Wealth in America. Reality vs Ideal... Thoughts?

[momo]

Saw this video on Wealth Distribution in America and wanted to know what others thought on the topic.
http://economy.money.cnn.com/2013/03/08/wealth-video/?iid=HP_River

Kindly share your thoughts. Cheers!

[strider3700]

It's probably correct,  I don't find it overly shocking and short of crashing the entire system or massively taxing the ultra rich to the point that they flee the country there is nothing that can be done to redistribute that wealth.

The entire premise behind MMM's early retirement strategy is accumulate enough wealth that it will earn enough for you to live on.   If you earn more then that and let that excess earn more money  eventually time and compound interest will result in very few having almost everything.

Those that are really good at earning and saving will have an advantage,  those that are crappy at earning and saving will be at a big disadvantage.     1 million in the bank at 5% is 50000 a year more then enough to live a modest lifestyle.   50 million in the bank at 5% is 48,000 a week enough to live an amazingly lavish lifestyle.   500 million in the bank at 5% is $480,000  a week.   Gates has near 50 billion   which at 5% works out to 48 million a week.  even at 99% taxes he'd still have half a million a week to spend.       The only reason we don't have a trillionaire at this point is because it becomes so hard to find investments capable of paying 5% on a billion dollars.  The worlds GDP becomes the limiting factor to how much wealth these people can have.  If you greatly improve the world then it stands to figure that these people will be able to gain from that growth as well.

[tooqk4u22]

Obviously wealth is skewed and the change as illustrated in the charts is exponential over the years.  There are a number of reasons for this

1. productivity increases, of course this hurts the average worker both in hourly wage and number of available jobs, why would anyone think it wouldn't. 

2. consumerism - the US has evolved from a productive society to a services society and people in the lower and middle classes spend a large portion of their money on products and services that deplete wealth and guess who is providing those products and services - the wealthy and wanna be wealthy.

3. international transfers - really a function/result of #1 & #2 but it causes wealth to be transferred to other nations and with the large trade imbalances has also contributed to a weak dollar and therefore lower purchasing power.

4. Social transfer payments - these are nothing more than keeping the populace at bay and are complete disincentive to work toward improvement. 


All very complicated and difficult to solve but at the end of the day if you want the problem solved then the masses need to stop buying crap and live the way of the Mustache, and because so much wealth is concentrated at the top as people stop buying this crap all those assets will decline in value.  Sure there will be near term pain as unemployment will jump but from a wealth standpoint there is a floor on how much you can lose and being that the middle and lower classes don't have much then they can't lose much. 

Odds of this happening - almost zero - but this is really the only solution to getting a better wealth distribution, raising taxes won't do it as the wealthy have too many ways/options to shield thier income and wealth.

And in fact, a lot of people on this site are demonstrating that it is possible and if a "household" happens to accumulate $1MM net worth then they are in the top 10% of wealth distribution - for all those that think there is a problem think about that as $1mil is a fairly common number that is looked to for a SWR goal. 

[KGZotU]

One significant problem is that people confuse wealth with income. Income is how much money you make, and wealth is how much you have saved. What matters to most people in terms of money is spending power, and for most individuals spending power is a function of their income and not their wealth. Unfortunately, the presenter both intentionally and unintentionally conflates wealth and income/spending power.

Also, wealth is not zero-sum. We create wealth as a species every day, and some people capture more of that created wealth than others. But quality of life is generally improving across the globe; the rich aren't stealing wealth so much as capturing greater proportions of the wealth that's created.

Consider also that if I own a large telecommunications company, that business composes a part of my wealth. And yet, that wealth is not in competition with your $1000 savings account for procuring goods and services. My telecommunications company isn't driving up your costs by competing against your dollars at the grocery store, or in the apartment-rental market.

Basically, your wealth doesn't affect me until you spend it and send some dollars out to compete against my own dollars. If you want to know to what degree the wealthy compete against the less-wealthy for goods and services, then you can look at a graph of spending-inequality.

Aside from the question of whether or not wealth inequality is interesting, the presenter also uses a lot of deceptive rhetoric. I count plenty of: argument from incredulity ("Do you really think that..."), straw man ("...the CEO works 380 times as hard as his average employee?"), and drawing conclusions that would require a scale from a graph with no scale.


The video is ostensibly about the difference between perception, ideal, and reality. But it's also clearly intended as an attack on wealth-inequality. But wealth inequality is not itself a problem. Poverty is a problem. The video is entirely concerned with how much the big guy has and not with whether the little guy has enough.

My personal response is that arguments like this (look at how much the big guy has) are very appealing because they inspire jealousy. That's much more appealing than an argument about how little the little guy has, because following that argument inspires shame in anyone with a comfortable life.

[Jamesqf]

IGates has near 50 billion   which at 5% works out to 48 million a week.  even at 99% taxes he'd still have half a million a week to spend.

Well, not exactly.  Gates doesn't have $50 billion cash, he has (mainly) shares in a company which at current stock prices might be worth $50 billion.  But if he sold a significant part of those shares 1) He wouldn't own the company any more; and 2) The market value of the shares would probably plummet.

[TheDude]

That is a great video I love the way he shows it. The one really big problem I have with it is the ideal is actually based on Sweden's income distribution. There is not a country in the world that has a wealth distributions like that. 

I do think we need higher taxes on everyone but especially on higher (say over 5mil including dividends) incomes. I also think we need to switch to an Inheritance Tax to encourage people to divide up their wealth upon death.

[swiper]

I also think we need to switch to an Inheritance Tax to encourage people to divide up their wealth upon death.

+1 on shifting tax burden to estate taxes

[TheDude]

Not Estate, Inheritance Tax. There is a difference.

[KGZotU]

That is a great video I love the way he shows it. The one really big problem I have with it is the ideal is actually based on Sweden's income distribution. There is not a country in the world that has a wealth distributions like that. 

Thought that was an interesting reference so I tracked it down.

[swiper]

Not Estate, Inheritance Tax. There is a difference.

I guess I use the terms interchangeably as we only have estate tax (paid as last return by estate) in Canada.

Had to look it up for the States and it sounds like:
Estate tax: Collected by federal gov and paid out of the estate.
Inheritance tax: Collected at state level and paid by recipients of the estate.

[TheDude]

Not Estate, Inheritance Tax. There is a difference.

I guess I use the terms interchangeably as we only have estate tax (paid as last return by estate) in Canada.

Had to look it up for the States and it sounds like:
Estate tax: Collected by federal gov and paid out of the estate.
Inheritance tax: Collected at state level and paid by recipients of the estate.

