Interesting stats on # of millionaires/billionnaires in U.S.

[dude]

https://www.bloomberg.com/news/articles/2017-06-16/the-u-s-is-where-the-rich-are-the-richest

From past polls, I know there are a significant number of millionaires on this website. The future projections are pretty eye-opening, and while I'm happy to be counted among them, I am concerned about income inequality in this country getting even further out of balance. It's bad for (what's left of our) democracy.

[SwordGuy]

So, let's think this thru.

For purposes of discussion, to set the terms in the debate, there are four groups of people:

Poor
Middle Class
Rich              (Mustachians with a $1M stash are here.)
Incredibly Rich

Now, what does "income inequality mean"?

Does it mean there are more rich+ people?    Hell no!   That's actually a good thing!  It means that more people are moving from the middle-class or poverty into the rich group.  That would be proof our economic system is increasing prosperity!

Does it mean that the middle class is shrinking?  Maybe.   If the middle class is joining the rich, it's a good thing.   Only if the middle class is sinking back into poverty is it a bad thing.

Or does it mean that the Incredibly Rich own a huge proportion of the total wealth?   That's what I think it means.   And again, that's only a problem if the size of the Incredibly Rich group isn't getting proportionally larger.

It's also important to use median numbers, not averages.

I bring up these points because I see a lot of articles where these different issues are all garbled together with erroneous conclusions.

One other thing that's dreadfully important to this discussion is an understanding of the importance of saving and investing to the building of wealth.   As Mustachians, we've learned the incredible power of compound growth on investments.   People who invest will gain a lot of wealth compared to those who do not invest.   And we know two additional facts that bear on this: (a) people in the middle class have the income to be able to invest and (b) they generally do not do so.  The result is a mathematical foregone conclusion - those who invest will get wealthier at a more rapid rate than those who do not.   And, of course, those who overspend and are in debt will gain wealth even more slowly (if at all).   As long as that behavior (a) remains true and (b) is rewarded by the economy by increased wealth, the numbers will continue their trend.
 

[Bicycle_B]

I agree it's somewhat out of balance, but like SwordGuy think the biggest key is opportunities for the middle class and the poor. 

The article itself stated that a quarter of income goes to "the rich", apparently meaning the 1% who hold the most wealth.  Arguably some of that income, if successfully distributed to the poor and/or middle class somehow, could improve outcomes and life chances for the recipients.  Presumably this would also increase broad acceptance that society's balance is fair, improving mental health and reducing the risk of social conflict, civil war, etc. 

The article mentions that in the past, this distribution was achieved via high tax rates in on high incomes.  That may be helpful, but I think other methods might be more effective per dollar spent, hour invested, ounce of political capital expended.  Making college education affordable, enabling entrepreneurship by maintaining or improving Obamacare, and systematically streamlining tax/regulation incentives could make a big difference too.  For example, if we stopped advertising pharmaceuticals, and instead used the government's position as the biggest drug buyer to push down prices, we could reduce national costs instead of just redistributing wealth. 

I've been told there's a lot of good research out there that marginal costs from income increases are higher for many poor and working poor than for the wealthy, preventing them from rising into the middle class.  Adjusting that cost curve more fairly would help a lot, as would things like better government funding for child care or simply a higher minimum wage.  All of these things could help us get a balance that is more productive and more equal, in ways that are fair to everyone. 

IMHO giving the poor and working poor a fair break is a bigger piece than anything else because those who make it to the middle class have enough power in our hands to "make it."

[SwordGuy]

Great points, Bicycle_B!

I would love to see subsidized day care.  It would help nice people who lack other job skills find employment and seriously reduce the costs to couples to have children when they are young and can least afford them.

I would also love to see highly subsidized trade school and college educations.  (While we're at it, I would like to see the expensive dorms and fancy amenities dropped from the subsidized budgets.   People can learn to live in style when they can afford it.   Simple dorms and healthy food is all that needs to be provided.  Ditto for the bloating on the numbers of administrative staff.   Make the administration lean to keep costs down and not leave them time to think up and work on foolishness on taxpayer dollars.)

In addition, I would like to see K-12 funding moved from local responsibility to state responsibility.   That way, rich areas don't get better schools than poor areas.  If rich areas want to use their lobbying clout to get better quality schools, EVERYBODY gets better quality schools.

Universal health care, with one provision below.

That's on the "Carrot" side of the equation.

Now for the "Stick" side of the equation.

If someone is physically and mentally capable of graduating from high school, they should be given the clear expectation that they will do so.   If they need assistance in getting better quality parents to do so, then we need to pony up with funding and laws that let that happen.  Part of that "setting expectations" includes informing them that if they fail to graduate from high school they will face the following immediate penalties:
(1) No welfare as an adult, no aid to their parents to take care of them, no free health care at health clinics or the hospital, etc.   
(2) 1/2 unemployment benefits as they can be expected to make more use of them than high school graduates.
(3) Double all fines and jail or prison time.   (If they graduate while incarcerated, their sentence is returned to normal.)

Learn or starve.   If we're going to expend this much of our national treasure, which is gleaned from the hard work of millions of people, in order to give people a good chance to succeed, we have the right to expect them to do their part of the work.  If they choose not to do their part of the work, then we reserve the right as a society not to give a damn about them.  They don't care, why should we?

[aceyou]

I wonder how they made their estimates for how many millionaires there are.  I'm not skeptical, I just want to know what their method is. 

For example, my parents own a two hundred acre apple operation that is probably worth 1.5-2 million dollars.  They have probably a couple hundred thousand of liquid assets, and a paid off house that's probably worth 350k.  Would they consider my parents among the 18 million millionaires in the world?  If so, how would they have known to count them.  If they would not count, then how many more people are there with well over a million in assets that didn't get counted. 

For another example.  In about 7 years I expect to crack a million net worth, and in about 10 years I expect my investments to total 1 million, but I'll happen through very boring index funds held through 403b's, 457's, and Roths.  How will the agency that got these stats know to include me when I cross the 1 million threshold?  And more importantly, are there tons of others around the world who are really worth over a million for various reasons but didn't get counted?   

My gut tells me 18 million millionaires is a very low estimate given how easy it seems to become one, and how many ways there are to be worth over a million, either through land, real estate, businesses, paper assets, etc. 

[scottish]

Great points, Bicycle_B!

I would love to see subsidized day care.  It would help nice people who lack other job skills find employment and seriously reduce the costs to couples to have children when they are young and can least afford them.

