Thread: An Idiots Guide to Inequality Part 1

Not even remotely true. Geoists would be the ones who would want to destroy the ability of money to pool in the hands of rent seekers.

 

Nothing you can buy from Bill Gates will improve your standard of living except stocks. Most of your microsoft spending will lower your standard of living. I do understand quite well that you have no idea what I was discussing, among other things.

 

wrong of course!! we buy his software because we are better off with it than with the money it costs to buy it. He is a God

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if so millions would not buy it!! if people bought stuff that lowered their standard of living very soon they would all be starving rather than getting richer and richer!!

 

WRONG, WRONG, WRONG

This is "how the money circulates": First, you have enormously high income, which is not difficult for upper-income individuals due to the enormously low taxation-rates. Income net of taxation thus becomes Wealth; which, when deducting Debt, becomes Net Worth.

There it sits in a bank awaiting your instructions.

So, it is with this Net Worth that you "Invest" in buying other income-generating properties; that accrued Income is barely taxed (15 to 30% maximum). So the cycle starts over again and it is re-cyclic (year after year after year) almost automatically as your Net Worth accumulates.

The Wealth thus pools at the top, which give us this:


What happens then? Of course, the Wealth is passed down through generations (due to lax Inheritance Taxation, which yet another same-but-different sad taxation-tale as seen here).

And the process continues on and on ... ad nauseam. Meaning, the US has returned to a Monarchic System that regenerates Wealth within families, which existed before its revolution in 1776.

The irony of this history lesson is that we have come full-circle, whilst passing from the Agrarian to the Industrial Age thus enhancing significantly the accumulation of riches in a tiny group. Today, the wealth is pooling once again at the top - this time because Reckless Ronnie* instituted in the 1980s a ridiculous flat-rate taxation of only 30% (which, for Milt Romney was only 14% in 2012!). See here:


Should we therefore have millionaires? Of course, any market-economy must satisfy mankind's urge to better its lot-in-life. It's the way we are programmed from birth.

Does it need billionaires? No, not at all ... they are a useless appendage to an economic system gone dreadfully wrong, wrong, wrong.

*And why they make soooo many statues to "Saint Ronnie", the miracle-man, here:

 

That sure is a lot of pretty graphs to undermine the inherent flaw in your logic you hit on but then bounced off of like a little spermy who ain't getting the egg. The money that sits in the capital markets just holds its own against inflation. It is not generating over time significantly more wealth in terms of nominal value. The rich therefore are not getting richer. Thomas Piketty has been thoroughly refuted to everybody except the democratic talking point writers by an MIT study that shows that housing is the driver of inequality. People are spending so much money in housing that they are not able to spend it on investments, education or to save it. That money pools to the benefit of the financial markets instead of the local bakery. People then look for dirt low prices on everything else, and that drives down profits for your local hardware store as they buy from Amazon instead of them. Money is being vacuumed from local economies by New York City (which really produces little to nothing outside hospitality and entertainment), LA, and Chicago.

 

Your arguement is refuted by the first of the infographics I put up. You did not bother to understand the investigative research and how it was conducted. Look, the researchers were conducting an excercise in accounting. They were finding monetary-value and simply adding it up.

The team, which still exists, went into national archives to get the original data, and did so for over a considerable period of time. But, I am not going to go over the entire story. Because I perfectly well it doesn't interest you. You are "cooked", so any further discussion is useless.

Nonetheless, for the reader here, I am suggesting a visit to Piketty's DataBase, hereis the introductory page. The database is open to all comers, but the infographics I have been putting up are the principle fruit of the tremendous amount of labor required to produce them for the US.

Refute the results if you like, but you'll need some really good arguments ... and not frivolously caustic remarks (as some prefer to give).

So far the database construction has been a great-many ways, and I have seen no really pertinent complaints regarding the methodology. Having said that, there is a real complaint made by none other than Joseph Stiglitz worth noting, which consists of this:

Indeed, land-costs are a central part in the estimation of wealth, but to disregard them as not "proper monetary value" is not acceptable either. Taking into account inflation, into which calculation is figured land and realty prices, should correct for any possible under- or over-appreciation of value.

