10 ms·

Capitalists, Arise: We Need to Deal With Income Inequality

32 points by kareemm 11y ago

cottonseed 11y ago
"I’m scared. ... the income gap will most likely be resolved in one of two ways: by major social unrest or through oppressive taxes, such as the 80 percent tax rate on income over $500,000" I stopped reading here. Try again. Current top income tax rates are insanely slow by historical standards. They were 90% in the 40s and 50s and 70% in the 70s [0] [0] http://taxfoundation.org/sites/default/files/docs/fed_individual_rate_history_nominal.pdf http://taxfoundation.org/sites/default/files/docs/fed_indivi...
- wmeredith 11y ago
  I had s similar reaction to this example of an "oppressive tax". This is just the sort of taxes that were in place when America was taking over the world. It's not oppressive. It's a good idea. It hurts the oligarchs, it helps the 99 percent, which is who drives the economy.
  - liquidise 11y ago
    I have never understood the notion that taxes at or above 50% are at all ethical, and yet some argue openly for 80%+. The idea that the government is entitled to more of someone's earnings than they are is shocking. To then suggest the government is entitled to 4 out of every 5 dollars a person earns is, quite frankly, beneath consideration in my eyes. What right do you, i or anyone else have to call this anything but theft?
    - lfowles 11y ago
      Tax brackets. The government isn't entitled to 80% of what _any_ person earns, just a portion of what the _richest_ earn. Looking at GP's PDF for 1945: Income Take home $10,000 $7,060 $20,000 $12,140 $50,000 $21,680 $100,000 $29,680 $200,000 $37,180 $500,000 $55,180 Of course, this is for income, the people being taxed the highest rates will also have capital gains. Inspired by michaelchisari below, here's the same table in 2015 $$ Income Take home $132,576.67 $93,599.13 $265,153.33 $160,948.07 $662,883.33 $287,426.21 $1,325,766.67 $393,487.55 $2,651,533.33 $492,920.05 $6,628,833.33 $731,558.05 Whew, big numbers.
      - michaelchisari 11y ago
        Fr the record, $55,180 in 1945 is the equivalent of $727,917.20 now.
        lfowles 11y ago
        Thanks! Added another table with modern day $$$. Big numbers!
      - liquidise 11y ago
        > The government isn't entitled to 80% of what _any_ person earns, just a portion of what the _richest_ earn. Astounding double standards. Some numbers: if Ted makes $100,000/yr and Jim earns $1,000,000/yr and both are taxed at 30%, Jim is already paying $270,000 _more_ in taxes every year. Even at the same tax rate. Crank Jim's rate to 90% and we are looking at an $870,000/yr difference! Through what greed can we morally justify such insatiable lust for the money other's have earned? Furthermore, the capital gains argument is rife with unintended consequences. It, quite literally, disincentives the wealthiest folks from innovating and earning money through economically productive means. Instead, we send the message "if you insist on earning money by working like the rest of us, we are going to take 80% of it. But, if you want to rest on the laurels of your investments and be otherwise unproductive, by all means. The choice is yours." It terrifies me that this mindset is the majority opinion these days.
        lfowles 11y ago
        As the other reply says " Please learn how marginal tax brackets and rates work before talking about the issue where people can hear you. "
        liquidise 11y ago
        I am aware how they work. I get that all earning up to a point are taxed under bracket x, and then after that are taxed at bracket y, and so forth. Unless you mean something else in which case i welcome you to explain where i have erred here. If that is in fact what you mean, it still changing absolutely nothing. The effective tax rate on folks in these upper brackets would still be enormous. But i guess piggybacking baseless comments is an easy way to avoid justifying these stances. I still have not seen someone say how they are justified in taking that much money from people while feeling ethical.
    - 1971genocide 11y ago
      Do you know what is theft ? When kids born today are unable to afford to go to college, while the same people who are against +80% tax were born in an era when tax was way higher at +90% that helped pay for their education and create the infrastructure that allowed them to earn their wealth. "Surplus Wealth is a scared trust which its possessor is bound to administer in his lifetime for the good of the community " - Andrew Caregie. Guess what if you think the government is treating you unfairly then be prepared when society bifurcates and returns a stack error in the form of "bolsheviks".
      - onewaystreet 11y ago
        Some of the wealthiest people in the US were born just a few decades ago. Not all US billionaires are not crotchety 80-year-olds.
      - yummyfajitas 11y ago
        More kids than ever before can afford to go to college. http://www.bls.gov/opub/ted/images/2010/ted_20100428.png http://www.bls.gov/opub/ted/images/2010/ted_20100428.png
        rosser 11y ago
        Having little choice but to sign yourself up for a mortgage-sized debt that can't be discharged isn't the most obvious definition of "affordable" I've ever encountered.
        yummyfajitas 11y ago
        I'm defining "afford to go to college" as "have enough money to actually attend if they choose to". The number of people who actually attend is a lower bound on this number. A quick google search yields an average cost of $9k for a state school, $22k for out of state, and $31k for private. Maybe the expensive side of college is "mortgage-sized" debt, provided you are comparing to the cheapest mortgages.
        thetopher 11y ago
    - eli_gottlieb 11y ago
      Please learn how marginal tax brackets and rates work before talking about the issue where people can hear you.
    - unprepare 11y ago
      > dollars a person earns When an individual who grows up without ever taking advantage of a single piece of society, they will have an argument for taxes being unfair. Lets not forget the debts that all citizens owe to the country: Roads Internet Telephones Water Food regulation Environmental regulation Scientific advancements Protection from outside forces (military) Flight regulations etc. Once youve paid for all of those you can begin to complain about how taxes are unfair.
      - liquidise 11y ago
        I am not arguing for no taxes. I am saying that an effective tax rate above 50% is theft. Taxing more successful people at multiplicatively higher %'s is lunacy. They already are paying way more than lower income folks at the same rate. If your argument is that more successful people consume more resources and thus owe the government a greater debt, then i would argue we should be taxing consumption more. Not income.
        unprepare 11y ago
        > i would argue we should be taxing consumption more Consumption tax disproportionately affects the poorest citizens. It is a non-workable solution. Consumption is what drives the economy, disincentives to consumption would hurt the economy as a whole (causing the wealthy to lose money via investments). Further, a citizen has no hope to pay off the debt that it owes the government for the things i listed previously. There is no tax rate at which you would effectively pay back the government for its investments in society. The yearly budget of the US Department of Transportation alone, is 77 billion - that's just to keep federal roads drivable. If you think theres some tax level at which you have paid for the initial investment and upkeep of the federal highway system, by all means share it here, i would love to know what number you think is 'fair' since its 'your money' even though they aren't 'your roads' You have an extremely entitled view of what "fair" is.
    - njharman 11y ago
      Don't earn such a disproportionate amount of money and it won't get "stolen". In other words if you don't steal so much from others, go meet won't steal it back.
  - fezz 11y ago