I would also love to see highly subsidized trade school and college educations.  (While we're at it, I would like to see the expensive dorms and fancy amenities dropped from the subsidized budgets.   People can learn to live in style when they can afford it.   Simple dorms and healthy food is all that needs to be provided.  Ditto for the bloating on the numbers of administrative staff.   Make the administration lean to keep costs down and not leave them time to think up and work on foolishness on taxpayer dollars.)

In addition, I would like to see K-12 funding moved from local responsibility to state responsibility.   That way, rich areas don't get better schools than poor areas.  If rich areas want to use their lobbying clout to get better quality schools, EVERYBODY gets better quality schools.

Universal health care, with one provision below.

That's on the "Carrot" side of the equation.

Now for the "Stick" side of the equation.

If someone is physically and mentally capable of graduating from high school, they should be given the clear expectation that they will do so.   If they need assistance in getting better quality parents to do so, then we need to pony up with funding and laws that let that happen.  Part of that "setting expectations" includes informing them that if they fail to graduate from high school they will face the following immediate penalties:
(1) No welfare as an adult, no aid to their parents to take care of them, no free health care at health clinics or the hospital, etc.   
(2) 1/2 unemployment benefits as they can be expected to make more use of them than high school graduates.
(3) Double all fines and jail or prison time.   (If they graduate while incarcerated, their sentence is returned to normal.)

Learn or starve.   If we're going to expend this much of our national treasure, which is gleaned from the hard work of millions of people, in order to give people a good chance to succeed, we have the right to expect them to do their part of the work.  If they choose not to do their part of the work, then we reserve the right as a society not to give a damn about them.  They don't care, why should we?

That sounds a bit like... China.   Interesting.    They've really advanced their economy using similar measures.

Do you think Americans would go for it?

[Rosy]

Interesting approach, sword guy.

Seems everyone in the world is looking at these results - both UK and Germany keep debating this phenomena, this is at least the fifth time I've come across articles of this study

... in recent decades the rich have been taking ever-larger shares of wealth and income—especially in the U.S., where corporate profits are nearing records while wages for the workforce remain stagnant.

... In fact, while global inequality is simply accelerating, in America it’s gone into overdrive. The share of income going to the top 1 percent in the U.S. has more than doubled in the last 35 years...

... By 2021, their share of the nation’s wealth will rise to an estimated 70 percent.

... The wealth held by everyone else is just barely growing.

It is the inequality that is simply staggering. What happens to a country when it is headed in the direction of 70% of its wealth held by the rich?

[marty998]

What happens to a country when it is headed in the direction of 70% of its wealth held by the rich?

A great depression happens. Not enough people have enough money to keep spending to keep the system going.

[EnjoyIt]

There is something I don't understand. Every person in the United States has the ability to get an education and make a reasonable income to move up the ranks. America is the land of opportunity. It is the reason why so many continue to immigrate to this country. Yes, some demographics may have it more difficult than others, but it does not change the facts. Every person in the United States has the potential to increase income.

I realize it may be harder if a child grows up in a family that does not value education, but the less income your family has, the more subsidies and scholarships are available to that family. I just don't understand how that translates to inequality.

[teen persuasion]

There is something I don't understand. Every person in the United States has the ability to get an education and make a reasonable income to move up the ranks. America is the land of opportunity. It is the reason why so many continue to immigrate to this country. Yes, some demographics may have it more difficult than others, but it does not change the facts. Every person in the United States has the potential to increase income.

I realize it may be harder if a child grows up in a family that does not value education, but the less income your family has, the more subsidies and scholarships are available to that family. I just don't understand how that translates to inequality.

Just because there are subsidies and scholarships available doesn't mean you can actually take advantage of them, especially if you aren't very educated or bright.  The FAFSA and financial aid system is pretty convoluted to optimize.  I've been motivated to do so, but I've also seen/tried to help other families who could barely get thru the application process w/o getting scammed by for-profit businesses "helping" them apply, let alone optimize their EFC.

My state is touting its "free" college tuition plan for families w/ income under $100k, rising to $125k in future years.  It's a joke, almost no one will qualify.  They've set it up this way on purpose.  Only state U system attendees, must carry 30 credits/yr, must finish in 4 years, must be state resident, must work in state for 4 years after graduating, only for 1st bachelor's, only for tuition (not fees or R&B), and other state and/or federal aid is subtracted first.  I have 2 kids currently at 2 different schools in the state U system, and neither will qualify.  One is finishing up her last semester, after attending 4 years full time - it's common to need more than 4 years to get all your courses in at the state Universities, certain ones are impossible to get in on time (which is why many will fail the 30 credits/yr rule, too).  The other won't have any tuition charges left after fed and state aid is applied.  Finally, the "free" college tuition is limited to $5500 I've heard - tuition is really ~$6k/yr.  Fees add another $3k, R&B adds another $12k+.  So tuition is actually pretty reasonable, it's the living expenses and extraneous fees that are more out of reach for many. 

The key here would be to live at home (not an option if you are > 30 miles away), and do everything in your power to get done in 4 years while meeting every rule.  Break one rule, you are ineligible - "free" tuition now  converts to a loan!

This program will drive up attendance at the state Universities, which will exacerbate class scheduling, kicking more off the program.

[maizefolk]

There is something I don't understand. Every person in the United States has the ability to get an education and make a reasonable income to move up the ranks. America is the land of opportunity. It is the reason why so many continue to immigrate to this country. Yes, some demographics may have it more difficult than others, but it does not change the facts. Every person in the United States has the potential to increase income.

I realize it may be harder if a child grows up in a family that does not value education, but the less income your family has, the more subsidies and scholarships are available to that family. I just don't understand how that translates to inequality.

Well what you're describing is about equality of opportunity. Folks may disagree to some extent, but I think there is a general consensus that many people (particularly young, educated, motivated) people have a great deal of opportunity in the USA.

What the article is talking about is equality of outcome. There is no inherent reason equality of opportunity and inequality of outcome cannot co-exist, as long as even people whose parents ended up at the less successful end of the distribution of outcomes still have a good shot at good outcomes themselves. That is a big part of the reason why there are so many different scholarships and subsidies to make sure kids (or at least the smartest and most motivated kids*) with poor parents can still get afford to get a good education.

*I agree with tee persuasion that equality of opportunity in the USA does a lot more for the motivated and intelligent. If you aren't very educated or bright, you'll have a bunch better outcome if you were born to rich parents than poor ones.

[EnjoyIt]

Basically if you are hard working and motivated then you have a high likelihood for success in this country. If the above statement is true which I believe it is, then why should unmotivated lazy people get ahead?