Thus, I remain confidant that Piketty, Saez (and Co.) did their jobs well ...

 

But so what. In the estimation of who owns what, what Piketty have found is that those in the bottom-range of the population have "negative wealth", meaning that they have more mortgage debt than offsetting credits in their bank accounts. The upper-levels, with significantly higher incomes pay-off their debt quicker. And so why should this factor change anything in the calculation.

In fact, what it shows is that the 10Percenters of the population (who earn nearly 50% of all Income) are less indebted than the lower classes. Which means effectively that mortgage-debt at the lower end take longer to extinguish than in the upper-class of worker where they account positively for Wealth. Which show in the numbers that Piketty provides that differentiate Net Worth and Wealth (the former being the latter less Debt).

The net-worth of the poor is and always will remain negative, especially if they are big spenders (and owe money to credit-card accounts) and rent (thus do not have any mortgage-debt). The only way to get rid of negative Net Worth amongst the really-poor is to raise the Minimum Wage and keep it corrected for inflation.

 

wrong of course since supply equals demand. IF you raise price of labor less of it will be demanded. WalMart is already being put out of business by Amazon and McDonalds is using kiosks and robots. Always think twice before you post.

 

not if you count the nations GDP as an asset since it is the principle from which they draw their welfare!!
The poor are worth trillions if you count fairly!! Why accumulate conventional wealth when you have welfare?

Chinese
earn 30% of what Americans earn but save double what Americans do because they cant draw down the nations wealth the way Americans can. Fun?

 

That brought to mind an image of the dog chasing its' tail.
Maybe if you could freeze ALL WAGES EXCEPT for the minimum wage it might have less impact on inflation.

A $25 minimum wage would result in a $52,125 annual income, but what would the cost of government aid become, and would more jobs be created as a result? Probably so, but not likely productive jobs as the production would likely be done abroad while sales would consume the increased income and inflation would raise the price of what remained a permanent fixture in the U.S., land and homes for one example.

I would suggest that our problem, and that of many if not all countries, is population growth which exceeds the needs of production. Added to that is increasing life expectancy which amounts to nothing more than consumption.

 

Right, it's mainly the result of privilege. But wage taxation is the major way privilege is financed.

I don't know your situation, but the taxes working people pay are largely given to rich, greedy, privileged takers. That increases inequality by transferring wealth from those who have less but produce more to those who have more and produce less.

It pools because of privilege: the more you own, the more wealth is taken from those who own less and given to you.

No, it's not about spending at all. It's about how wealth is obtained. When the earnings of those at the low end are taxed away to give unearned wealth to those at the high end, increasing inequality is inevitable. That is what privilege does.

 

No, modern "capital" markets are all about trying to find rent seeking opportunities. Collecting rents of privilege enables the rent collectors to take from everyone else.

It is.

They are.

I.e., it is LANDOWNING that is the driver of inequality. That's the actual meaning of the Matthew Rognlie papers you are referring to.

Right, but that means they are paying that money to landowners and mortgage lenders: rich, greedy, privileged parasites therefore get richer than the ordinary homeowners.

It goes to mortgage lenders -- especially banks, which are privileged to CREATE money to lend to homebuyers -- and landowners.

It's vacuumed up by landowners and mortgage lenders. That's why banksters and landowners are so rich, despite not contributing anything to production.

 

Piketty does the opposite: hides the inconvenient truth by aggregating entirely dissimilar forms of wealth as "capital."

Wrong. Land prices are almost entirely absent from the CPI, and land appreciation is also largely eliminated from the Case-Shiller House Price Index.

Nope. A large part of neoclassical analysis of inequality consists of hiding the contribution of landowner privilege. See Hudson, Michael, "How to Lie with Real Estate Statistics."

They didn't, as Rognlie and Stiglitz have proved. The neoclassical trend has been to aggregation, but the truth in economics will always lie in disaggregation.

