Author Topic: Inequality: the long view  (Read 13144 times)

Leisured

  • Bristles
  • ***
  • Posts: 383
  • Age: 72
  • Location: South east Australia, in country
  • Retired, and loving it.
Inequality: the long view
« on: June 25, 2017, 11:28:21 PM »
This article in the online magazine Aeon looks at the history of inequality, and suggests that inequality gradually increases unless society is hit by a disaster.

https://aeon.co/essays/are-plagues-and-wars-the-only-ways-to-reduce-inequality

I already knew that wages for agricultural workers in Europe increased after the Black Death of 1350, because of the shortage of labour. I had also read the idea that if all rich people in a country had their wealth confiscated and distributed among the poor, then after say 50 years, there would still be a rich elite and the poor would still be poor. This idea matches the anecdotes we see on the forum Antimustachian Wall of Shame and Comedy.

I recommend the online magazine Aeon.




jooniFLORisploo

  • Handlebar Stache
  • *****
  • Posts: 2384
  • Location: on terra wateria
Re: Inequality: the long view
« Reply #1 on: June 25, 2017, 11:52:29 PM »
Interesting!

I could see various reasons re: rich becoming rich again and poor becoming poor again.

Some people become wealthy through practices such as frugality and investing, and some become poor by wasting. Those traits would likely be retained through a redistribution of resources.

But there are also a bunch of people who become wealthy via power plays, cheating, aggression, taking advantage of others...and they would likely retain those qualities through and after a redistribution. And there are a bunch of people who become poor by sharing almost all of what they receive, and that trait too would likely be retained after a redistribution.

To move from poverty to abundance, I had to work very hard psychologically to retrain myself to stop giving everything (income, assets, work) away and to begin hoarding for myself. I found that extraordinarily challenging. I still find it weird.

EscapeVelocity2020

  • Handlebar Stache
  • *****
  • Posts: 1388
  • Age: 43
  • Location: Houston
    • EscapeVelocity2020
Re: Inequality: the long view
« Reply #2 on: June 25, 2017, 11:53:52 PM »
Been on my mind quite a bit after this last bull market in the US that seems to now be spinning out of control with the election of such a divisive, 'America First' (aka Billionaires First) President.  Also agrees Elon Musk's philosophy that mankind is in a race against time at this point to evolve and advance technology sufficiently to protect civilization.  An interesting offshoot being 'racing extinction'.

Quote
It is always tempting to assume that the lessons of history are no longer relevant because the world has changed so much as indeed it has. But we must bear in mind that the exact same claim could have been made back in the 1950s, 60s and 70s, when inequality declined even as economies boomed and the middle classes thrived. There was no obvious reason why this should ever change: and yet change it did. It is just as likely as not that we are currently riding another upward wave in the concentration of income and wealth, continuing a pattern that stretches back thousands of years. In the not-too-distant future, robotics, genetic engineering and biomechatronic enhancements of the human body could well create inequalities we can barely even imagine. And if they do, will it all end in yet another unforeseen, sudden and dramatic violent turn?
Transitioning to FIRE'd albeit somewhat cautiously...

BTDretire

  • Handlebar Stache
  • *****
  • Posts: 1195
Re: Inequality: the long view
« Reply #3 on: June 26, 2017, 09:04:53 AM »
Interesting!

I could see various reasons re: rich becoming rich again and poor becoming poor again.

Some people become wealthy through practices such as frugality and investing, and some become poor by wasting. Those traits would likely be retained through a redistribution of resources.

But there are also a bunch of people who become wealthy via power plays, cheating, aggression, taking advantage of others...and they would likely retain those qualities through and after a redistribution. And there are a bunch of people who become poor by sharing almost all of what they receive, and that trait too would likely be retained after a redistribution.

To move from poverty to abundance, I had to work very hard psychologically to retrain myself to stop giving everything (income, assets, work) away and to begin hoarding for myself. I found that extraordinarily challenging. I still find it weird.
Gee joon, you went from immoral, "power plays, cheating, aggression, taking advantage of others" for people that aquire assets, to moral, "people who become poor by sharing almost all of what they receive" and thus have nothing.
  I hope you found a middle ground where you can live a moral financial life build assets and prepare for your future.
 I think I did and I don't feel I'm part of your first group.

jooniFLORisploo

  • Handlebar Stache
  • *****
  • Posts: 2384
  • Location: on terra wateria
Re: Inequality: the long view
« Reply #4 on: June 26, 2017, 09:11:30 AM »
But wait, you missed the whole opening part! :)    I said, "Some people become wealthy through practices such as frugality and investing, and some become poor by wasting."

I don't associate wealth with immorality nor poverty with morality, nor vice versa. I see different individuals having any of a variety of traits, and set out four different examples.

Yes, I hope I've found a middle ground for me. I do still feel uncomfortable hoarding while others go without, and continue to try to find the optimal path there.