    It also created a larger market for hugely expensive cars and other luxury items. The 1970's had a 70% tax for the richest. In 1982, that dropped to 50% and coincidently was when the boom in excess really got started.
    - cpursley 11y ago
      Good point! Another reason to drop personal and corporate income tax, short-term capital gains tax and replace it with a progressive consumption tax.
  - mc32 11y ago
    I don't think it's that simple. Oligarchs will go live in another jurisdiction which taxes less. Rich people have alternatives, so unless you have a global tax agreement of some sort, I don't think this is viable. Potentially, one could end up collecting fewer tax dollars because they are "living" in the Bahamas or Cayman Is.
    - bro-stick 11y ago
      Truly rich people tend to invest their balance sheet mostly illiquidly in trusts and pay themselves a low-as-possible allowance from low interest, short-term loans against assets. Personally, they don't tend to own much directly to avoid the taxman's reach and for liability too.
- ikeboy 11y ago
  There's an argument that the effective rates then were only around 50%. See https://www.aei.org/publication/why-we-cant-go-back-to-sky-high-1950s-tax-rates/ https://www.aei.org/publication/why-we-cant-go-back-to-sky-h..., http://www.bloombergview.com/articles/2013-01-02/1950s-tax-fantasy-is-a-republican-nightmare http://www.bloombergview.com/articles/2013-01-02/1950s-tax-f..., and http://www.wsj.com/articles/SB10001424127887324705104578151601554982808 http://www.wsj.com/articles/SB100014241278873247051045781516....
- Rangi42 11y ago
  The highest one I see is a 94% tax on income over $200,000 in 1945. First of all, that was towards the end of a World War during which we developed an entirely new kind of bomb. Nothing our government is currently doing requires that level of commitment from its citizens. Second, that income bracket in 1945 would be at $2.676 million today [1]. Even the top 0.1% of US incomes today start at just $1.6 million [2]; a tax bracket like the 1945 one would have barely any people in it. [1]: https://www.wolframalpha.com/input/?i=US%24200000+%281945+US+dollars%29 https://www.wolframalpha.com/input/?i=US%24200000+%281945+US... [2]: https://en.wikipedia.org/wiki/Affluence_in_the_United_States#Top_percentiles https://en.wikipedia.org/wiki/Affluence_in_the_United_States...
- refurb 11y ago
  Nobody paid those rates. There were a ton of deductions available to reduce taxable income. Also the top rate would apply to income over $5M in today's dollars (can't remember the exact number, but it was high). How much money do you think you can raise from folks making over $5M per year? The answer is not much, there aren't that many of them relatively speaking. Also, if you include the earned income tax credit, low income folks are paying way less in taxes than they were back then.
  - cottonseed 11y ago
    > There are a ton of deductions available to reduce taxable income. FTFY. They wouldn't today, either.
    - refurb 11y ago
      I think your comment is a bit cynical, but I can't disagree. There are many ways to make money and if the gov't decides to tax one more highly, the money just shifts to the low tax routes. The gov't eventually clamps down and the process starts all over again. Hell, the reason the US has employer sponsored healthcare is because there were wage caps during WW2. So what did companies do? Compensate with something other than wages.
      - cottonseed 11y ago
        I'm just looking at the data. In 2010, the top tax rate was 35%. The nominal tax rate for 1% earners (over $1.4M) was 20% [0]. [0] https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Effective_income_tax_rates https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
- marcoperaza 11y ago
  That's misleading. Marginal tax rates on the highest tax brackets were nominally high, BUT there were way more deductions and loopholes. There was no Alternative Minimum Tax like there is today. A big part of Reagan's tax reforms was eliminating these deductions while bringing the rates down. Also, America was the only game in town during those years. All of the competition was still recovering from WW2 and/or being suffocated by communist rule. And it was a single market the size of the rest of the Western world combined. If you had money, America was the place to invest it. Major technological breakthroughs, even when originating overseas, generally took off in the US. On a moral note, I think that an 80% tax rate is oppressive. That money would otherwise be flowing into business investments & consumption, charity, and civil society, the natural institutions of free people.
  - cottonseed 11y ago
    > That money would otherwise be flowing into business investments & consumption, charity, and civil society, the natural institutions of free people. What do you think the gov't does with it, burn it? 5 of the 6 startups I worked for wouldn't have happened without government assistance (DARPA-funded university project spinouts, SBA, government contracting.) Consumption is spending money. They government spends it, or give it to people who do (that seems to cover consumption and charity.) What is more civil than banding together to take some of the variance out of life?
    - marcoperaza 11y ago
      > What is more civil than banding together to take some of the variance out of life? Letting people decide how to spend their own money. Private charity is "banding together to take some of the variance out of life". Like all of the government's authority, taxation flows from the end of a gun. You can be imprisoned and fined if you don't pay what you owe. > What do you think the gov't does with it, burn it? 5 of the 6 startups I worked for wouldn't have happened without government assistance Government investment in certain sectors can be good, such as for fundamental sciences. But in general, private investment does better with the same amount of money. Even when government programs are well designed at their birth, the world around them changes faster than politics and bureaucracy can keep up with.
doubt_me 11y ago
Reminds me of this Ted Talk from 2014 Nick Hanauer: Beware, fellow plutocrats, the pitchforks are coming www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitchforks_are_coming
ctdonath 11y ago
Stop taxing away so much income. Resolve the entitlements cliff that makes earning more than $12/hr untenable until breaking even at $38/hr. Back off the regulations that make inexpensive living practically illegal. Help people relocate out of high cost of living areas (NY Times location take note). Slash the red tape making business startups near impossible. Squelch the tort, liability, insurance and other laws making risk costs overwhelming. You can't fix social problems by demanding capitalism be socialism.
- maak 11y ago
  Scandinavia says, yes you can.
  - lfjmfkekdk5 11y ago
    Scandinavia is not socialist. When will this ignorant myth end?
    - MrTonyD 11y ago
      Democratic Socialist parties have been in power in many Scandinavian countries for decades. The current systems evolved from Socialism - and Democratic Socialism really defines the modern, functioning form of Socialism -- a type of Socialism that provides a positive alternative to the unfettered Capitalism suggested by the original poster.
      - xname 11y ago
        What you called Socialism is just capitalism+welfare. It has nothing to do with Socialism.
      - eli_gottlieb 11y ago
        No, that's social democracy you're thinking of.
      - lfjmfkekdk5 11y ago
        The ignorance of economic systems here on HN is just unbelievable. Scandinavian countries are very pro free trade and capitalist. They have that alongside a relatively large welfare system. That is not socialism. They are capitalist with few regulations and few state owned enterprises. It's shocking how the myth continues to persist among the economically uninformed.
MrTonyD 11y ago
