Rich Getting Richer, ever wonder why?

I think wealth is finite because there's only so much resources that can be harvested or produced. That said, the economy is generally a positive sum game and, although dividing the pie is important, it can be expanded as well. Through the expansion of this pie, real wages for English workers in the nineteenth century, for example, were doubled after entire centuries of almost no growth. Similarly, the rate of extreme poverty has fallen very rapidly in recent years just because of rapid growth, or a rapid expansion of the pie, in emerging market countries like China. Around eighty percent of people in 1820 would have lived in extreme poverty, about fourty percent in 1980, and around twenty percent now, and that's all largely due to industrialization in different parts of the world.

As for whether or not inequality is bad, I think it clearly is. Well, not really. Inequality in and of itself isn't bad. What's bad is poverty, and inequality doesn't necessarily require that others are poor, because of the positive sum game idea. I think America's choices for restoring middle class income growth are limited. Income growth for workers has largely shifted from first world to third world countries, while first world countries have taken on greater sophistication and managerial responsibilities. I think this is a natural movement that can't be avoided, and overall, I don't even think it's a bad one.

I support wealth distribution out of empathy for the poor, not out of a desire to see things completely equal or level. American's should be better educated to cope with the modern world, and worker retraining programs should be larger, so as to help those who are displaced by change. Simple things like better EI, stronger transfer payments for people with dependents, and universal healthcare would help too, I think.

 

You didn't answer my first or last questions but I can't find anything in the TFP rule book that says you have to.

But rather than hammer at the reasons for the corporate exodus to cheap labor alternatives and why it has left the US labor force in the crapper - because most of here understand full well what the corporate incentives and motivations were/are to do so, as well as we understand how ill-prepared we were/are for it, could we possibly discuss the unnatural advantages which have been and are continuing to be given to the already naturally advantaged wealthy?

I don't believe in wealth distribution or financial equality for all. I am not a socialist. I am fully behind capitalism and it's potential to reward those who have the ambition and put forth the extra effort to succeed. Capitalism is not broken and does not need fixing.

But government (democracy) and capitalism are strange bedfellows. Capitalism is in the business of making a profit, government is in the business of protecting its citizens. In order for them to get along, they need to stay on their own side of the bed.

I think most of us appreciate the value of Capitalism in our society but Capitalism does not appreciate or value the unprofitable principles of our democracy except in Democracy's role to provide a fertile atmosphere for turning a profit at the expense of it's consumerist citizenry which can also double as a labor force (until one factor or the other proves be a liability).

Those who understand capitalism are smart enough not to underestimate it's hunger and wise enough to know it will rarely rise above it's own base nature and instincts.

It's a beast that will never curb it's appetite willingly.

But we have an elected government to rely on. We expect them to put a few barriers in place to make sure we have adequate protection from the capitalist nature. In return we give Capitalism the room it needs to do it's business to the benefit of all.

So what happens when Capitalism rolls over in that bed, climbs on top of government and says "I'll pay you handsomely, if you let me fuck you and those you represent," and the government responds with "here's my off-shore bank account number?"

So I'm not talking about the advantage of wealth naturally creating more wealth, or about decisions one would expect corporations to make to sustain profitability, though in my opinion, the shift to cheaper foreign labor markets has been more the result of corporate greed rather than need, in most cases. But it is what it is and I don't regard the globalization of manufacturing as a negative. I think we will all benefit in the long run by the rising standard of living, globally. I'm not averse to seeing the US drop down a few notches as the playing field levels - as long as our inability as a society to compete in the global labor market is our only disadvantage and the only reason for the wide disparity we are seeing between the top and the bottom.

It's not, of course. As if the wealthy were not advantaged enough naturally, they are receiving unnatural advantages in the form of select and focused governmental policies and legislation, while being allowed to virtually operate without interference (despite the promise of stricter regulation after 2008), while we the people the government are supposed to be protecting from Capitalist abuse are left disadvantaged.

All your ideas are great, arw, but you don't have to look too closely to see where our government stands on improving education, providing job and career re-training, raising the EI payment, increasing minimum wage and providing universal healthcare seeing that everyone has access to health care coverage. Those on Capitol Hill not looking to dispense with the entire lot of them are forced to watch the blood flow as these programs and others are slashed and cut. What you offer is called spending - it's a dirty word and we can't have any of it. We can't raise taxes a nickel either.

Oy vey, such a state we're in.

 

I had never given much thought to Canadian politics and economics but since interacting with some of you here, mostly Baraka, I have been taking a closer look. Canada did a much better job handling the most recent recession than the US, did not have the housing bubble, and is not experiencing anything like the countries in the Euro zone. Canada is clearly on the right track. And now it appears they are continuing to do the right thing and actually lowering corporate taxes. Go figure.

http://news.investors.com/Article/596263/201112291827/tax-cuts-give-canada-economy-a-boost.htm

 

Do you believe the Conservative's agenda is going to be harmful to the Canadian economy? Do you think lower Corporate tax rates is going to drive business away or attract business? Will Canadian's be helped or harmed from this move? What was at the root of Conservatives winning the majority this year? We may have some similarities in the US, perhaps the US is a few years behind.