Bucksandreds

  • Pencil Stache
  • ****
  • Posts: 591
Re: Inequality: the long view
« Reply #5 on: June 26, 2017, 09:22:06 AM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

surfhb

  • Stubble
  • **
  • Posts: 140
Re: Inequality: the long view
« Reply #6 on: June 26, 2017, 10:10:57 AM »
To be fair, most millionaires are self made and the Waltons are the largest employers in the US

jmecklenborg

  • 5 O'Clock Shadow
  • *
  • Posts: 45
Re: Inequality: the long view
« Reply #7 on: June 26, 2017, 10:19:12 AM »
To be fair, most millionaires are self made and the Waltons are the largest employers in the US

The Waltons received the largest inheritance in the history of the world.  They paid no tax on it because Sam Walton transferred 80% of his ownership to his kids before they turned 18.  They are the wealthiest family in the world and have never worked. If there had been just one Walton kid, he or she would be by far the wealthiest person in the world. 

Meanwhile, many Wal-Mart employees qualify for assistance.  So taxpayers subsidizing basic services for Wal-Mart workers pays dividends to the Walton kids. 

2lazy2retire

  • Bristles
  • ***
  • Posts: 279
Re: Inequality: the long view
« Reply #8 on: June 26, 2017, 12:26:06 PM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

+1000 for this, agree a generous inheritance amount - say 100 times median family income. After that tax at 80%+

Bucksandreds

  • Pencil Stache
  • ****
  • Posts: 591
Re: Inequality: the long view
« Reply #9 on: June 26, 2017, 12:38:13 PM »
To be fair, most millionaires are self made and the Waltons are the largest employers in the US

To be fair, no one on this thread has proposed raising taxes on self made millionaires. Inheritance tax is about taxing those that have done nothing to earn these obscene sums. Isn't that what America stands for, being self reliant and not a hereditary hierarchy?

solon

  • Pencil Stache
  • ****
  • Posts: 887
  • Age: 1816
  • Location: CO
Re: Inequality: the long view
« Reply #10 on: June 26, 2017, 12:52:43 PM »
To be fair, most millionaires are self made and the Waltons are the largest employers in the US

The Waltons received the largest inheritance in the history of the world.  They paid no tax on it because Sam Walton transferred 80% of his ownership to his kids before they turned 18.  They are the wealthiest family in the world and have never worked. If there had been just one Walton kid, he or she would be by far the wealthiest person in the world. 

Meanwhile, many Wal-Mart employees qualify for assistance.  So taxpayers subsidizing basic services for Wal-Mart workers pays dividends to the Walton kids.

The fact that many Walmart employees qualify for assistance doesn't have anything to do with Walmart. They qualify for assistance because of their low income, not because they work at Walmart. We are not subsidizing basic services for Walmart workers, we are subsidizing basic services for low income people. Whether that's good or bad, you can't blame it on Walmart.

EscapeVelocity2020

  • Handlebar Stache
  • *****
  • Posts: 1388
  • Age: 43
  • Location: Houston
    • EscapeVelocity2020
Re: Inequality: the long view
« Reply #11 on: June 26, 2017, 01:24:54 PM »
To be fair, most millionaires are self made and the Waltons are the largest employers in the US

The Waltons received the largest inheritance in the history of the world.  They paid no tax on it because Sam Walton transferred 80% of his ownership to his kids before they turned 18.  They are the wealthiest family in the world and have never worked. If there had been just one Walton kid, he or she would be by far the wealthiest person in the world. 

Meanwhile, many Wal-Mart employees qualify for assistance.  So taxpayers subsidizing basic services for Wal-Mart workers pays dividends to the Walton kids.

The fact that many Walmart employees qualify for assistance doesn't have anything to do with Walmart. They qualify for assistance because of their low income, not because they work at Walmart. We are not subsidizing basic services for Walmart workers, we are subsidizing basic services for low income people. Whether that's good or bad, you can't blame it on Walmart.

I think the point that was trying to be made is that America is moving toward a more Oligarchic system, and this would become an inevitablility if the US inheritance tax is replealed.  The Walton familty may or may not be a good example, but there are certainly plenty of others (the Koch Brothers, many of the billionaires Trumps cabinet, etc.) so let's not get caught up in a WalMart quibble. 
Transitioning to FIRE'd albeit somewhat cautiously...

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1051
Re: Inequality: the long view
« Reply #12 on: June 26, 2017, 01:25:20 PM »
To be fair, most millionaires are self made and the Waltons are the largest employers in the US

The Waltons received the largest inheritance in the history of the world.  They paid no tax on it because Sam Walton transferred 80% of his ownership to his kids before they turned 18.  They are the wealthiest family in the world and have never worked. If there had been just one Walton kid, he or she would be by far the wealthiest person in the world. 

Meanwhile, many Wal-Mart employees qualify for assistance.  So taxpayers subsidizing basic services for Wal-Mart workers pays dividends to the Walton kids.

The fact that many Walmart employees qualify for assistance doesn't have anything to do with Walmart. They qualify for assistance because of their low income, not because they work at Walmart. We are not subsidizing basic services for Walmart workers, we are subsidizing basic services for low income people. Whether that's good or bad, you can't blame it on Walmart.
Too bad companies can't give raises.

radicaledward

  • Bristles
  • ***
  • Posts: 348
Re: Inequality: the long view
« Reply #13 on: June 26, 2017, 01:35:09 PM »
Too bad companies can't give raises.
Economics 101: why would they when they can find other people will to work at the same rate as the current employees? The whole reason that striking workers try to block access to a facility (i.e., make you cross the picket line) is to apply social pressure on others to prevent them from taking the jobs.