This forum is a great example of people from different socioeconomic backgrounds with different levels of education who are hardworking and motivated. Just about everyone here either is rich or will be rich at some point.  Although not everyone in the US can be mustachian, just about everyone in the US can be successful is some way or another if they are motivated and willing to work for it.

[JoshuaSpodek]

What happens to a country when it is headed in the direction of 70% of its wealth held by the rich?

Imagine ten people owning 100 dollars between them. In one case, imagine each owning ten dollars. In another, imagine one owning 91 dollars and the others owning one dollar each. Different worlds!

For a given amount of wealth, a small number of people having more than they can spend means the nation is effectively impoverished, since wealth is sitting there, not doing anything, out of reach.

To the extend they invest it, it means they control others and get a share of the profits of others' labor. If that person with 91 dollars invests 81 dollars equally in each, then each has ten dollars again, except the nine others owe the investor shares of their profits. They can't choose as freely as they would before.

I'm not saying whether that's good or bad, which depends on your expectation of the results and your values, only one perspective on what happens.

[maizefolk]

Imagine ten people owning 100 dollars between them. In one case, imagine each owning ten dollars. In another, imagine one owning 91 dollars and the others owning one dollar each. Different worlds!

Imagine ten people owning each owning 10 dollars, for a total of $100. Now imagine ten people, nine of whom own 20 dollars, and one of whom owns $1,820, for a total of $2,000. Are the other nine people impoverished in the second scenario?

In other words, I think it makes a significant difference whether changes in income or wealth inequality come from redistributing the pie, or from growing the overall size of the pie. I'm not sure which is happening right now in the US. Maybe a little of both. And at a certain point extreme income disparities do start to have negative effects on institutions like the democratic process and free and fair markets. But simple analogies can make people lose sight of the fact that it's not as simple as dividing a fixed amount of income among a fixed number of people.

[Bicycle_B]

Basically if you are hard working and motivated then you have a high likelihood for success in this country. If the above statement is true which I believe it is, then why should unmotivated lazy people get ahead?

This forum is a great example of people from different socioeconomic backgrounds with different levels of education who are hardworking and motivated. Just about everyone here either is rich or will be rich at some point.  Although not everyone in the US can be mustachian, just about everyone in the US can be successful is some way or another if they are motivated and willing to work for it.

The bolded part is true as a vague generality but not very true for a lot of people.  Most of us would fail if starting from an unprivileged spot on the socioeconomic spectrum, but succeed if starting from a position of privilege.  The difference suggests to me not to rely on the bolded belief.

I've heard very saddening stories on the radio about smart kids from poor schools who get scholarships but drop out of college because, when problems come up that result from their poor background, either they drop out because there's not enough support to overcome the problems, or they don't know that they can ask for the needed support.

Quick examples from personal experience:

My friend the professional engineer states clearly that his parents helped him repeatedly between age 19 and 25 with support beyond the standard FAFSA package, with help that ranged from money to advice to a safe place to live after a surprise divorce (surprise to him... everyone else figured the whole relationship was a mistake).  He swears that without the extra support, he would be a factory worker today if he could even find such a job.

My friend the advocate for the homeless works every weeks with teens and 20somethings who came from foster care, but emerged with zero support from anyone the day they turned 18.  Most people don't pay for all of college plus all of their living expenses anyway, and these kids can't either.  Their 18th birthday present is to get kicked out on the street with their clothes in a trash bag because there's not enough money for a suitcase.  No one shows them how to get a job, let alone into college.  It's hard to get a job to pay for school when you can't give an address on the job application, and can't take a shower, and can't leave your trash bag of clothes anywhere because you need them. 

One day I was volunteering with some of these homeless youth.  One young lady asked me how she could buy an apartment.  We discussed the matter but without much useful advice from me... because it wasn't until later that I realized she meant RENT an apartment.  Proof to me that I was no smarter than her, just was given a background that showed me how to do middle class things.  The whole concept of how you get all the way through college has so many elements that I was taught in my family and these kids were not, it's astounding and sad.  Honestly, I think most people who think it's all up to the individual are disrespectful to their own families.  For every person who succeeds by pure talent without any family base, there's four people who were helped repeatedly in ways that they never noticed.  At least three of those people would have failed without that support, IMHO, and I'm one of them.

[mm1970]

Basically if you are hard working and motivated then you have a high likelihood for success in this country. If the above statement is true which I believe it is, then why should unmotivated lazy people get ahead?

This forum is a great example of people from different socioeconomic backgrounds with different levels of education who are hardworking and motivated. Just about everyone here either is rich or will be rich at some point.  Although not everyone in the US can be mustachian, just about everyone in the US can be successful is some way or another if they are motivated and willing to work for it.

The bolded part is true as a vague generality but not very true for a lot of people.  Most of us would fail if starting from an unprivileged spot on the socioeconomic spectrum, but succeed if starting from a position of privilege.  The difference suggests to me not to rely on the bolded belief.

I've heard very saddening stories on the radio about smart kids from poor schools who get scholarships but drop out of college because, when problems come up that result from their poor background, either they drop out because there's not enough support to overcome the problems, or they don't know that they can ask for the needed support.

Quick examples from personal experience:

My friend the professional engineer states clearly that his parents helped him repeatedly between age 19 and 25 with support beyond the standard FAFSA package, with help that ranged from money to advice to a safe place to live after a surprise divorce (surprise to him... everyone else figured the whole relationship was a mistake).  He swears that without the extra support, he would be a factory worker today if he could even find such a job.

My friend the advocate for the homeless works every weeks with teens and 20somethings who came from foster care, but emerged with zero support from anyone the day they turned 18.  Most people don't pay for all of college plus all of their living expenses anyway, and these kids can't either.  Their 18th birthday present is to get kicked out on the street with their clothes in a trash bag because there's not enough money for a suitcase.  No one shows them how to get a job, let alone into college.  It's hard to get a job to pay for school when you can't give an address on the job application, and can't take a shower, and can't leave your trash bag of clothes anywhere because you need them. 

One day I was volunteering with some of these homeless youth.  One young lady asked me how she could buy an apartment.  We discussed the matter but without much useful advice from me... because it wasn't until later that I realized she meant RENT an apartment.  Proof to me that I was no smarter than her, just was given a background that showed me how to do middle class things.  The whole concept of how you get all the way through college has so many elements that I was taught in my family and these kids were not, it's astounding and sad.  Honestly, I think most people who think it's all up to the individual are disrespectful to their own families.  For every person who succeeds by pure talent without any family base, there's four people who were helped repeatedly in ways that they never noticed.  At least three of those people would have failed without that support, IMHO, and I'm one of them.

