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But the poor today all have fridges. Everything you describe is a problem of poverty, not inequality. Inequality is when the poor get 2x richer, but the rich g

But the poor today all have fridges. Everything you describe is a problem of poverty, not inequality. Inequality is when the poor get 2x richer, but the rich get 3x richer, in real terms (not nominal). Do you have any reason to believe this is a problem?

ThomPete 10y ago
The cost of living goes up. So yes it's a problem.
- yummyfajitas 10y ago
  You deliberately ignored the words "in real terms".
  - ThomPete 10y ago
    It goes up in real terms since salaries are not going up with the cost of living.
antisthenes 10y ago
> Inequality is when the poor get 2x richer, but the rich get 3x richer, in real terms (not nominal). Do you have any reason to believe this is a problem? But that isn't what's happening. The bottom quartile's incomes have shrunk when adjusted for inflation and they have stagnated since the 80s. That IS a problem.
- zo1 10y ago
  "That IS a problem." To be a bit of a devil's advocate here: Why is that a problem as well? Assuming that despite their wages "shrinking", they are still leading decent, normal lives then what about that is bad? Perhaps their labour in the greater context isn't worth all that much to others and that doesn't fit in to our world-view? Or are we simply expecting that their "status" or "wealth" should be increasing along with the economy?
  - charlesdm 10y ago
    The question should then be, what would you consider a decent life? The definition of that is different for everyone.
  - igk 10y ago
    The problem is consolidation. If more and more earn and own less and less, while less and less earn and own more and more,this creates power imbalance, impededes real growth( as in, new value being created due to Innovation. A balanced portfolio motivates less than starting the company/research yourself) and since the investors still want a return, even without growth, somebody will get shafted. There are people dying in London because their fridge was shut of, causing their insulin to go bad. why did get shut off? Because they did not have the money to pay for electricity. Mind you, this all goes out the window if a good , if austere life is guaranteed somehow, then capitalism and consolidation away.
  - antisthenes 10y ago
    > Assuming that despite their wages "shrinking", they are still leading decent, normal lives then what about that is bad? Perhaps their labour in the greater context isn't worth all that much to others and that doesn't fit in to our world-view? Or are we simply expecting that their "status" or "wealth" should be increasing along with the economy? 1. Nothing, assuming of course they are living those lives. There is a body of evidence, however, so overwhelming that at the lower incomes the people are not leading healthy lives. That is a matter of debate for someone with a medical degree and you could probably write books about this topic alone. Poor conditions reinforce poor behaviors. 2. Perhaps. Of course everyone will argue that their "greater context" is the right one. The question you're really asking here is "are we okay with letting the least productive members of our society suffer and struggle for survival?" Maybe for some people the answer will be yes. There's no logical argument I can provide for those people that will sway them. 3. That is the mantra of trickle down economics that has been proven consistently false over the last 30 years. Neither wealth nor income have trickled down despite increases in productivity. Of course one could also subscribe to the idea of "this is not a problem", but that's the intellectual equivalent of sticking your head in the sand or throwing a tantrum.