On the subject of estate taxes. I'd have to dig around for a bit, but I seem to recall that at least one of the founders of the United States was in favor of them for precisely the reason of preventing dynastic wealth from forming. Effectively they were in favor of very low to no taxes (if possible) on the living and very high taxes on the dead.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1051
Re: Inequality: the long view
« Reply #14 on: June 26, 2017, 01:50:46 PM »
Too bad companies can't give raises.
Economics 101: why would they when they can find other people will to work at the same rate as the current employees? The whole reason that striking workers try to block access to a facility (i.e., make you cross the picket line) is to apply social pressure on others to prevent them from taking the jobs.

On the subject of estate taxes. I'd have to dig around for a bit, but I seem to recall that at least one of the founders of the United States was in favor of them for precisely the reason of preventing dynastic wealth from forming. Effectively they were in favor of very low to no taxes (if possible) on the living and very high taxes on the dead.
Then why don't all companies pay the minimum? At some point we all have responsibilities for our individual actions, even the Waltons. It might be a great business decision, you're still responsible for it, Economics 101 doesn't alleviate you from cause/effect. If you read the linked article, you'll see examples spanning thousands of years of rich people complaining about paying more in wages; followed by periods of adjustment.

Contrast the example of the Waltons to the american folk hero Henry Ford. He bucked your theory of and was rewarded when he paid higher wages. In modern days we have Costco vs. Walmart in the grocery wars, Costco pays more yet they also stay in business.

Accountant007

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: Inequality: the long view
« Reply #15 on: June 26, 2017, 02:10:28 PM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

I guess I have no problem if someone chooses to leave their money to their kids or whomever else they decide.  Not sure what you mean by hurts society.  I think I would rather squander the money than leave it to some greedy bureaucrat to spend as he/she sees fit, or as you eloquently put it "peacefully rebalance our society".

centwise

  • 5 O'Clock Shadow
  • *
  • Posts: 73
Re: Inequality: the long view
« Reply #16 on: June 26, 2017, 02:22:09 PM »
Bookmarking

Bucksandreds

  • Pencil Stache
  • ****
  • Posts: 591
Re: Inequality: the long view
« Reply #17 on: June 26, 2017, 02:28:36 PM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

I guess I have no problem if someone chooses to leave their money to their kids or whomever else they decide.  Not sure what you mean by hurts society.  I think I would rather squander the money than leave it to some greedy bureaucrat to spend as he/she sees fit, or as you eloquently put it "peacefully rebalance our society".

Considering that the IMF, OECD and just about every intelligent study ever conducted shows inequality harms growth I think you do know what I mean by 'hurts society.' Or is that just 'fake news?' I just regurgitated the peaceful balancing idea from the article but since it appears you didn't read it, I'm not sure I'll take your opinions seriously.

Bucksandreds

  • Pencil Stache
  • ****
  • Posts: 591
Re: Inequality: the long view
« Reply #18 on: June 26, 2017, 02:31:49 PM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

I guess I have no problem if someone chooses to leave their money to their kids or whomever else they decide.  Not sure what you mean by hurts society.  I think I would rather squander the money than leave it to some greedy bureaucrat to spend as he/she sees fit, or as you eloquently put it "peacefully rebalance our society".

Considering that the IMF, OECD and just about every intelligent study ever conducted shows inequality harms growth I think you do know what I mean by 'hurts society.' Or is that just 'fake news?' I just regurgitated the peaceful rebalancing(equalization) idea from the article but since it appears you didn't read it, I'm not sure I'll take your opinions seriously.

BlueHouse

  • Handlebar Stache
  • *****
  • Posts: 2441
  • Location: WDC
Re: Inequality: the long view
« Reply #19 on: June 26, 2017, 02:44:40 PM »
Too bad companies can't give raises.
Best quote ever
Sometimes nothing can be a real cool hand

Accountant007

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: Inequality: the long view
« Reply #20 on: June 26, 2017, 02:45:18 PM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

I guess I have no problem if someone chooses to leave their money to their kids or whomever else they decide.  Not sure what you mean by hurts society.  I think I would rather squander the money than leave it to some greedy bureaucrat to spend as he/she sees fit, or as you eloquently put it "peacefully rebalance our society".

Considering that the IMF, OECD and just about every intelligent study ever conducted shows inequality harms growth I think you do know what I mean by 'hurts society.' Or is that just 'fake news?' I just regurgitated the peaceful rebalancing(equalization) idea from the article but since it appears you didn't read it, I'm not sure I'll take your opinions seriously.

Oh, was there any original thoughts in what you posted or was it all a regurgitation of someone else's thoughts? Unfortunately, the solution that you champion does nothing for inequality.  All it does is take money from individuals and put it in the hands of government officials who are likely to spend it in ways that ensures their re-election.

MOD EDIT: Rude. Forum rule #1, please.
« Last Edit: June 26, 2017, 04:26:45 PM by arebelspy »

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1051
Re: Inequality: the long view
« Reply #21 on: June 26, 2017, 03:09:27 PM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

I guess I have no problem if someone chooses to leave their money to their kids or whomever else they decide.  Not sure what you mean by hurts society.  I think I would rather squander the money than leave it to some greedy bureaucrat to spend as he/she sees fit, or as you eloquently put it "peacefully rebalance our society".