Thats close but the tax could be collected by the feds too. Here is the way I understand it

Estate Tax: Tax is paid by the Estate or essentially the person who died
Inheritance tax: Paid by the person who inherits the money. So if you inherit money its treated more like income. IMHO this encourages people to give their money to more people.

Heres a good reference http://www.taxpolicycenter.org/briefing-book/key-elements/estate/inheritance.cfm

[mm31]

I think wealth inequality is a problem when it continues to grow as it has. I don't think anger is such a bad feeling to have when looking at these numbers, unless you think the status quo is fine or unchangeable.

[Jamesqf]

I think wealth inequality is a problem when it continues to grow as it has.

Why?  Seems to me that increasing inequality of wealth is natural, and perhaps inevitable, in a growing & prosperous economy.  Say that everyone's income grows by 25%: those in the lower quintiles will (unless they are Mustachians!) tend to spend most of the increase on augmenting their material style of living, instead of saving or investing.  Indeed, their increased income may lead to decreased - that is, increasingly negative - wealth, as it allows them to buy more on credit.  The already-wealthy already have all they want in the way of material things, so the increase adds to their wealth.  Thus we have wealth inequality as a consequence of increased prosperity.

Much as we might decry the materialism that causes many in the lower income groups to spend, and over-spend, their income instead of saving, what other alternative do we have in a free society?  Should we force people to save?  Should the government confiscate the wealth of those who do save?  (As for instance with giving government assistance to those who bought homes they could no longer afford, but doing nothing for those who chose to live within their means.)

[PKFFW]

For those interested, you might find a book called "The price of civilisation" by Jeffrey Sachs to be a good read.

Wealth inequality doesn't have to be "inevitable".  In fact, true wealth inequality on the scale we see today is a relatively recent phenomenon.  In tribal societies you simply do not see the complete disparity of wealth that is evident in developed societies.  It is true that the choicest haunch of a kill, or the warmest fur or nicest feathers would generally go to the elite of the tribe.  Having said that, the entire tribe was looked after and, generally speaking, no one was left to fend for themselves whilst others hoarded a nice stash of fruit and veg or meat etc.

Stigmatizing the poor as people who simply don't save enough and classifying any sort of welfare as "social transfer payments" whilst the opportunities for education, health and prosperity are so disproportionate is just avoiding the issue.  For a society that prides itself on being the land of opportunity it boggles my mind how little concern there is for those who are too far down the food chain to be afforded these opportunities in any sort of meaningful way.

[mpbaker22]

Much as we might decry the materialism that causes many in the lower income groups to spend, and over-spend, their income instead of saving, what other alternative do we have in a free society?  Should we force people to save?  Should the government confiscate the wealth of those who do save?  (As for instance with giving government assistance to those who bought homes they could no longer afford, but doing nothing for those who chose to live within their means.)

I would approve of the abolition of the income tax in favor of a consumption (sales or vat) tax.  So, in that sense, yes. 

And we could counter the regressive nature of a sales tax by giving EVERY citizen $2,000 (or whatever) on January 1, and instituting a 20% sales tax.  Thus, you only have a positive effective tax rate if you spend more than 10K, and those who spend less than 10K are subsidized.  The numbers can be skewed to be more realistic, but it's just the idea that I think is great.

[ivyhedge]

I think wealth inequality is a problem when it continues to grow as it has. I don't think anger is such a bad feeling to have when looking at these numbers, unless you think the status quo is fine or unchangeable.

mm31 - I realize you're referencing the presentation above, but there are many areas of the world where folks are not as angry as we would expect from our (likely) first world perches.


Accepting that income inequality, for many reasons, exists, please don't discount the literally hundreds of millions of folks who have progressed from purges to business ownership and vastly improved lives.

[The_Dude]

That is a great video I love the way he shows it. The one really big problem I have with it is the ideal is actually based on Sweden's income distribution. There is not a country in the world that has a wealth distributions like that. 

Thought that was an interesting reference so I tracked it down.

Interesting read.  Thanks for posting the link.

[Jamesqf]

Wealth inequality doesn't have to be "inevitable".

Inevitable, perhaps not.  Desirable, yes.  See my comments above.

In fact, true wealth inequality on the scale we see today is a relatively recent phenomenon.  In tribal societies you simply do not see the complete disparity of wealth that is evident in developed societies.

Do you suppose that this might just perhaps have something to do with the fact that tribal societies have very little wealth?  As soon as societies began to accumulate wealth, that wealth was distributed unequally.  I dare say that one could find many historic examples of greater wealth inequality: say the difference between Crassus and the Roman slaves. 

We also see an even greater effective* wealth inequality today in those societies that claim to promote equality.  Is not the difference between a North Korean peasant and the members of Kim Jong Un's clique far greater than that between a US welfare mom and Bill Gates?  (Hint: I don't think Bill has people killed for dissing Windoze :-))  How about the difference between the Castros and the average Cuban?

*I say effective, because the "wealth" is control of the apparatus of state power.
 

For a society that prides itself on being the land of opportunity it boggles my mind how little concern there is for those who are too far down the food chain to be afforded these opportunities in any sort of meaningful way.

You should address those complaints to someone who didn't start out pretty close to the bottom of that chain :-)

[PKFFW]

Inevitable, perhaps not.  Desirable, yes.  See my comments above.

I don't see how equating rising standards of living to inequality of wealth distribution makes the latter any more desirable.

I agree, rising standards of living for all is a great thing.  I disagree with your contention that this means concentrating a greater and greater proportion of wealth into the hands of fewer and fewer people is therefore also a good thing.  The two are unrelated and a society can choose to have both rising standards of living for all and greater equality in the distribution of wealth.

Do you suppose that this might just perhaps have something to do with the fact that tribal societies have very little wealth?  As soon as societies began to accumulate wealth, that wealth was distributed unequally.  I dare say that one could find many historic examples of greater wealth inequality: say the difference between Crassus and the Roman slaves. 

We also see an even greater effective* wealth inequality today in those societies that claim to promote equality.  Is not the difference between a North Korean peasant and the members of Kim Jong Un's clique far greater than that between a US welfare mom and Bill Gates?  (Hint: I don't think Bill has people killed for dissing Windoze :-))  How about the difference between the Castros and the average Cuban?

*I say effective, because the "wealth" is control of the apparatus of state power.

Firstly, I suppose if you want to redifine wealth to mean something that isn't referred to in the video and is not the topic under discussion then you are absolutely correct.  I could just as easily redifine wealth to mean only things that are non-material and enhance ones emotional well being such as personal friendships and ones love life.  Of course that doesn't really add to the discussion at hand though.

