of-peaks/" BTW, Krugman is noted for trade theory, not macro.

I don't recall anywhere in the article that Krugman claimed anything other than his opinion. And I simply stated it was a interesting read, and I did not use it as a source. Perhaps some need to learn the difference between an opinionated article and a research paper. There is a large difference in trying to pass something off as fact and stating an opinion. Krugman did not try to publish this in some journal; instead, he published it under the OPINON section of the NY Times.

Einstein was a very opinionated person, and sometimes his opinions were quite wrong. But should an opinion of Einstein be given consideration?

 

[mege]

Also, to cover the point about unions specifically.

Unions aren't intrinsically evil. Their a natural evolution in the marketplace - esspecially when formed into a guild they become their own company with a corner on the market for skilled labor. Unions presence helps to maintain proper wages for the low-skill workforce. That's a good thing, imo.

American unions, in practice, are horribly corrupt and instigate class wars over pennies. Working years as a contractor (vehicle programming) for GM, I saw the barriers that Unions put up for self-preservation at the cost of productivity. My favorite example: I couldn't take delivery of shipments of paper manuals. I had to let the union garage know to expect my delivery, and schedule a time for them to deliver it to my desk. Now, I could flag certain things as highly urgent and they'd do it immediately (Except at lunch), but if something came in at 9am to their dock - it wasn't uncommon for me to not get it until the next day. Even if I went down, pointed out my shipment in person, and asked to take it - I'd get an earful about how I was trying to take their jobs. This wasn't 20 years ago, this was 4 years ago. The barriers that organized labor put up to efficiency in a workplace, as self preservation, is amazing to me - and sickening. Also, I think that the thought of work stopage and strikes are horribly childish and are overused. Unions cause jobs to become to hyper-specialized that soon we'll have union workers doing our typing, I'll dictate, they'll type! Can't have one person doing too much, right?

Do I think that companies should spread the wealth if they do extremely well? Yes and, for the most part, companies do profit sharing and bonuses based on company performance. The reason Unions are points of contentions now is because companies (and the governments of the US) are going in the opposite way - having to tighten their belt. With all of the absolutely horrible (sarcasm) things that are done now to employees of the government and in the private sector in the name of austerity, I find it incredible that those same workers forget about the decades of amazing benefits and wage increases that they got. I feel that modern unions are antithetical to that solution as they are solely out for themselves, and not the overall situation. I do feel that the stranglehold on American labor has been a large contributor to the downfall of Detroit, the automakers became immobile to keep the workers happy. Luckilly, times were good enough for GM and Chrystler that they could afford to. Times got tough, and they got really tough. If unions weren't entrenched into the decision making process for the company, I strongly believe they would have been able to create higher quality autos since the 70s. Unions have become more corrupt than the companies that they represent, and that's the ultimate problem.

 

[mege]

I don't recall anywhere in the article that Krugman claimed anything other than his opinion. And I simply stated it was a interesting read, and I did not use it as a source. Perhaps some need to learn the difference between an opinionated article and a research paper. There is a large difference in trying to pass something off as fact and stating an opinion. Krugman did not try to publish this in some journal; instead, he published it under the OPINON section of the NY Times.

Einstein was a very opinionated person, and sometimes his opinions were quite wrong. But should an opinion of Einstein be given consideration?

Lots of 'qualitative analysis' has been done to counter Krugman's opinions already in this thread. While 'no numbers' has just been 1 indictment, lots of examples and rhetoric counter to his opinions have been given as well - to the point that Krugman's fundamental premises don't stand up to some basic reasoning.

 

[Al68]

I have a more direct, ethics-based argument that many may find simply offensive, but I think the logic is pretty strong if people are willing to set their emotions and sense of entitlement aside for a minute and fairly consider the logic in this thesis:

The rich are worth it, the poor are not...

The problem I have with your analysis is the (implicit) presumption that what someone's labor is "worth" is determinable in some way by you or I (or any third party), instead of determined by the parties to the agreement in a completely voluntary (force and fraud free) relationship.

And it is an ethical issue: voluntary agreements are ethical, force and fraud are not. And in the absence of force and fraud, what someone's labor is worth is exactly what the parties to the agreement agree it is worth. No more, no less.

 

[Al68]

Inequality to me is about how many options one has in life and how well one is represented at the government level; however, inequality is not about conditions resulting from bad decisions. In other words, are people born equal in the United States?

Of course not. In fact, no two people are ever born equal. We have varying abilities, intelligence, strength, etc. that greatly impact "how many options one has in life".

Of course we are all born with equal rights, but that's a different issue from being born equal in a general sense.

Einstein was a very opinionated person, and sometimes his opinions were quite wrong. But should an opinion of Einstein be given consideration?

Sure, as long as it isn't fashion advice.

 

[Char. Limit]

The problem I have with your analysis is the (implicit) presumption that what someone's labor is "worth" is determinable in some way by you or I (or any third party), instead of determined by the parties to the agreement in a completely voluntary (force and fraud free) relationship.

And it is an ethical issue: voluntary agreements are ethical, force and fraud are not. And in the absence of force and fraud, what someone's labor is worth is exactly what the parties to the agreement agree it is worth. No more, no less.

There are two problems with your argument here: One, to prove that force and fraud are being used in the markets today (if this is indeed what you're arguing). Two, to prove that force and fraud are unethical.

