Inequality much worse than most think

[flintlock]

Re: Inequality much worse than most think

however, I strongly believe every job should provide a comfortable level of living through fair compensation. No person should have to fear hunger or homelessness. Not in modern society.

I am in agreement. I don't buy into the minimum wage argument that the economy would be ruined if people made another $1 hour or whatever. That is a smokescreen to avoid addressing real issues like "what the heck are we going to do with so many people in a world that doesn't need as many?"

[rtchoke]

Re: Inequality much worse than most think

That guy is a jackass. The amount of work people put in for low wages is insane. I work far, far less now that I make more than double the minimum wage. Sometimes the work can be strenuous, but it generally isn't. People should rightly be compensated to the point they can sustain themselves with any job. People that work physically tough jobs shouldn't be looked down upon because they cannot pass muster with regards to mental work.

I agree with this 100%!

[Rajiv]

Re: Inequality much worse than most think

I have absolutely no arguments with you about the seven deadly sins. But that is not what we are talking about. We are talking about a fair distribution of income and wealth. We are really talking about macroeconomic issues, and how policy decisions over the past half century have led to a worsening of social equality, which springs in large part from economic inequality. The fruits of the increasing labor productivity have gone, not to the labor that is more productive, or even to a mix of labor and capital, but rather the fruits have gone to a tiny sliver of "financial geniuses" (#sarcasm)

A case in point is the NY times article from a couple of days ago - "On Register’s Other Side, Little to Spend"

Median pay for the nation’s 3.4 million fast-food workers stands at $8.80 an hour. For Tenesha Hueston, a shift manager at a Burger King in Durham, N.C., a $10.10 minimum wage would be a godsend for her Christmas shopping. She says her pay — $7.75 an hour —is too meager for her to buy the gifts her children are hankering for:

[dcarrigg]

Re: Inequality much worse than most think

Most( not all!) pay differences today are still a result of the differences in the capability and implementation of that brain.

I disagree. For most people it may matter. Not so much for the legion of young jobless nurses and lawyers I meet at serving me drinks everywhere I go in the northeast. It was bad luck to be born in the late 1980s for most kids for sure.

But regardless, if the range of pay in America is between $1 and $250,000, you may be right. There will still be frat boys who inherit daddy's dealership and never actually work a day in their lives. But they will be fewer and farther between than most.

Yet between $250,000 and $1,000,000,000 per year (a much larger range), it is all birth and luck. That's the rub.

And sure, you can make the argument that a few families have ruled every country in every society since the dawn of time. I think you'd be right.

But it doesn't mean it's not worth realizing this fact. And it doesn't mean that hard work earned the Walton Kids a free billion dollars for being part of the lucky sperm club. And it doesn't mean that they should be taxed less than people who actually work for a living (they are).

And it doesn't mean that they should get an outsized say in politics (they do, where do you think all these for-profit charter schools are coming from?) And it doesn't mean it's not worth discussing it, since the Forbes 400 list is increasingly in our face running our politics in a way it wasn't even 20 years ago. And that counts double in a post-Citizens United world.

Look, if they get to be born swimming in a pile of krugerrands like Scrooge McDuck, fine - but this is a democracy, so I say tax 'em.

If they want to drop those krugerrands into small local elections in my state, which they've never even visited so far as I know, just to take my neighbor's pension away and privatize my little school I walked the kids to down the street, them's fightin' words. I can't think of another time historically that the reach of the Forbes 400 has gone straight down into far flung local politics. But it's damn well doing it hard right now.

So I'll offer you a deal right now. I'll stop talking about them when they stop messing with my local life. If they won't, I think it's fair game. And if they won't stay out of my way, I say soak 'em. I don't care what side of the isle they're on. They don't live in this county. If they want the public to stop giving them heat, maybe they should mind their own goddamn business.