Am I supposed to take the article seriously? A rich guy suggesting that the first thing to do to solve the 1% having 50% of our wealth is "Government can provide tax incentives to business". It made me think of the quote from John Kenneth Galbraith."It is a strange idea that the rich work better if they constantly get richer, while the poor just work better if they get poorer". We need to stop incentivizing the rich - they have been incentivized for too long already.
- gnaritas 11y ago
  Money is the incentive for being rich, they don't need any more incentives than that.
- gremlinsinc 11y ago
  Amen brother- -the only way to solve this is a Guaranteed Basic Income across the board... With maybe a 50-60% tax on the rich, we don't need to go all the way up to 80%. They'll get it back probably in loopholes, and business breaks anyways.
  - spacehome 11y ago
    I'm not sure exactly what you think will happen if the tax rate is 50-60%. My tax rate in California is already over 50%, and I just see my dollars funding the murder of lots of brown people.
    - cpursley 11y ago
      Agreed. "Higher taxes" is a lazy excuse for just fixing how the money is being utilized in the first place. I'd agree to higher taxes, but only after political jurisdictions have proved they are good stewards of my money.
  - TheHydroImpulse 11y ago
    As a libertarian, basic income seemed quite against everything initially. However, if basic income were to completely replace the current entitlement system and all it's defects, I would absolutely support it. It would cost considerably less and thus higher taxation would be less of a concern (as a way to stifle more money from the rich to the poor).
adventured 11y ago
Ok, let's deal with the root cause of why income inequality soared from 1995-2015: The Federal Reserve debased the dollar, paying for wars, terrible government spending choices and entitlements that are ballooning. They also spurred numerous asset bubbles through bad policy choices. It's entirely understood that the Fed can cause asset bubbles by holding interest rates too low for too long. They've been aggressively using that understanding for the last six years. The rich can deal with the dollar losing half of its value in a decade. Nobody else can. The rich have capital, and make a lot of money on the Fed's intentional asset bubbles in real estate and stocks. The S&P 500 - and the wealthy who own most of it - benefits massively from a debased dollar, as their exports boom - while most of America suffers from a vast loss of purchasing power. The end of the strong dollar of the 1990s, is what began the era of dramatically increased inequality. It's not a coincidence. The currency race to the bottom, is really code for a decimation of the median standard of living. This is especially true in a country that consumes so much of its own manufacturing. Debasing the dollar and sending commodities soaring benefited a very small group of people (Saudi Arabia, Canada, Australia, Norway, commodity investors). Who it didn't benefit: US manufacturing that is consumed domestically. The oil price boom of the mid 2000's, caused by the weak dollar, also harmed the US dramatically as deficits soared and the Middle East got uber rich. It acted as a huge wealth transfer to Canada as well. The soaring inequality was caused by the Fed's horrendous, and repetitive monetary policy mistakes. You'll find people on the left go out of their way to evade ever pinning any blame to the Fed (it makes the welfare state possible through deficits and debt, so they love the Fed), and the people on the right don't want to talk about inequality at all. What did QE accomplish? Primarily it reinflated wealthy people's balance sheets, and reinflated the housing market (which disproportionately benefits the top half in the US). The median net wealth of Americans still hasn't recovered, even with housing and stocks so high. Skeptics will claim QE helped to heal the economy, generate jobs and so on - as though the US economy didn't do that on its own for 200 years prior to the Fed utilizing QE.
- MrTonyD 11y ago
  I'm not saying you're completely wrong...but it is worth noticing that the middle class had growing prosperity until the mid 1970's - and since then has either stagnated or slid down. The GDP during that time was rising - but going disproportionately to the wealthy. So it is worth examining other factors in the change - I would argue that "debasing the currency" becomes no more than an occasionally contributing factor.
tempestn 11y ago
I was recently having a conversation with some friends about what major technological changes we might see in the future. The idea was that when these changes happen, they tend to alter society in ways that couldn't easily have been predicted beforehand. It would have been hard to imagine the ubiquity of the internet or smartphones in our lives before they existed. So what could the next major change be? Self-driving cars on the scale where manual driving is illegal on city streets perhaps? That actually isn't too hard to envision. Something else? One thought that came out of that is that a major change I would love to see, although not a technological one, is for a major economy to implement a workable guaranteed basic income. It's been a popular subject on HN, and does seem to be starting to gain traction in the 'real world'. While obviously there are issues to solve, it's something I see as really having a chance of working. _Something_ will have to happen to address the growing inequality as technology keeps moving us closer to a post-scarcity society, and a basic income seems to fit the bill. Or perhaps it will be something else. But some kind of a transition to a post-scarcity society seems inevitable at _some_ point if the human race survives long enough, so maybe significant strides in that direction will be made in our lifetimes. It would certainly be exciting.
- 1971genocide 11y ago
  I do not think basic income is a solution. I know programmers are thrilled at the magic of modern AI but its very simple to tip it over even theoretically. Self Driving cars are not even that good, they are better than the average and that is an immense amount of creative labour destruction. But if you look back at history there has been a greater amount of labour destruction both physical and mental. Coming back to basic income. Do you think the way we use resources in the modern world is anyway efficient ? Speaking from Physics we are still way off from having solved major problems in society. Right now 1/2 of adults in the UK are on entitlement which puts immense debt burden on the other half. Both US and Europe are heading in that direction. Both US and Europe need a massive restructuring of their infrastructure if climate change is to be dealt with. Not to mention helping african countries get on their feet. Right now that burden is shared mostly be china who are helping build roads and other developed nations within africa like nigeria. The faster we can get contraceptives to africa we can stop the problem of the african baby boom due to industrialization right at its toes. We know from data that the country of Nigeria alone will have 750 Million people by 2100. These are real problems facing the globalized economy. There also the problem of deflation. Economically once the poor global south industrialize there will be immense downward pressure of wages for all forms of jobs. We know what happened when 700 million chinese joined the global economy. What happens when the rest of the 3 billion join ? Most of them of younger age and would constitute higher labour productivity. China as a country is already much more efficient - they have high speed rail links connecting their entire nation. No need to buy fossil fuels when all their transportation is powered via electric. which is generated by solar panels in the gobi desert. They have one of the most sophisticated supply chain producing all our iphones and computers. Now they are interested in doing the same in central asia which geographically is the most mineral rich regions on earth. Yes all of this doesn't matter if you are in Europe where the population is low enough and the resources is high. But the cost of production will get lower and labour gets cheaper along with resources. We will end up with a situation where something in Europe costs significantly higher than produced in africa.
