Explaining America's massive, untenable wealth-gap with video

Yay! I’m not terrible!

Maintaining a property like that is what cheap Mexican labor is all about, although if you’re talking about an island resort kind of thing then it’s probably cheap local labor.

Landscaping = Mexican. Maid service = Caucasian only. Also the musicians except in rare cases.

No, you most definitely are not and the comment is growing on me and I do like it. I read it wrong the first time, so the universe handed me a sign. Or the BB system glitch did, whatever. Anyway…

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If the median family income was $90,000/yr a lot more families would be able to put their kids through college without taking on crippling levels of debt, more families would be able to buy heath insurance without assistance and more families would be able to save for retirement and not be solely dependent on Social Security. This would probably also raise wages and create more job opportunities at the bottom of the income distribution so there would be less need for public assistance. Overall, the country would be healthier and there would probably be less need for government intervention.

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The original sources are cited at the end of the presentation.

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I would like to see a wealth charts like this, drawn for each country where the data is available.

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I have to agree. There’s a scarcity of practical solutions. Targeting “CEOs” misses the mark. Heck, I was a CEO of a small company for several years and made an average of less than minimum wage most of those years (my net worth declined too). Sweat equity nearly turned into sweat bankruptcy.

To improve wealth distribution, you have to start with income distribution. Some folks will always end up with zero assets (I’ve got family member who exemplify this). But for most folks, if you can increase income slightly, the marginal increase can end up as savings. If they don’t spend it on more stuff that just depreciates away, like a bigger SUV.

The trick is to make it desirable to pay people more in the least heavy handed way possible while encouraging savings. Simple, right?

How can we correct for the fact that household sizes have dropped considerably since 1970, the significant increase in the number of single parent households and the change in the average number of adults with jobs in a household? Obviously this would have considerable impact on the earning potential of a given household and radically change the shape of the distribution on a household basis.

I know it’s not popular, but I really think we should tax capital gains much more heavily. I don’t understand why it is taxed at a lower rate than regular income when it’s basically the result of people letting their money work for them–the rich getting richer.

They always say that the capital will flee the country if we increase the tax rate, but where is it going to go? Europe? China? Russia? They all have their own problems and taxes and everything. It’s as crazy as oil/gas companies saying that they’re not going to drill anymore unless they get tax subsidies, despite the fact that drilling is what their company does and each well is obscenely profitable. We already saw in the video that Capital gains taxes are almost entirely a tax on the rich (Only 0.5% of the lower 40% would be affected, and even then not very much) and one that puts some backpressure on the rich getting richer.

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Honestly, I like the idea of taxing capital gains, gifts, and estates above income in general. I’m not sure how it works with global markets though.

I’d love to work the results to show that everyone over a certain would, in general, vote against more equality. One of the points driven home was that 92% of the people polled agreed that things should be more equitable. While there’s not a 1-1 correlation, it is interesting to think that the top 1% most probably wouldn’t be in favor of better distribution, and the other 7% are probably those who think they’re moving closer to the 1% anyway.

Meaning, the more “unfair” it gets, the more people on the short end of the stick desire to be on the other end.

So the poll numbers aren’t surprising in the least, and they probably reveal as much about the true inequality as anything else. This country is, and always has been, stuck on a lottery mentality. The lottery = “The American Dream”, IMHO.

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There is always some noise in polls too. Some people like to answer contrarily just because. I also don’t think every single 1%er would vote “nope, no problem here”. Some of the people just have no clue and answer more or less randomly.

“there would probably be less need for government intervention.”

Less welfare, yes. But it would be government intervention that would make it happen in the first place. Such as, perhaps, linking the minimum wage to the living wage. (Since, you know, in inflation-adjusted terms the 1968 minimum was was over $10.50/hr, and we’re more, not less, wealthy now than we were then).

Stark and terrifying.

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Taxing more reduces what the wealthy get, which tries to fix inequality by bringing the top end down in the hope that the money will distribute more equally. I’m more hopeful of finding a way to boost the low end. The problem isn’t necessarily that the rich have a ton of money. That’s a symptom, not the problem. The problem is the poor have nothing.

Fixing things is going to take a solution that needs a generation to implement fully. No quick fixes. No magic wands. It’s going to take policy decisions that liberals and conservatives both like. Yes, like. Not just tolerate, but like. Anybody who says “If we just elect X, then we can fix things.” is opting for more warfare instead of solutions.

Capital gains is a good example. If you can find a way to reduce capital gains for those that invest in ventures that pay joe schmoe really well, you’d probably get good support. Make it revenue neutral (boost the marginal rate) so there’s a stick as well as a carrot. Ok, maybe that’s not a great solution. But I’m just giving an example of the type of thinking I’m interested in.

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I’m not trying to be a troll – I honestly know very little about economics – but all other things being equal, if the median salary was $90,000 per year instead of $50,000, wouldn’t that just have the effect of pushing the price of everything up so the net purchasing power remained the same? I.e. some commodity (for example, a chocolate bar) that costs $2 now would cost $3.60 if the median wage was 80% higher.

Yes, but the rich wouldn’t be as rich, and everyone else wouldn’t be as precariously positioned, and the rich would find it harder to find full-service service workers to exploit. Just as businesses now exist to promote shareholder value, governments now exist to promote powerholder value.

Household size isn’t actually down that much since 1970, its still 83% of what it was, and 95% of what it was in 1980. Inequality started increasing in the later 70’s, so households are less than 10% smaller than they were when inequality began to worsen. Further it seems likely that household sizes are down across the income distribution. Even further-er household size was decreasing more rapidly in the 40 years before 1970 and median income was increasing rapidly at that same time. Yet a little further since 1990 household size has been very very flat and median income has continued to fall behind total income.

Now to jump ahead a whole lot further who is to say that single motherhood is not an effect of inequality, or what is causing inequality, rather than a cause?

But anyhow two things I love about this stat:

  1. That $40k is very palpable to people. As a commenter said above its a year of higher education. It’s a cabin and boat on the lake. Its way more than health insurance.
  2. Because it is about medians over time it points you in the right direction, and away from the wrong direction many people are currently pointing. To realizing that total income did go up, people like you just didn’t get any of it.
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I think you answered your own question there.