- charlesdm 10y ago
  It also has to do with economic policy. If labour income is taxed at 50% and capital gains at 25%, then investment income will obviously grow faster, because 1) capital gains taxes can be deferred until a stock is liquidated, and 2) they're taxed lower. An investor making $10,000 will keep $7,500 vs an employee, who will keep $5,000. Add to that the massive QE programs over the last few years, where some investors have easily tripled / quadrupled (or more) their capital, and it's easy to see how this is happening.
  - yummyfajitas 10y ago
    You are comparing money at two different times, which is invalid. Assume an income tax rate of X%, cap gains tax rate of Y%, and a rate of return R. Consider a spender. In year 0 he earns 1 dollar, he pays X% in cap gains and spends the rest. In total he paid X year 0 dollars. Consider a saver. In year 0 he earns 1 dollar, he pays X% in cap gains and invests the rest. 1 year later he is holding (1-X)(1+R), which he cashes out of. He then pays Y[(1-X)(1+R)-(1-X)] in taxes. In total, he has paid X+Y[(1-X)(1+R)-(1-X)]/(1+R) in year 0 dollars in taxes. The latter is always greater than the former. Lets expand your example. Suppose the rate of return is 100%. The spender received $10,000 at time 1 and paid $5,000 in year 1 dollars. 50% tax rate. In contrast, the saver received $20,000 at time 0 and paid $10,000 in taxes. Then they invested the remainder, and at time 1 received an additional $10,000. He then paid $2,500 on that. In year 1 dollars, he paid $20,000 ($10,000 year 0 dollars == $20,000 year 1 dollars) in income taxes + $2,500 in cap gains. That's a total tax rate of 56.25%.
- yummyfajitas 10y ago
  So you claim the problem is not inequality, then. So why are we talking about inequality instead of this income drop? If you want to argue inequality is a problem by itself, your argument must apply to my hypothetical also. Also, I'd love to see evidence of an income drop (not to be confused with a wage drop, since wages are only a shrinking fraction of income).
  - woodandsteel 10y ago
    The problem has to do with two things: income stagnation or drop, and growing inequality. According to conservative trickle-down economics, it is good if the rich get richer, because they can only do so in ways that make everyone else richer too. And that idea for a long time lead most people to support laws that make it possible for the rich to get richer. But what has been happening for at least 30 years is the rich are getting considerably richer, but everyone else's income is either stagnant or dropping. To expect the general public to continue to be happy with this state of affairs is simply unreasonable.
- markvdb 10y ago
  That might be what has happened in much of the western world. On a worldwide scale, things look much better though.
  - ThomPete 10y ago
    Yes but only because the rest of the world came from a much worse place. In the west however it's stagnating which it also will other places over time.
internaut 10y ago
I don't have a problem with the rich. Provided they are capitalists. Effectively allocating capital is an important role. That's part of how the poor get wealthier. Outside of that (and stability/coherence of political power), what reason is there for rich people to exist though? Because I can't think of any. And typically non-productive beings that exist due to the efforts of others are known as parasites.