Good stuff here. I  was a poor kid who went to college on scholarship.  My parents were divorced.
- My mom sent me care packages of ramen noodles and mac and cheese
- I got some scholarships
- I was smart enough to realize that taking the 3 year ROTC scholarship (I didn't know about ROTC until too late to apply for a 4 year) meant I'd graduate MUCH less in debt
- My parents were not addicted to anything.  They were smart and hardworking.  I didn't have much of a relationship with my dad, but my mom would drive me to college and pick me up on breaks, and even the occasional weekend
- My mom encouraged me to go.  My dad told me to get married.  Mom won.

I can't imagine going to college after having been a foster kid, with no family to support you after.  Even if it was just emotional support.  That's huge.

[EnjoyIt]

How about the story of the mother of two who worked full time and raised two kids while going back to school and received her nursing degree? How about the doc I work with who grew up in a poor neighborhood? What about me who started out in the projects and took on a shit ton of debt to get me here? What about the immigrant who studied engineering and now works for apple?

For every sob story of "can't get ahead" there is a story of "living the American dream."

It is unfortunate that many foster kids don't get the education they need to understanding how life works.  It is unfortunate that kids of deadbeat parents are less likely to not succeed as compared to a family that favors education.  I agree that helping them understand how to navigate through life would be a benefit to society. How do we do that, and would a few people make a difference in income inequality?

[MrsPete]

I wonder how they made their estimates for how many millionaires there are.  I'm not skeptical, I just want to know what their method is. 

I had the same thought.  I mean, who has the ability to add up my salary, my savings, my investments, my property ... those things aren't necessarily hooked together anywhere. 

Maybe they figure that anyone with X amount of salary must be a millionaire?  If so, they'd skip over me. 

[Paul der Krake]

Research firms make inferences from smaller sets of data all the time. Things like TV/radio audiences and even election polls are very accurate even though they only use a sample size in the low 4 digits to represent a population of 300+ million.

[SwordGuy]

I consider affordable education (including trade and college educations) plus subsidized healthcare and daycare to be essential components of guillotine insurance.    If the majority of people are reasonably well off and see they have prospects for advancement, those of us who have already advanced our prospects are much less likely to find our heads being chopped off.

Teddy Roosevelt went around explaining that concept to his rich friends and they got the message.   

We need some folks in the GOP leadership to do the same.  Warren Buffett and Bill and Melinda Gates are trying, but it's not enough.

[index]

I consider affordable education (including trade and college educations) plus subsidized healthcare and daycare to be essential components of guillotine insurance.    If the majority of people are reasonably well off and see they have prospects for advancement, those of us who have already advanced our prospects are much less likely to find our heads being chopped off.

Teddy Roosevelt went around explaining that concept to his rich friends and they got the message.   

We need some folks in the GOP leadership to do the same.  Warren Buffett and Bill and Melinda Gates are trying, but it's not enough.

This was the attitude of many of the late Roman Emperors as well. I think what we are starting to see politically in the past 30 years though, is not a focus on making the majority of people feel well off with a chance at advancement, but distracting the masses with other causes so they don't demand a bigger piece of the pie.

As long as people are taking to the streets demanding social justice i.e. religion, race, LGBT, abortions etc. or are reacting in fear to losing 2nd amendment, terrorism, foreign influence etc., the masses are not worried about things that would really impact the ultra wealthy in the country. Increased taxes.     

[Guesl982374]

For purposes of discussion, to set the terms in the debate, there are four groups of people:

Poor
Middle Class
Rich              (Mustachians with a $1M stash are here.)
Incredibly Rich

I'm not sure I would consider most Mustachian's to be rich though. If you are really looking to FIRE then at best you an call yourself middle class. Here's how I tend to think of things:

Imagine you have a $1,000 emergency expense. How do you react?

• Poor: I don't have the money. I may have to take out a payday loan or ask friends and family for a loan.
• Lower Middle Class: I'll put it on the credit card and slowly pay it off.
• Middle Class: I can pay for it from savings, but it's going to set us back for awhile.
• Upper Middle Class: I'll pay for it from savings and it really will not bother me.
• Rich: It doesn't bother me.
• Very Rich: $1,000 is a rounding error.

So effectively it's based upon how big of a hit to your savings you can take. Also, there is a difference between the savings you have for living expenses (i.e., retirement funds) and all other savings. Having $1M in the bank doesn't mean much if it is earmarked for retirement. Having $1M in the bank that you can spend on anything is a completely different game.

So tuition is actually pretty reasonable, it's the living expenses and extraneous fees that are more out of reach for many.

Historically that was the case as well. Attending college was rare not because the tuition was high, but because most people couldn't afford four years (or more) of living expenses from their savings. Likewise, most families didn't have that much saved to send their children to school as well. Being able to send a child to college was an extreme luxury because it meant that you had the surplus savings and didn't need their labor in any way.

You do realize that $1,000 is 0.1% of $1MM, right? Which makes it a rounding error / market noise, which would, by your definition, put Mustachians in the Rich/Incredibly Rich groupings. Just because money is in a retirement account doesn't mean you can't spend it.

[BTDretire]

You do realize that $1,000 is 0.1% of $1MM, right? Which makes it a rounding error / market noise, which would, by your definition, put Mustachians in the Rich/Incredibly Rich groupings. Just because money is in a retirement account doesn't mean you can't spend it.

  Yes, I agree with you, $1M puts you up in the 93% or 94% as far as NW. Living Large!
But, I do recall one time telling my daughter that having $1M will only generate $40,000 a year, so I does not really make you rich.
  I think that arguement would be a hard sell to about 80% of the US population though.

[acroy]

pssst....
Poor people in the US are not poor. They are not as rich as rich people in the US.
80% have AC
75% have a car
35% have 2+ cars
90%+ were never hungry in the last year
40% own their own home
'Poor' Americans have more living space than 'average, non-poor' Swede, French, or German.

Dam' we have it good.

[Bicycle_B]

How about the story of the mother of two who worked full time and raised two kids while going back to school and received her nursing degree? How about the doc I work with who grew up in a poor neighborhood? What about me who started out in the projects and took on a shit ton of debt to get me here? What about the immigrant who studied engineering and now works for apple?

For every sob story of "can't get ahead" there is a story of "living the American dream."

Those success stories are obviously real, and part of what makes America great.  As long as there's even a hint of a chance, these people will succeed, and make terrific contributions, and have great lives.