Considering that the IMF, OECD and just about every intelligent study ever conducted shows inequality harms growth I think you do know what I mean by 'hurts society.' Or is that just 'fake news?' I just regurgitated the peaceful rebalancing(equalization) idea from the article but since it appears you didn't read it, I'm not sure I'll take your opinions seriously.

Oh, was there any original thoughts in what you posted or was it all a regurgitation of someone else's thoughts? Unfortunately, the solution that you champion does nothing for inequality.  All it does is take money from individuals and put it in the hands of government officials who are likely to spend it in ways that ensures their re-election.
I think that's the point, take money from the rich and spend it on everyone. Long term accumulation of wealth will be minimized as it becomes harder to have generational wealth transfer.Warren BuffetT espoused this, as did Bill Gates, in their giving pledge.

If you think bureaucrats are bad you can bypass them by leaving it all to charity.

Milizard

  • Bristles
  • ***
  • Posts: 336
  • Location: West Michigan
Re: Inequality: the long view
« Reply #22 on: June 26, 2017, 03:27:43 PM »

Accountant007

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: Inequality: the long view
« Reply #23 on: June 26, 2017, 04:00:04 PM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

I guess I have no problem if someone chooses to leave their money to their kids or whomever else they decide.  Not sure what you mean by hurts society.  I think I would rather squander the money than leave it to some greedy bureaucrat to spend as he/she sees fit, or as you eloquently put it "peacefully rebalance our society".

Considering that the IMF, OECD and just about every intelligent study ever conducted shows inequality harms growth I think you do know what I mean by 'hurts society.' Or is that just 'fake news?' I just regurgitated the peaceful rebalancing(equalization) idea from the article but since it appears you didn't read it, I'm not sure I'll take your opinions seriously.

Oh, was there any original thoughts in what you posted or was it all a regurgitation of someone else's thoughts? Unfortunately, the solution that you champion does nothing for inequality.  All it does is take money from individuals and put it in the hands of government officials who are likely to spend it in ways that ensures their re-election.
I think that's the point, take money from the rich and spend it on everyone. Long term accumulation of wealth will be minimized as it becomes harder to have generational wealth transfer.Warren BuffetT espoused this, as did Bill Gates, in their giving pledge.

If you think bureaucrats are bad you can bypass them by leaving it all to charity.

I'm sure you are correct.  Most people would give to charity before turning over their money to the government.  Charities are not all focused on inequality so the impact that would have is certainly debatable.  How would you define rich?  Ask most of the world and you would get a different answer.

A much better use of the governments efforts would be to ensure equal opportunities, and not try to force equal outcomes.

EnjoyIt

  • Pencil Stache
  • ****
  • Posts: 754
Re: Inequality: the long view
« Reply #24 on: June 26, 2017, 04:15:38 PM »
Studies show that it takes 1 generation to build wealth and 2 generations to destroy it.  Don't worry The Walton grandkids will more than likely spend it all. 

Just look and see what happened to John Rockeffelar the richest man who ever lived. He died in 1937 worth $340 Billion dollars.  Today that wealth is distributed through 200 people and worth $10 billion.  The next generation will be even lower.  People who attain massive unearned wealth have no idea how to value it and waste it just as fast as they received it.

Bucksandreds

  • Pencil Stache
  • ****
  • Posts: 591
Re: Inequality: the long view
« Reply #25 on: June 26, 2017, 05:46:42 PM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

I guess I have no problem if someone chooses to leave their money to their kids or whomever else they decide.  Not sure what you mean by hurts society.  I think I would rather squander the money than leave it to some greedy bureaucrat to spend as he/she sees fit, or as you eloquently put it "peacefully rebalance our society".

Considering that the IMF, OECD and just about every intelligent study ever conducted shows inequality harms growth I think you do know what I mean by 'hurts society.' Or is that just 'fake news?' I just regurgitated the peaceful rebalancing(equalization) idea from the article but since it appears you didn't read it, I'm not sure I'll take your opinions seriously.

Oh, was there any original thoughts in what you posted or was it all a regurgitation of someone else's thoughts? Unfortunately, the solution that you champion does nothing for inequality.  All it does is take money from individuals and put it in the hands of government officials who are likely to spend it in ways that ensures their re-election.

MOD EDIT: Rude. Forum rule #1, please.

I regurgitated the peaceful equalization line that they used to describe Latin America between 2002 and 2010 but what you would have realized if you read the article is that I applied it to a way the US could find a similar effect.  Continuing to post in a thread about an article you've never read is about the definition of conservative ideology. Know nothing, factless slack jawed yokel thought.

[MOD EDIT: Forum rule #1.]
« Last Edit: June 27, 2017, 08:02:04 PM by arebelspy »

sokoloff

  • Pencil Stache
  • ****
  • Posts: 513
Re: Inequality: the long view
« Reply #26 on: June 26, 2017, 06:34:13 PM »
To be fair, most millionaires are self made and the Waltons are the largest employers in the US
To be fair, no one on this thread has proposed raising taxes on self made millionaires. Inheritance tax is about taxing those that have done nothing to earn these obscene sums. Isn't that what America stands for, being self reliant and not a hereditary hierarchy?
I don't know. Maybe America stands for deferred gratification, saving for a rainy day, and providing security for one's family by forgoing current consumption in favor of saving and investing for a future day. If you start from that premise, then saving and passing along money to your offspring is a red-white-and-blue American value.

