^ nanny state
Wealth & Income Inequality
- Thread starter Eboue
- Start date
Or just make a better NHS?
The risk needs to be aggregated across the whole of society. The moment it goes case by case everything falls over.
We may be at cross purposes but I'm not in favour of the private sector being anywhere near a public health system. There's a place for additional inputs. But not at a baseline level.
Really it's a product of pooling risk in situations where access to the relevant information is asymmetric. For instance if Barclays went under in 2009 certain clients may have lost a great deal of money even though they were in no way party to the bank's predeliction for making bad loans. By investing in bad loans Barclays would have created a moral hazard by exposing their clients to risk without their knowledge and participation.
The causation principle related to MUFC would be to change the governance of the club(in other words change ownership)? If you perform a rootcause analysis/5 whys the fundamental cause is the governance/ownership of this club.
Probably if someone offered me a trade, where you swapped in a public health system but took out government managed pension programs (i.e. social security in the US), I'd take that. Because the pensions tend to grow into even bigger open-ended liabilities than healthcare systems. And that one I really expect people to be able to manage individually (save your money).
For clarity, I mean just the pension part of what in the US falls under social security. I still think governments should provide welfare to the unemployed or disabled.
Well, its not easy as the present settings are a result of decades of special interests pushing to socialize the risk and privatize the profits. Series of books could be written on this but I'll try a short, basic summary that is by no means comprehensive. I know I'll forget some things:
1. Remove money from political influence. This means reversing Citizen's United and then going even further. In the long run, we should works towards only public funding of candidates and either drastically limiting or just eliminating altogether political advertising. If we want a more informed polis, then more public debates and removing the private money from campaign influence as much as possible.
2. Empower the public sector where profit motive incentives misalign with the goals of society - health care, private prisons, education and the military need to be strengthened from the public sector. This would also included trying to minimize the influence of money on the judicial system.
As the recent libertarian study showed - universal healthcare is far, far more efficient for a society. The Federal government will spend more but overall, the citizens will save 2 trillion USD / year. Other massive savings could also be had - the US Military is far more efficient than hiring private contractors to do military work (ie Blackwater/Xe). The US government could save a lot of money by stop prosecuting and locking up non-violent drug offenders to fill private prisons. And crooks like Angelo Mozilo need to be jailed to deter that type of hustle.
3.. Eliminate the large amounts of illegal and legalized theft in high finance and other top level corporate industries. High frequency trading as you know is another massive problem that robs legitimate investors of tens of millions of wealth every day. There are many giant corporations ripping off taxpayers for billions per year through false claims legal manipulation. The False Claims Act needs to be strengthened. There is so much inefficiency and corruption in the private sector when you peel off the veneer of propaganda its staggering.
4. Regulation is necessary for a functioning competitive free market. Recognize where unregulated laissez-faire capitalism is a proven empirical failure.
Radical de-regulation for laissez faire capitalism has caused many of the world's economic crisis. From the rush to de-regulate Russia that resulted in oligarchs to greedy de-regulation that caused the Savings & Loan crisis in the 1980s, the California energy de-regulation mess of the 1990s and de-regulation of financial markets of the FSMA & CFMA (which served essentially as a force multiplier) directly led to billions, even trillions of the general public's wealth being lost.
5. Worldwide there is a big black market problem that connects to the Paradise Papers. It gets little attention because arcane accounting is about as un-sexy as it gets. Except there is a huge problem with corrupt money being circulated around the world. I have a responsible banker friend who dislikes bitcoin and crypto because of how much easier it makes it to money launder. I think the amount of dirty money around the world is staggering and most people have no idea. The dirty money system from the drug/gun/human trade that funnels through corrupt private sector entities would stun many westerners. This takes a lot more than just a handful of football fans speculating to fix. Its going to take a lot of the world's smartest and most honest minds over several generations to begin to solve.
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For the US to have a universal healthcare they would need to reduce the military and that means closing all the bases in foreign countries, stopping giving money away to regimes, tariff the other countries the same rate they use against US. The europeans cried when trump said he would remove the American forces from Europe, the europeans and chinese got offended because US is going to tariff their products at same rate, why they never told us in school the US since the WW2 was a sucker and for example they would tariff the europeans at 2.5% rate on cars but the europeans they tariffed the american cars at 10%?
I want to meet the 5% enthusiastically socialist Republican voters.
Edit - I can't see any "Gen-Z" basklash against socialism, which is surprising.