 

...

Leave it to IBD and ace to ignore those facts.

Didnt the Canadian $multi-billion stimulus package focus on infrastructure spending, developing clean energy programs, education funding, R&D funding, as well as middle class tax relief?

 

Canadian debt as a percentage of GDP is low compared to the US. The US is running at about 100%, Canada is about 1/3 of that. Canada could afford to spend what they spent.

http://www.tradingeconomics.com/canada/general-government-net-debt-in-percent-of-gdp-imf-data.html
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First, I am interested in understanding generally how your wealth creation point of view applies on a national level. Canada has clearly made some good choices. The country has maintained a spending discipline. Set priorities, i.e., national healthcare as a choice and is paying for it. The country generally has not taken excessive risks in housing, banking and other financial matters. The country is managing natural resources and attempting to do it in a environmentally friendly manner. The country is not over-exposed in foreign matters and has avoided the major costs of war. My point of view is predictable. I think Canada has positioned itself well, it should benefit from the mistakes made by other nations including the US. The Canadian people have made sacrifices, while other nations have not. Being able to lower corporate taxes is one of many ways that Canada can improve its national wealth by attracting business and higher paying jobs. I think wealth/capital should shift in Canada's direction because Canada has been doing things correctly. I thing wealth/capital should flow away from countries that have been doing things incorrectly. I would argue the same at the corporate level and even the individual level. I think there has to be consequences for good and bad decision making. Over the course of time we have been interacting, I have been presenting this asking questions in many different ways - and I simply can not get a good handle on your point of view. Is there anything you can add to clarify, perhaps in the context of nations and national decisions and choices?

 

The difference is in debt. The US "revenue" growth has not covered US spending growth since the 1980's looking at the long-term trend line. Canada saw a long-term trend reversal in the mid 90's. In order for the US to see such a change, if we just looked at "revenues", we would need a rate well above 28.2%, 38.4%, perhaps going well into the 40% to 50% range, and this does not include national healthcare for all, which Canada has. The US has to get spending under control. "revenue" or economic growth is not enough. My argument is first get spending under control, get waist under control, reform the tax code, then look at passing the burden of debt reduction to tax payers.

Again, there is the issue of debt. The US debt burden per person is $44,900. The Canadian debt burden per person is about $22,000.

If Canadians are making choices on what they want to spend money on and pay for it, that is a good thing. US politicians have been play games, leading people to believe we can spend, spend, spend without accountability.

What happened in the mid-90's in Canada that lead to their trend reversal?

 

My hat is off to Canada. I want the same for the US. Tea Party people want the same for the US. Current US trends are not acceptable.





The path the US is on will not be sustained, with both the tax burden and debt increasing as a percentage of GDP. I predict the US will do what Canada did in the 90's. I don't care which party takes credit, but currently both are to blame for our conditions and current trajectory.

 

I disagree. When you look at Canada from the mid 70's to the mid 90's, I think we see a trend similar to what we see in the US currently. Canada turned it around, so can the US. I don't want to keep imposing on you for a Canadian history lesson, but what was going on in Canada during that 20 year period, when Canadian spending was out of control relative to economic growth?

Perhaps it is an issue of semantics again. To me, a balanced approach involves first addressing the major problem. In the US it is spending. Nothing els matters until that is fixed. For example if a person is in an horrendous accident with many injuries, what is a balanced approach? First, you may need to stop the bleeding if the risk of bleeding to death is high. Mending a broken arm will have little value under those circumstances. As I outlined, I support a balance approach, starting with getting spending under control. I have no problem with paying more in taxes if I had confidence in the government.

I have written many times that I respect honesty. If a person ran on that agenda, won, and acted in a manner consistent with their views, they would have my respect and I would follow their leadership even if I disagreed with their agenda. I am not saying I would not advocate for my point of view, I simply would give 100% support to the final decision.

In the context of the "rich getting richer" , Canada's GDP is about 1/10 of the US's. I see that ratio improving in Canada's favor over the next decade regardless of what happens in the next few years politically. As I think about it, becoming a Canadian citizen would mean my share of the notational debt would be cut in half, and I would get free healthcare. Why does it have to be so freak'n cold up there?