But, apart from that rant, here's the deal. I was responding to Forrest's comment that wealth was a symbol of hard work. I was saying I disagree. Wealth is often a symbol of luck or inheritance. I've got a guy round here that's in the local pub whenever I go in. Always, he's smashed. He gets DUIs left and right. He's in terrible health. He basically never works. He's of average intelligence. But he's got a hedge fund and he's worth tens of millions and he futzes around with politics. Daddy was some sort of bigwig at Shawmut and got him in the door and spun up with capital in the early days of funds. So it goes.

For every virtuous example of wealth, I know of a vicious one. And that's just the way the world is. I think there's something un-American about thinking that's the way the world should be. Hard work should be rewarded with wealth, but birthright? No, I don't think that's American at all. And maybe you disagree. But when I think of Government By the People, Of the People, and For the People, I don't think of some far-flung Texas billionaire spinning up multi-million dollar campaigns to unseat small-fry local reps and city leaders in Kentucky and Arizona and Rhode Island to get his way. Of course, in any rightly-run world, nobody would ever vote a local pol back in who even had lunch with these cretins.

I suppose if wealth wasn't so tied up with power, I could ignore the Forbes 400 and just let them suck up our precious resources and wealth for trivial lives of leisure. But they won't leave me alone. They went so far as to fund a direct mail campaign to dislodge my little local state rep, a guy I like having coffee with from time to time. They failed. But just barely. And they got their way with several others.

None of these folks are from New England. Hell, most of them don't even visit Nantucket or the Vineyard. But they're spending millions to mess with our way of life. Our schools are mostly good up here and we're mostly proud of them. Now they want to dismantle the system we built, particularly the Massachusetts system, which was the first and most extensive one in the country. And they want to replace it with a private management firm run by some schmuck in a tower in lower Manhattan.

So insofar as what the 400 are up to affects myself, my family, my neighbors, my friends, and their collective children, it matters to me. And I think it should matter to you too. You can't control everything. We don't have the power individually to extinct every poisonous snake. But we do have the power to learn how to recognize them, learn to steer clear, and try to take a machete to one's head now and again when we stumble across one.

Hell, if it were up to me, I'd make it illegal for them to donate to local races in states, counties, and towns they don't live in, and make the penalty running 'em up a mast by their belt-loops with 'fool' painted across their belly on a nice tour through Mass Bay. But since that's not happening, the best I can do is point out how foolish it is to tax lazy, good-for-nothing, interloper, inheritors at a lower rate than regular, honest, working people. And I can publicly advocate using government to minimize their power wherever and whenever possible.

After all, the Constitution forbids titles of nobility.

And I think maybe Thomas Jefferson said it better than myself:

Thomas Jefferson,

to John Adams



Monticello, October 28, 1813




I agree with you that there is a natural aristocracy among men. The grounds of this are virtue and talents. Formerly, bodily powers gave place among the aristoi [aristocrats]. But since the invention of gunpowder has armed the weak as well as the strong with missile death, bodily strength, like beauty, good humor, politeness, and other accomplishments, has become but an auxiliary ground for distinction. There is also an artificial aristocracy, founded on wealth and birth, without either virtue or talents; for with these it would belong to the first class. The natural aristocracy I consider as the most precious gift of nature, for the instruction, the trusts, and government of society. And indeed, it would have been inconsistent in creation to have formed man for the social state, and not to have provided virtue and wisdom enough to manage the concerns of the society. May we not even say, that that form of government is the best, which provides the most effectually for a pure selection of these natural aristoi into the offices of government? The artificial aristocracy is a mischievous ingredient in government, and provision should be made to prevent its ascendency. I think the best remedy is exactly that provided by all our constitutions, to leave to the citizens the free election and separation of the aristoi from the pseudo-aristoi [pseudoaristocrats], of the wheat from the chaff. In general they will elect the really good and wise. In some instances, wealth may corrupt, and birth blind them, but not in sufficient degree to endanger the society.



