What Is Economic Fairness?

ECONOMIC FAIRNESS

The single most common thread throughout the history of mankind is its evolution in terms of societal “fairness”. Of course, it is not anywhere near its culmination point. But neither are you or I a Roman slave, nor a medieval serf, nor an indentured servant in the 16th/17th century, nor a black slave in the 18th/19th century America.

You are (supposedly) “free”. But are you? Perhaps in name only? Have you ever thought of that?

What has happened recently in the US (called the Great Recession) is a repeat of the Roaring Twenties and the subsequent stock-market crash. Why’s that?

Because there was/is too much money in the hands of too few people. As I read recently somewhere, the 1Percenters as a class have a net worth of close to 2 trillion dollars. Which indicates that something is dangerously wrong with our system of taxation that so much should be owned by so few.

People should not earn a lot of money if they are capable of it? Of course they should. But we are talking about a “horrendous” amount of money, that will trickle upwards to become Wealth, and then back down dynastically to their inheritors who did not earn a penny of it. The result is the perpetuation of Income Disparity as economists would call it. Or Income Unfairness for others.

A HISTORY OF INCOME UNFAIRNESS IN AMERICA

The history of what happened is very obvious:

*See the historical info-graphic of US tax-rates here:


The above shows tax-rate evolution since the inception of a national income tax in the early 20th century.

Moreover:
*Note how taxation was uniformly very high except in two periods, one that coincides with the Stock Market crash in 1929 and the other more recently in the 1980s. Who was PotUS in the 1980s? (Reckless Ronnie)

*LBJ (of all people) in the early 1960s brought upper-income tax rates down for the level of income at which excessive revenues accumulate to select groups. Actually, it was JFK who brought the upper-level rates down, and LBJ who actually signed the bill.) That tax-rate level was somewhere between 80 and 90% and depends upon which level of income at which they begin to apply.

*Reckless Ronnie (in the 1980s) completed the hatchet-job, bringing them down to the ridiculous level of 25/30%. They are presently, effectively (i.e. net of deductions) in the 2025% range.

*This reduction in upper-level taxation is the single most factor producing the Trickle-Up Economy in which Americans now live. It leads directly to the fact that there has been a massive redistribution of income upwards; but also, since income becomes wealth, also a great redistribution of riches.

*The Paris School of Economics at their web-site (here: World Income Database http://wid.world/country/usa/) shows the evolution of Income Share by householder percentile. If you reduce the numbers, the decade-by-decade evolution of the US “10Percenter Class” looks like this:
1960 – 33.8%
1970 – 31.5%
1980 – 32.9%
1990 – 38.8%
2000 – 43.1%
2010 – 46.3%
2015 – 50.5%

(Note how the percentage changes from 1980 onwards. Who was PotUS during the 1980s?)

Need we all stick around until 2020 to see what the sharing would look like? And these questions beg themselves: Why the above Income Disparity? Why have we let it happen?

Because we are a nation that, in the past 30 years since Reagan opened Pandora’s Box of Ills upon us, has become enamored of wealth. We adore the rich. We adulate the rich. They are “winners!” As if life were a giant gambling casino.

The rich have become our role-models whether we work in the Silicon Valley as hi-tech entrepreneurs or are simply Jack ‘n Jill America playing the state lottery. Because our key value-of-reference has become monetary – meaning we are genuflecting to the God of Mammon.

MY POINTS?

*Our desire for get-rich-quick wealth is a corrosive sociological factor eating away at the moral fabric of the country that leads to the sort of economic catastrophe such as the Toxic Waste Mess and the subsequent Great Recession – created by a mindless frenzy to earn a lot of money quickly by fraudulent means.

*Which has done great harm to ordinary people - and from which we have yet to see the light at the end of the tunnel. Because the unfortunate consequence is to incarcerate 14% of the American households below the Poverty Threshold. That’s nearly 45 million American men, women and children …

Q E D.?