 

Because they have been robbed to subsidize landowning, and must then pay rent to landowners for the opportunity to earn enough money to afford to pay the resulting additional rent to landowners and interest to mortgage lenders.

Because it is part of a massive, systematic, institutionalized transfer of wealth from those who earn it to rich, greedy, privileged landowners and mortgage lenders.

Duh.

No. It means WEALTH is disconnected from WAGES at both the upper and lower ends.

Mortgage debt is simply a measure of wealth transfer from wage workers to landowners and mortgage lenders.

No, that's a silly idea that won't work. Raising the minimum wage, like raising welfare rates, just prompts their landlords to raise rents. The ONLY way to get rid of negative net worth among the poor is to restore their rights to liberty, which have been removed and made into the private property of the privileged, especially landowners and mortgage lenders.

 

What you refuse to understand (it's dead simple if you read carefully):

*Wages are Income, and less the taxation of earned Income becomes Wealth.

*When an effectively minuscule flat-tax upper-income taxation exists (because of tax boondoggles*), then massive Income becomes massive Wealth.

*Which is passed down generation to generation, always the same families possessing the gross majority of the nation's Wealth.

*Bringing us back historically to before 1776 when America was a colony and the reason why we had a revolution in the first place.

Duhhhhhhhhh ...

*How Tax Shelters Work

 

Aside from your pernicious BS, let's see the proof ...

What Stiglitz said here:

Yes, but so what? The increase in the value of "land" for the rich is not "land", it is the value of the companies of which they maintain nominal possession. (Stock ownership) And, yes, that depends upon the daily quotation of the stock.

But so what? What Piketty says about the value of upper-incomes is that they are ludicrously more important for a tiny percentage of the population, than for the rest of us (who are actually working to produce the intrinsic value of those corporations).

I'm am not going to allow a difference in opinion regarding accounting practices - which you uphold - excuse the gross disparity of Income Sharing that is occurring in the US.

Your remarks are patent BS - and I can smell it from over here ...

 

Cannot parse. Are you trying to say that earned income that is not paid in tax becomes wealth? That is incorrect. It only becomes wealth if it is not spent on consumption -- which is also taxed.

No, accumulated wealth far exceeds what has been saved as untaxed earned income. That is the point. The vast majority of the wealth of the wealthy consists of untaxed capital gains.

That doesn't happen because EARNED income isn't taxed enough. It happens because PRIVILEGE enables those who already HAVE wealth to get income in proportion to their wealth WITHOUT earning it.

I don't think you have a very clear understanding of why the American Revolution occurred. It certainly had nothing whatever to do with income tax.

Indeed...

 

I've already given it.

So you are completely wrong. Inequality has NOTHING WHATEVER to do with inadequate taxation of earned income, and EVERYTHING to do with the unearned gains of landowners.

Uh, and what do you incorrectly imagine investors base their estimate of a stock's value on?

So you and Piketty are wrong.

I don't know what you incorrectly imagine that means. There is no such thing as intrinsic value outside numismatics.

You clearly don't know anything about accounting practices, or what they mean. You will always be wrong as long as you insist on taxing income, and refuse to understand the difference between income earned by commensurate contribution to production and income obtained by dint of privilege, through the uncompensated abrogation of others' rights, without any commensurate contribution to production.

No, I have stated the facts, which prove you wrong, and you cannot refute a single sentence I have written. Simple.

 

You quoted Stiglitz from an article in which he made a remark about "how the Piketty data was conjured", and he certainly did not say that Income Disparity in the US was not acute.

I posted that article and the controversy derives from how Wealth is calculated. However, it is calculated, it is unfair in its consequences. What Stiglitz suggests as a corrective measure would not change much the fact that Wealth in America is disproportionate. That is, if we have aberrant Income Disparity then, ipso facto, we also have aberrant Wealth Disparity!

Stiglitz was not saying that Piketty was wrong in his conclusion but in the manner in which he arrived at his data. And that manner would not change the results significantly. (Frankly, Stiglitz is nitpicking!)

Duhhhhhhhhhhhhhh

 

SOCIAL DEMOCRACY

I never made that point. There was NO INCOME TAX at the time.