ThomPete 10y ago

The cost of living goes up. So yes it's a problem.

yummyfajitas 10y ago
You deliberately ignored the words "in real terms".
- ThomPete 10y ago
  It goes up in real terms since salaries are not going up with the cost of living.

antisthenes 10y ago

> Inequality is when the poor get 2x richer, but the rich get 3x richer, in real terms (not nominal). Do you have any reason to believe this is a problem? But that isn't what's happening. The bottom quartile's incomes have shrunk when adjusted for inflation and they have stagnated since the 80s. That IS a problem.

zo1 10y ago
"That IS a problem." To be a bit of a devil's advocate here: Why is that a problem as well? Assuming that despite their wages "shrinking", they are still leading decent, normal lives then what about that is bad? Perhaps their labour in the greater context isn't worth all that much to others and that doesn't fit in to our world-view? Or are we simply expecting that their "status" or "wealth" should be increasing along with the economy?
- charlesdm 10y ago
  The question should then be, what would you consider a decent life? The definition of that is different for everyone.
- igk 10y ago
  The problem is consolidation. If more and more earn and own less and less, while less and less earn and own more and more,this creates power imbalance, impededes real growth( as in, new value being created due to Innovation. A balanced portfolio motivates less than starting the company/research yourself) and since the investors still want a return, even without growth, somebody will get shafted. There are people dying in London because their fridge was shut of, causing their insulin to go bad. why did get shut off? Because they did not have the money to pay for electricity. Mind you, this all goes out the window if a good , if austere life is guaranteed somehow, then capitalism and consolidation away.
- antisthenes 10y ago
  > Assuming that despite their wages "shrinking", they are still leading decent, normal lives then what about that is bad? Perhaps their labour in the greater context isn't worth all that much to others and that doesn't fit in to our world-view? Or are we simply expecting that their "status" or "wealth" should be increasing along with the economy? 1. Nothing, assuming of course they are living those lives. There is a body of evidence, however, so overwhelming that at the lower incomes the people are not leading healthy lives. That is a matter of debate for someone with a medical degree and you could probably write books about this topic alone. Poor conditions reinforce poor behaviors. 2. Perhaps. Of course everyone will argue that their "greater context" is the right one. The question you're really asking here is "are we okay with letting the least productive members of our society suffer and struggle for survival?" Maybe for some people the answer will be yes. There's no logical argument I can provide for those people that will sway them. 3. That is the mantra of trickle down economics that has been proven consistently false over the last 30 years. Neither wealth nor income have trickled down despite increases in productivity. Of course one could also subscribe to the idea of "this is not a problem", but that's the intellectual equivalent of sticking your head in the sand or throwing a tantrum.
charlesdm 10y ago
It also has to do with economic policy. If labour income is taxed at 50% and capital gains at 25%, then investment income will obviously grow faster, because 1) capital gains taxes can be deferred until a stock is liquidated, and 2) they're taxed lower. An investor making $10,000 will keep $7,500 vs an employee, who will keep $5,000. Add to that the massive QE programs over the last few years, where some investors have easily tripled / quadrupled (or more) their capital, and it's easy to see how this is happening.
- yummyfajitas 10y ago
  You are comparing money at two different times, which is invalid. Assume an income tax rate of X%, cap gains tax rate of Y%, and a rate of return R. Consider a spender. In year 0 he earns 1 dollar, he pays X% in cap gains and spends the rest. In total he paid X year 0 dollars. Consider a saver. In year 0 he earns 1 dollar, he pays X% in cap gains and invests the rest. 1 year later he is holding (1-X)(1+R), which he cashes out of. He then pays Y[(1-X)(1+R)-(1-X)] in taxes. In total, he has paid X+Y[(1-X)(1+R)-(1-X)]/(1+R) in year 0 dollars in taxes. The latter is always greater than the former. Lets expand your example. Suppose the rate of return is 100%. The spender received $10,000 at time 1 and paid $5,000 in year 1 dollars. 50% tax rate. In contrast, the saver received $20,000 at time 0 and paid $10,000 in taxes. Then they invested the remainder, and at time 1 received an additional $10,000. He then paid $2,500 on that. In year 1 dollars, he paid $20,000 ($10,000 year 0 dollars == $20,000 year 1 dollars) in income taxes + $2,500 in cap gains. That's a total tax rate of 56.25%.
yummyfajitas 10y ago
So you claim the problem is not inequality, then. So why are we talking about inequality instead of this income drop? If you want to argue inequality is a problem by itself, your argument must apply to my hypothetical also. Also, I'd love to see evidence of an income drop (not to be confused with a wage drop, since wages are only a shrinking fraction of income).
- woodandsteel 10y ago
  The problem has to do with two things: income stagnation or drop, and growing inequality. According to conservative trickle-down economics, it is good if the rich get richer, because they can only do so in ways that make everyone else richer too. And that idea for a long time lead most people to support laws that make it possible for the rich to get richer. But what has been happening for at least 30 years is the rich are getting considerably richer, but everyone else's income is either stagnant or dropping. To expect the general public to continue to be happy with this state of affairs is simply unreasonable.
markvdb 10y ago
That might be what has happened in much of the western world. On a worldwide scale, things look much better though.
- ThomPete 10y ago
  Yes but only because the rest of the world came from a much worse place. In the west however it's stagnating which it also will other places over time.

internaut 10y ago

I don't have a problem with the rich. Provided they are capitalists. Effectively allocating capital is an important role. That's part of how the poor get wealthier. Outside of that (and stability/coherence of political power), what reason is there for rich people to exist though? Because I can't think of any. And typically non-productive beings that exist due to the efforts of others are known as parasites.