However the wealth being discussed and referenced in the video is not about whether one can have another killed at their whim.  The differences re NK peasant and US welfare mom are not so great when it comes to standard of living.  When one has to choose if one heats their home to avoid freezing or puts food on the table to avoid starving I don't think they are terribly concerned if Bill Gates or good ol' Kim are looking to off them.

Also, there are many options to consider other than unbridled capitalism in which we see the kind of inequality evident in the US and totalitarian communist regimes.  Attempting to frame the discussion in terms of diametrically opposite extremes, as if these are the only options available, is disengenious and non productive.

Secondly, no, the fact the tribal societies don't have much wealth is not the reason there isn't greater inequality.  The fact they have a different mindset is the reason.  A tribal society understands that the individual would be unable to survive without the tribe just as the tribe would not survive without a minimum number of individuals.  Therefore there is no real benefit to hiding a stash of bananas so one has a nice big pile of "wealth" while the rest of the tribe starves to death.

As for Rome, I would hardly call that a tribal society.  I stated that the wealth inequality we see today is a relatively recent phenomenon in human history.  Agrarian and industrial based civilisation itself is a relatively recent phenomenon.  It is only this recent period in human history, in which society has gained some measure of control over its food supply and therefore transferred the emphasis of physical labour from survival to other areas, that we see this unequal wealth distribution.

You should address those complaints to someone who didn't start out pretty close to the bottom of that chain :-)

My comments were not directed at any one person.

However, regardless of where one started on the chain, if one shows a distinct lack of empathy or concern for those lower on the chain then my comment, which merely indicates my astonishment at this lack of concern, stands.

[Jamesqf]

I don't see how equating rising standards of living to inequality of wealth distribution makes the latter any more desirable.

Seems obvious: as I pointed out above (and others have as well) when income increases generally, those near the lower end of the economic scale spend the increased income, increasing their (perceived & subjective) quality of life without increasing their wealth.  Those who already have wealth have little need or desire to increase spending, therefore their wealth increases.  Thus increasing income disparity is natural (and probably inevitable) in any prosperous society.

I disagree with your contention that this means concentrating a greater and greater proportion of wealth into the hands of fewer and fewer people is therefore also a good thing.

Wealth does not concentrate into the hands of fewer people.  Even discounting inflation, there are more billionaires now than in any time in the modern era.

The two are unrelated and a society can choose to have both rising standards of living for all and greater equality in the distribution of wealth.

No, they can't (or at least not for long), because that lack of equality in distribution is what drives prosperity. 

Firstly, I suppose if you want to redifine wealth to mean something that isn't referred to in the video and is not the topic under discussion then you are absolutely correct.

What's being redefined?  Is not effective ownership of an entire country a form of wealth?

As for Rome, I would hardly call that a tribal society.  I stated that the wealth inequality we see today is a relatively recent phenomenon in human history.

But you fail to define relatively.  If you're thinking of "relative recent" as anything happening after the first non-hunter-gatherer cultures, then you are technically correct.  But you wrong in thinking that it's not an inherent characteristic of the difference in cultures.

It is only this recent period in human history, in which society has gained some measure of control over its food supply and therefore transferred the emphasis of physical labour from survival to other areas, that we see this unequal wealth distribution.

Which is only saying that we don't see unequal wealth distribution in a society until that society develops wealth.  Or in other words, DUH!

You should address those complaints to someone who didn't start out pretty close to the bottom of that chain :-)

My comments were not directed at any one person.

However, regardless of where one started on the chain, if one shows a distinct lack of empathy or concern for those lower on the chain then my comment, which merely indicates my astonishment at this lack of concern, stands.

You misunderstood my comment.  What I was trying to say in a polite way is that your comments about opportunity not being available in any meaningful way to those of us who started out low on the food chain are just plain wrong.  Like the man said, been there, done that, so I can see through the lies.

[Nords]

Those that are really good at earning and saving will have an advantage,  those that are crappy at earning and saving will be at a big disadvantage.

I'm always impressed by how much money the media makes from the following headline:
"News flash:  Rich get richer!!!"

[PKFFW]

Seems obvious: as I pointed out above (and others have as well) when income increases generally, those near the lower end of the economic scale spend the increased income, increasing their (perceived & subjective) quality of life without increasing their wealth.  Those who already have wealth have little need or desire to increase spending, therefore their wealth increases.  Thus increasing income disparity is natural (and probably inevitable) in any prosperous society.

Again, increased standard of living for all is good.  I'm not debating that.

Increased inequal distribution of wealth is not inevitable as a result of increased standard of living for all.  Suggesting it is simply because poor people will choose to heat their house and put food on the table at the same time rather than saving their increased income again reduces the discussion to one of extremes that serves no useful purpose.

And that doesn't even begin to address the fact that real average wages have remained stagnant since about the 1970's so there isn't a heck of a lot of increasing income going on to begin with.

Wealth does not concentrate into the hands of fewer people.  Even discounting inflation, there are more billionaires now than in any time in the modern era.

My apologies for not being specific enough.  I should have said the concentration of wealth into a smaller and smaller percentage of the population.

Yes there are more billionaires than ever before.  There are also many more people.  There is also inflation which means that given enough time everyone will be a millionaire, if not a billionaire.  That doesn't mean the wealth is being distributed any more equally.

No, they can't (or at least not for long), because that lack of equality in distribution is what drives prosperity.

Yes they can and they have for most of human history.  Many socities today still have a much more equal distribution of wealth than does the USA.

As for the lack of equality being what drives prosperity, only if you believe the propaganda. 

What's being redefined?  Is not effective ownership of an entire country a form of wealth?

Yes it is a type of wealth.  Just as a loving relationship is a type of wealth.  Neither is the type of wealth being discussed in this thread or that was referenced in the original video.

As such I don't think comparisons between peasants in North Korea and welfare moms in the USA and which one is more likely to be killed by heads of state or business adds much to the discussion.  Unless of course ones' argument is simply that others have it worse and therefore there is no problem.

But you fail to define relatively.  If you're thinking of "relative recent" as anything happening after the first non-hunter-gatherer cultures, then you are technically correct.  But you wrong in thinking that it's not an inherent characteristic of the difference in cultures.

Yes, I did fail to define relatively.

However, I did use tribal socities as my example and the Roman Empire was clearly not a tribal society.  Furthermore, most historians would agree the time of the Roman Empire is considered to be "relatively recent" when discussing human history.

Which is only saying that we don't see unequal wealth distribution in a society until that society develops wealth.  Or in other words, DUH!

Nice strawman but no.

Hunter gatherer tribal socities do have wealth.  They have food, clothing, shelter, precious metals, gems and stones, other ornaments, art etc etc.  All of that is wealth.  Money is really only a substitute for these things.