Creating high estate taxes causes a lot of work for trust attorneys and estate planners and a lot of business for life insurance salespeople. It's not obvious to me that that's better than the current system.

radicaledward

  • Bristles
  • ***
  • Posts: 348
Re: Inequality: the long view
« Reply #27 on: June 26, 2017, 06:59:54 PM »
Then why don't all companies pay the minimum? At some point we all have responsibilities for our individual actions, even the Waltons. It might be a great business decision, you're still responsible for it, Economics 101 doesn't alleviate you from cause/effect. If you read the linked article, you'll see examples spanning thousands of years of rich people complaining about paying more in wages; followed by periods of adjustment.
In general companies try and pay the least for the required skills that they can get away with. The labor market is subject to supply and demand along with the rest of the free market. Basic neoclassical economic theory expects that employers are going to seek to minimize their costs, of which labor is one part.

Quote
Contrast the example of the Waltons to the american folk hero Henry Ford. He bucked your theory of and was rewarded when he paid higher wages. In modern days we have Costco vs. Walmart in the grocery wars, Costco pays more yet they also stay in business.
Look up Taylorisim or Scientific Management when you get a chance since it's the management practice that Ford subscribed to. Part of it was reducing labor costs due to turnover. Realistically you didn't need to have many skills to work for Ford on the assembly line. Anyone that could follow simple directions could do it. However, by paying higher than the $2.25/day wage of the time he was able to avoid employee turnover which in turn reduced downtime and improved line efficiency. This makes sense because even now employers want to reduce employee turnover since it can be very expensive to replace employees - cheaper to pay them just enough that they will not leave. Also, Ford didn't exactly pay his wage employees $5/day. He paid them $2.50/day with the remaining $2.50/day being a bonus that was contingent upon such things as learning English, taking classes to be "Americanized" (if an immigrant), and would only be given to women if they were unmarried.

Alim Nassor

  • Stubble
  • **
  • Posts: 164
Re: Inequality: the long view
« Reply #28 on: June 26, 2017, 07:19:40 PM »
I've never understood the mindset that thinks the government is more entitled to an estate than the heirs are.  SMH.

Leisured

  • Bristles
  • ***
  • Posts: 383
  • Age: 72
  • Location: South east Australia, in country
  • Retired, and loving it.
Re: Inequality: the long view
« Reply #29 on: June 27, 2017, 01:43:15 AM »
I've never understood the mindset that thinks the government is more entitled to an estate than the heirs are.  SMH.

'entitled' is not the point. The point of a stiff inheritance tax is to break up inherited wealth. Any government has to raise taxes somehow, and an inheritance tax is one way of doing it.

Leisured

  • Bristles
  • ***
  • Posts: 383
  • Age: 72
  • Location: South east Australia, in country
  • Retired, and loving it.
Re: Inequality: the long view
« Reply #30 on: June 27, 2017, 01:51:38 AM »
much better use of the governments efforts would be to ensure equal opportunities, and not try to force equal outcomes.

Interesting idea, Accountant007. Scholarships, perhaps?  A billion dollars invested in a tax free vehicle, would yield about $40 million a year. Assume each scholar gets $40k a year for tuition and living expenses, then a billion dollars in a scholarship fund would support a thousand scholars a year. Do such charities exist?

Accountant007

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: Inequality: the long view
« Reply #31 on: June 27, 2017, 07:13:03 AM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

I guess I have no problem if someone chooses to leave their money to their kids or whomever else they decide.  Not sure what you mean by hurts society.  I think I would rather squander the money than leave it to some greedy bureaucrat to spend as he/she sees fit, or as you eloquently put it "peacefully rebalance our society".

Considering that the IMF, OECD and just about every intelligent study ever conducted shows inequality harms growth I think you do know what I mean by 'hurts society.' Or is that just 'fake news?' I just regurgitated the peaceful rebalancing(equalization) idea from the article but since it appears you didn't read it, I'm not sure I'll take your opinions seriously.

Oh, was there any original thoughts in what you posted or was it all a regurgitation of someone else's thoughts? Unfortunately, the solution that you champion does nothing for inequality.  All it does is take money from individuals and put it in the hands of government officials who are likely to spend it in ways that ensures their re-election.

MOD EDIT: Rude. Forum rule #1, please.

I regurgitated the peaceful equalization line that they used to describe Latin America between 2002 and 2010 but what you would have realized if you read the article is that I applied it to a way the US could find a similar effect.  Continuing to post in a thread about an article you've never read is about the definition of conservative ideology. Know nothing, factless slack jawed yokel thought.

Actually the thread is on inequality.  I thought the thread might benefit from a discussion on ways to address it.  However, if you would like to continue your book report on the article, by all means, carry on.