 

There's no economics in this post. To derive anything above rant there needs to be engagement with economic concepts. For an orthodox approach, that will start with definitions into aspects such as horizontal and vertical equity. It will then go on to refer to welfare economics and ideas such as a second welfare theorem ("any efficient allocation can be attained by a competitive equilibrium, given the market mechanisms leading to redistribution")

 

Democrats rant against the rich without a fundamental comprehension of the term money. Not clear if they understand wealth but seems not.

This is one reason why I lost my desire to remain a Democrat. I saw a party of pure jealousy. Jealous that Johnny got more bites then I got. This actually happened as I was brought up. The "Johnnie" was my younger brother. He would watch each eat and count their bites of food. And announce to Mom, so and so got more bites than I got. Nobody told him how much to eat. Nobody cared what he ate. Mom did not put a sparse serving on the table. She was a good cook and fed us a variety.

Democrats count the bites the rich get.

By the way, though he was never fat, he never starved either. At times he could really make us all laughed. He should still be living but for his penchant for over imbibing beer. Sad to see beer take a man out.

 

Isn't it more that they play lip-service to equity, as a means to manipulate the voter, but ultimately merely support the status quo and wealth divides heavily skewed towards the elite?

 

Ask them if they support the super rich Oprah Winfrey? They absolutely support her though she now has so much more income and money that she does no longer relate to her poor background.

 

So the real problem is that they do not, in practice, embrace social democracy?

 

I apologize for not being fluent in social democracy. To me, democracy stands for I am asked by government to vote as an expression of my thinking. If enough in the area vote my way, my way prevails. If less than the number needed vote my way, the other side view wins.

I can't relate my remark over Oprah Winfrey to what you just said.

 

Social democracy puts a much higher weighting on equity. I suppose you could simplify it to maximin politics (i.e. maximising the well-being of the worst off person)

 

I am still a fan of the founding principles. If you recall, the founders did not have income taxes. The founders did not sound as divisive as say the politics of our last president.

Trump never speaks of helping the rich. He wants the best for all of us. What we decide.

 

Another thing about social equity. Democrats love to talk this up. But when they are in charge, it vanishes from their agenda. To wit, take CA. This state does not approach the poor with legislation to make the poor more well off. Just to collect food benefits, the CA state credit card, aka food stamps, they put you through a grilling you can only imagine. They clearly do not favor the poor. They round the poor up off city areas of control and give them the boot up their behinds. See what San Jose did recently. Democrats power bases despise the poor.

 

Some time ago, a group of people put everything on the line to create an environment that would give even the worst off person the freedom to change their circumstances.

It can be argued the results of that effort and sacrifice has done more to lift the worst off than any other system or program has been able to achieve in the last 241 years.

 

It is the case that Anglo-Saxon capitalism has much higher poverty, child poverty, working poverty than social democratic nations. They also tend to have much lower social mobility and demonstrate intergenerational immobility.

 

LOL

On the other hand, as a result of the foundation that was established, no other system has done more globally to address poverty, famine, and repression.

The score on that measure versus Social Democratic nations is so lopsided, it's not even worth contemplating.

 

Piffle 'n drivel.

Here's why the Democrats "rant" against the rich:


Let me help you read that infographic:
*We poor slobs are most at or below that $50K/year red-line, which is the median annual income for an American family (typically of 2/4 children)
*When the Poverty Threshold is $24K, just less than half of the median income.
*But the top 5% of the population is raking in (and KEEPING due far too low-taxation) an income of at least $350K, which is SEVEN TIMES the median income.

America's Democrats are not socialists* so they do not believe in the same wage for all workers. But SEVEN TIMES THE DIFFERENCE with the median wage is just TOO MUCH. What the Dems want is far, far more taxation for the rich such that the difference is more like 3 to 1 and not 7 to 1. (And the revenue therefrom is applied to obtaining more government services that allow them a better lifestyle.)

