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> When Reagan lowered the tax rates in exchange for eliminating the tax shelters... We got skyrocketing wealth inequality leading to a near breakdown of the po

by CPLX 8y ago

> When Reagan lowered the tax rates in exchange for eliminating the tax shelters... We got skyrocketing wealth inequality leading to a near breakdown of the political and social order 30 years later.

whatshisface 8y ago
What's the argument for how inequality skyrocketed as a result of the reduced tax rate, and how inequality caused a "near breakdown of political and social order?"
- CPLX 8y ago
  Rising income inequality is essentially defined as rich people getting more money. Lowering taxes on the rich gives them more money. That’s a pretty direct mechanism of action, not sure what else you need. However if you’re genuinely seeking answers there’s plenty of data on how regressive policies have led to increased inequality, it’s not a secret. As for validating the second part I recommend turning on your television.
  - WalterBright 8y ago
    Asserting there is a breakdown of the social order is quite different from asserting what caused the breakdown. There was an awful lot of social strife in the 1960s, for example, which had those high tax rates.
  - antidesitter 8y ago
    > Lowering taxes on the rich gives them more money. > Therefore, lowering taxes on the rich causes “skyrocketing inequality”. Did I get your argument right? Seems to be missing a premise or two.
    - lucas_membrane 8y ago
      Here are two premises: (1) Extraordinary money confers extraordinary power. (2) It is a proper role of government to put reasonable limits on the power of wealth. Sadly, the American government now works on a revised version of (2), i.e.: It is a proper role of wealth to put unreasonable limits on the power of government.
      - WalterBright 8y ago
        The federal government is more powerful than at any time in history. I'm curious what you consider unreasonable limits imposed by rich people.
        jakelazaroff 8y ago
        More powerful than the time during which it allowed people to legally own other human beings? Or when it forcibly relocated people to reservations across the country? Or when it put people into concentration camps because of a war we were fighting at the time?
        nec4b 8y ago
        Immensely more powerful than at any of those points you have written. Today at a push of a button it can eliminate most of the world as we know it. Remember, it had to fight civil war to prevent people owning other people.
        jakelazaroff 8y ago
        The parent is referring to legal power, not military power.
        nec4b 8y ago
        Legal power without means to enforce it is meaningless, hence the civil war when the government was weaker in the past.
  - seibelj 8y ago
    The social order is only “broken down” if you only get your news from television. Things can get unbelievably worse.
  - saiya-jin 8y ago
    You are analyzing one aspect of the system in vacuum, and probably conflating correlation and causation. You, and nobody else don't really know what higher taxation over last 30 years would bring. More tax havens, which are really everywhere these days? Which is an effect I can confirm from my home country (higher tax -> higher avoidance/optimalization -> less taxes to the state). Lower the taxes, and tax office actually collects more cash for a given year. Rich are not dumb, they will not just sit and watch some state eat their wealth and getting nothing tangible back, in contrary. I know I would too, if for nothing else then my future kids and their kids.
    - CPLX 8y ago
      Nothing tangible? Maybe we can herd them up and drop them in Somalia so they can get familiar with some of the tangible benefits of a stable society with a well funded and functional government.
      - saiya-jin 8y ago