astrocyte 11y ago
I'd like to strike at the core of this ... Why is that every such time a system is extorted/exploited to the point of disaster, the same individuals who pushed it to that point then want to say 'We need to deal with the problem'.. The problem they very well and knowingly created.. And they never speak up before this point.. It's only after they've sucked every last drop out of the system.. And Oh' b.t.w: > lets not solve it by fixing the exploits that created the problem in the first place > lets not go after the individuals who exploited it the most and their gains Lets solve it by : > extorting/exploiting the income of everybody > Putting a band-aid on the problem > And Oh', btw, lets put the people who created the disaster in charge of administering the program Is this supposed to be a joke? And why does society fall for it every-time? And I like how socialism is being promoted as a solution while the very same jokers who decimated American culture/free market capitalism are pumping in illegals by the boatloads. It's as if they're already prepping to tank/exploit the next system that gets paraded as a solution. Yeah, so there's not enough jobs and the jobs there are don't pay enough because we allow corporations and individuals to extort the crap out of everything a person needs. So, lets ignore all of that and have : > Guaranteed income > Free healthcare And since there isn't enough to go around in way of jobs, lets have : > Open borders so people can overload the system > Tons more legal immigrants > Tons more illegal immigrants And lets not focus at all on education so people can actually be productive... In fact, lets make it harder for the educated individuals by importing tons of competition from outside the country...Yeah, that'll work out great Who pays for all of this? Certainly not those who create/created this disaster. But yeah, socialism will fix things. After-all, it works in Europe where they have all of the things we don't have : > Far more strict immigration > Far more Homogeneous culture and population > Far less exploitative economic system > Far more educated and involved populous > Far less corrupt government *Facepalm .. Here we go again .. For anyone who doesn't see that this country is in sharp decline, I wonder. Every time, America puts the foxes in charge of the hen house and then people wonder why it ends in disaster... When you fix a bug, do you target the root or do you try to find the most inefficient and indirect way of fixing the code issue? If you have an unreliable code base (economic equality), do you initiate an unbridled code blitz among your worst software engineers (Unbounded illegal immigration)? I feel like I'm in the twilight zone sometimes in this country... But then, I stop and look around and I decide to see it for what it is and then things don't see that strange after-all.
yummyfajitas 11y ago
This article is incoherent. Title discusses income inequality, then 13 paragraphs discussing issues which are completely orthogonal to inequality (mobility, "poverty" and overconsumption). The article never actually addresses inequality at all. Then it starts comparing unrelated statistics (productivity and wages) and cribbing about how they diverge, and ignoring the real cause (the rise of non-wage benefits) for the divergence. Finally, it devolves into random peripheral solutions like reducing share buybacks. Because somehow it'll be good for America if Qualcomm can't return money to shareholders to invest in Tesla? I guess it's better for CEO's to spend profits on empire building than for investors to seek returns? Why is this nonsense here?
- guelo 11y ago
  Productivity and wages are most definitely related. Increased productivity is surplus value created per worker. In a strong labor market workers are able to demand some of the generated productivity surplus as wages. When workers have no power all the gains go to the owners which is what causes inequality to rise.
  - yummyfajitas 11y ago
    In a strong labor market workers are able to demand some of the generated productivity surplus as compensation. Wages have been somewhat flat because employers are paying workers in (untaxed) health and retirement benefits instead of (taxed) wages. Secondly, there is no particular reason wages should track productivity. Productivity is output / workers. If output increases due to capital (e.g. automation), there is no reason for wages to go up.
DickingAround 11y ago
This all just beats around the bush. What's killing incomes for some and raising others is automation. One day soon, the only asset people are born with (minds and bodies) will be essentially zero value. Until now, everyone has at least that asset and now they won't. That might imply we need guaranteed income. And maybe we do. But if that's coming from the government, remember who we're talking about; they lie to start wars, they're replete with corruption. If we ask the government to redistribute out wealthy, they'll redistribute it to their friends. The power to take everyone's money is too tempting for anyone to have.
- mc32 11y ago
  I think you're right. If not right now, some time in the future. I think at this time outsourcing and off-shoring are dampening wage growth --but in the future it will be automation which puts the kibosh on it. For sure higher minimum wages will accelerate the obsolescence of low-skill low productivity jobs. The one question about guaranteed income is who is qualified for it? Anyone and everyone? What do rich countries with high automation do about illegal immigrants, send them back? If minimum income is offered to everyone, why wouldn't everyone for whom the guarantee is above their own incomes want to come and undermine everyone else's income?
tomjen3 11y ago
No we don't. Socialism failed for a reason instead we should encourage people to be less jealous.
thetopher 11y ago
Excuse my ignorance, but I have an honest question. I assume that income inequality can be approximated by measuring the difference between the income of a certain group of high-earners and a certain group of low-earners. If the income of the low-earners is increased by mandate then wouldn't the entire system, over time, adjust upward? Wouldn't the difference between the two groups (income inequality) remain the same?
Mz 11y ago
We business leaders know what to do. But do we have the will to do it? Are we willing to control the excessive greed so prevalent in our culture today and divert resources to better education and the creation of more opportunity? I think we need to wrestle with the fact that the world has changed and education and credentialing are different things. Education and information can be made available to large numbers of people for very little money via the Internet. It doesn't get you a status-y sheepskin, but that doesn't always matter. This new reality requires a new approach to sharing the wealth. I don't know what exactly that will look like, but I am confident that we need to hammer that out. The fact that real wages have been flat for about four decades, while productivity has increased by 80 percent, shows that has not been happening. Before the early 1970s, wages and productivity were both rising. Now most gains from productivity go to shareholders, not employees. This is a serious problem and needs to be clearly addressed. There is a way to start. Government can provide tax incentives to business to pay more to employees making $80,000 or less. The program would exist for three to five years and then be evaluated for effectiveness. I have my doubts that this is the way to address it. Generally speaking, poverty solutions that start by trying to help 'poor' people are dead ends that do not work. A more oblique approach, that defines the problem in other terms, is usually more effective.