At the first session of our legislature after the Declaration of Independence, we passed a law abolishing entails [limitations on the inheritance of property to a specified succession of heirs]. And this was followed by one abolishing the privilege of primogeniture [the eldest child?s exclusive right of inheritance], and dividing the lands of intestates equally among all their children, or other representatives. These laws, drawn by myself, laid the ax to the foot of pseudoaristocracy. And had another which I prepared been adopted by the legislature, our work would have been complete. It was a bill for the more general diffusion of learning. This proposed to divide every county into wards of five or six miles square, like your townships; to establish in each ward a free school for reading, writing, and common arithmetic; to provide for the annual selection of the best subjects from these schools, who might receive, at the public expense, a higher degree of education at a district school; and from these district schools to select a certain number of the most promising subjects, to be completed at a university, where all the useful sciences should be taught. Worth and genius would thus have been sought out from every condition of life, and completely prepared by education for defeating the competition of wealth and birth for public trusts?.




With respect to aristocracy, we should further consider, that before the establishment of the American States, nothing was known to history but the man of the old world, crowded within limits either small or overcharged, and steeped in the vices which that situation generates. A government adapted to such men would be one thing, but a very different one, that for the man of these States. Here every one may have land to labor for himself, if he chooses; or, preferring the exercise of any other industry, may exact for it such compensation as not only to afford a comfortable subsistence, but wherewith to provide for a cessation from labor in old age. Every one, by his property, or by his satisfactory situation, is interested in the support of law and order. And such men may safely and advantageously reserve to themselves a wholesome control over their public affairs, and a degree of freedom, which, in the hands of the canaille [the masses] of the cities of Europe, would be instantly perverted to the demolition and destruction of everything public and private. The history of the last twenty-five years of France, and of the last forty years in America, nay of its last two hundred years, proves the truth of both parts of this observation.



But even in Europe a change has sensibly taken place in the mind of man. Science had liberated the ideas of those who read and reflect, and the American example had kindled feelings of right in the people. An insurrection has consequently begun, of science, talents, and courage, against rank and birth, which have fallen into contempt. It has failed in its first effort, because the mobs of the cities, the instrument used for its accomplishment, debased by ignorance, poverty, and vice, could not be restrained to rational action. But the world will recover from the panic of this first catastrophe. Science is progressive, and talents and enterprise on the alert. Resort may be had to the people of the country, a more governable power from their principles and subordination; and rank, and birth, and tinsel-aristocracy will finally shrink into insignificance, even there. This, however, we have no right to meddle with. It suffices for us, if the moral and physical condition of our own citizens qualifies them to select the able and good for the direction of their government, with a recurrence of elections at such short periods as will enable them to displace an unfaithful servant, before the mischief he meditates may be irremediable.



A constitution has been acquired, which, though neither of us thinks perfect, yet both consider as competent to render our fellow citizens the happiest and the securest on whom the sun has ever shone. If we do not think exactly alike as to its imperfections, it matters little to our country, which, after devoting to it long lives of disinterested labor, we have delivered over to our successors in life, who will be able to take care of it and of themselves.

[BadJuju]

Re: Inequality much worse than most think

And I think maybe Thomas Jefferson said it better than myself:

I think you said it pretty well.

[Rajiv]

Re: Inequality much worse than most think

Also relevant to this topic - Blame Rich, Overeducated Elites as Our Society Frays

Complex human societies, including our own, are fragile. They are held together by an invisible web of mutual trust and social cooperation. This web can fray easily, resulting in a wave of political instability, internal conflict and, sometimes, outright social collapse.
Analysis of past societies shows that these destabilizing historical trends develop slowly, last many decades, and are slow to subside. The Roman Empire, Imperial China and medieval and early-modern England and France suffered such cycles, to cite a few examples. In the U.S., the last long period of instability began in the 1850s and lasted through the Gilded Age and the “violent 1910s.”
We now see the same forces in the contemporary U.S. Of about 30 detailed indicators I developed for tracing these historical cycles (reflecting popular well-being, inequality, social cooperation and its inverse, polarization and conflict), almost all have been moving in the wrong direction in the last three decades.