        I assume you are trolling for fun/boredom and in reality don't have this naive and outright dangerous early soviet-style mindset. Or maybe you do (and don't share basic values of western civilization), and then I would kindly ask you a favor - could you please relocate to North Korea, at least for some time? I struggle to find any other similar paradise on the face of earth these days, they seemed to crumble despite their apparent greatness but this one is still holding a bit and showing off to those evil capitalists how masses cleverly run the show... right. When I meant tangible returns, it is in vein of giving say 4 millions $$ to the state and seeing nothing actually coming back in form of better roads, schools and hospitals or anything else in the area they live. The money just disappears in bottomless bit called state budget, where corrupt officials take a cut or two, then it gets paid either in salaries of state employees (which many view as ineffective bureaucrats) or in messed up overpriced contract work to maintain/improve, of course only to overly friendly companies. It is a bit of a caricature of functional western society but so is some evil uncle Scrooge, reality looks a bit differently. The more we move towards this caricature the more real the culprits on both sides will be, including types you like yourself to pose in.
  - pcstl 8y ago
    “They would have the poor be poorer, provided the rich were less rich!”
- dragonwriter 8y ago
  > What's the argument for how inequality skyrocketed as a result of the reduced tax rate You need a map to figure out how rich people keeping more of their income and and paying less into shared services reinforces inequality?
cryptonector 8y ago
https://www.youtube.com/watch?v=pdR7WW3XR9c https://www.youtube.com/watch?v=pdR7WW3XR9c EDIT: I would make my comment more substantial, but Margaret Thatcher made my comment better than I could.
- BLKNSLVR 8y ago
  Saying that the incomes have improved in 11 years is hardly an argument worth repeating outside the ultra-short-term pithy-insult points scoring arena that is parliament. In 1979 the average house cost 18,785 GBP and the average wage was 4,198, whilst in 1990 the average house price was 56,365 and the average wage was 11,820.[0] The average house price increased 300% whilst the average wage increased 282%. It's a grossly poor resolution comparison, but it shows that, using this metric alone, just looking at averages alone (somewhat problematic in itself), wages increased more slowly than housing. [0]: http://thedesignlab.co.uk/costofliving2015/ukupdate.php?uid=36 http://thedesignlab.co.uk/costofliving2015/ukupdate.php?uid=...
adventured 8y ago
We got skyrocketing wealth inequality solely due to the breakdown in the value of the dollar after it became unlinked in 1971 and with the Fed system becoming an asset inflation device for people with capital. Take a look at any commodity priced in dollars after 1971, as though wages were going to keep up with that dramatic real inflation. Just try keeping up with even 3% inflation if you're a median wage worker. Meanwhile, the rich can easily beat that inflation and move their capital around pursuing higher returns. Inflation massacres workers over time. If you have 0% inflation, and your wages go up 3% per year, you can make some real progress in a society over 20 years. If you've got even just 2% inflation, and 1% net real wage gains, you're going to struggle to get anywhere once recessionary set-backs are accounted for. While that 2%-3% inflation is eating your wage growth and pushing up consumer prices, it's also rapidly destroying the real value of your primary middle class asset: your house. The Fed loves persistent inflation because it debases the national debt, which is drowning the US Government. It's terrible for the average person.
- pjc50 8y ago
  There's a good point in here about wage inflation, but if you get a graph of CPI inflation then 1971 hardly jumps out and there were a number of much higher periods before that.

