Income Inequality: So What?

[jk]

Re: Income Inequality: So What?

Do you remember any big bubbles during the years without billionaires? I don't.

can't say i remember it personally, but the railroad mania leading up to the panic of 1873 would seem to qualify.

[dcarrigg]

Re: Income Inequality: So What?

can't say i remember it personally, but the railroad mania leading up to the panic of 1873 would seem to qualify.[/FONT][/COLOR]

The timing (and my timing in all this) is a little fuzzy. But I suspect Cornelius Vanderbilt and Jay Gould had something to do with that one.

[dcarrigg]

Re: Income Inequality: So What?

Is the study of extreme wealth outliers the best dataset to use?

Or would the study of lower order wealth(circa $10 million NTA) be more relevant?

Thomas Stanley’s published works in the 90’s had a big impact on me.

The Millionaire Mind

The Millionaire Next Door

I remember his data set included quite significant proportions of both 1st generation wealth creation and 1st generation immigrant wealth creation.

His data set included 1st gen wealth, sector success, and country of origin as I recall.

‘Is this a “Moneyball” Problem? Focusing on celebrity home run kings, when we should focus on journeymen/women winning the entrepreneurial game?

While I do believe there are aligned interests( quite seperate to deep state conspiracies) amongst the extreme outlier wealthy to both protect and enhance their power, I tend to look towards new arrival immigrant entrepreneurs for their perspective.

The 1st generation immigrants I know in the US tend to look at the US as still a country of opportunity, warts and all.

i have a “fixer” of mine from Afghanistan who managed to get a visa due to the work he did and he is killing it in the brutally low margin medical supply sector.

He couldn’t be happier working 18 hours a day to build a business for his family picking up pennies in front of a steamroller, and no longer having to deal with the extreme corruption and extreme violence he helped me negotiate in his country of birth.

Perspective?

Hunger?

Resilience?

It seems odd to me, when talking about inequality, to ignore the outliers, since they are so often the decision-makers and source of the problem itself. It's almost like talking about baseball and splitting it into homerun kings and work-a-day players while ignoring the owners, who have the power to hire and fire any of them and the management and set the budget or to unilaterally decide whether or not to implement a moneyball strategy. The point isn't just the score on the board. It's power. It's authority. It's control. It's the ability to shape and make institutions. It's the ability shape and make law. It's the ability to break law on a massive scale. It's existing above the law. It's the desire and drive to control and dominate the lives of millions of employees or students or citizens. That's what drives inequality and creates the feedback that keeps it exacerbating itself. Some low-level immigrant working 18 hours per day to put together a hundred grand might indeed be happy to be out of a place that has been in perpetual war like Afghanistan. Why shouldn't he be? It doesn't change the fact that the fabric of the republic is being deliberately chewed up by oligarchs.

I mean, I'm not sure how much clearer I can be. It's not about sour grapes. It's not about opportunity. This is not me pouting and throwing a child's tantrum wishing I had one of those yachts with a little yacht inside. It's about a group of people at the extremes--the outliers--yanking themselves and their families out from under the rule of law and manipulating the system to punish the many for the benefit of the few. These guys spend hundreds of millions of dollars buying up media outlets and politicians and think-tanks and setting up court cases to get the very few things left in the world that they want, but cannot have yet. And they don't care what damage that does.