Doesn’t this work in the same way for for-profit insurance companies though?
They want to protect themselves from risk by charging higher premiums to people with pre-existing conditions.
Why would they have to do that?
When discussing the connection between wealth and political clout in the US, we should always remember this.
Salaries for executives in the US amaze me.
The head of Statoil, Norway's biggest oil company and one of the biggest in the world earns $1,6M\year.
People would lose their shit if he earned some of the sums you see from the US.
The head of Statoil, Norway's biggest oil company and one of the biggest in the world earns $1,6M\year.
People would lose their shit if he earned some of the sums you see from the US.
Could argue we're already seeing this to an extent with new voting measures intended to make those poorest less likely to vote. The Republicans in a lot of US states have taken plenty of measures to try and stop certain minority groups from voting etc.
And history in many countries has largely been a case of the governing powerful gradually seceding power to the majority, whether it be working-class men, women in general etc.
Welcome to the 1400 year old Islamic concept of Zakat. A 2.5% annual "tax" paid by Muslims to the state on all wealth they held over "x amount". In the absence of a caliphate, Muslims today continue to pay this 2.5% of their wealth, but it's paid to charities instead.
It was essentially a wealth tax;
It was essentially a wealth tax;
- I think we should implement a form of it today across all society.
- The threshold for it should be £1 million worth of assets (not including the property you live in).
- It should probably be just 1%, rather than 2.5 - otherwise the bourgeois might kill us all.
- It should be strictly only spent on poverty alleviation and welfare.
Not only that, but you see executives getting bonuses of multiple millions of dollars, even when running the company to the ground! The Toys R Us executives for example, claimed $16m in bonuses while filing for bankruptcy. Also the Lehman Brothers case; "Fuld said that he had in fact taken about $300 million (£173 million) in pay and bonuses over the past eight years. Despite Fuld's defense on his high pay, Lehman Brothers executive pay was reported to have increased significantly before filing for bankruptcy."
Bonkers.
Really blows apart the argument that they're only getting paid that much because they're good at their jobs and are being incentivised to do better. Instead it's simply sheer greed being facilitated by other people who partake in and benefit from that level of greed.
I listened to a podcast about this recently. It's a relatively recent phenomenon, which kicked off in the mid-90s. It's basically down to a bit of accounting smoke and mirrors where paying CEOs with equity makes it easier to balance the books. End result, they've been making out like bandits ever since.
Good article:
https://www.washingtonpost.com/busi...1bf7847b375_story.html?utm_term=.bd168e324685
Succinctly covers the difference between mobility vs inequality and solutions.
https://www.washingtonpost.com/busi...1bf7847b375_story.html?utm_term=.bd168e324685
Succinctly covers the difference between mobility vs inequality and solutions.
You have to think about the maths of these comparisons. The CEO is one person. Even if their pay stayed absolutely static and the $7.8m pay increase was divvied up amongst all the workers would it make much difference? General Motors employs 180,000 people so we’d be talking about an extra $43 dollars to each employee per year in that scenario.
And that’s without even getting into the way that CEO’s are mainly paid by stock options, so cutting/freezing their salary wouldn’t suddenly free up a load of cash for all these bumper $43 salary increases.
You're looking at it as if the 2011 standard, when CEOs made merely 208 times as much as workers was an acceptable baseline. That's not the case. The fact that they now make 346 times as much as workers is just another example of the decades long transfer of wealth from workers to management.
Yeah, sure. And I think CEOs are paid too much, if only because I don't see why any one person would need that sort of moolah.
I just think presenting data the way it is in that tweet is misleading. In terms of the annual turnover of these companies, the CEO salary is still an absolute drop in the ocean. Sticking with GM. The company has about 100 million shares. They paid $0.40 per share dividend last year. $40 million dollars leaving the company through dividends paid to investors. Every single year.
In these massive corporations, whether the CEO is paid $1m or $10m is essentially irrelevant to the average employee. Although it's 100% in their interest to have their company run by as competent a CEO as money can buy.
Ok but I don't think having a system where CEOs make 350 times the average worker produces demonstrably better CEOs than a system where they make 30 times the average worker. And for you and I, $43 might not be much but for people struggling paycheck to paycheck it absolutely can be.
That’s $43 per year!
Agree with your first sentence by the way. The tricky bit is putting the genie back in the bottle.
Some of the finance/stock experts in Norway's biggest bank actually make more money than the CEO. The head of Equinor, Norway's (by far) biggest company, makes 12.5 times more than the average employee.
