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I'll bite. Because capitalism is a system in which the rich get richer. This preferential accumulation of wealth where wealth already is is an inherent featur
by linschn 9y ago
I'll bite.
Because capitalism is a system in which the rich get richer. This preferential accumulation of wealth where wealth already is is an inherent feature of capitalism.
The same kind of phenomenon can be seen in the population of cities for example: the more people there are in a city, the more other people are likely to move there.
If you want to know more about this, see, e.g. Picketty (https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...)
Also, profound inequality is bad for growth (The IMF says so, https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2016/12/31/Causes-and-Consequences-of-Income-Inequality-A-Global-Perspective-42986 https://www.imf.org/en/Publications/Staff-Discussion-Notes/I...): "when the rich get richer, benefits do not trickle down.".
So given that there is a runaway feedback loop that make the rich get richer faster than the poor get richer, and given that profound inequality is detrimental to the economy at large, it logically follows that there must exist some scheme to redistribute a part of the wealth of the extra-rich to the rest of society.
Taxation is (or should be) such a shame.
Note that there is no moral argument here. No finger pointing, no entiltement. Just a systemic view of things: it is detrimental to all to let a runaway feedback loop increase inequalities.
- Baeocystin 9y agoI think you have salient points. That said, did you mean shame? Or scheme?
- linschn 9y agoI meant scheme, as in mechanism, or process, thank you :) I can't edit the original post now.
- golergka 9y agoYour logic is based on the assumption that > and given that profound inequality is detrimental to the economy at large which has nothing to do with "liberty" - it's about "efficiency" or may be "equality" (of outcomes), but not "liberty" in any way. (Also, there's a lot of valid criticism of Picketty that his supporters usually choose to completely ignore, but that's not the point of the argument anyway).
- linschn 9y agoI don't understand your point about liberty. I did not talk about liberty. Could you please clarify ? As for Picketty, the only serious criticism I'm aware of had to do with his explanation about why wealth begets wealth, not on the fact that there is a preferential accretion mechanism for wealth inherent to capitalism. If you have any source or example where capital holders do not increase their share faster than non capital holders (say, e.g. workers) then I'd be happy to know about it.
- valuearb 9y agoExcept that huge inequalities exist in socialistic economies as well, and capitalism means the middle class of today live as well or better than the richest people in the world did in the 1920s.
- linschn 9y agoI am not advocating switching to a planned economy. I'm just pointing out that any capitalistic system has a tendency to concentrate wealth. I even acknowledge that the poor are getting richer. The problem is just that they are getting richer at a slower pace than the rich, and unless this problem is addressed through taxation, then it will lead to economic stagnation or worse.
- valuearb 9y agoIf you want to address concentrated wealth address the tax system and real crony capitalism (not the fake kind that is used to slur Buffett). Eliminate patents, tariffs, tax businesses that receive government subsidies, etc. Competition is the best bar to too much competition.
- linschn 9y agoWhile I also long for the elimination of some of the things you list (mainly patents), I want to emphasize that even in a perfectly competitive and ideal market, the phenomenon of preferential wealth accretion would still happen. Picketty's explanation is that capital's reward is higher than work's, but I'm not bent on defending that explanation (even if until a better one comes up, I'll stick to Picketty's). As far as I know there is no counter example of the phenomenon itself (whatever the underlying reason is).
- valuearb 9y agoYou can't stop some people from working harder or smarter than others, or saving money instead of spending everything they make. Those people will accumulate wealth far faster over time.