Fishindude

  • Handlebar Stache
  • *****
  • Posts: 1395
Re: Inequality: the long view
« Reply #32 on: June 27, 2017, 07:23:33 AM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

Thinking like this bothers me.
I suppose you would think it is OK if you inherited $100K from a rich uncle, but somehow it's not OK that Sam Waltons (or similar) kids inherit a few million.  They are going to spend their millions and trickle it down into the economy same as you are going to spend your $100K.   And why do you think they contribute nothing to society, just because they inherited a big windfall?   

This whole wealth inequality debate is silly.   Take everything away from everyone and those same wealthy people will rise to wealth, while those at the bottom will stay at the bottom.  Wealthy people and families get wealthy because of their behavior and you can't get the poor ahead by "giving" them money.

A Definite Beta Guy

  • Stubble
  • **
  • Posts: 176
Re: Inequality: the long view
« Reply #33 on: June 27, 2017, 07:40:04 AM »
It's difficult to make comparisons to prior eras, not even going into the measurement problems. Current states have totally different political and economic arrangements from prior states. We are explicitly engaged in redistributive actions. Older Empires basically are extractive institutions designed to solely support an upper elite.

So I don't see our wealth inequality building up over the course of centuries in the same way the High Middle Ages might, or the Romans, or the Sumerians.

I also don't see this as a major issue. People aren't going to have equal outcomes. They also aren't going to have equal opportunities. Trying to change this a fool's errand.

Bucksandreds

  • Pencil Stache
  • ****
  • Posts: 591
Re: Inequality: the long view
« Reply #34 on: June 27, 2017, 07:44:33 AM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

I guess I have no problem if someone chooses to leave their money to their kids or whomever else they decide.  Not sure what you mean by hurts society.  I think I would rather squander the money than leave it to some greedy bureaucrat to spend as he/she sees fit, or as you eloquently put it "peacefully rebalance our society".

Considering that the IMF, OECD and just about every intelligent study ever conducted shows inequality harms growth I think you do know what I mean by 'hurts society.' Or is that just 'fake news?' I just regurgitated the peaceful rebalancing(equalization) idea from the article but since it appears you didn't read it, I'm not sure I'll take your opinions seriously.

Oh, was there any original thoughts in what you posted or was it all a regurgitation of someone else's thoughts? Unfortunately, the solution that you champion does nothing for inequality.  All it does is take money from individuals and put it in the hands of government officials who are likely to spend it in ways that ensures their re-election.

MOD EDIT: Rude. Forum rule #1, please.

I regurgitated the peaceful equalization line that they used to describe Latin America between 2002 and 2010 but what you would have realized if you read the article is that I applied it to a way the US could find a similar effect.  Continuing to post in a thread about an article you've never read is about the definition of conservative ideology. Know nothing, factless slack jawed yokel thought.

Actually the thread is on inequality.  I thought the thread might benefit from a discussion on ways to address it.  However, if you would like to continue your book report on the article, by all means, carry on.

Actually this thread was started about a single essay which is linked in the OP.  Just because you want to push your conservative viewpoint in a thread, without even spending 5-10 minutes of time reading the details of the reason behind the thread doesn't mean you can arbitrarily change the scope of the topic to your liking.  Read the essay and comment on it like the rest of us or GTFA.

radicaledward

  • Bristles
  • ***
  • Posts: 348
Re: Inequality: the long view
« Reply #35 on: June 27, 2017, 08:10:52 AM »
I suppose you would think it is OK if you inherited $100K from a rich uncle, but somehow it's not OK that Sam Waltons (or similar) kids inherit a few million.  They are going to spend their millions and trickle it down into the economy same as you are going to spend your $100K.   And why do you think they contribute nothing to society, just because they inherited a big windfall?
Except that trickle down economics have been proven false and we have overwhelming historical evidence that dynastic wealth is difficult to break-up. Usually it takes wars to destroy dynastic wealth and even that doesn't do the trick.

Trickle down economics doesn't even pass the basic sniff test.  One of the first rules of capital management is don't spend the principle! Therefore you are going to want to put the money in secure investments (e.g., government debt, corporate bonds) that place a high value in maintaining the status quo. As such, you can actually show that high-net worth (i.e. > $1B) actually hinder economic development since those assets don't flow as easily. It's the exact same principles as why the Fed enacted quantitative easing.

bender

  • Pencil Stache
  • ****
  • Posts: 776
Re: Inequality: the long view
« Reply #36 on: June 27, 2017, 08:11:55 AM »
I also don't get how some can be OK with the concept of FIRE, but have concerns about inequality at some arbitrarily chosen 'extreme' wealth level.  For example, if one has $1M, they are pointing the finger at those that have 10M or 50M as being part of the problem.  In reality if inequality is such a huge problem, we'll never solve it by simply taking money from the ultra rich.  It will have to come all the way down to include many members of this board who are working towards FI. 

The average US wealth is about $300k http://www.financialsamurai.com/average-net-worth-is-huge/.

The truth is there isn't enough money to make everyone equal and FI, one goal of this site and forum is to help increase the level of inequality.  Those that make smart decisions and investments, sacrificing pleasures now for financial security later are going to end up being part of the inequality 'problem' once they achieve their goals.

There are many who have nothing or are in debt so have less than nothing.  Most people pointing the finger at the ultra rich who have billions.  There are so few people who have that kind of wealth that it wouldn't make much difference even if we took it all from them.  We have 10 million millionaires in the US, and about 500 billionaires. 