Which is why, when it comes to Wealth, this is what the rip-off looks like:


The top 0.1Percenters are garnering as much of the National Wealth as we 90Percenters obtain.

It does not take a quick-brain to see the patent unfairness of the American taxation-system. (The above research was made long before Donald Dork reduced YET AGAIN upper-income taxation. Hoping that his "friends" will forgive him his pathetic antics and give him the money necessary to obtain another 4-year presidency-in-hell come November, 2021.)

And since Net After-tax Income becomes Wealth, and minus Debt, become Net Worth, this is the pie-chart applicable:


The US today is a rip-off of Wealth that, with stronger taxation, could be used to subsidize a National Healthcare System (for all) and Nearly-free Postsecondary Education (for those earning below the national median income of $50K/year).

What is so wrong with that program? Huh? What ... ?

*They are Social Democrats who believe in economic fairness for all ...

 

Not really a response to what I said. Do you think social demcoracy's lower poverty, lower child poverty, lower working poverty, higher social mobility and higher intergenerational mobility is a good thing?

Regarding your comment, you're still on very dodgy ground. Both the US and the EU have conspired to generate an unlevel 'trade' playing field. That has ensured tht African countries, reflecting resource exploitation, actually lose out from trade.

 

Given the level of inequality in the US (plus, until Trump, political consensus), this is not a credible comment.

 

I think countries develop whatever model they want, and people who live there either sign on to it, or don't.

With freedom, comes responsibility. Some can't handle that, and require a structure that addresses that shortcoming.

However, in the end, it's rather clear the social democracy you're promoting has limited applicability outside carefully structured societies acclimated to it's restrictions. Missing is the fact that no other national structure has done more for people around the globe to combat poverty, famine, and turmoil than the one set up 241 years ago.

The difference in that level of effort, vs. what "social democracies" have achieved over the same period of time is so substantial, it's not worth debating.

 

"No other national structure"? Really? Depends upon your criteria.

In fact, the OECD has funded a study on the Quality of Life. It goes out of its way to underscore the fact that measuring such a variable is extremely difficult.

Nonetheless, here is a key chart that the OECD reported this year;


It appears that the US far excels France in terms of "Comparative performance on material conditions", which in both instances is fairly mediocre. But both the US and France are roughly equal in terms of Quality of Life. Which astounds me.

But if one wants to maximize both criteria, then they would best live in the nordic countries - or Canada.

Anyway, the study is interesting and from an economics point-of-view (at least) it will be interesting to see how the OECD pursues it because the study is only at the very beginning.

 

Well, the challenge of overcoming the subjective bias of OECD's analysis will always remain.

 

I don't think its that straigh-forward. Take the original Anglo-Saxon economy and the Limeys. Their system, with power crucially skewed through unequal land ownership, can be traced back to 1066 the the Norman conquest by William the Bastard. The US still suffers from the consequences of human rights abuses such as slavery (and continuation of discriminatory practices).

You're exaggerating the structural changes associated with social democracy here. Ultimately it merely a rebalancing of institutions towards supporting the well-being of those lower down the income/wealth distribution.

 

Fair trade is when all parties involved are satisfied with the outcome.

 

True enough. But people have differences of opinion often based upon factual evidence but sometimes just sentiment.

That's what makes for horse-races and ... economic systems. ;^)

 

Cheap shot.

Or substantiate your remark about "subjective bias" ...

 

The unsubstantial people do not matter in american society, most especially in a post-industrial society. We/they are now in the way of "progress", just like all the folks removed from the path of "progress" before by this society and its values.

 

Agreed. But, it is not that way in Europe.

They turned out differently over here (I live in France) - and have a far greater appreciation of Intrinsic Values of mankind. You know, the kind you CANNOT put a dollar price on them.

For as long as muney, muney, muney is the Only Yardstick in America, we are hooked on it. Nothing else matters. Black or white. Male or female. Rich or poor. The distinctions just don't matter.

Only money matters ...