It is only since the agricultural revolution and then the industrial revolution and the consequential specialization of labour that the idea of money had any relevance.  It is only with the advent of money that the unequal distribution of wealth became possible on the scale we see since that time.

You misunderstood my comment.  What I was trying to say in a polite way is that your comments about opportunity not being available in any meaningful way to those of us who started out low on the food chain are just plain wrong.  Like the man said, been there, done that, so I can see through the lies.

Firstly, nothing I have posted is a lie.  You may argue that I am incorrect but being incorrect is different to lying.

Secondly, your experiment of one does not disprove the reality.  By your logic one could argue that Obama being president proves there is no racism in the USA anymore too.  Chance, for example, plays a tremendous role in any persons success.  You, whether you care to admit it or not, will have no doubt had fortuitous luck at some point that may have completely changed the trajectory of your life.  Your neighbour may not have benefitted from this luck.  That is just one example of the influences at play.  There are many more.

An anecdotal story of one person achieving FI and wealth from a beginning in poverty does not mean that opportunites for good education, good health care, decent housing, decent jobs etc are there for all in equal measure.

Having said all that, it is clear you are not able to discuss the issue without making personal comments and resorting to strawman fallacies so I will cease replying now and let the discussion continue amongst other posters.

[KGZotU]

Why do you dislike wealth inequality, PKFFW? Is there something inherently bad about wealth inequality?

[Jill the Pill]

"Hunter gatherer tribal socities do have wealth.  They have food, clothing, shelter, precious metals, gems and stones, other ornaments, art etc etc.  All of that is wealth.  Money is really only a substitute for these things."

  Oh, you have to read David Graeber's Debt. 

What's being redefined?  Is not effective ownership of an entire country a form of wealth?
==========
*I say effective, because the "wealth" is control of the apparatus of state power.

  And that is a huge problem here in the US.  That guy on the right end of that wealth chart has far more political access and influence than the guy furthest to the left. 

Is there something inherently bad about wealth inequality?

Inherently? no, just contingently   -- as long as people lack real necessities or wealth is gained at the expense of the poor, inequality is indefensible. 

[KGZotU]

Is there something inherently bad about wealth inequality?

Inherently? no, just contingently   -- as long as people lack real necessities or wealth is gained at the expense of the poor, inequality is indefensible.

On the first count, it sounds like you have a problem with poverty. I can respect that. But I'm confused on the second count; could you give me an example of wealth being gained at the expense of the poor?

[NumberJohnny5]

...could you give me an example of wealth being gained at the expense of the poor?

Ooh, can I jump in here?

Rent-to-own stores.

Payday loans.

Credit cards that give you, say, a $500 limit but has $500 of fees before you even get the card (many times worse than a secured card that you must put down $500 before you can use it).

Tax refund anticipation loans.

Stated-income mortgages (you just walk in, say "um, I make $100,000+ a year, but somehow I seem to have lost every evidence that I even have a job", and you were approved).

Lots more examples. Yeah, you can make lots of money off certain rich people (who freely spend what they can), but you can also make lots of money off poor(er) people, as there's so many of them.

[KGZotU]

In that case, I don't quite understand Jill's argument. As long as there are pay-day loans (etc.), there shouldn't be wealth inequality? What about wealth that is made in the process of improving the lives of others? Is it OK for people to accumulate that wealth?

[PKFFW]

Why do you dislike wealth inequality, PKFFW? Is there something inherently bad about wealth inequality?

I don't dislike wealth inequality per se.  It is merely a symptom of the greater problem.  Granted, it is one that causes a chain reaction of other problems but it is still just a symptom.

The greater problem is the extreme libertarianism that has at its core the ethos that every man is an island that owes nothing( or as little as humanly possible at any rate) to anyone, nor to the society in which he lives.

Frankly this idea is demonstrably and undeniably wrong.  Try making a billion dollar fortune without using roads, rail, the education system through childhood, the medical industry for health, drinking water, having electricity, police to protect you, fire fighters and ambulance officers to aid you when in need, the military to defend you from all threats foreign and domestic, etc etc etc.

Yet when it comes to sharing some of that wealth attained in great part through the services and industry provided by the society in which the wealthy person lives it is suddenly right and proper and inevitable that wealth should be spread with greater and greater inequality to those who already have more than they could ever hope to spend and away from those who have little to nothing.

[PKFFW]

Oh, you have to read David Graeber's Debt.

Thank you for the suggestion, I will put it on my TBR list.

What's being redefined?  Is not effective ownership of an entire country a form of wealth?
==========
*I say effective, because the "wealth" is control of the apparatus of state power.

  And that is a huge problem here in the US.  That guy on the right end of that wealth chart has far more political access and influence than the guy furthest to the left. 

Is there something inherently bad about wealth inequality?

Inherently? no, just contingently   -- as long as people lack real necessities or wealth is gained at the expense of the poor, inequality is indefensible.

Well said.

[PKFFW]

On the first count, it sounds like you have a problem with poverty. I can respect that. But I'm confused on the second count; could you give me an example of wealth being gained at the expense of the poor?

I would say the most glaringly obvious example is the fact that taxes are levied only on realised income and not on wealth.  A nice little bit of tax legislation brought about by lobbying from the wealthy that directly impacts those who are not already wealthy.

The single biggest advantage the wealthy have over the less wealthy is they can afford to realise only a tiny percentage of their wealth as income and still live a more than comfortable and affluent life.  The poor on the other hand need to realise virtually their entire wealth as income in order to simply survive.

Here in Australia there was a man named Kerry Packer who died a few years ago.  He proudly proclaimed that he did all he could to minimise tax, as was his legal right I wont deny.  He paid less tax than me for example.  Yet at the same time he proudly told a story about being willing to bet a multi-millionaire Texan he met once for the texans entire net worth on the flip of a coin simply because he found the Texan to be rude.  Kerry Packer loved to gamble and would drop $100k on each hand at the blackjack table and would play for hours at a time.

So tell me, how is taxing this man less than your common middle class worker right and proper and "inevitable"?

[KGZotU]

On the first count, it sounds like you have a problem with poverty. I can respect that. But I'm confused on the second count; could you give me an example of wealth being gained at the expense of the poor?

I would say the most glaringly obvious example is the fact that taxes are levied only on realised income and not on wealth.  A nice little bit of tax legislation brought about by lobbying from the wealthy that directly impacts those who are not already wealthy.

The single biggest advantage the wealthy have over the less wealthy is they can afford to realise only a tiny percentage of their wealth as income and still live a more than comfortable and affluent life.  The poor on the other hand need to realise virtually their entire wealth as income in order to simply survive.