 

[Al68]

There are two problems with your argument here: One, to prove that force and fraud are being used in the markets today (if this is indeed what you're arguing).

Why is that a problem? I made no such claim in that argument. My claim was that a person's labor is worth exactly what the parties to the agreement agree it is worth in the absence of force and fraud.

(Of course force is used in some cases, like the minimum wage, but I never claimed that represented what anyone's labor is worth.)

Two, to prove that force and fraud are unethical.

Nothing can ever be proved to be unethical. So just label that one IMO.

 

[Char. Limit]

Why is that a problem? I made no such claim in that argument. My claim was that a person's labor is worth exactly what the parties to the agreement agree it is worth in the absence of force and fraud.

(Of course force is used in some cases, like the minimum wage, but I never claimed that represented what anyone's labor is worth.)Nothing can ever be proved to be unethical. So just label that one IMO.

All right then. Just checking.

 

[SixNein]

Inequality is definitely about what options a person has. Even in the status quo, anyone can go to college. A 40 year old janitor can take out subsidized student loans and start at a community college from scratch and become an MD, if he has the capacity for it. Now, he may be limited by other factors of his decisions - kids, mortgage, etc - but the option is there. His outcome, though, is determined by his past decisions which may limit his options in the future. One thing I do conceed - parents do play a strong role in a childs life. Impoverished parents often fail to motivate their children properly, if a parent doesn't drive their child to 'escape' the poverty - they're probably not going to do it. If a parent is constantly down on themselves and their family, the child is going to have a hard time overcoming that. Handouts won't do anything to help with that mentality except reinforce it as a possible practice. It doesn't make anyone more 'equal' than another. If you really want a great equalizer - join the military. That's an opportunity that every young person has to escape their parent's predicament. My main point though - it's not government policy that's limiting choices, it's parental involvement for most children. While it sucks, yes, there's a lot of idiot parents out there making bad choices for their family - and their children have it a little harder because of it. The kids opportunities aren't gone, but their will to go for it may be.

I agree that there are still opportunities there, but I believe those opportunities are growing thinner for a number of Americans. In many states, public universities are slowly being turned private. In order to obtain a college education, students are having to borrow hefty sums of money. Without outside support, this debt can be crushing to their long term future. I think the number of degrees worth the cost for students is shrinking more by year. Can you justify a 40k loan for a sociology degree?

 

[mege]

I agree that there are still opportunities there, but I believe those opportunities are growing thinner for a number of Americans. In many states, public universities are slowly being turned private. In order to obtain a college education, students are having to borrow hefty sums of money. Without outside support, this debt can be crushing to their long term future. I think the number of degrees worth the cost for students is shrinking more by year. Can you justify a 40k loan for a sociology degree?

Then maybe you shouldn't get a sociology degree if the cost-benefit isn't there. Just because someone can do something, doesn't mean they should. Lots of people get lots of 'worthless' degrees, and that compounds the perceived problems of higher education (and the supposed education-gap in the workforce) IMO.

 

[SixNein]

Of course not. In fact, no two people are ever born equal. We have varying abilities, intelligence, strength, etc. that greatly impact "how many options one has in life".

Of course we are all born with equal rights, but that's a different issue from being born equal in a general sense.Sure, as long as it isn't fashion advice.

Lets assume that two super smart people are born with similar talents. Should they have the same opportunities?

Or are you taking a nobleman's position?

 

[Al68]

Lets assume that two super smart people are born with similar talents. Should they have the same opportunities?

Opportunities provided by who? Assuming whoever is providing a particular opportunity is free, it's up to them. Your question only makes sense if you're asking someone who thinks that society should be controlled in that way. It's like asking someone which religion people should be forced to observe: the question only makes sense if you're asking someone who doesn't believe in religious freedom.

People are born with equal rights. Equal rights preclude equal outcomes, as a matter of simple logic.

Or are you taking a nobleman's position?

Nope. I'm taking a libertarian's position.

 

[mege]

Lets assume that two super smart people are born with similar talents. Should they have the same opportunities?

Or are you taking a nobleman's position?

You're equivocating opportunities to rights, which are different things. Same rights, yes - opportunities can be dependant on lots of other different things. To start, a middle-income family in Detroit will have different opportunities than a middle-income family in LA. They're in different places, and thus different opportunities. The same can be said of an individual living in a rural environment versus a suburban environment versus downtown-urban environment.

Even if we had raw and total income redistribution in the country - would that change either of those factors? No, and I would suggest that there is no need to change those factors. Individuals grow up differently and have different opportunities presented in different ways.

 

[daveb]

Alternet has an interseting, albeit one-sided view of the effects of lowering/raising taxes.
http://www.alternet.org/economy/151463/if_ayn_rand_and_the_free_market_fetishists_were_right%2C_we%27d_be_living_in_a_golden_age_--_does_this_look_like_a_golden_age_to_you/"

A healthy economy is one where the vast majority people can buy products, which can then be manufactured more cheaply, creating a positive cycle of profits and prosperity

While this is true, the real debate is how to create policy that encourages this. What worked for the post WWII era may not necessarily work in today's world of globalization, where, like it or not, countries vie in a sort of social Darwinistic fashion to be at the top.