The funny thing is that my prescription for the problem is really not all that unconventional. Renewed and extensive fair labor standards. Renewed and extremely vigorous anti-trust enforcement. A new division of the Justice Department to focus on and pursue high-value financial crimes and the prosecution of violent crimes and conspiracies by ultra-high net-worth individuals (and to actually prosecute people this time). The total destruction and abolition of offshore tax havens (this will require a lot of hard-nosed diplomacy, but it's not impossible). Expanded and higher estate and trust taxes. Increased capital gains and dividend tax rates back up to the rates working people pay for a living. Then making the whole tax curve more progressive (lower taxes for the bottom 80%, same for the next 10%, higher for the top 10%, double or triple the number of brackets and add more as you head up). Use some of it to make education more merit-based and cheaper for kids (rather than make it about how much mommy and daddy earn). Fix the massive disaster of a healthcare system that leaves 40 million and growing with no coverage whatsoever (this is easy, there are about 6 models from different countries we can pick that work, just shut up about stupid free markets and do the practical thing and pick one and implement it, don't try new stupid website exchanges and crap, just pick a tried-and-true method and get it done; even Botswana figured it out). Give family leave and sick leave as a right (every single country on earth does this except the US and Papua New Guinea). And give people a new bill of rights for while they're at work. Call it "freedom from your employer" or "freedom from the boss." Make them pay if they force you to keep your schedule clear 24/7 for instant flex-scheduling. Make them pay overtime for the lowly worker making $40k per year they classify as an Exempt employee and salary and work 70 hours per week (which they didn't used to be able to do). Make them pay for calling you an "independent contractor" when you're not independent in any real sense. This happens in almost every other country. It works with capitalism. It's not extreme. And it's a way better way to spend a trillion dollars than on corporate tax cuts for stock buy-backs in an already overheated market. At least that seems obvious to me.

Of course, all that is probably impossible as long as we have unlimited money in politics. And the problem there is that even though 20 states and 100 cities and 50 senators or something have called for a constitutional amendment to end citizens united, and even though it's very popular, the money itself will prevent it from ever happening. And the senate basically extra-legally stole a supreme court seat that might have let it be overturned. I'm beginning to think packing the court is the only way out at this point. And I bet you if the thought entered my head, it has entered a few more besides...

[vt]

Re: Income Inequality: So What?

I respect your concerns, and believe it or not share them. I have sons and granddaughters that I do not want to be debt slaves.

Facebook will likely not be around 10 years from now.

Google may well break itself up. Amazon may do the same. Before both will lower the costs of goods and services to benefit the lower and middle classes, just like Wal Mart did.

We still need antitrust, but not to protect static old industries wishing protection.

Traditional college education will likely be replaced by two year work related training, followed 20 years later by deeper education as part of maybe 2nd careers. We may even see 3rd careers, each intellectually satisfying and financially rewarding.

[dcarrigg]

Re: Income Inequality: So What?

I suppose it's the "financially rewarding" part I don't believe. In my lifetime, the deal has only gotten more rotten, and the rules have only changed to the detriment of working people, never in their favor. It's all one direction for 40 some-odd years. Turning it around will require a monumental effort, like making the Mississippi flow north. But the alternative is even more unthinkable.

[dcarrigg]

Re: Income Inequality: So What?

Every time we ask for healthcare or college, the response is "How are you gonna pay for it!?!?!?!?!?!??!?!?!?!!!!!!!!"

When Republicans asked for trillions of dollars for corporate tax cuts, the MSM was mum. They didn't ask how we would pay for it.

And now it looks like the Administration is planning on cutting another $100 billion in capital gains without congressional approval.

Nobody asks where we will get the money to pay for it. Nobody will ever ask.

If it's free give-aways to the wealthy, nobody bats an eye. But everyone gets their panties all bunched up worried about how we'll afford old Edith's social security or little Aiden's tuition.

The $100 billion give-away is more than enough to make college free. The corporate tax cut could have done that and given everyone dental insurance and then some. We already pay more per capita in government healthcare than most other countries do to make it free and universal. And yet we force 40 million people to suffer without it. The men who chose such a course of action will have to reckon with their misdeeds. In this life, or the next.

That is the key now, I think. For 40 years the moral judgements and aspersions were cast from high unto those below--Edith was judged guilty for collecting her pension, Aiden guilty for his grants-in-aid. But what of the moral culpability of the men who, like priests of pagan cults of old, cast 40 million to their doom, and judge that something unreal bade it so? For spiritus or mercatus, the judgements are the same, as is the reprehensible callousness and lack of morals. When the fervor of American moral righteousness no longer points down, but up, then, and perhaps only then, may real change come to pass.

John Brown's body lies mouldering in its grave.
But his Truth still marches on.
Glory, glory, hallelujah!
His Truth keeps marching on.



