Author Topic: Inequality: the long view  (Read 41324 times)

Leisured

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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.




joonifloofeefloo

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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

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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?

BTDretire

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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.

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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

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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.

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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

Hash Brown

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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

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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

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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

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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

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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. 

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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.

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Re: Inequality: the long view
« Reply #13 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.

BoonDogle

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Re: Inequality: the long view
« Reply #14 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

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Re: Inequality: the long view
« Reply #15 on: June 26, 2017, 02:22:09 PM »
Bookmarking

Bucksandreds

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Re: Inequality: the long view
« Reply #16 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

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Re: Inequality: the long view
« Reply #17 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

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Re: Inequality: the long view
« Reply #18 on: June 26, 2017, 02:44:40 PM »
Too bad companies can't give raises.
Best quote ever

BoonDogle

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Re: Inequality: the long view
« Reply #19 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

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Re: Inequality: the long view
« Reply #20 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

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Re: Inequality: the long view
« Reply #21 on: June 26, 2017, 03:27:43 PM »

BoonDogle

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Re: Inequality: the long view
« Reply #22 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

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Re: Inequality: the long view
« Reply #23 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

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Re: Inequality: the long view
« Reply #24 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

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Re: Inequality: the long view
« Reply #25 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.

Alim Nassor

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Re: Inequality: the long view
« Reply #26 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

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Re: Inequality: the long view
« Reply #27 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

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Re: Inequality: the long view
« Reply #28 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?

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Re: Inequality: the long view
« Reply #29 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

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Re: Inequality: the long view
« Reply #30 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

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Re: Inequality: the long view
« Reply #31 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

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Re: Inequality: the long view
« Reply #32 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.

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Re: Inequality: the long view
« Reply #33 on: June 27, 2017, 08:16:14 AM »
::excited, happy clapping at bender's::

BoonDogle

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Re: Inequality: the long view
« Reply #34 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

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Re: Inequality: the long view
« Reply #35 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

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Re: Inequality: the long view
« Reply #36 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

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Re: Inequality: the long view
« Reply #37 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

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Re: Inequality: the long view
« Reply #38 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. 

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Re: Inequality: the long view
« Reply #39 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%.   

Bucksandreds

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Re: Inequality: the long view
« Reply #40 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

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Re: Inequality: the long view
« Reply #41 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

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Re: Inequality: the long view
« Reply #42 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. 

EscapeVelocity2020

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Re: Inequality: the long view
« Reply #43 on: June 27, 2017, 09:48:13 AM »
Also, most people have no clue what the wealth distribution really looks like in the the US.

Here's a good 6 minute YouTube primer graphically showing what 'ideal', perceived, and actual wealth distribution in the US looks like.  Pretty shocking.

Politicians thrive on keeping the 99% uninformed, bickering, and emotional.  And now there's this new invention of slapping the label 'fake news' on inconvenient truths.  But the fact people perceive (or decieve themselves) like the US has some healthy middle class '1950s' wealth distribution goes to show that people are not informed or just can't conceive of what the concentration of the top 1% wealth looks like.
« Last Edit: June 27, 2017, 09:51:44 AM by EscapeVelocity2020 »

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Re: Inequality: the long view
« Reply #44 on: June 27, 2017, 09:50:53 AM »
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.

Society can make spending choices that encourage equal opportunities. 

Low/no tuition fees for post-secondary education mean more students can continue their educations. 
Universal health care means people are not tied to their jobs because they fear losing work-related health insurance.
Good parental leaves mean women and men have more options for work/family life.

And so on.  These are all social choices.

Davnasty

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Re: Inequality: the long view
« Reply #45 on: June 27, 2017, 09:55:40 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. 
I don't think extreme wealth is arbitrary.

The concept of FIRE is to make just enough to live the life you want and then retire. Many on these forums advocate giving back anything above that number. We haven't really put a number on "extreme wealth" in this thread but most of the debate is whether or not any number is high enough that it should be taxed at a steeply progressive rate. When I think of extreme wealth I'm thinking of numbers many multiples of what a family could live off of without touching the principle.

I would also argue that as an individual you should start giving away your wealth well before you reach that point, but that's another debate.

A Definite Beta Guy

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Re: Inequality: the long view
« Reply #46 on: June 27, 2017, 10:13:19 AM »
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.

Society can make spending choices that encourage equal opportunities. 

Low/no tuition fees for post-secondary education mean more students can continue their educations. 
Universal health care means people are not tied to their jobs because they fear losing work-related health insurance.
Good parental leaves mean women and men have more options for work/family life.