32 points by kareemm 11y ago

"I’m scared. ... the income gap will most likely be resolved in one of two ways: by major social unrest or through oppressive taxes, such as the 80 percent tax rate on income over $500,000" I stopped reading here. Try again. Current top income tax rates are insanely slow by historical standards. They were 90% in the 40s and 50s and 70% in the 70s [0] [0] http://taxfoundation.org/sites/default/files/docs/fed_individual_rate_history_nominal.pdf http://taxfoundation.org/sites/default/files/docs/fed_indivi...

wmeredith 11y ago
I had s similar reaction to this example of an "oppressive tax". This is just the sort of taxes that were in place when America was taking over the world. It's not oppressive. It's a good idea. It hurts the oligarchs, it helps the 99 percent, which is who drives the economy.
- liquidise 11y ago
  I have never understood the notion that taxes at or above 50% are at all ethical, and yet some argue openly for 80%+. The idea that the government is entitled to more of someone's earnings than they are is shocking. To then suggest the government is entitled to 4 out of every 5 dollars a person earns is, quite frankly, beneath consideration in my eyes. What right do you, i or anyone else have to call this anything but theft?
  - lfowles 11y ago
    Tax brackets. The government isn't entitled to 80% of what _any_ person earns, just a portion of what the _richest_ earn. Looking at GP's PDF for 1945: Income Take home $10,000 $7,060 $20,000 $12,140 $50,000 $21,680 $100,000 $29,680 $200,000 $37,180 $500,000 $55,180 Of course, this is for income, the people being taxed the highest rates will also have capital gains. Inspired by michaelchisari below, here's the same table in 2015 $$ Income Take home $132,576.67 $93,599.13 $265,153.33 $160,948.07 $662,883.33 $287,426.21 $1,325,766.67 $393,487.55 $2,651,533.33 $492,920.05 $6,628,833.33 $731,558.05 Whew, big numbers.
    - michaelchisari 11y ago
      Fr the record, $55,180 in 1945 is the equivalent of $727,917.20 now.
      - lfowles 11y ago
        Thanks! Added another table with modern day $$$. Big numbers!
    - liquidise 11y ago
      > The government isn't entitled to 80% of what _any_ person earns, just a portion of what the _richest_ earn. Astounding double standards. Some numbers: if Ted makes $100,000/yr and Jim earns $1,000,000/yr and both are taxed at 30%, Jim is already paying $270,000 _more_ in taxes every year. Even at the same tax rate. Crank Jim's rate to 90% and we are looking at an $870,000/yr difference! Through what greed can we morally justify such insatiable lust for the money other's have earned? Furthermore, the capital gains argument is rife with unintended consequences. It, quite literally, disincentives the wealthiest folks from innovating and earning money through economically productive means. Instead, we send the message "if you insist on earning money by working like the rest of us, we are going to take 80% of it. But, if you want to rest on the laurels of your investments and be otherwise unproductive, by all means. The choice is yours." It terrifies me that this mindset is the majority opinion these days.
      - lfowles 11y ago
        As the other reply says " Please learn how marginal tax brackets and rates work before talking about the issue where people can hear you. "
        liquidise 11y ago
        I am aware how they work. I get that all earning up to a point are taxed under bracket x, and then after that are taxed at bracket y, and so forth. Unless you mean something else in which case i welcome you to explain where i have erred here. If that is in fact what you mean, it still changing absolutely nothing. The effective tax rate on folks in these upper brackets would still be enormous. But i guess piggybacking baseless comments is an easy way to avoid justifying these stances. I still have not seen someone say how they are justified in taking that much money from people while feeling ethical.
  - 1971genocide 11y ago
    Do you know what is theft ? When kids born today are unable to afford to go to college, while the same people who are against +80% tax were born in an era when tax was way higher at +90% that helped pay for their education and create the infrastructure that allowed them to earn their wealth. "Surplus Wealth is a scared trust which its possessor is bound to administer in his lifetime for the good of the community " - Andrew Caregie. Guess what if you think the government is treating you unfairly then be prepared when society bifurcates and returns a stack error in the form of "bolsheviks".
    - onewaystreet 11y ago
      Some of the wealthiest people in the US were born just a few decades ago. Not all US billionaires are not crotchety 80-year-olds.
    - yummyfajitas 11y ago
      More kids than ever before can afford to go to college. http://www.bls.gov/opub/ted/images/2010/ted_20100428.png http://www.bls.gov/opub/ted/images/2010/ted_20100428.png
      - rosser 11y ago
        Having little choice but to sign yourself up for a mortgage-sized debt that can't be discharged isn't the most obvious definition of "affordable" I've ever encountered.
        yummyfajitas 11y ago
        I'm defining "afford to go to college" as "have enough money to actually attend if they choose to". The number of people who actually attend is a lower bound on this number. A quick google search yields an average cost of $9k for a state school, $22k for out of state, and $31k for private. Maybe the expensive side of college is "mortgage-sized" debt, provided you are comparing to the cheapest mortgages.
        thetopher 11y ago
  - eli_gottlieb 11y ago
    Please learn how marginal tax brackets and rates work before talking about the issue where people can hear you.
  - unprepare 11y ago
    > dollars a person earns When an individual who grows up without ever taking advantage of a single piece of society, they will have an argument for taxes being unfair. Lets not forget the debts that all citizens owe to the country: Roads Internet Telephones Water Food regulation Environmental regulation Scientific advancements Protection from outside forces (military) Flight regulations etc. Once youve paid for all of those you can begin to complain about how taxes are unfair.
    - liquidise 11y ago
      I am not arguing for no taxes. I am saying that an effective tax rate above 50% is theft. Taxing more successful people at multiplicatively higher %'s is lunacy. They already are paying way more than lower income folks at the same rate. If your argument is that more successful people consume more resources and thus owe the government a greater debt, then i would argue we should be taxing consumption more. Not income.
      - unprepare 11y ago
        > i would argue we should be taxing consumption more Consumption tax disproportionately affects the poorest citizens. It is a non-workable solution. Consumption is what drives the economy, disincentives to consumption would hurt the economy as a whole (causing the wealthy to lose money via investments). Further, a citizen has no hope to pay off the debt that it owes the government for the things i listed previously. There is no tax rate at which you would effectively pay back the government for its investments in society. The yearly budget of the US Department of Transportation alone, is 77 billion - that's just to keep federal roads drivable. If you think theres some tax level at which you have paid for the initial investment and upkeep of the federal highway system, by all means share it here, i would love to know what number you think is 'fair' since its 'your money' even though they aren't 'your roads' You have an extremely entitled view of what "fair" is.
  - njharman 11y ago
    Don't earn such a disproportionate amount of money and it won't get "stolen". In other words if you don't steal so much from others, go meet won't steal it back.
- fezz 11y ago
  It also created a larger market for hugely expensive cars and other luxury items. The 1970's had a 70% tax for the richest. In 1982, that dropped to 50% and coincidently was when the boom in excess really got started.
  - cpursley 11y ago
    Good point! Another reason to drop personal and corporate income tax, short-term capital gains tax and replace it with a progressive consumption tax.
- mc32 11y ago
  I don't think it's that simple. Oligarchs will go live in another jurisdiction which taxes less. Rich people have alternatives, so unless you have a global tax agreement of some sort, I don't think this is viable. Potentially, one could end up collecting fewer tax dollars because they are "living" in the Bahamas or Cayman Is.
  - bro-stick 11y ago
    Truly rich people tend to invest their balance sheet mostly illiquidly in trusts and pay themselves a low-as-possible allowance from low interest, short-term loans against assets. Personally, they don't tend to own much directly to avoid the taxman's reach and for liability too.
ikeboy 11y ago
There's an argument that the effective rates then were only around 50%. See https://www.aei.org/publication/why-we-cant-go-back-to-sky-high-1950s-tax-rates/ https://www.aei.org/publication/why-we-cant-go-back-to-sky-h..., http://www.bloombergview.com/articles/2013-01-02/1950s-tax-fantasy-is-a-republican-nightmare http://www.bloombergview.com/articles/2013-01-02/1950s-tax-f..., and http://www.wsj.com/articles/SB10001424127887324705104578151601554982808 http://www.wsj.com/articles/SB100014241278873247051045781516....
Rangi42 11y ago
The highest one I see is a 94% tax on income over $200,000 in 1945. First of all, that was towards the end of a World War during which we developed an entirely new kind of bomb. Nothing our government is currently doing requires that level of commitment from its citizens. Second, that income bracket in 1945 would be at $2.676 million today [1]. Even the top 0.1% of US incomes today start at just $1.6 million [2]; a tax bracket like the 1945 one would have barely any people in it. [1]: https://www.wolframalpha.com/input/?i=US%24200000+%281945+US+dollars%29 https://www.wolframalpha.com/input/?i=US%24200000+%281945+US... [2]: https://en.wikipedia.org/wiki/Affluence_in_the_United_States#Top_percentiles https://en.wikipedia.org/wiki/Affluence_in_the_United_States...
refurb 11y ago
Nobody paid those rates. There were a ton of deductions available to reduce taxable income. Also the top rate would apply to income over $5M in today's dollars (can't remember the exact number, but it was high). How much money do you think you can raise from folks making over $5M per year? The answer is not much, there aren't that many of them relatively speaking. Also, if you include the earned income tax credit, low income folks are paying way less in taxes than they were back then.
- cottonseed 11y ago
  > There are a ton of deductions available to reduce taxable income. FTFY. They wouldn't today, either.
  - refurb 11y ago
    I think your comment is a bit cynical, but I can't disagree. There are many ways to make money and if the gov't decides to tax one more highly, the money just shifts to the low tax routes. The gov't eventually clamps down and the process starts all over again. Hell, the reason the US has employer sponsored healthcare is because there were wage caps during WW2. So what did companies do? Compensate with something other than wages.
    - cottonseed 11y ago
      I'm just looking at the data. In 2010, the top tax rate was 35%. The nominal tax rate for 1% earners (over $1.4M) was 20% [0]. [0] https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Effective_income_tax_rates https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
marcoperaza 11y ago
That's misleading. Marginal tax rates on the highest tax brackets were nominally high, BUT there were way more deductions and loopholes. There was no Alternative Minimum Tax like there is today. A big part of Reagan's tax reforms was eliminating these deductions while bringing the rates down. Also, America was the only game in town during those years. All of the competition was still recovering from WW2 and/or being suffocated by communist rule. And it was a single market the size of the rest of the Western world combined. If you had money, America was the place to invest it. Major technological breakthroughs, even when originating overseas, generally took off in the US. On a moral note, I think that an 80% tax rate is oppressive. That money would otherwise be flowing into business investments & consumption, charity, and civil society, the natural institutions of free people.
- cottonseed 11y ago
  > That money would otherwise be flowing into business investments & consumption, charity, and civil society, the natural institutions of free people. What do you think the gov't does with it, burn it? 5 of the 6 startups I worked for wouldn't have happened without government assistance (DARPA-funded university project spinouts, SBA, government contracting.) Consumption is spending money. They government spends it, or give it to people who do (that seems to cover consumption and charity.) What is more civil than banding together to take some of the variance out of life?
  - marcoperaza 11y ago
    > What is more civil than banding together to take some of the variance out of life? Letting people decide how to spend their own money. Private charity is "banding together to take some of the variance out of life". Like all of the government's authority, taxation flows from the end of a gun. You can be imprisoned and fined if you don't pay what you owe. > What do you think the gov't does with it, burn it? 5 of the 6 startups I worked for wouldn't have happened without government assistance Government investment in certain sectors can be good, such as for fundamental sciences. But in general, private investment does better with the same amount of money. Even when government programs are well designed at their birth, the world around them changes faster than politics and bureaucracy can keep up with.