Here in Australia there was a man named Kerry Packer who died a few years ago.  He proudly proclaimed that he did all he could to minimise tax, as was his legal right I wont deny.  He paid less tax than me for example.  Yet at the same time he proudly told a story about being willing to bet a multi-millionaire Texan he met once for the texans entire net worth on the flip of a coin simply because he found the Texan to be rude.  Kerry Packer loved to gamble and would drop $100k on each hand at the blackjack table and would play for hours at a time.

So tell me, how is taxing this man less than your common middle class worker right and proper and "inevitable"?

I don't know if I'd say that it is, but I could possibly be persuaded to defend it as an acceptable failure of a system that has generated enough wealth to raise the vast majority to a standard of living inconceivable 10,000 years ago.

A wealth tax is an exotic solution. You're right that income taxes hurt the poor more than a wealth tax. But a sufficient wealth tax would destabalize capitalist society entirely; basically, nobody would want to own the means of production. Something better might come out of the wreckage, but that's a large unknown and rhetorically I'd suggest you can make a stronger case by referring to existing countries with both strong wealth-production mechanisms and a strong social safety net. I don't know if you're concerned with the US specifically, we do have the most progressive taxation among our peer nations. That suggests to me that we don't have a problem with the fairness of what people put into the system so much as the fairness in terms of what the system gives back. Tangent.

I guess I don't mind some people having more advantages than other people. Social justice for me rests on the idea that everyone can with reasonable effort (which may be scaled to those for whom an effort is more difficult) achieve a comfortable standard of living. Wealth-inequality doesn't really reflect that.

[tooqk4u22]

Frankly this idea is demonstrably and undeniably wrong.  Try making a billion dollar fortune without using roads, rail, the education system through childhood, the medical industry for health, drinking water, having electricity, police to protect you, fire fighters and ambulance officers to aid you when in need, the military to defend you from all threats foreign and domestic, etc etc etc.

Yet when it comes to sharing some of that wealth attained in great part through the services and industry provided by the society in which the wealthy person lives it is suddenly right and proper and inevitable that wealth should be spread with greater and greater inequality to those who already have more than they could ever hope to spend and away from those who have little to nothing.

This argument is founded in bullshit....while it is true that those public services enabled the creation of wealth it was also enabled by investment, taking risk, innovation, experience, etc.  If it was sole attributed to roads and schools and such then we would all be billionaires or more likely all have equal wealth and income.  Also, it ignores that while these wealthy people were becoming wealthy they were paying a lot of the income taxes and employing people that also paid taxes.  So again - this argument is bullshit and is only espouse by slackers who feel entitled to spoils they did not earn.

I would say the most glaringly obvious example is the fact that taxes are levied only on realised income and not on wealth.  A nice little bit of tax legislation brought about by lobbying from the wealthy that directly impacts those who are not already wealthy.

The single biggest advantage the wealthy have over the less wealthy is they can afford to realise only a tiny percentage of their wealth as income and still live a more than comfortable and affluent life.  The poor on the other hand need to realise virtually their entire wealth as income in order to simply survive.

Here in Australia there was a man named Kerry Packer who died a few years ago.  He proudly proclaimed that he did all he could to minimise tax, as was his legal right I wont deny.  He paid less tax than me for example.  Yet at the same time he proudly told a story about being willing to bet a multi-millionaire Texan he met once for the texans entire net worth on the flip of a coin simply because he found the Texan to be rude.  Kerry Packer loved to gamble and would drop $100k on each hand at the blackjack table and would play for hours at a time.

So tell me, how is taxing this man less than your common middle class worker right and proper and "inevitable"?

A wealth tax is also bullshit - and never mind that there already is one in the form of an estate tax and to some extent I would argue that property taxes are a form of wealth tax.  Taxes are paid on income, so if I choose to save 60% of my income after paying a significant amount of taxes then you expect I shoul have to pay tax on what I have accumulated.  So dumb.

And there is nothing wrong with minimizing taxes if done legally, which by the way more often than not involves some sort of investment/risk and generally supports jobs of some kind.

And if your billionaire buddy won the bet then he would have to pay income tax on the value of of the texan's net worth - so even he did have too much money to throw around he still would have been subject to the taxman. 

[swiper]

it was also enabled by investment, taking risk, innovation, experience, etc.

... and lets not forget a very important one which we really don't need to reward: Chance

A wealth tax is also bullshit - and never mind that there already is one in the form of an estate tax and to some extent I would argue that property taxes are a form of wealth tax.  Taxes are paid on income, so if I choose to save 60% of my income after paying a significant amount of taxes then you expect I shoul have to pay tax on what I have accumulated.  So dumb.

And there is nothing wrong with minimizing taxes if done legally, which by the way more often than not involves some sort of investment/risk and generally supports jobs of some kind.

And if your billionaire buddy won the bet then he would have to pay income tax on the value of of the texan's net worth - so even he did have too much money to throw around he still would have been subject to the taxman.

I think an estate tax (end of life) touches different incentives than a wealth tax applied during working years. I think moving tax burden away from yearly income and toward a combination of (estate/inheritance tax depending on where you live) & consumption taxes (providing a prebate/rebate up to a certain basic level) would be a good long term economic move.

[Jack]

The thing that's inherently bad about wealth inequality is that sooner or later the proles get fed up and start rioting, pillaging, and killing the aristocrats.

[Spork]

What I find particularly disingenuous is that there seems to be something terrible about wealth inequality in America.... but that wealth inequality among nations -- not such a big deal.

There is a whole army of 99 percenters that would love to redistribute wealth in America, but if you ask them about redistributing THEIR wealth to the 99 percenters of the world -- well, that's absurd.

If you live in the USA and don't live under a bridge: you're likely to be "wealthy" by a huge portion of the world.  Over time we have redefined the middle class and the poor.  Fifty years ago a middle class family probably lived in a 1600sqft house, had one car and one phone line and thought they were the luckiest people alive.  We now have a middle class living in 4000 sqft houses, 3 cars, even the dog has an iPhone, and we think we're a miserable lot that would be okay if the fatcats at the top were just not taking all our money.

Life is grand here.  We should just get over ourselves and see that.

[capital]

The problem with extreme disparities in wealth is that it can lead to extreme disparities in power, which can lead to exploitative relationships between rich and poor. If a wealthy person (or group thereof) is able to gain control of the necessities of life at some local scale, such as food or shelter or land, they are able to exploit the poor. A person without food is willing to give just about anything to gain it, and the same of a person without shelter.