But for the middle people in society's ability range to succeed or fail depends on more than a mere hint of daylight.  We middle schmucks rise or fall according to the general level of support and circumstance.  The outcomes for the majority depend on a broader system than just the narrow framework that allows a few lucky stars to succeed who will make it no what.   Again, I and my friend (middle class middle performers) testify that we only succeeded with others' help. 

A broad societal feeling of fairness isn't going to come from just  a few people succeeding.  It requires the middle people to succeed too.

It is unfortunate that many foster kids don't get the education they need to understanding how life works.  It is unfortunate that kids of deadbeat parents are less likely to not succeed as compared to a family that favors education.  I agree that helping them understand how to navigate through life would be a benefit to society. How do we do that, and would a few people make a difference in income inequality?

Great questions, EnjoyIt.  My opinion:

How to do it...
1. On individual level, reach out and talk to them.  Find them through homeless shelters, or talking to street people, or networking with individuals/groups/churches/etc who work with the homeless.
2. This can be a slow and discouraging process despite occasional bright spots.  I don't claim to do a lot of it. 
3. If you're willing and able, I think sometimes the best way would be (but I haven't done this): 
a. set aside $200, take the young person to lunch, get them a hotel room where they can wash up and sleep safely. 
b. Leave their stuff there, take them to Target to buy any supplies they need (suitcase/backpack, soap, socks, mirror, razors, vitamins). 
c. If you want to go whole hog, and they for some reason don't have a phone, you can buy and activate a cheap phone. 
d. Ask them about their plans for the month, the year, their life.  If you have relevant connections or advice to offer, fine, but listening and encouragement are fine too.  Say that you think they're going to make it, and while you can't be there every day, you care about them.  Then you wish them luck and let them relax in the rare luxury of their safe private space.  You're done.
e. The leaving part is very important because most people who do that much for a street person are setting them up for sex or trafficking.  So get the hell out of there as soon as you've given them their supplies and encouragement.

Would a few people make a difference...
4.  To the many starfish stranded on the beach, no.  To the few starfish you save, yes.
5.  To be fair, maybe 70% of the homeless young people will figure out a life after 10 or 15 years anyway, according to my friend who works with them; in the most common case, you're accelerating their progress by 5 or 10 years, rather than saving them from never ever rising to the housed class.
6.  Consider volunteering at CASA (Texas' name for it) or other programs where you become an advocate for and mentor to a foster kid while they're in the system... get 'em on track before 18.

Though...
7.  In the big picture, individual acts are a drop in the bucket.  By yourself, you won't change everything.
8.  So I'm in favor of bigger solutions like:
a. Advocate to your state and city politicians that foster kids get care packages (supplies, etc) upon leaving
b. Paying some actual money to CASA advocates
c. Ensuring that there are state supplements to federal student aid
d. Politically supporting programs or parties that help the poor and working poor in general; see post upthread.

I'm sort of literalist, so if your question was rhetorical, I apologize.  You hit my hot button. 

[libertarian4321]

I wonder how they made their estimates for how many millionaires there are.  I'm not skeptical, I just want to know what their method is. 

I had the same thought.  I mean, who has the ability to add up my salary, my savings, my investments, my property ... those things aren't necessarily hooked together anywhere. 

Maybe they figure that anyone with X amount of salary must be a millionaire?  If so, they'd skip over me.

I assume they must use some sort data from samples of people interviewed, then extrapolate using statistical methods.

There is no way I'd be labeled a millionaire based on my salary/work history.  And there isn't enough information on tax forms for anyone to be able to make that leap.  I'm certainly not living in a neighborhood that screams "rich."

[Bicycle_B]

I wonder how they made their estimates for how many millionaires there are.  I'm not skeptical, I just want to know what their method is. 

I had the same thought.  I mean, who has the ability to add up my salary, my savings, my investments, my property ... those things aren't necessarily hooked together anywhere. 

Maybe they figure that anyone with X amount of salary must be a millionaire?  If so, they'd skip over me.

I assume they must use some sort data from samples of people interviewed, then extrapolate using statistical methods.

There is no way I'd be labeled a millionaire based on my salary/work history.  And there isn't enough information on tax forms for anyone to be able to make that leap.  I'm certainly not living in a neighborhood that screams "rich."

From reading the article in OP's link, the company that issued the report appears to indeed have used statistical methods - ones related to wealth trends and the size of markets in different countries, where the "market" means  something like "all the people in a given country or region who are wealthy enough to be a customer for wealth management services".  Very focused statistics, but mostly not expected to contact any given individual, just as you thought.

[teen persuasion]

So tuition is actually pretty reasonable, it's the living expenses and extraneous fees that are more out of reach for many.

Historically that was the case as well. Attending college was rare not because the tuition was high, but because most people couldn't afford four years (or more) of living expenses from their savings. Likewise, most families didn't have that much saved to send their children to school as well. Being able to send a child to college was an extreme luxury because it meant that you had the surplus savings and didn't need their labor in any way.

Housing costs are much higher than previously, and many more students dorm than in the past.  When my dad attended college (on the GI bill) everyone was local - there were no residence halls.  When DH and I attended the same college, federal subsidized loans were enough to completely cover R&B, even after the hefty origination fees (so under $2500 - $300 maybe).  Eventually we wised up and realized we could cover our costs (off-campus, so lower) easily on minimum wage on-campus jobs).  I just checked current costs at the same college - R&B are above $13k for the base rooms/plans we had, more for the new upscale residences built in recent years.  That's well more than double the federal loans offered to freshmen/sophomores.  I also see that freshmen and sophomores are now required to live on campus unless living at home with a parent.

[Bateaux]

Being a millionaire isn't all that big a deal anymore.  In fact, on this site I'd say within ten years or less nearly everyone on the MMM site will be a millionaire.   Likely many times over.  If not blame yourself.

Personally I've lived frugally to become a millionaire for the life it affords.  I think that's common here.  Some save up quick and retire cheap.  Nothing wrong with that either.

[Rosy]

pssst....
Poor people in the US are not poor. They are not as rich as rich people in the US.
80% have AC
75% have a car
35% have 2+ cars
90%+ were never hungry in the last year
40% own their own home
'Poor' Americans have more living space than 'average, non-poor' Swede, French, or German.

Dam' we have it good.

Pssst - LOL, words fail me - link might be good too:)

Oh, and might I mention that you conveniently left things like Health Care off your rather strange list - wouldn't do to admit that several first world countries have successfully provided health care for all their citizens for decades, right? - rich or poor.