doubt_me 11y ago

Reminds me of this Ted Talk from 2014 Nick Hanauer: Beware, fellow plutocrats, the pitchforks are coming www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitchforks_are_coming

ctdonath 11y ago

Stop taxing away so much income. Resolve the entitlements cliff that makes earning more than $12/hr untenable until breaking even at $38/hr. Back off the regulations that make inexpensive living practically illegal. Help people relocate out of high cost of living areas (NY Times location take note). Slash the red tape making business startups near impossible. Squelch the tort, liability, insurance and other laws making risk costs overwhelming. You can't fix social problems by demanding capitalism be socialism.

maak 11y ago
Scandinavia says, yes you can.
- lfjmfkekdk5 11y ago
  Scandinavia is not socialist. When will this ignorant myth end?
  - MrTonyD 11y ago
    Democratic Socialist parties have been in power in many Scandinavian countries for decades. The current systems evolved from Socialism - and Democratic Socialism really defines the modern, functioning form of Socialism -- a type of Socialism that provides a positive alternative to the unfettered Capitalism suggested by the original poster.
    - xname 11y ago
      What you called Socialism is just capitalism+welfare. It has nothing to do with Socialism.
    - eli_gottlieb 11y ago
      No, that's social democracy you're thinking of.
    - lfjmfkekdk5 11y ago
      The ignorance of economic systems here on HN is just unbelievable. Scandinavian countries are very pro free trade and capitalist. They have that alongside a relatively large welfare system. That is not socialism. They are capitalist with few regulations and few state owned enterprises. It's shocking how the myth continues to persist among the economically uninformed.