Moreover, wealth can only be maintained at any scale beyond "personal effects" with a state apparatus dedicated to the preservation of private property. I would be unable to accumulate and maintain my (modest) wealth without there being men and women with guns whose job it is to preserve my ownership of that property. Since there need be a social structure (almost always a state) to allow the accumulation of wealth, said state (especially if it is democratic) should likewise have some say in how that wealth is distributed. This is especially true of forms of wealth that cannot meaningfully be increased via human effort, such as land (and the natural resources derived from it).

[DebtDerp]

This is a very interesting discussion but I think the larger point is being missed. In America (and indeed all societies) you will never have completely equal wealth among all people. Theoretically you could tax every person at 100% of their wealth, seize everything they own and redistribute the accumulation of all of that wealth evenly among all people. However you could only theoretically do this at one point in time and within minutes wealth would be unequal again. That is the nature of the free market.

What you are really saying when you think that wealth inequality is wrong or too high is that you think the current distribution is unfair. So, you want to make the system fairer. At face value this is a worthy goal. However, the problem with ‘fairness’ is that there is no objective solution to what fair actually looks like. Fairness is completely subjective. Your definition of what is fair may not seem fair to me at all. This has been recently illustrated in the arguments between President Obama and Congressional Republicans. The President thinks taxes should go up even more so that the wealthy pay their fair share. The Republicans think that the rise in taxes at the beginning of the year was enough and that now to be fair we should cut spending. Two completely different ideas on what is fair.

On the other side of the coin we have a tax system in America that punishes people who work for their money over people who have their money work for them. That is the nature of a wealth tax over an income tax. This is best illustrated by MMM himself. MMM has more wealth than 90% of Americans yet pays a far lesser amount of money in taxes each year on an absolute basis than most Americans. He even pays less than many as a percentage of his annual income and as a percentage of his wealth. Even still he receives the same benefits from public services, infrastructure, national defense, etc. Because he worked ten years he will be eligible for social security benefits (not sure how that works with him being from Canada but for arguments sake lest say he is eligible). All of this is a reward for having a much more leisurely lifestyle than most of the working stiffs in America. Do you think that is fair?

Well you might say that MMM doesn’t live an ostentatious lifestyle and isn’t in the top 1% so it’s ok for him. You might say that you are only referring to the uber wealthy who have too much wealth. Again this is a subjective evaluation based on your definition of what is too much. I don’t think anybody here is actually arguing that wealth inequality is bad I think people are really arguing that too much wealth inequality is bad. The problem then becomes: what is the right mix of wealth inequality? And how do we achieve that mix?

Since we have established that fairness among wealth inequality is subjective then whose definition do we use? Well Mr. Obama won re-election so maybe we should use his definition of fairness. Or the Republicans retained control of the House of Representatives so maybe we should use their definition of fairness. Ultimately the compromise that is reached between all levels of government is the system that is actually put in place. Not surprisingly most Americans think this system isn’t actually fair.

As a thought experiment let’s say we all agree that to be fair we want the wealthy in our society to have 20% less wealth and the poorest to have 20% more wealth. The next step is how we achieve that mix. The only real way to achieve this definition of fairness is to decrease freedom; that, ladies and gentlemen, is why this is such a contentious debate in this country. To make the wealth distribution more fair in this country you have to decrease freedom for all people.

There are plenty of examples to draw on. Most recently, because most people thought it wasn’t fair that people in this country went without health insurance now everyone has to purchase it. You are no longer afforded the freedom to choose if you want to live with health insurance or not. If you go without insurance now you pay a penalty. Another, people in our country thought it wasn’t fair that after working a lifetime people in old age were forced into homeless because they had no way to make money and no savings to live off of, so social security was invented. Freedom was reduced by forcing working American’s to set aside a percentage of their salaries into a government ran trust account to be disbursed at the government’s discretion when/if that person reaches old age. I, and many others would agree, think these goals are worthy to give up some freedoms to ensure the social safety net for the less fortunate.

So to reach our goal of a more fair distribution of wealth in America we have to decrease freedom. The only ways that I can see to meet this goal is to dramatically increase the taxation on the traditional income sources from wealth (i.e. dividends, long term capital gains), to tax wealth directly, or a combination thereof. Taxes on traditional income (i.e. wages and salary) are not going to reduce wealth inequality; in fact they may make it worse. However doing this will reduce freedom especially for those who live off of their wealth (MMM himself). If you tax income from wealth enough you may force people to take a larger percentage of their wealth out each year to maintain their lifestyle. If you tax wealth directly you will have an even more dramatic effect on how long that wealth will last. If you tax it enough you could force people like MMM to go back to work or alter their lifestyle. They will be less free to live the way they currently live. You will also disincentivize people to follow in MMM’s footsteps.

Now, I am against this kind of thinking. I would rather keep more of my freedom to live my life as I see fit than to make wealth distribution fairer. I think instead of seeking more wealth equality in this country we should continue to work towards more equality of opportunity. America is still a country where almost anyone can work hard, make smart choices and reap the benefits of that hard work and those choices. I think we should be working towards making our schools better, making it easier to start a business, putting less restrictions on small businesses, breaking up monopolistic practices of large corporations, making higher education more affordable. To me having the opportunity to go out and achieve your dreams is the great equalizer in this country, not taking wealth from the wealthy and distributing it to the less wealthy.

Yes this system is unfair if you measure it by who holds the wealth. You will have people that don’t work very hard and reap huge amounts of wealth off of this system. You will have people who are born into wealth. This may be unfair but who am I to say that those people don’t deserve their wealth? Instead of worrying about whether a person achieved their wealth fairly or if the amount they have is fair I would much rather have the opportunity to go out and accumulate my own wealth with little restrictions. It’s not the best system but it is the best system that has ever been invented and affords the most freedom ever in the history of the world. There is still much that can be improved but, for me, redistributing wealth is not an improvement.

TL;DR: When people say wealth inequality is bad they are really saying that the current distribution of wealth is unfair. However the definition of what is fair is entirely subjective. To achieve a fair distribution of wealth you have to take away freedom from people. For me a better goal is not a more equal distribution of wealth but ensuring equality of opportunity, i.e. ensuring people have the opportunity to achieve their definition of wealth.

[Jamesqf]

What's being redefined?  Is not effective ownership of an entire country a form of wealth?
==========
*I say effective, because the "wealth" is control of the apparatus of state power.

  And that is a huge problem here in the US.  That guy on the right end of that wealth chart has far more political access and influence than the guy furthest to the left.

And why exactly is that a problem?  For one thing, in the US even the multi-billionaires at the top of the Forbes list have vastly less political influence than the ruling cliques who own those supposedly egalitarian countries.
 

Is there something inherently bad about wealth inequality?