Regardless, the question raised in this thread is about how income in the US is shifting at such an accelerated rate, an income shift that is so alarming that it caught the attention of the entire world.
What that really means to all of us who have it "so dam' good" as you put it, is that we are looking at a new reality. A world in which those with stagnating income will only fall further behind. That is a problem for any nation, if I ever saw one.
It means a power shift of monumental proportions, it will require - as sword guy pointed out so eloquently - guillotine protection:)

This is no laughing matter, it is troublesome indeed if you think through all the implications.

It is interesting to me to see how the young crowd sees and deals with this new found wealth and the inherent power and influence to impact future legislation which comes along with it.
MMM has plenty of current and future millionaires, they will shape their world as they see fit, no doubt.

We may all live in our own bubble and interpret changes only as they apply to us, but I know that if I live another 20 or so years there will be some serious issues to contend with.
Taking the list above for literal truth for a moment - I'd rather not become that 20% poor (old) lady, who will die in the summer heat due to power shut off and/or no AC. Happens every year here in Florida, same as in Houston, Tx.....

More important however, is to protect our young, to nurture them and help them find a way out of poverty. We can and should find ways to do better. Bicycle-B - kudos for addressing it in detail. One on one mentoring is the best alternative, but difficult to provide.

While I like the idea of paying for a child's education in another country, I do find greater satisfaction in helping our children in need, right here, in front of our noses. That one summer away at camp could be life changing for a struggling youth. Exposure to different values and perspectives is everything.

Local initiatives are helpful - we have a One Hundred Club, a brilliant idea.
A group of ladies each pledge $100 each month, anyone can join. Each month a local charity or individual need is identified, then reviewed in detail and voted on by all. These monies are not provided as a general gift, but come with the provision to be used in a predetermined way.

We also have an Angel Fund in our city to pay for utilities for someone who cannot pay their power bill, generally speaking those are old people on limited income or struggling families. Totally funded only by the residents and off and on by local businesses. Limited in scope to be sure, but essential, down home assistance for those who do not have it that "dam' good".

[Spiffy]

In Texas, kids in foster care, or who were in it formerly, go to college for free. Tuition and fees are waived.

[EnjoyIt]

Why do things need to be fair?

It is one thing to have maliciousness causing unfairness such as a dictatorship where you can go to prison for having to much success and threaten the regime.  Life just isn't fair and those who strive to succeed have every chance available to them in the United States.

In America the poorest people can get free housing, free food, and even free healthcare if they actively seek it out.  You can even get a free education.  If that isn't the ability of upward mobility I have no idea what is.  It is not the responsibility of everyone to force people into action or worse provide outpatient economic care that disables them from motivation.  Provide the basic needs of survival and those who want to succeed will.  Provide a comfortable lifestyle and there is little motivation to succeed.  Maybe the reason why we have income inequality is the vast majority of Americans who have a comfortable lifestyle paid for by taxes and have little desire to do better.

A few years ago I saw a patient with asthma who told one of our technicians who also has asthma that he should go on disability.  He would never have to work again.  Her asthma is not debilitating and very very well controlled.  There is no reason why that patient should be on disability.  But how do you convince someone that working is better than doing nothing?  This patient wore nice clothes, hair was well kept, had an iPhone and appeared fed.

[tarheeldan]

It doesn't have to be fair. But we can do better. Economic mobility in the US is not that high, lower than countries where people are provided the kinds of safety nets that some people think destroy motivation.

I haven't read through this thing, I just picked it as one of many sources showing US economic mobility against other countries:
http://inequality.stanford.edu/sites/default/files/Pathways-SOTU-2016-Economic-Mobility-3.pdf

[Bicycle_B]

In Texas, kids in foster care, or who were in it formerly, go to college for free. Tuition and fees are waived.

Reaction 1:  Whaaaat?
Reaction 2: (Google, Google...)  http://www.collegeforalltexans.com/apps/financialaid/tofa2.cfm?ID=551
welll... looks like those who are lucky enough to get adopted can.  That's definitely awesome.  It might not help the non-adopted ones who got kicked out on the street, but is a good thing to know about.  Thanks for prompting the search.

[Rosy]

Why do things need to be fair?

It is one thing to have maliciousness causing unfairness such as a dictatorship where you can go to prison for having to much success and threaten the regime.  Life just isn't fair and those who strive to succeed have every chance available to them in the United States.

In America the poorest people can get free housing, free food, and even free healthcare if they actively seek it out.  You can even get a free education.  If that isn't the ability of upward mobility I have no idea what is.  It is not the responsibility of everyone to force people into action or worse provide outpatient economic care that disables them from motivation.  Provide the basic needs of survival and those who want to succeed will.  Provide a comfortable lifestyle and there is little motivation to succeed.  Maybe the reason why we have income inequality is the vast majority of Americans who have a comfortable lifestyle paid for by taxes and have little desire to do better.

A few years ago I saw a patient with asthma who told one of our technicians who also has asthma that he should go on disability.  He would never have to work again.  Her asthma is not debilitating and very very well controlled.  There is no reason why that patient should be on disability.  But how do you convince someone that working is better than doing nothing?  This patient wore nice clothes, hair was well kept, had an iPhone and appeared fed.

It can't be totally fair - clever, healthy and industrious people will always be better off, in any system. Circumstances, opportunities and talents are a huge factor, I will give you that.
I also concede, that people who do more, should get more. That would be only fair, right:) So take that extra slice from the cake, but don't take 70% - that is causing an imbalance and that spells trouble in the long run in any society. If the actual article that we are discussing is correct, then 70% is a distinct possibility.
Do some already well off people really feel "entitled" to all 100%? Just like some never-do-well may feel entitled to get something for nothing? Where is your cut off point? Is there a cutoff point at all? IDK, just spinning this forward to its final ludicrous end.

... and I call BS on your point that homeless people in America will magically get a place to stay!

Last Sunday's paper - Tampa Bay Times newspaper, front page headliner - AN INVISIBLE CRISIS, dated June 18, 2017
Quote: In Pinellas County a dearth of emergency shelters leaves homeless families scrambling. ... The homeless family crisis is fueled by low wages and a dearth of affordable housing.
Quote: Families come to the doorstep with kids just trying to see if we have space. They are standing in front of us, and we have no solution. (Holly Harmon, St. Petersburg Salvation Army social services director.)
Quote: HUD doesn't count families scrapping by week to week in cheap motels. ... tents in the woods or couch surfing with family and friends.

Here are the numbers of those they did count:
Quote: 11,843 Pinellas County total homeless population 2015-2016 fiscal year.
1,984 were family members incl. 1,214 children >>> 185 individual emergency shelter beds for families.

There is no room at the inn...