MrTonyD 11y ago

Am I supposed to take the article seriously? A rich guy suggesting that the first thing to do to solve the 1% having 50% of our wealth is "Government can provide tax incentives to business". It made me think of the quote from John Kenneth Galbraith."It is a strange idea that the rich work better if they constantly get richer, while the poor just work better if they get poorer". We need to stop incentivizing the rich - they have been incentivized for too long already.

gnaritas 11y ago
Money is the incentive for being rich, they don't need any more incentives than that.
gremlinsinc 11y ago
Amen brother- -the only way to solve this is a Guaranteed Basic Income across the board... With maybe a 50-60% tax on the rich, we don't need to go all the way up to 80%. They'll get it back probably in loopholes, and business breaks anyways.
- spacehome 11y ago
  I'm not sure exactly what you think will happen if the tax rate is 50-60%. My tax rate in California is already over 50%, and I just see my dollars funding the murder of lots of brown people.
  - cpursley 11y ago
    Agreed. "Higher taxes" is a lazy excuse for just fixing how the money is being utilized in the first place. I'd agree to higher taxes, but only after political jurisdictions have proved they are good stewards of my money.
- TheHydroImpulse 11y ago
  As a libertarian, basic income seemed quite against everything initially. However, if basic income were to completely replace the current entitlement system and all it's defects, I would absolutely support it. It would cost considerably less and thus higher taxation would be less of a concern (as a way to stifle more money from the rich to the poor).

adventured 11y ago

Ok, let's deal with the root cause of why income inequality soared from 1995-2015: The Federal Reserve debased the dollar, paying for wars, terrible government spending choices and entitlements that are ballooning. They also spurred numerous asset bubbles through bad policy choices. It's entirely understood that the Fed can cause asset bubbles by holding interest rates too low for too long. They've been aggressively using that understanding for the last six years. The rich can deal with the dollar losing half of its value in a decade. Nobody else can. The rich have capital, and make a lot of money on the Fed's intentional asset bubbles in real estate and stocks. The S&P 500 - and the wealthy who own most of it - benefits massively from a debased dollar, as their exports boom - while most of America suffers from a vast loss of purchasing power. The end of the strong dollar of the 1990s, is what began the era of dramatically increased inequality. It's not a coincidence. The currency race to the bottom, is really code for a decimation of the median standard of living. This is especially true in a country that consumes so much of its own manufacturing. Debasing the dollar and sending commodities soaring benefited a very small group of people (Saudi Arabia, Canada, Australia, Norway, commodity investors). Who it didn't benefit: US manufacturing that is consumed domestically. The oil price boom of the mid 2000's, caused by the weak dollar, also harmed the US dramatically as deficits soared and the Middle East got uber rich. It acted as a huge wealth transfer to Canada as well. The soaring inequality was caused by the Fed's horrendous, and repetitive monetary policy mistakes. You'll find people on the left go out of their way to evade ever pinning any blame to the Fed (it makes the welfare state possible through deficits and debt, so they love the Fed), and the people on the right don't want to talk about inequality at all. What did QE accomplish? Primarily it reinflated wealthy people's balance sheets, and reinflated the housing market (which disproportionately benefits the top half in the US). The median net wealth of Americans still hasn't recovered, even with housing and stocks so high. Skeptics will claim QE helped to heal the economy, generate jobs and so on - as though the US economy didn't do that on its own for 200 years prior to the Fed utilizing QE.

MrTonyD 11y ago
I'm not saying you're completely wrong...but it is worth noticing that the middle class had growing prosperity until the mid 1970's - and since then has either stagnated or slid down. The GDP during that time was rising - but going disproportionately to the wealthy. So it is worth examining other factors in the change - I would argue that "debasing the currency" becomes no more than an occasionally contributing factor.

tempestn 11y ago

I was recently having a conversation with some friends about what major technological changes we might see in the future. The idea was that when these changes happen, they tend to alter society in ways that couldn't easily have been predicted beforehand. It would have been hard to imagine the ubiquity of the internet or smartphones in our lives before they existed. So what could the next major change be? Self-driving cars on the scale where manual driving is illegal on city streets perhaps? That actually isn't too hard to envision. Something else? One thought that came out of that is that a major change I would love to see, although not a technological one, is for a major economy to implement a workable guaranteed basic income. It's been a popular subject on HN, and does seem to be starting to gain traction in the 'real world'. While obviously there are issues to solve, it's something I see as really having a chance of working. _Something_ will have to happen to address the growing inequality as technology keeps moving us closer to a post-scarcity society, and a basic income seems to fit the bill. Or perhaps it will be something else. But some kind of a transition to a post-scarcity society seems inevitable at _some_ point if the human race survives long enough, so maybe significant strides in that direction will be made in our lifetimes. It would certainly be exciting.

1971genocide 11y ago
I do not think basic income is a solution. I know programmers are thrilled at the magic of modern AI but its very simple to tip it over even theoretically. Self Driving cars are not even that good, they are better than the average and that is an immense amount of creative labour destruction. But if you look back at history there has been a greater amount of labour destruction both physical and mental. Coming back to basic income. Do you think the way we use resources in the modern world is anyway efficient ? Speaking from Physics we are still way off from having solved major problems in society. Right now 1/2 of adults in the UK are on entitlement which puts immense debt burden on the other half. Both US and Europe are heading in that direction. Both US and Europe need a massive restructuring of their infrastructure if climate change is to be dealt with. Not to mention helping african countries get on their feet. Right now that burden is shared mostly be china who are helping build roads and other developed nations within africa like nigeria. The faster we can get contraceptives to africa we can stop the problem of the african baby boom due to industrialization right at its toes. We know from data that the country of Nigeria alone will have 750 Million people by 2100. These are real problems facing the globalized economy. There also the problem of deflation. Economically once the poor global south industrialize there will be immense downward pressure of wages for all forms of jobs. We know what happened when 700 million chinese joined the global economy. What happens when the rest of the 3 billion join ? Most of them of younger age and would constitute higher labour productivity. China as a country is already much more efficient - they have high speed rail links connecting their entire nation. No need to buy fossil fuels when all their transportation is powered via electric. which is generated by solar panels in the gobi desert. They have one of the most sophisticated supply chain producing all our iphones and computers. Now they are interested in doing the same in central asia which geographically is the most mineral rich regions on earth. Yes all of this doesn't matter if you are in Europe where the population is low enough and the resources is high. But the cost of production will get lower and labour gets cheaper along with resources. We will end up with a situation where something in Europe costs significantly higher than produced in africa.