Inherently? no, just contingently   -- as long as people lack real necessities or wealth is gained at the expense of the poor, inequality is indefensible.
[/quote]

So what are those "real necessities"?  And where in the US do you find any significant number of people who a) lack what a reasonable person would call necessities; and b) haven't brought that lack on themselves through lifestyle choices such as drug or alcohol use?

Rent-to-own stores.

Payday loans.

Credit cards that give you, say, a $500 limit but has $500 of fees before you even get the card (many times worse than a secured card that you must put down $500 before you can use it).

Tax refund anticipation loans.

And aren't those all lifestyle choices, just as choosing a life of booze or meth use is a lifestyle choice.  Or for that matter, covering your body with tattoos & piercings?  All of them are going to reduce your chances of long-term wealth accumulation.

[Forcus]

Wealth redistribution is an idiotic idea.
Income equalization is an idiotic idea.
Opportunity equalization - well, I could support that as long as it doesn't create reverse discrimination.

But as someone else noted, the poor here, compared to the poor in, say, Somalia - the poor here, using a US HHS 2012 numbers for a family of 3, would be at 88.65% percentile worldwide. (I am solid middle class and I was 99.3%). I have not seen any support from certain elements in purging all wealth from America to send to other countries which seems hypocritical at best.

[Jill the Pill]

     

And that is a huge problem here in the US.  That guy on the right end of that wealth chart has far more political access and influence than the guy furthest to the left.

And why exactly is that a problem?  For one thing, in the US even the multi-billionaires at the top of the Forbes list have vastly less political influence than the ruling cliques who own those supposedly egalitarian countries.

Because we are supposed to be a representative democracy, not an oligarchy.

So what are those "real necessities"?

Draw the line somewhere on Maslow's hierarchy: physiological needs, safety and justice.

And where in the US do you find any significant number of people who a) lack what a reasonable person would call necessities; and b) haven't brought that lack on themselves through lifestyle choices such as drug or alcohol use?

In any urban middle school or food pantry, among the laid-off, the mentally ill, veterans, single moms, disabled, or elderly.

Rent-to-own stores

wasn't the example I had in mind. Rather, I was thinking of unfair labor practices: wealth gained by short-changing hard-working people on a living wage, adequate healthcare, safe work environment -- Massey Energy, e.g.

Eghee & Spork, your comments are really excellent.  DD, thank you for putting so much time and thought into an analysis that I totally disagree with but just can't spare any more time to engage (I lost a whole reply I'd typed). 

[DebtDerp]

Opportunity equalization - well, I could support that as long as it doesn't create reverse discrimination.

This is a really good point that I did not go into. While opportunity is more equal in this country than most it is not completely equal. There is inequality of opportunity. This can be because of nepotism or gender or race or access to schools or countless other factors. We can’t deny that discrimination does occur and has a direct impact on opportunity. However, I think striving for equality of opportunity is a worthy aim whereas striving for wealth equality (or more wealth equality a.k.a. ‘fairness’) is not. The way to do it is through increasing access to education, decreasing barriers to starting a business, increasing competition in the marketplace, and recognizing merit. I recognize that even opportunity is something that will never be completely equal but I think it is a worthwhile goal to strive for.

[Jamesqf]

  Because we are supposed to be a representative democracy, not an oligarchy.

Supposed to be?  Who says?  Not the Constitution, and certainly not the Constitution as it was originally written.  What you're saying is that you want it that way, because you think it will lead to the election of people who'll support policies you like.

And where in the US do you find any significant number of people who a) lack what a reasonable person would call necessities; and b) haven't brought that lack on themselves through lifestyle choices such as drug or alcohol use?

In any urban middle school or food pantry, among the laid-off, the mentally ill, veterans, single moms, disabled, or elderly.

Bet you'll find that most of those people have a lot of "stuff" that wouldn't fit any reasonable person's definition of "reasonable".  And we're still not addressing the issue of lifestyle choice.  Sure, there are doubtless veterans who wind up down & out, but there are many more (me, for instance) who manage to become reasonably prosperous, others who become wealthy and/or influential - consider that about 25% of the US Congress are veterans, as are about 8-9% of Fortune 500 CEOs.  Problem here is that you're slapping a label on a highly-diverse group of people.

[PKFFW]

I don't know if I'd say that it is, but I could possibly be persuaded to defend it as an acceptable failure of a system that has generated enough wealth to raise the vast majority to a standard of living inconceivable 10,000 years ago.

I disagree.

Yes the standard of living has increased over what it was 10,000 years ago.  I don't think that should be used as an excuse to dismiss failures of they system we have today.

Furthermore, the discussion at hand is not about "the system".  As if seeking to have a more equitable distribution of wealth is somehow akin to tearing down the entire Capitalist system and replacing it with something else.

A wealth tax is an exotic solution. You're right that income taxes hurt the poor more than a wealth tax. But a sufficient wealth tax would destabalize capitalist society entirely; basically, nobody would want to own the means of production. Something better might come out of the wreckage, but that's a large unknown and rhetorically I'd suggest you can make a stronger case by referring to existing countries with both strong wealth-production mechanisms and a strong social safety net. I don't know if you're concerned with the US specifically, we do have the most progressive taxation among our peer nations. That suggests to me that we don't have a problem with the fairness of what people put into the system so much as the fairness in terms of what the system gives back. Tangent.

I'm not concerned with the US specifically.  It is just the most glaring example and the one referenced in the OP.

And again, no one is talking about over throwing the beloved and benevolent and seemingly perfect system known as Capitalism.  Taking care of the less fortunate in a society by ensuring they have equal opportunity doesn't have to be thought of as an attack an everything good and right and the american way.

I guess I don't mind some people having more advantages than other people. Social justice for me rests on the idea that everyone can with reasonable effort (which may be scaled to those for whom an effort is more difficult) achieve a comfortable standard of living. Wealth-inequality doesn't really reflect that.

I guess if the opportunities for all to achieve a comfortable standard of living were equally available to all then it wouldn't be a problem.  Unfortunately they are not.

[PKFFW]

This argument is founded in bullshit....while it is true that those public services enabled the creation of wealth it was also enabled by investment, taking risk, innovation, experience, etc.  If it was sole attributed to roads and schools and such then we would all be billionaires or more likely all have equal wealth and income.  Also, it ignores that while these wealthy people were becoming wealthy they were paying a lot of the income taxes and employing people that also paid taxes.  So again - this argument is bullshit and is only espouse by slackers who feel entitled to spoils they did not earn.

A wealth tax is also bullshit - and never mind that there already is one in the form of an estate tax and to some extent I would argue that property taxes are a form of wealth tax.  Taxes are paid on income, so if I choose to save 60% of my income after paying a significant amount of taxes then you expect I shoul have to pay tax on what I have accumulated.  So dumb.