And so on.  These are all social choices.
None of those create equal opportunity. Just to go with the third, since it's extremely obvious, some families have 2 parents, and some families do not. You cannot adjust for that, unless you decided to off my Dad somehow. Perhaps through a war or a bubonic plague, which is what the original article suggests is the ONLY way to create equality.

I don't care if the average person goes to college, they still aren't going to have the opportunities of wealthy kids unless you prevent their parents from helping them in other ways (connections, job advice, additional rent money, whatever).

EDIT: If you want to spend money on it, fine, but I'm not interested wasting money on an equality dream. Expanding coverage to the remaining 20 million uninsured is probably going to cost another $200 billion per year. Trying to correct for the fact that everyone has crappy plans with high deductibles is going to cost several hundred billion more. Bernie Sanders free college is $75 billion. If you want to increase all the education spending in the US to $18,000 per pupil, that's another $300+ billion.

Now you're talking another $1.2 trillion in spending, which is a 36% increase in taxes, and we're still not going to be equal, so someone is going to come back in 10 years and want even more. I haven't even touched retirement, or pre-K programs, for instance.
« Last Edit: June 27, 2017, 10:23:49 AM by A Definite Beta Guy »

Davnasty

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Re: Inequality: the long view
« Reply #47 on: June 27, 2017, 10:23:09 AM »
Does anyone have opinions on very high taxation of luxury items?

Defining luxury would certainly be difficult, but personally I would be ok with anything that is a non-necessity. Which will still be difficult to define. Food is a necessity, but what about steak. Transportation is a necessity, but Escalades are not. Homes...where to begin.

Maybe we could apply the high tax rate to all purchases and then give exemptions rather than looking at it the other way around? Then product lobbyists would fight for that exemption. Lots of room for corruption. Tax luxury product manufacturers directly?

Just some thoughts, feel free to butcher them.

BoonDogle

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Re: Inequality: the long view
« Reply #48 on: June 27, 2017, 10:31:46 AM »
Also, most people have no clue what the wealth distribution really looks like in the the US.

Here's a good 6 minute YouTube primer graphically showing what 'ideal', perceived, and actual wealth distribution in the US looks like.  Pretty shocking.

Politicians thrive on keeping the 99% uninformed, bickering, and emotional.  And now there's this new invention of slapping the label 'fake news' on inconvenient truths.  But the fact people perceive (or decieve themselves) like the US has some healthy middle class '1950s' wealth distribution goes to show that people are not informed or just can't conceive of what the concentration of the top 1% wealth looks like.

If you look at the top 1% of global wealth, you are looking at someone with a net worth of around 775K (includes home equity).  That would include a sizeable number of us in this forum.  Top 1% of wage earners globally earn in the neighborhood of 32K.  I would guess that would be a good many of us here.  So if the people at the top 1% are a problem, then we all better take a good look in the mirror, instead of pointing to people even higher up the wealth ladder (extreme wealth, as we like to call it).  Just carving out our wealthy nation to determine who is the top 1% doesn't show the full picture.

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Re: Inequality: the long view
« Reply #49 on: June 27, 2017, 10:42:59 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/

It is more about effective tax rate. The top 20% of Americans control 85% of the money. A rational person would assume they pay 85% of the taxes. The tax code favors those who are living off of capital gains and dividends. The CEO who makes 200k/yr with $3M in stock options, a person making 5x the median income off dividends, and real estate developers. W2 wage earners are all getting the short end of the stick, even those who make a ton of money. A surgeon or law firm partner who is making 600k is paying ~50% of it in taxes; the CEO from earlier is paying ~20%.   

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.

This is just common sense. If I have $10B, which is $400M/yr without touching the principal, it makes more sense for me to donate a tax deductible portion of that to make sure politicians who favor your current situation (i.e. conservative <-- don't want change or only slow change by definition) are elected to office.

The average Senate campaign costs 10M. There are 33 senators being elected in 2018. All winning senators will spend ~300-350M combined in 2018. The combined wealth of the top 0.01% (families with 20M+ in assets) in the US is 9T. 0.008% of their wealth could fund the entire 2018 senate election (winners and losers).   

That is for a national senate race. When you look on the local level at city councils, mayors, state senate etc. it gets even crazier. How much do you think a few real estate guys have to donate to a city council race in Atlanta Georgia to sway an election their way?   

 

Wow, a phone plan for fifteen bucks!