Dear shadows, now you know it all,
All the folly of a fight
With a common wrong or right.
The innocent and the beautiful.
Have no enemy but time;
Arise and bid me strike a match
And strike another till time catch;
Should the conflagration climb,
Run till all the sages know.
We the great gazebo built,
They convicted us of guilt;
Bid me strike a match and blow.

[vt]

Re: Income Inequality: So What?

You have to have growth. Thanks to the tax cuts you have:

"a sharp increase in the personal savings rate. The increase was due to an upward revision in wages and salaries and jumped to 6.7% from 3.4% for 2017 and averaged 7% in the first half of this year. That’s about $500 billion more in the pockets of Americans than previously estimated and helps to explain why consumer spending has remained strong."

From 7/30 WSJ on "The Return of Growth"

"The Congressional Budget Office reports that faster growth under President Trump has already added $1.3 trillion to the 10-year federal revenue projection, with the CBO’s April economic adjustment alone showing an addition of $1.1 trillion—the single largest growth-driven revenue gain ever reported. State and local governments can anticipate a similar dividend, amounting to as much as $600 billion."

"The CBO’s April revision projected an extra $6.1 trillion in GDP over the next decade—more than $18,000 of growth for every man, woman and child in America."

"A 2016 study in Tax Notes found that about 50% of all domestically owned corporate shares are in individual retirement accounts and pension plans—the nest eggs of working Americans. Another 17.6% of shares are held by nonprofits and life-insurance companies. Record dividends and buybacks could see total shareholder returns this year exceed $1 trillion, with the majority flowing to retirees or charities like United Way."

"the CBO’s assessment that President Obama’s economic slump lost $3.2 trillion in projected 10-year revenues during his last three years—almost five times more revenue lost than was gained by his 2013 tax hike."

7/29/18 WSJ "Tax cuts bust 'Secular Stagnation'"

[dcarrigg]

Re: Income Inequality: So What?

Forget the well-proven fact that tax rates empirically do not correlate with GDP growth.

Instead, perhaps it's better to ask you to imagine something.

Imagine for a second that in a fictional storyline, a group of men wrestled their way to power in the United States. These men--the ones with the most power to make decisions--decide not to be patriots. Imagine that instead they decided to loot the republic for everything it was worth. Simply to raid the public treasury and pay it out to themselves, leaving the nation deeply in debt and with deep pathologies both legal and material. Now, imagine they were sitting in a room, around a table, coming up with a plan to milk it for everything it's worth. What type of policies do you think they would enact?

[jk]

Re: Income Inequality: So What?

Imagine for a second that in a fictional storyline, a group of men wrestled their way to power in the United States. These men--the ones with the most power to make decisions--decide not to be patriots. Imagine that instead they decided to loot the republic for everything it was worth. Simply to raid the public treasury and pay it out to themselves, leaving the nation deeply in debt and with deep pathologies both legal and material.

interesting, this is the standard practice in private equity lbo's. find a company with unused debt capacity, buy it out essentially with its own new debt, pay themselves big special dividends so that they get their money upfront. then cut labor and either the company goes belly up because of the debt burden, or it gets by and they float an ipo to exit.

[vt]

Re: Income Inequality: So What?

DC the group of men you describe are exactly the ones that are dictators or that head socialist and communist countries. It would describe fascists too if there were any.

Think Diaz-Canel, Maduro, and Putin. In addition these men lower the standard of living for the people.

[dcarrigg]

Re: Income Inequality: So What?

interesting, this is the standard practice in private equity lbo's. find a company with unused debt capacity, buy it out essentially with its own new debt, pay themselves big special dividends so that they get their money upfront. then cut labor and either the company goes belly up because of the debt burden, or it gets by and they float an ipo to exit.

It is a curious idea. Especially given how often the ruling class has done a stint at Bain or Carlyle or CPG or Goldman PIA, etc.

[dcarrigg]

Re: Income Inequality: So What?

DC the group of men you describe are exactly the ones that are dictators or that head socialist and communist countries. It would describe fascists too if there were any.