by CPLX 8y ago

> When Reagan lowered the tax rates in exchange for eliminating the tax shelters... We got skyrocketing wealth inequality leading to a near breakdown of the political and social order 30 years later.

whatshisface 8y ago

What's the argument for how inequality skyrocketed as a result of the reduced tax rate, and how inequality caused a "near breakdown of political and social order?"

CPLX 8y ago
Rising income inequality is essentially defined as rich people getting more money. Lowering taxes on the rich gives them more money. That’s a pretty direct mechanism of action, not sure what else you need. However if you’re genuinely seeking answers there’s plenty of data on how regressive policies have led to increased inequality, it’s not a secret. As for validating the second part I recommend turning on your television.
- WalterBright 8y ago
  Asserting there is a breakdown of the social order is quite different from asserting what caused the breakdown. There was an awful lot of social strife in the 1960s, for example, which had those high tax rates.
- antidesitter 8y ago
  > Lowering taxes on the rich gives them more money. > Therefore, lowering taxes on the rich causes “skyrocketing inequality”. Did I get your argument right? Seems to be missing a premise or two.
  - lucas_membrane 8y ago
    Here are two premises: (1) Extraordinary money confers extraordinary power. (2) It is a proper role of government to put reasonable limits on the power of wealth. Sadly, the American government now works on a revised version of (2), i.e.: It is a proper role of wealth to put unreasonable limits on the power of government.
    - WalterBright 8y ago
      The federal government is more powerful than at any time in history. I'm curious what you consider unreasonable limits imposed by rich people.
      - jakelazaroff 8y ago
        More powerful than the time during which it allowed people to legally own other human beings? Or when it forcibly relocated people to reservations across the country? Or when it put people into concentration camps because of a war we were fighting at the time?
        nec4b 8y ago
        Immensely more powerful than at any of those points you have written. Today at a push of a button it can eliminate most of the world as we know it. Remember, it had to fight civil war to prevent people owning other people.
        jakelazaroff 8y ago
        The parent is referring to legal power, not military power.
        nec4b 8y ago
        Legal power without means to enforce it is meaningless, hence the civil war when the government was weaker in the past.
- seibelj 8y ago
  The social order is only “broken down” if you only get your news from television. Things can get unbelievably worse.
- saiya-jin 8y ago
  You are analyzing one aspect of the system in vacuum, and probably conflating correlation and causation. You, and nobody else don't really know what higher taxation over last 30 years would bring. More tax havens, which are really everywhere these days? Which is an effect I can confirm from my home country (higher tax -> higher avoidance/optimalization -> less taxes to the state). Lower the taxes, and tax office actually collects more cash for a given year. Rich are not dumb, they will not just sit and watch some state eat their wealth and getting nothing tangible back, in contrary. I know I would too, if for nothing else then my future kids and their kids.
  - CPLX 8y ago
    Nothing tangible? Maybe we can herd them up and drop them in Somalia so they can get familiar with some of the tangible benefits of a stable society with a well funded and functional government.
    - saiya-jin 8y ago
      I assume you are trolling for fun/boredom and in reality don't have this naive and outright dangerous early soviet-style mindset. Or maybe you do (and don't share basic values of western civilization), and then I would kindly ask you a favor - could you please relocate to North Korea, at least for some time? I struggle to find any other similar paradise on the face of earth these days, they seemed to crumble despite their apparent greatness but this one is still holding a bit and showing off to those evil capitalists how masses cleverly run the show... right. When I meant tangible returns, it is in vein of giving say 4 millions $$ to the state and seeing nothing actually coming back in form of better roads, schools and hospitals or anything else in the area they live. The money just disappears in bottomless bit called state budget, where corrupt officials take a cut or two, then it gets paid either in salaries of state employees (which many view as ineffective bureaucrats) or in messed up overpriced contract work to maintain/improve, of course only to overly friendly companies. It is a bit of a caricature of functional western society but so is some evil uncle Scrooge, reality looks a bit differently. The more we move towards this caricature the more real the culprits on both sides will be, including types you like yourself to pose in.
- pcstl 8y ago
  “They would have the poor be poorer, provided the rich were less rich!”
dragonwriter 8y ago
> What's the argument for how inequality skyrocketed as a result of the reduced tax rate You need a map to figure out how rich people keeping more of their income and and paying less into shared services reinforces inequality?

cryptonector 8y ago

https://www.youtube.com/watch?v=pdR7WW3XR9c https://www.youtube.com/watch?v=pdR7WW3XR9c EDIT: I would make my comment more substantial, but Margaret Thatcher made my comment better than I could.

BLKNSLVR 8y ago
Saying that the incomes have improved in 11 years is hardly an argument worth repeating outside the ultra-short-term pithy-insult points scoring arena that is parliament. In 1979 the average house cost 18,785 GBP and the average wage was 4,198, whilst in 1990 the average house price was 56,365 and the average wage was 11,820.[0] The average house price increased 300% whilst the average wage increased 282%. It's a grossly poor resolution comparison, but it shows that, using this metric alone, just looking at averages alone (somewhat problematic in itself), wages increased more slowly than housing. [0]: http://thedesignlab.co.uk/costofliving2015/ukupdate.php?uid=36 http://thedesignlab.co.uk/costofliving2015/ukupdate.php?uid=...

adventured 8y ago

We got skyrocketing wealth inequality solely due to the breakdown in the value of the dollar after it became unlinked in 1971 and with the Fed system becoming an asset inflation device for people with capital. Take a look at any commodity priced in dollars after 1971, as though wages were going to keep up with that dramatic real inflation. Just try keeping up with even 3% inflation if you're a median wage worker. Meanwhile, the rich can easily beat that inflation and move their capital around pursuing higher returns. Inflation massacres workers over time. If you have 0% inflation, and your wages go up 3% per year, you can make some real progress in a society over 20 years. If you've got even just 2% inflation, and 1% net real wage gains, you're going to struggle to get anywhere once recessionary set-backs are accounted for. While that 2%-3% inflation is eating your wage growth and pushing up consumer prices, it's also rapidly destroying the real value of your primary middle class asset: your house. The Fed loves persistent inflation because it debases the national debt, which is drowning the US Government. It's terrible for the average person.

pjc50 8y ago
There's a good point in here about wage inflation, but if you get a graph of CPI inflation then 1971 hardly jumps out and there were a number of much higher periods before that.