Source:Wikipedia https://en.wikipedia.org/wiki/Millionaire  Note the chart shows a much higher number of millionaires.  I'm going with 10M as I've seen estimates vary as low as 7M in the US.  If the real number is even larger, it only further proves my point.

If we seized all the billionaires assets - estimate 10B * 500 Billionaires = 5T.
If we seized all the millionaires assets - estimate 5M * 10M Millionaires = 50T. 

These are rough estimates, but you get the picture - there's about 10x more wealth tied up by mere millionaires than billionaires.  So if we truly care about inequality, we need to target millionaires too.  Even someone with 1 Million is part of the problem, as there are many with $100k who will look and see the rich millionaire as a huge inequality.

« Last Edit: June 27, 2017, 08:18:54 AM by bender »

jooniFLORisploo

  • Handlebar Stache
  • *****
  • Posts: 2384
  • Location: on terra wateria
Re: Inequality: the long view
« Reply #37 on: June 27, 2017, 08:16:14 AM »
::excited, happy clapping at bender's::

Accountant007

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: Inequality: the long view
« Reply #38 on: June 27, 2017, 08:22:13 AM »
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

Actually this thread was started about a single essay which is linked in the OP.  Just because you want to push your conservative viewpoint in a thread, without even spending 5-10 minutes of time reading the details of the reason behind the thread doesn't mean you can arbitrarily change the scope of the topic to your liking.  Read the essay and comment on it like the rest of us or GTFA.
[/quote]

I did read the article and it was a fairly interesting historical perspective.  You proposition that we implement an 80-90% inheritance tax provoked my response.  If you cannot tolerate a dissenting argument about that or have an adult conversation without reverting to "conservative, fake news, slack jawed yokel, GTFA" you should stick to a less galvanizing topic - maybe a thread on good recipes or pretty flowers.  I don't believe there is anything overly conservative about opposing government taking the entire wealth of a family just because the kids did not "contribute to society".  Maybe the mirror is a good place to look for someone pushing ideologies.

Alim Nassor

  • Stubble
  • **
  • Posts: 164
Re: Inequality: the long view
« Reply #39 on: June 27, 2017, 08:24:57 AM »
I've never understood the mindset that thinks the government is more entitled to an estate than the heirs are.  SMH.

'entitled' is not the point. The point of a stiff inheritance tax is to break up inherited wealth. Any government has to raise taxes somehow, and an inheritance tax is one way of doing it.

It IS the point.  Why do you feel that breaking up inherited wealth is the right thing to do?  What makes the government, or the beneficiaries of the government more deserving of that wealth than the heirs?

sokoloff

  • Pencil Stache
  • ****
  • Posts: 513
Re: Inequality: the long view
« Reply #40 on: June 27, 2017, 08:31:53 AM »
So if we truly care about inequality, we need to target millionaires too.  Even someone with 1 Million is part of the problem, as there are many with $100k who will look and see the rich millionaire as a huge inequality.
I don't care a single bit about inequality down to the single-digit of millions per household. (I also don't care at a higher figure, but I understand some do and that's OK.)

$1MM in assets for a 55-year old retiree couple is very meager existence. They don't need "targeting" and society does not benefit in aggregate from them being "targeted".

Bucksandreds

  • Pencil Stache
  • ****
  • Posts: 591
Re: Inequality: the long view
« Reply #41 on: June 27, 2017, 08:33:46 AM »
Quote
I find 7 figure and up inheritances a big problem. How does it harm society if a few people (Elon Musk, Bezos, etc) change the world with their business/ vision and get insanely rich? It actually helps society.  What hurts society are the Walton kids and the trust fund babies who contribute nothing to society and rent seek for a career.  80-90% inheritance tax on amounts over a reasonable sum (that number is up for debate) would go a large way towards peacefully rebalancing our society.

Actually this thread was started about a single essay which is linked in the OP.  Just because you want to push your conservative viewpoint in a thread, without even spending 5-10 minutes of time reading the details of the reason behind the thread doesn't mean you can arbitrarily change the scope of the topic to your liking.  Read the essay and comment on it like the rest of us or GTFA.

I did read the article and it was a fairly interesting historical perspective.  You proposition that we implement an 80-90% inheritance tax provoked my response.  If you cannot tolerate a dissenting argument about that or have an adult conversation without reverting to "conservative, fake news, slack jawed yokel, GTFA" you should stick to a less galvanizing topic - maybe a thread on good recipes or pretty flowers.  I don't believe there is anything overly conservative about opposing government taking the entire wealth of a family just because the kids did not "contribute to society".  Maybe the mirror is a good place to look for someone pushing ideologies.

Only one of us two has been reprimanded for intolerance in this thread and it's not me. Maybe you need to be the one to look in the mirror. Who said anything about taking the entire wealth of a family?  I advocated for an untaxed amount (admitting that the amount should be debated) followed by 80-90% taxes. Maybe you need to learn some reading comprehension.  I've always known that hypocrisy is the M.O. of the right.