Think Diaz-Canel, Maduro, and Putin. In addition these men lower the standard of living for the people.

OK. Good. Now imagine for a moment in this fictional storyline there are no "-isms" that you are familiar with. Say the United States practices Dolotchism and maybe they had an ideological battle with Memphism and Echampism once a long time ago or something. Just shed the idea from historical preconceptions.

Now, you made an interesting suggestion, which was, maybe somebody isn't quite experienced or trained in public policy enough to know what kind of policies these men who want to rob the fictional US blind might enact. But you suggest that those type of men will lower the standard of living for the people.

Now imagine...and I know this is a stretch...but just try to imagine this:

In this fictional USA:

1. The standard of living for 80% of the people has been dropping for 40 years.
2. 40 million of them, more than the entire population of Canada or the Netherlands or Australia have no health coverage whatsoever. Cancer patients routinely go bankrupt and lose their homes. The only major wealthy country on earth that allows anything like this kind of cruel tragedy.
3. Over 2 million people in this fake USA are in prisons and a million more are in the system and 20 million more have been disenfranchised for having been there in the past, more than any other country in the world as a percentage and as a raw number, regardless of what 'ism' they follow.
4. Over half of all men under 40 have been arrested at least once before age 23.
5. No major investments in infrastructure have been made in half a century.
6. Budgets for higher education and learning have been slashed. Student debt is at record levels.
7. The press has been decimated, and what's left of it is owned mostly by these men themselves with skeleton crews and waning semblances of editorial independence.
8. Life expectancy has dropped for a least the past few years. Rickets and scurvy and other nutritional diseases have come back. Obesity and diabetes are at epidemic levels, and nobody proposes to do anything about it. 71% of the population is obese. And the price of insulin quintupled in the past few years. Some old drugs went up by thousands of percent. No citizens of any other nation have to worry about this.
9. Child poverty is widespread, 15 million children live under the official poverty line.
10. The number of entrepreneurs has steadily declined, as has the number of independent businesses, new business startups, and self-employed.
11. Many sectors of the economy are increasingly dominated by 1 to 4 major corporations that buy out all their nascent competition and collude to function as monopolies. Yet the Department of Justice has not brought an anti-trust case forth in over 15 years.
12. The percentage of people with internet access has actually decreased since 2012.
13. Healthcare costs for those who do have it have risen to $10,348 per person per year on average. That's over $41k for a family of 4 in a country where median household income is $59k.
14. Meanwhile, in this fictional USA, the 3 richest people have more wealth than the bottom 200,000,000 people combined, and climbing.
15. National debt is at levels not seen in 70 years since a great worldwide war, and even still they are expanding it further in order to give more money to those 3 people, and they're selling off public land and infrastructure to themselves so they can charge tolls and fees or raid the land for resources at every opportunity.

I mean, I could make several more points. But I think this paints a picture.

I know it's hard to imagine a fictional America like this. But let's just try for a moment.

It's quite obvious that these men have lowered the standard of living for the people in this fictional America, isn't it? So maybe whatever they claim their "ism" is (and it's irrelevant since in this fictional story, we don't understand it), it certainly seems it isn't very good (at least the way they practice it) for the people's standard of living.

So what types of policies would these kleptocrats (if we may call them that, since we know in this fictional story line these men really just want to raid the republic), try to enact then? What do you think?

[vt]

Re: Income Inequality: So What?

https://www.marketwatch.com/amp/stor...mpression=true

[dcarrigg]

Re: Income Inequality: So What?

From that article:

The employment cost index rose 0.6% in the second quarter, a tick below the MarketWatch estimate of 0.7%.

Also from that article:






Hmmm...how much shine can you put on a turd?

[vt]

Re: Income Inequality: So What?

Harding and Coolidge took us out of the 1921 depression by cutting taxes significantly and also cutting government spending. We had on of the greatest economic booms of all time.

https://www.amazon.com/Forgotten-Dep...40_&dpSrc=srch

Unfortunately Hoover raised taxes and we had the Smoot-Hawley tariif act, which led to the great depression of the 1930's.