 

I hate to interrupt, but if we are to compare the US to Canada, you cannot ignore US spending on military, black ops (to keep despots in power), an unnecessary, never ending war, the fact we are losing our tax base with fewer good paying jobs. When you have 1/2 or even a 1/3 of your population living in poverty, then the rich are forced or should be to make up the difference in lost revenue. It's different in Canada and other countries that are no where near our troubles because the middle class firmly exists in those countries. IT DOES NOT EXIST HERE, to say it does is to be blind. The rich need to either invest in better paying jobs or will eventually have to pay higher taxes here, cut military spending (not military benefits but black ops in the military budget), end the war.

Canada also has natural resources they have no problem using to bolster their economy, we have those resources but refuse to allow or make it very hard to use them to bolster our own economy.

We also need to cut corporate welfare to companies shipping jobs overseas, we should in fact punish them for destroying the tax base. Military funding, aid to other countries and corporate welfare eat far more of our tax dollars than all social programs combined do. "Provide for a common defense" does not mean shipping our troops to countries that are truly not a threat, nor does it mean propping up dictatorships simply for oil or cheap labor.

The countries (China, India, etc) that have growing economies are NOT capitalistic in nature. Money is not finite, it is only a source to pay for goods. How much is enough to the multi-billionaires demanding they get tax cuts, while the rest of the nation starves? There will come a time when the economic inequality in the US will create serious issues and civil unrest. Hence, the need for talking heads with private jets and living in gated communities sell their souls and get on the radio or TV to tell people struggling and barely making ends meet that "they understand and are like those people." Yeah, when was the last time Rush Limbaugh, Sean Hannity, Bill O'Reilly or Ann Coulter had to make the decision of paying bills or buying food? But hey, they are just like all the rest of us, right?

 

In a word - triage.

http://www.merriam-webster.com/dictionary/triage
The US government does not seem to have the ability to address multiple major issues at the same time. I do support tax reform, but in order to adequately know the best way to reform the tax code we need to get spending under control, cut waste (I don't expect perfection) and set priorities. In my view we have to do that before we can really address what is legitimately needed in the way of taxes. I have not or would support the Norquist pledge of never, ever, supporting a tax increase. I did like Cain's 999 plan and his reasons for it. Supporting a national sales tax is a new and increased tax. I think those living the millionaire life should pay taxes accordingly - there are ways to protect poor people from the tax being an added burden.
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In one respect I agree about the US going overboard with unending wars. When we engage in war we should fully commit, get the job done ASAP and leave. We have to have clearly defined military objectives.

I don't think we can say there is no middle class in the US. I think we still have a bell curve distribution as it relates to the numbers in income categories. In terms of controlling wealth, I don't dispute that the rich have been getting richer at a faster pace than everyone else. There are reasons for that. In summary I think it has been government policy. For example, government policy in California was the reason why I left the state, with my business. Millions of other businesses have left the state also over the last two decades. I had choices, that many did not have. Rich people have choices that poor people don't have. Just as I moved from California to North Carolina, I could move from North Carolina to Canada. with today's technology, I could live in Canada and run my US based business - and get free healthcare! I am 51, healthcare is becoming more and more an issue for me. In the past 2 years my premiums have gone up about 25% - at some point it is simply going to be too much.

The US has natural resources. We could manage those resources in a responsible manner and still benefit from them. We unnecessarily restrict ourselves in this regard, why? I don't understand it.

If the tax code is fair, we don't need to worry about jobs going overseas. Again if a corporation has choices, why would they pay a higher rate in the US if they can pay a lower rate elsewhere all other things being equal. Same with wages. The key involves the additional cost being justified.

Our current tax code and those in Washington favor big business. The government had no problem protecting GM, but they sure didn't give a f*** about my business or the millions of other small businesses hit hard over the past 3 years.

 

There is nothing in history that supports this. What is reasonable? Who decides? The national per capa GDP of Canada using 2010 IMF data is about $39,000. Zimbabwe is $436. Would you support a redistribution of about $19,282 of Canada's wealth per person to Zimbabwe? For "fairness", for "stability", to be "reasonable". Would you stop Canadian economic growth until Zimbabwe catches up? Is it Canada's fault Zimbabwe is experiencing no economic growth?

I keep saying there are reasons for this, assuming it is true. I can not see your logic. My logic is simple. The profit motive in humans has been constant over time. The rich are as equally motivated to get richer today as they were 1,00o years ago. The distribution of intellect and abilities has been relatively constant over time. There are always going to be smarter or more motivated people, when people achieve a certain level of success their motivations change. There should be a natural churning in economic status. When these processes get distorted, what is at the root of the distortion? The "rules of the game". Who controls the "rules of the game". Governments. Government can and does rig the game. I want government to be neutral. Do you? Or, do you want the government to pick the winners of your choice, at the expense of others?

Perhaps the word is not perfect, but I think of triage being applicable in the circumstance faced by the US.

This may be true, however start with...spending....

Most states have a sales tax, personal income tax rate and business income tax rate. Many countries have a national sales tax. Is your comment just a reflexive response? Have you taken a serious look at his plan?