[Rajiv]

Re: Inequality much worse than most think

Another relevant report - Simplified summary - Worker Wage Inequality Myth Exposed

In America today there is a crisis. That crisis is economic inequality. The U.S. workforce has been blamed and dismissed for the growing gap between rich and poor. Much effort has gone into blaming the victim. Americans have been called fat, lazy and stupid along with the never ending drumbeat claim U.S. workers are uneducated and do not have enough technological skills. The droning mantra to blame workers themselves for the growing income gap just got a loud blast of not so fast. Now a new study blows that blame the workers mantra out of the water. There is no evidence that technological shifts, a lack of education or the lack of technical skills is the cause of the great, growing cataclysmic chasm of income inequality in the United States.

[flintlock]

Re: Inequality much worse than most think

I agree, things are way out of balance. Its just that historically speaking, the post WWII years were the exception, not the norm. We all tend to look back on those days as a better balance of wealth. Nothing wrong with that.

[flintlock]

Re: Inequality much worse than most think

Well I was talking about most jobs, not the top 1%, which is a completely different discussion. I just think its wrong to say education, integrity, cleverness,etc have no relation to pay. Its everything for the majority of jobs. How hard we TRY should have no bearing, but rather the value we add. No argument here about the oligarchs and such.

[flintlock]

Re: Inequality much worse than most think

I agree that people should not be looked down upon because of what they do. Almost any work is noble. Heck if you could see what I do! But all pay is not based on IQ. That is not what I was saying. Rather things like reliability, punctuality, work ethic, attitude, and personality. All are "brain" related vs pure brawn. I have long argued here that people with less education and/or intelligence still need good jobs. That we cant all be PhDs. Most people have a strength, they just need to find it rather than settle. A lot of people's attitude is what is holding them back, not some evil force. When I read about adults working at McDonalds for 20 years for minimum wage you can bet at least some have settled for that lot in life. I'm not buying that it has been forced on them.

[gwynedd1]

Re: Inequality much worse than most think

I also know too many who have risen from nothing to mention. In fact, the standard of living has risen so greatly in this country that we all sound like a bunch of whinning babies in discussions like this. Myself included. We really fail to count our blessings and spend too much time looking at what others have and being miserable because we constantly compare ourselves and keep score. Virtually every person in the USA lives better than Henry VIII in most ways yet we still see ourselves as suffering and put upon. Why is that? Its because success and happiness will always be a relative notion. Many of us will never be happy. Some will always be happy despite our situation. It has as much to do with the individual as the system. It has always been this way to some degree but has gotten worse since the times when people could work their way up the ladder more easily. The 12th century peasant didn't worry himself about such things because his lot was cast in life the day he was born.

The only comment I would make is that I distinguish as two completely separate concepts wealth and standard of living vs financial wealth. The typical input of labor is much poorer financially and that spells trouble. In fact when someone buys something their standard of living improves while their finances diminish. So there is some short term inverse relationship. As I see it now , the middle class is enjoying a rising standard of living which is a what has baited them to destroy their finances under a much longer curve these days. China was "a capitalist" country before the US was even a country. It is not a pleasant thing to read the conditions.

[ProdigyofZen]

Re: Inequality much worse than most think

Well I was talking about most jobs, not the top 1%, which is a completely different discussion. I just think its wrong to say education, integrity, cleverness,etc have no relation to pay. Its everything for the majority of jobs. How hard we TRY should have no bearing, but rather the value we add. No argument here about the oligarchs and such.

I don't even think most jobs. Some of the smartest people in history died with pennies to their name so I know for sure that intelligence and output doesnt = money.

A friend came to me last week asking about Iraqi Dinars. I suspected it was that Iraqi Dinar scam that was going around during the Iraq war.

She said her good friend who is a doctor is trying to get her and her husband invested in Iraqi Dinars. Apparently he has put a bunch of money in it due to his "business partner." Sure doctors are notorious for being bad with money but there are about 1000 red flags why it's a scam.