MOD EDIT: Forum rule #1
« Last Edit: June 27, 2017, 08:04:10 PM by arebelspy »

Alim Nassor

  • Stubble
  • **
  • Posts: 164
Re: Inequality: the long view
« Reply #42 on: June 27, 2017, 08:36:50 AM »


Only one of us two has been reprimanded for intolerance in this thread and it's not me. Maybe you need to be the one to look in the mirror. Who said anything about taking the entire wealth of a family?  I advocated for an untaxed amount (admitting that the amount should be debated) followed by 80-90% taxes. Maybe you need to learn some reading comprehension.  I've always known that hypocrisy is the M.O. of the right.

I think the moderator fell asleep at the switch. 

radicaledward

  • Bristles
  • ***
  • Posts: 348
Re: Inequality: the long view
« Reply #43 on: June 27, 2017, 08:43:43 AM »
It IS the point.  Why do you feel that breaking up inherited wealth is the right thing to do?  What makes the government, or the beneficiaries of the government more deserving of that wealth than the heirs?
Historically the evidence is very clear that dynastic wealth leads to oligarchies. Adam Smith knew it, Thomas Paine  knew it, the founders knew it, and so forth. Dynastic wealth is fundamentally incomparable the survival of a free society.

Most of the arguments against an estate tax are moral arguments with weak - at best! - economic arguments.

index

  • Bristles
  • ***
  • Posts: 255
Re: Inequality: the long view
« Reply #44 on: June 27, 2017, 08:48:10 AM »
I've never understood the mindset that thinks the government is more entitled to an estate than the heirs are.  SMH.

'entitled' is not the point. The point of a stiff inheritance tax is to break up inherited wealth. Any government has to raise taxes somehow, and an inheritance tax is one way of doing it.

It IS the point.  Why do you feel that breaking up inherited wealth is the right thing to do?  What makes the government, or the beneficiaries of the government more deserving of that wealth than the heirs?

It is not the government that should be the beneficiaries of the wealth but society. The wealthy can choose to donate their wealth to charity rather than facing a high inheritance tax. Charities need to be reformed as well, but that is another conversation.

The problem in the US right now is the tax system is setup to favor those with high concentrations of wealth (even those on this board with $1M). Why is the capital gains and dividend tax rate 15-20%? Most individuals with 1M+ are getting a significant portion of their income from these sources. Why does Warren Buffett pay a lower effective tax rate than his secretary?

The answer is the extremely wealthy are writing their own laws. It is cheaper for the Koch's of the world to give 1% of their wealth (tax deductible) to political campaigns that make sure they stay in a 20% tax bracket than to see their tax rate go to 25%.   

bender

  • Pencil Stache
  • ****
  • Posts: 776
Re: Inequality: the long view
« Reply #45 on: June 27, 2017, 08:52:10 AM »
I disagree that the tax system in setup to favor the rich in this country.


Source http://www.pewresearch.org/fact-tank/2016/04/13/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/

bender

  • Pencil Stache
  • ****
  • Posts: 776
Re: Inequality: the long view
« Reply #46 on: June 27, 2017, 08:56:33 AM »
It is cheaper for the Koch's of the world to give 1% of their wealth (tax deductible) to political campaigns that make sure they stay in a 20% tax bracket than to see their tax rate go to 25%.   

This quote doesn't make much sense - please provide some reasoning behind it.  Many are passionate about this subject, but I'm finding that some statements are not backed up by facts.

Bucksandreds

  • Pencil Stache
  • ****
  • Posts: 591
Re: Inequality: the long view
« Reply #47 on: June 27, 2017, 09:10:06 AM »
I disagree that the tax system in setup to favor the rich in this country.


Source http://www.pewresearch.org/fact-tank/2016/04/13/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/

Your graph leaves out effective tax rate by income level because it's not quite as convincing?

A Definite Beta Guy

  • Stubble
  • **
  • Posts: 176
Re: Inequality: the long view
« Reply #48 on: June 27, 2017, 09:15:03 AM »
So if we truly care about inequality, we need to target millionaires too.  Even someone with 1 Million is part of the problem, as there are many with $100k who will look and see the rich millionaire as a huge inequality.
I don't care a single bit about inequality down to the single-digit of millions per household. (I also don't care at a higher figure, but I understand some do and that's OK.)

$1MM in assets for a 55-year old retiree couple is very meager existence. They don't need "targeting" and society does not benefit in aggregate from them being "targeted".

$1 million is a lot of money compared to most households.
http://www.shnugi.com/networth-percentile-calculator/?min_age=18&max_age=90&networth=1000000
This calculator said the median net worth for a household headed up by someone at age 55, is less than $100,000. $1MM was over the 80th percentile.

I mean, if the argument is "we need a lot more money," then that household with $1mm needs to pay more tax. I certainly don't care, they can go back to work for another 10-15 years.

Also, since this is a FIRE forum, our concept of wealth should include people who have retired early, not just people who have a lot of money. That's slack that can be targeted, if the nation really desperately needs money.

TimmyTightWad

  • 5 O'Clock Shadow
  • *
  • Posts: 75
Re: Inequality: the long view
« Reply #49 on: June 27, 2017, 09:26:22 AM »
Income Inequity is a problem to me mostly because US politicians are easily influenced by campaign contributers and lobbyists. Policy is being passed to benefit the elite class and widen the margin of inequality. At this point I'm not sure you can even argue against this.  The conditions being put in place have made it harder for people to achieve upward mobility imo.