First of all, if you can't even discuss a topic without resorting to such language then I wont bother replying in future.

Secondly, do a little reading and learn the difference between "realised income" and "wealth".  That is the crux of my point and why I specifically referred to realised income.  It's got noting to do with paying tax on what you have accumulated by saving what you can after paying tax.  After that, if you still think it's all "bullshit" and can actually post a coherent and polite response I'd be interested in reading it.

Furthermore I never said that all wealth is created through the social structures such as roads etc.  I said it would be impossible to create huge wealth without using those things.  If you think you could create a billion dollar empire without the use of any social institutions, services and products that would be quite an achievement.  Perhaps if you tried to actually understand a post rather than just reacting in anger the discussion might actually progress.

And there is nothing wrong with minimizing taxes if done legally, which by the way more often than not involves some sort of investment/risk and generally supports jobs of some kind.

Which is specifically why I said that doing so was his right.

However, if you think most of minimizing taxes comes down to and involves some sort of investment/risk and supports jobs then you are sorely mistaken.  Most tax minimization comes down to structuring ones wealth correctly through trusts and such so that the individual effectively owns nothing but controls everything.

And if your billionaire buddy won the bet then he would have to pay income tax on the value of of the texan's net worth - so even he did have too much money to throw around he still would have been subject to the taxman.

Not in Australia he wouldn't.  In Australia we don't pay taxes on winnings unless one is carrying on a business enterprise through which the winnings were procured.  So a once only bet for any amount of money would have no taxes on it if won.

[PKFFW]

What I find particularly disingenuous is that there seems to be something terrible about wealth inequality in America.... but that wealth inequality among nations -- not such a big deal.

There is a whole army of 99 percenters that would love to redistribute wealth in America, but if you ask them about redistributing THEIR wealth to the 99 percenters of the world -- well, that's absurd.

If you live in the USA and don't live under a bridge: you're likely to be "wealthy" by a huge portion of the world.  Over time we have redefined the middle class and the poor.  Fifty years ago a middle class family probably lived in a 1600sqft house, had one car and one phone line and thought they were the luckiest people alive.  We now have a middle class living in 4000 sqft houses, 3 cars, even the dog has an iPhone, and we think we're a miserable lot that would be okay if the fatcats at the top were just not taking all our money.

Life is grand here.  We should just get over ourselves and see that.

I agree that life in any western developed world is grand.  At least for the middle class and above.

However, the fact that many people in other, less developed countries, have it worse off than we do shouldn't be used as an excuse to just "get over it" and just let the status quo be.  We should always be trying to better the world and the society in which we live.

[Jill the Pill]

And where in the US do you find any significant number of people who a) lack what a reasonable person would call necessities; and b) haven't brought that lack on themselves through lifestyle choices such as drug or alcohol use?

In any urban middle school or food pantry, among the laid-off, the mentally ill, veterans, single moms, disabled, or elderly.

Bet you'll find that most of those people have a lot of "stuff" that wouldn't fit any reasonable person's definition of "reasonable".  And we're still not addressing the issue of lifestyle choice.  Sure, there are doubtless veterans who wind up down & out, but . . . others who become wealthy and/or influential.  Problem here is that you're slapping a label on a highly-diverse group of people.

Problem here is that you've lost the logical thread. 

I said: people lack necessities.
You said: What people?  Only those who make bad choices.
I gave examples of people whose lack of necessities is not their fault.  Note that I wrote "Among . . . veterans," not "ALL veterans" -- a highly diverse group. 

We don't need to address the issue of lifestyle choice; I acknowledge there are such people.  I ask you to recognize the people who are down-and-out from bad luck or systemic disadvantage. 

Your move from "drug and alcohol use" to "have a lot of stuff" is weak.  Your example of your own success is a fallacy of generalization.  Just because it CAN be done does not mean it should be expected anyone and everyone.

Last word to you.  :)

[PKFFW]

Wealth redistribution is an idiotic idea.
Income equalization is an idiotic idea.
Opportunity equalization - well, I could support that as long as it doesn't create reverse discrimination.

But as someone else noted, the poor here, compared to the poor in, say, Somalia - the poor here, using a US HHS 2012 numbers for a family of 3, would be at 88.65% percentile worldwide. (I am solid middle class and I was 99.3%). I have not seen any support from certain elements in purging all wealth from America to send to other countries which seems hypocritical at best.

So the choice must be between letting the status quo stand or purging all wealth from the USA and sending it to other countries?

To suggest there might be other options is hypocritical is it?

It's puerile reasoning like this that tries to bring a discussion down to polar opposite extremes that ensures no reasoned and rational discussion can even take place.

[PKFFW]

Supposed to be?  Who says?  Not the Constitution, and certainly not the Constitution as it was originally written.  What you're saying is that you want it that way, because you think it will lead to the election of people who'll support policies you like.

It seems to me that the USA itself has set itself up as the champion and spreader of democracy throughout the world.  Even going to war in other countries, ostensibly to defend democracy.

So I would say it is the USA itself that says it is supposed to be a representative democracy.  Along with saying the rest of the world should be as well.

[DebtDerp]

I think some of you are conflating standard of living and wealth when they are absolutely two different things. At least in the U.S. there is absolutely no correlation between standard of living and wealth. The data used in the video posted by op defined wealth as:

‘Wealth, also known as net worth, is defined as the total value of everything someone owns minus any debt that he or she owes. A person’s net worth includes his or her bank account savings plus the value of other things such as property, stocks, bonds, art, collections, etc., minus the value of things like loans and mortgages.’

By this definition I would most likely fall in the bottom 20% of the distribution on the actual wealth graph in the video (my net worth is -$90k). However, my standard of living is pretty high.

That is why I think it is such a poor argument to say that we need to make the distribution of wealth fairer. That has nothing to do with standard of living. I am all for ensuring a certain standard of living for all people in our society. I don’t think anyone should go without food, shelter, and medical care. I will happily pay taxes to make sure that happens. However I am entirely against the notion that we should take wealth from the richest and distribute it more evenly to the poor. Like I said in my original post trying to make the distribution of wealth more fair leads to less freedom for all.

[Spork]

Supposed to be?  Who says?  Not the Constitution, and certainly not the Constitution as it was originally written.  What you're saying is that you want it that way, because you think it will lead to the election of people who'll support policies you like.

It seems to me that the USA itself has set itself up as the champion and spreader of democracy throughout the world.  Even going to war in other countries, ostensibly to defend democracy.

So I would say it is the USA itself that says it is supposed to be a representative democracy.  Along with saying the rest of the world should be as well.

No.  The US is (and is supposed to be) a democratic republic.  We lost that idea somewhere, but it's there for a reason.