I know a guy who is ultra high net worth and runs a real estate development company. He just sold a large chunk of his land for 50 million.

He is exactly 54 years old. Which would mean he came to the market right after college in the early 1980s.

How much of his excess returns over the past 30 years was due to his "intelligence" instead of the greatest debt boom in history coupled with falling interest rates and inflation?

Remember I know him, he isn't the brightest guy and I am sure 1/2 of the iTulip community could run circles around him intellectually.

[ProdigyofZen]

Re: Inequality much worse than most think

I agree that people should not be looked down upon because of what they do. Almost any work is noble. Heck if you could see what I do! But all pay is not based on IQ. That is not what I was saying. Rather things like reliability, punctuality, work ethic, attitude, and personality. All are "brain" related vs pure brawn. I have long argued here that people with less education and/or intelligence still need good jobs. That we cant all be PhDs. Most people have a strength, they just need to find it rather than settle. A lot of people's attitude is what is holding them back, not some evil force. When I read about adults working at McDonalds for 20 years for minimum wage you can bet at least some have settled for that lot in life. I'm not buying that it has been forced on them.

EJ only has a bachelors degree in resource economics yet he is more intelligent and has figured out more things about the "macro-economic" economy than 99% of the PhDs in economics.

I have never once settled for my lot in life and spend 100% of my time in my chosen field trying to get ahead to the detriment of everyone and everything around me but it has equated to very little opportunity in what I actually know that I am good at and want to do.

I am sorry but your point doesn't ring true with my own case. Most of my friends are doctors, consultants or work in finance/hedge funds, all apparently tell me that I am very intelligent and should be working at a hedge fund. I do not work at a hedge fund and they all make double to triple to quadruple what I make yet are no more intelligent or even less intelligent than I am.

I have a friend who went Philips Academy --> Georgetown ---> Goldman Sachs investment banking ----> Harvard MBA ----> Consultant to endowments/pensions and doesnt even know what the great inflation of the 1970s was. I was chatting with her about economics at dinner one night and mentioned the great inflation of the 1970s and she said "what is that?"

Now I bet she is excellent at giving advice to endowments on "what/who to invest in."

[srivatsan]

Re: Inequality much worse than most think

I highly doubt this due to my own experiences.

You can be the smartest guy and most driven person yet not accomplish anything if the "gatekeepers" do not give you the opportunity to do it.

I can be intelligent and get in front of other hedge fund managers and allocaters but not one of them would give me 20 million to manage for them.

It is about being let into the club and only a select few are allowed in, usually based on college attended, ethnicity, family name etc.

I have to agree with these statements more than any set of statements because this has been the fact of my experiences in life. To summarize, intelligence and money making in many cases is badly correlated if at all. Money comes to folks because of "position" and not because of "talent". Who would tolerate El Presidente / CEO if he/she wasn't in that position?

[DSpencer]

Re: Inequality much worse than most think

I wouldn't describe us as beneficiaries. Maybe in a better life with a better world in a better universe, I would, but not this life nor this world or the universe it resides in. I do not think we have free will. A completely material existence that operates mechanically precludes it. I do not dispute consciousness; however, it is only awareness. Awareness is not agency. We are trapped in these bodies and minds and we exert no control over them.

BadJuju,

I think I can relate to how you feel. I too am still waiting for any compelling scientific explanation for the existence of free will. However, I don't think it's cause to despair. Technically, we may not have free will, but for all practical purposes we can still have the experience of it. Newtonian physics may be "wrong" in many ways, but it is still useful in everyday life. Our concept of Time may be incomplete and inaccurate, but we don't have to burn our clocks and watches. Free will or not, we can still experience joy and wonder and contentment. What's wrong with even a mechanical organism finding joy in its self awareness? Many religious people have pushed the agenda that life without God isn't worth living. If you reject the rest of their beliefs, why do you accept that?