 

[Bicycle_B]

In Texas, kids in foster care, or who were in it formerly, go to college for free. Tuition and fees are waived.

Reaction 1:  Whaaaat?
Reaction 2: (Google, Google...)  http://www.collegeforalltexans.com/apps/financialaid/tofa2.cfm?ID=551
welll... looks like those who are lucky enough to get adopted can.  That's definitely awesome.  It might not help the non-adopted ones who got kicked out on the street, but is a good thing to know about.  Thanks for prompting the search.

The programs in Texas are a bit weird, there is separate program for people ageing out of the system.[/b]

To provide financial assistance of up to $5,000 annually to help current and former foster youth ages 16 up to 23 to begin, continue or complete postsecondary education and training programs.

That looks helpful!  I will pass it on.

[mm1970]

There is something I don't understand. Every person in the United States has the ability to get an education and make a reasonable income to move up the ranks. America is the land of opportunity. It is the reason why so many continue to immigrate to this country. Yes, some demographics may have it more difficult than others, but it does not change the facts. Every person in the United States has the potential to increase income.

I realize it may be harder if a child grows up in a family that does not value education, but the less income your family has, the more subsidies and scholarships are available to that family. I just don't understand how that translates to inequality.

- disabled kids?
- children with fetal alcohol syndrome?
- children with brain damage due to lead in their water?
- children born addicted to heroin or meth?
- children who age out of foster care?
- children who spend much of their childhood homeless?
- people who are just...not that bright?
- children who are abused by their families

I mean, really.

[Rosy]

^^^ +1 ^^^

[EnjoyIt]

There is something I don't understand. Every person in the United States has the ability to get an education and make a reasonable income to move up the ranks. America is the land of opportunity. It is the reason why so many continue to immigrate to this country. Yes, some demographics may have it more difficult than others, but it does not change the facts. Every person in the United States has the potential to increase income.

I realize it may be harder if a child grows up in a family that does not value education, but the less income your family has, the more subsidies and scholarships are available to that family. I just don't understand how that translates to inequality.

- disabled kids?
- children with fetal alcohol syndrome?
- children with brain damage due to lead in their water?
- children born addicted to heroin or meth?
- children who age out of foster care?
- children who spend much of their childhood homeless?
- people who are just...not that bright?
- children who are abused by their families

I mean, really.

Disability, brain damage, addiction, and stupid.  Those are recipes for failure no matter what is done.  A percentage with addiction may be able to get clean and get an education if they have the motivation and willing to get help.  Lots of free help available in the US.

Abused, homeless, and foster children have the potential to succeed.  They have the ability to get a free education through high school and get subsidized college education if they so desired. Their back ground does not change that. Unfortunately for most, that same background does not give them the skills or the knowledge to succeed. It is probably where attention needs to be given trying to impress on those kids the importance of an education. If they still choose to not better themselves then who are we to try and force something they clearly don't want to work for.

I am always impressed by single moms who started off with little education and then realize how important it is.  They work full time and go to night school while still taking care of their kids.  I have no idea how the hell they do it. The shear motivation and stamina is staggering. I am a lazy piece of crap compared to them.

[powskier]

People should read this letter by one of the uber wealthy and his perspective on inequality. No matter your political viewpoint, I think he nails some pertinent issues.
Sorry it will take a few minutes to read.

http://www.topinfopost.com/2014/06/30/ultra-rich-mans-letter-to-my-fellow-filthy-rich-americans-the-pitchforks-are-coming

[JG in Hangzhou]

Great points, Bicycle_B!

I would love to see subsidized day care.  It would help nice people who lack other job skills find employment and seriously reduce the costs to couples to have children when they are young and can least afford them.


In addition, I would like to see K-12 funding moved from local responsibility to state responsibility.   That way, rich areas don't get better schools than poor areas.  If rich areas want to use their lobbying clout to get better quality schools, EVERYBODY gets better quality schools.

That sounds a bit like... China.   Interesting.    They've really advanced their economy using similar measures.

Do you think Americans would go for it?

Actually, I live in China.  The cost for Pre-school or day care is quite high here and most young Chinese couples both work.  Thier cheapest option is for grandma to watch the kids (one child policy has pretty much ended) but without preschool the children are disadvantaged when entering grade 1.  While they do have public schools, the best schools are private and residency rules restrict  public schools registration for couples migrating to city areas for work .

My point, education in China is not cheap (until college) and is highly competitive.  Next to home ownership its the main expense for a young family. 

healthcare on the other hand is cheap and quite efficient, and covered by government insurance program. 

[EnjoyIt]

People should read this letter by one of the uber wealthy and his perspective on inequality. No matter your political viewpoint, I think he nails some pertinent issues.
Sorry it will take a few minutes to read.

http://www.topinfopost.com/2014/06/30/ultra-rich-mans-letter-to-my-fellow-filthy-rich-americans-the-pitchforks-are-coming

Great article, thanks for sharing.  I couldn't agree more with building up the middle class.  The middle class has been squeezed by both democrats and republicans alike for decades. I also enjoyed his discussion regarding minimum wage and found it very enlightening. I can see $15/hr working in large cities.  Clearly it appears to be working in Seattle. I also find interesting that Seattle is #3 in the country for homelessness. Very likely completely unrelated, just interesting.

I also agree that we need to cut food stamps, section 8 housing, medicaid, etc, not by defunding it, but by allowing the people to have enough income that they don't need it.

Historically, pitchforks happen when the population is hungry and also not properly entertained/distracted.  Today there is practically no hunger and enough entertainment to keep almost everybody occupied on their couch. I think the billionaires are safe for now.

[sisca]

How did a thread about millionaires/billionaires and inequality turn into a discussion about the poor and their lack of effort/possibility?

If I were to wipe out all wealth in the world and distribute it equally, how many years would it take for inequality to become a problem again under current laws or tax code? Inequality will always exist, but we as a people decide how much. Not enough, and the economy stalls. Too much, and the same thing happens. Or?

[ambimammular]

pssst....
Poor people in the US are not poor. They are not as rich as rich people in the US.
80% have AC
75% have a car
35% have 2+ cars
90%+ were never hungry in the last year
40% own their own home
'Poor' Americans have more living space than 'average, non-poor' Swede, French, or German.

Dam' we have it good.

Do you have a source you can link me to?

The elementary school I work at in a random small town in Indiana has 69.9% of kidlets on a free or reduced lunch. Income has to be below $21500 to qualify. The kids in my classroom were HUNGRY in the morning. They had both breakfast and lunch at school. I worry about how they're doing all summer.