The point being made is one that historically was unprecedented. Both Franklin and Jefferson and John Paul Jones visited Paris, from where both revolutions (American and French) were fomented by intense discussion. The Americans were the first off, as history happened, in freeing themselves from a Monarchic System whereby most of the Wealth in the Agricultural Age was held by rich land-owners who owed their allegiance to the King of England. (Look up how the state of Pennsylvania got its name.)

It did not happen over night, but over a long period of time before the American revolutionaries declared Independence from the King of England. And, at the time, the French government (in the name of the King of France) supported the revolution.

The King of England inevitably lost his colonies, but the King of France lost his head to a guillotine in January of 1793. It still took France another 200 years to evolve a truly democratic governance that they have today.

And the US is still refusing "social-democracy*" that has swept Europe, where it is the principle means of democracy amongst a population of 740 million people. (And remains still "work-in-progress".)

The historical evolution of nations is well worth reading towards understanding the present context of how nations are governed. Income Disparity still plagues most nations on this earth and remains the root-evil of all poverty ...

*Definition: "Social democracy is a political, social-economic governance that supports economic and social interventions by the state to promote social justice within the framework of a capitalist economy; and a policy regime involving collective bargaining arrangements, a commitment to representative democracy, measures for income redistribution, regulation of the economy in the general interest and welfare state provisions."

 

BS you have repeated, but not the facts.

I'm done with you.

Moving right along ...

 

Income disparity is certainly acute. But taxing it more is not going to change the underlying injustice that causes it to be so acute. It is just a classic band-aid solution, a treatment of the symptoms, not the disease. Hacking at branches.

But you refuse to think about WHEN and WHY it is unfair in its consequences. That is the fundamental lie and injustice behind income tax: pretending that earning income is the same as stealing it.

Wrong.

BUT THE INCOME DISPARITY IS JUST A SYMPTOM of the wealth disparity!!!1!

NO. Piketty got it all wrong, because he aggregated instead of disaggregating. Stiglitz provided an important correction to Piketty's error.

Go back to sleep.

 

A STORY IN PICTURES

It can appear that way and very often does. The US is a prime example of a type of sociopathology called Income Disparity - meaning (quite simply) this: "Income inequality refers to the extent to which income is distributed in an uneven manner among a population. In the United States, income inequality, or the gap between the rich and everyone else, has been growing markedly, by every major statistical measure, for some 30 years." (From here.)

Which graphically looks like this (obtained from "Inequality.org"):


The above named site states that Income Inequality has been worsening in the US for the past thirty-years. What happened thirty-years ago to trigger the phenomenon?

This: Ronald Reagan was allowed to change profoundly upper-income taxation - which had already been altered by JFK and LBJ (of all people) in the 1960s. See that history of upper-income tax-rates looking at particularly Reagan's tenure of office beginning in 1980:


Which means what? It means that lightly taxed Income for the upper-class has become ridiculously low. Remember Romney who crowed to Replicant Crowd how he'd only paid 14% income taxation in 2010? (No? See here.) And since After-tax Income becomes Wealth, which becomes Net Worth (after deduction of Debt) - the outcome looks like this for America.

Meaning this:Only 20% of American households own 89% of the nation's Net Worth; and we, the sheeple, own the other 11% ...

 

caused by liberal illegals, liberal unions, liberal budget deficits, liberal taxes and liberal attack on and destruction of family, schools and religons of America, not capitalism. Make sense?

 

No, your argument doesn't make sense at all.

Did you forget the evidence I posted to you a couple weeks ago? Here it is again.

It doesn't make sense to claim "liberal unions" caused inequality when we've seen union membership drop dramatically at the exact same time that inequality skyrocketed.

It doesn't make sense to claim "liberal budget deficits" caused inequality when it has been conservative administrations that have busted budgets and exploded deficits while liberal administrations reduced (or in the case of Clinton, eliminated) them.

It doesn't make sense to blame "liberal taxes" for inequality when we have had dramatic tax cuts for the richest at the same time inequality exploded.

Make sense?