astrocyte 11y ago

I'd like to strike at the core of this ... Why is that every such time a system is extorted/exploited to the point of disaster, the same individuals who pushed it to that point then want to say 'We need to deal with the problem'.. The problem they very well and knowingly created.. And they never speak up before this point.. It's only after they've sucked every last drop out of the system.. And Oh' b.t.w: > lets not solve it by fixing the exploits that created the problem in the first place > lets not go after the individuals who exploited it the most and their gains Lets solve it by : > extorting/exploiting the income of everybody > Putting a band-aid on the problem > And Oh', btw, lets put the people who created the disaster in charge of administering the program Is this supposed to be a joke? And why does society fall for it every-time? And I like how socialism is being promoted as a solution while the very same jokers who decimated American culture/free market capitalism are pumping in illegals by the boatloads. It's as if they're already prepping to tank/exploit the next system that gets paraded as a solution. Yeah, so there's not enough jobs and the jobs there are don't pay enough because we allow corporations and individuals to extort the crap out of everything a person needs. So, lets ignore all of that and have : > Guaranteed income > Free healthcare And since there isn't enough to go around in way of jobs, lets have : > Open borders so people can overload the system > Tons more legal immigrants > Tons more illegal immigrants And lets not focus at all on education so people can actually be productive... In fact, lets make it harder for the educated individuals by importing tons of competition from outside the country...Yeah, that'll work out great Who pays for all of this? Certainly not those who create/created this disaster. But yeah, socialism will fix things. After-all, it works in Europe where they have all of the things we don't have : > Far more strict immigration > Far more Homogeneous culture and population > Far less exploitative economic system > Far more educated and involved populous > Far less corrupt government *Facepalm .. Here we go again .. For anyone who doesn't see that this country is in sharp decline, I wonder. Every time, America puts the foxes in charge of the hen house and then people wonder why it ends in disaster... When you fix a bug, do you target the root or do you try to find the most inefficient and indirect way of fixing the code issue? If you have an unreliable code base (economic equality), do you initiate an unbridled code blitz among your worst software engineers (Unbounded illegal immigration)? I feel like I'm in the twilight zone sometimes in this country... But then, I stop and look around and I decide to see it for what it is and then things don't see that strange after-all.

yummyfajitas 11y ago

This article is incoherent. Title discusses income inequality, then 13 paragraphs discussing issues which are completely orthogonal to inequality (mobility, "poverty" and overconsumption). The article never actually addresses inequality at all. Then it starts comparing unrelated statistics (productivity and wages) and cribbing about how they diverge, and ignoring the real cause (the rise of non-wage benefits) for the divergence. Finally, it devolves into random peripheral solutions like reducing share buybacks. Because somehow it'll be good for America if Qualcomm can't return money to shareholders to invest in Tesla? I guess it's better for CEO's to spend profits on empire building than for investors to seek returns? Why is this nonsense here?

guelo 11y ago
Productivity and wages are most definitely related. Increased productivity is surplus value created per worker. In a strong labor market workers are able to demand some of the generated productivity surplus as wages. When workers have no power all the gains go to the owners which is what causes inequality to rise.
- yummyfajitas 11y ago
  In a strong labor market workers are able to demand some of the generated productivity surplus as compensation. Wages have been somewhat flat because employers are paying workers in (untaxed) health and retirement benefits instead of (taxed) wages. Secondly, there is no particular reason wages should track productivity. Productivity is output / workers. If output increases due to capital (e.g. automation), there is no reason for wages to go up.

DickingAround 11y ago

This all just beats around the bush. What's killing incomes for some and raising others is automation. One day soon, the only asset people are born with (minds and bodies) will be essentially zero value. Until now, everyone has at least that asset and now they won't. That might imply we need guaranteed income. And maybe we do. But if that's coming from the government, remember who we're talking about; they lie to start wars, they're replete with corruption. If we ask the government to redistribute out wealthy, they'll redistribute it to their friends. The power to take everyone's money is too tempting for anyone to have.

mc32 11y ago
I think you're right. If not right now, some time in the future. I think at this time outsourcing and off-shoring are dampening wage growth --but in the future it will be automation which puts the kibosh on it. For sure higher minimum wages will accelerate the obsolescence of low-skill low productivity jobs. The one question about guaranteed income is who is qualified for it? Anyone and everyone? What do rich countries with high automation do about illegal immigrants, send them back? If minimum income is offered to everyone, why wouldn't everyone for whom the guarantee is above their own incomes want to come and undermine everyone else's income?

tomjen3 11y ago

No we don't. Socialism failed for a reason instead we should encourage people to be less jealous.

thetopher 11y ago

Excuse my ignorance, but I have an honest question. I assume that income inequality can be approximated by measuring the difference between the income of a certain group of high-earners and a certain group of low-earners. If the income of the low-earners is increased by mandate then wouldn't the entire system, over time, adjust upward? Wouldn't the difference between the two groups (income inequality) remain the same?

Mz 11y ago

We business leaders know what to do. But do we have the will to do it? Are we willing to control the excessive greed so prevalent in our culture today and divert resources to better education and the creation of more opportunity? I think we need to wrestle with the fact that the world has changed and education and credentialing are different things. Education and information can be made available to large numbers of people for very little money via the Internet. It doesn't get you a status-y sheepskin, but that doesn't always matter. This new reality requires a new approach to sharing the wealth. I don't know what exactly that will look like, but I am confident that we need to hammer that out. The fact that real wages have been flat for about four decades, while productivity has increased by 80 percent, shows that has not been happening. Before the early 1970s, wages and productivity were both rising. Now most gains from productivity go to shareholders, not employees. This is a serious problem and needs to be clearly addressed. There is a way to start. Government can provide tax incentives to business to pay more to employees making $80,000 or less. The program would exist for three to five years and then be evaluated for effectiveness. I have my doubts that this is the way to address it. Generally speaking, poverty solutions that start by trying to help 'poor' people are dead ends that do not work. A more oblique approach, that defines the problem in other terms, is usually more effective.