[By the River]

... I also enjoyed his discussion regarding minimum wage and found it very enlightening. I can see $15/hr working in large cities.  Clearly it appears to be working in Seattle. I also find interesting that Seattle is #3 in the country for homelessness. Very likely completely unrelated, just interesting...

Maybe the Seattle minimum wage isn't helping as much as planned and the homelessness may not be unrelated...https://www.usatoday.com/story/money/nation-now/2017/06/27/report-finds-seattles-15-minimum-wage-may-hurting-workers/431424001/

[MustachianAccountant]

I'll add another link: https://youtu.be/QPKKQnijnsM

It's a 6 minute YouTube video on wealth inequality in the U.S. - what people think it looks like, what they think it SHOULD look like, and what it REALLY is.

Perception vs. Reality is good to know in a discussion like this.

Sources are mentioned in the video description.

[J Boogie]

How about the story of the mother of two who worked full time and raised two kids while going back to school and received her nursing degree? How about the doc I work with who grew up in a poor neighborhood? What about me who started out in the projects and took on a shit ton of debt to get me here? What about the immigrant who studied engineering and now works for apple?

For every sob story of "can't get ahead" there is a story of "living the American dream."

I don't know about that math.  I'd say it's probably more like For every doctor who grew up in poor neighborhood, there are 50 low wage earners living paycheck to paycheck and 10 in jail or dead.

I definitely favor the idea of equality of opportunity over equality of outcome, but it's foolish to expect the majority of people to become something other than a product of their environment. 

I just think we need to work harder on providing equality of opportunity.  And of course as mustachians we all know we need to fundamentally change the values of our consumer culture.

[jlcnuke]

One of the primary problems with most discussions of inequality (whether wealth or income) is that the discussion is almost universally framed in such a way to imply that the "rich" having something means that someone else doesn't. 18 million households worth $1M+ does NOT mean that other households are forced to have less. The economy doesn't prevent people from accumulating more money just because someone else has accumulated money as well. A CEO making 500 times the salary of the janitor doesn't meant the janitor is being paid less than they would be if the CEO made 5 times the salary of the janitor.

Let's start a fictional company. It has a CEO with 5 workers doing basic labor, and 1 HR person. The workers take care of cleaning up. The CEO is responsible for all 6 employees, getting customer, and taking care of running the business. It then branches out. Now the CEO has 5 managers working for him, each running one of the various lines of business, each line of business with 20 employees, HR is now a department with 2 people and they've hired a janitor. Now, the CEO is responsible for 108 employees, 5 lines of business, is still doing sales sometimes, as well as running the now 7-figure business.

So, do CEO's new responsibilities mean he should be compensated more to reflect the additional work/responsibility he has? Sure. The janitor, however, is now just doing basic labor that others used to take care of on the side of their own job so he's probably not going to make much.

If that company grows 10-fold again, the CEO is now responsible for a $70M business and over 10k employees, and maybe they go public now so he's also in charge of ensuring the shareholders are pleased. So his responsibilities have grown significantly again. Does that not warrant an increase in compensation? The janitor that was taking care of 10k sq ft of office space is, however, still just taking care of 10k sq ft of office space. Does he deserve to get paid more just because the CEO's role and responsibilities have increased? I can't find a good reason to answer that question with a "yes". So, the person with the higher level of responsibility and/or desirability in the market experiences an increase in wages as they move into roles that need those skills and/or experience while the person with no increase in their role or responsibility within an organization has stagnant wages, and the relative income between them widens.

As any economy grows, the relative number of "people at the top" (who have the highly desired skills and/or experience which warrants a position with a lot more responsibility than the entry level worker) will tend to stay the same or decrease (though generally it decreases as the "top" of the pyramid gets higher instead of just having more pyramids to have someone atop). Thus, the gap between those and the people at the base level will widen.

There are only two ways I've ever heard of to combat such a thing - government mandated wages for those on the bottom (which tend to adjust relative compensation of those at the bottom most, not really addressing the broader concept) or government set wages/wage bands for everyone. Without artificial wage restrictions/mandates, those with more rare skills/experience will always see relatively higher compensation.  Thus the income inequality can only be addressed by massive interference in the compensation of employees.

That leaves the "inequality solution" really stuck with the wealth inequality side of things. The problem here is, the only "solutions" for wealth inequality are those that involve taking wealth from some people who earned it (or who were given it by those who earned it) and handing that wealth to people who didn't earn it. This works great on a small scale, when it's just a slightly higher tax rate to pay for programs that most people of moral character can get behind (taking care of the infirm, helping those in poverty, etc). When it expands beyond that, however, then you've accepted a government that is allowed to take from people without cause anytime they wish, which isn't a free society.

I don't believe you can "solve" wealth or income inequality and maintain freedom at the same time as any solution I can envision or have heard of necessarily involves the government either preventing freedom of choice for businesses (the choice to decide what income is appropriate for a given position) or the government preventing freedom of ownership (the government taking from those who have earned their compensation and deciding to give those earnings away).  We have a small amount of both right now, but as government power/interference grows then those pitchforks could just as easily be pointed at the government as they could be pointed at the wealthy.

[moonpalace]

The problem here is, the only "solutions" for wealth inequality are those that involve taking wealth from some people who earned it (or who were given it by those who earned it) and handing that wealth to people who didn't earn it. This works great on a small scale, when it's just a slightly higher tax rate to pay for programs that most people of moral character can get behind (taking care of the infirm, helping those in poverty, etc). When it expands beyond that, however, then you've accepted a government that is allowed to take from people without cause anytime they wish, which isn't a free society.

Was the US still a free society from 1932-1981, when the top marginal rate was 63% or higher? When a democratically elected government imposes taxes, aren't those taxes just part of living in a free society? At what % do we stop being free? :-)

[Paul der Krake]

The problem here is, the only "solutions" for wealth inequality are those that involve taking wealth from some people who earned it (or who were given it by those who earned it) and handing that wealth to people who didn't earn it. This works great on a small scale, when it's just a slightly higher tax rate to pay for programs that most people of moral character can get behind (taking care of the infirm, helping those in poverty, etc). When it expands beyond that, however, then you've accepted a government that is allowed to take from people without cause anytime they wish, which isn't a free society.

Was the US still a free society from 1932-1981, when the top marginal rate was 63% or higher? When a democratically elected government imposes taxes, aren't those taxes just part of living in a free society? At what % do we stop being free? :-)

That's an oft-touted talking point, but it's much harder to find real data on the effective tax rates paid by people at the time. Yeah the top rates around war time sometimes reached 80%, but there were exemptions so large you could drive a truck through them.