Both companies are doing excellent.
Both companies are doing excellent.
That’s probably because your “average employees” are paid a fecking fortune!
Norway throws up so many appealing stats when it comes to income and quality of life. Makes it seems like a fantastic place to live but I’m not sure it translates well to countries that aren’t awash with oil money.
I listened to a podcast about this recently. It's a relatively recent phenomenon, which kicked off in the mid-90s. It's basically down to a bit of accounting smoke and mirrors where paying CEOs with equity makes it easier to balance the books. End result, they've been making out like bandits ever since.
This is interesting because it creates a perverse incentive for CEO's to inflate stock prices then get out before they drop. I'll listen to this later today
That 's only somewhat true. The median income is decent, for sure, but it's not outrageous, even in the oil industry. Also, keep in mind that these companies make billions and billions of dollars. Why don't they pay the executives tens of millions dollars, if that's the only way to attract the best executives?
Also, one of the reasons we have a high median income is because of the social mentality. It's not like the government / oil industry is paying everyone in every sector.
Edit: we could have done something very different with our approach to our oil luck. We could have chosen the Saudi, Qatar, og Venezuelan way. They have more oil, more money, and look at the state of those countries. Our welfare/quality of life is not a lucky/random occurence. It's a series of concious decisions through generations of politicians who actually care about their own population.
Don’t get me wrong. I think Norway is a very well run country and has been for ages. I think Nordic/Scandi countries in general are great at making decisions based on what is best for every citizen, rather than a select view. It’s a model that I think every country should aspire to.
The US is the opposite extreme. Another wealthy country but where the average citizen is encouraged to fend for themselves and the rich are more and more isolated from everyone else. Places like Ireland and UK are somewhere in between. I know which direction I’d rather see us go in. I just think CEO salaries are a pretty insignificant part of the problem.
Ah, I thought it was just another one of those "but you have oil!!!!!" arguments. Haha. Sorry if I came across as a dick
Imagine if the average american CEO made 12.5 times the median worker, with the difference redistributed towards the employees, welfare, and healthcare (would involve more taxes obviously). That would make a difference for sure. But ofc the money trickle down today, so there's no need for that.
Ah, I thought it was just another one of those "but you have oil!!!!!" arguments. Haha. Sorry if I came across as a dick
Imagine if the average american CEO made 12.5 times the median worker, with the difference redistributed towards the employees, welfare, and healthcare (would involve more taxes obviously). That would make a difference for sure. But ofc the money trickle down today, so there's no need for that.
Didn’t think you were being a dick at all!
Re the bit in bold. See above for the effect on the average employee of radical cuts to CEO pay in these massive corporations. Spoiler, not much.
Would have a big impact in a small company, mind you. That’s why you see a lot of CEOs in smaller tech companies choosing to pay themselves very little.
Crtl+shift+n on your google chrome and paste the link there, or use private browsing on Safari/iOS.
I dont see any connection between pay and competence especially in some companies. For instance Les Moonves at CBS was paid 117m last year. Personally I don't think he 8s anywhere near 117 times as valuable to CBS stock value as a million dollar executive. In fact that podcadt basically shows the insane rise in C level pay has little to do with competence. BTW its important to note its not just the CEO that receives this crazy pay but generally all c-levels (CFO, COO,etc) so its more than just one person getting overpaid its a select group.
Didn't realize there was a paywall...and I've not paid for any news sites! Not sure I can quote the full article, but here goes...
Lloyd Blankfein, who is stepping down as chief executive of Goldman Sachs, personified the era of economic inequality. At a time when average Americans are struggling to make wage gains, Blankfein was paid tens of millions every year, and his firm catered to the wealthiest of Americans.
This country could use more people like Blankfein.
It has become axiomatic that inequality is the United States’ leading social problem, and by that metric, Blankfein, if not quite public enemy one, is certainly a social undesirable. Indeed, Blankfein’s firm has the rare distinction of being an anathema to both supporters of Bernie Sanders and of Donald Trump.
But what if inequality is the wrong metric. Herewith a modest proposition: economic inequality is not the best yardstick. What we should be paying attention to is social mobility.
The concepts are similar enough to often be confused. For instance, if you lived in a country where all the wage gains were captured by a very few (inequality), it would be hard for anyone else to make progress (lack of mobility). And that’s not so far off from describing the United States today.
But the distinctions are important, and they lead to different sorts of conclusions. If the problem is defined as inequality, a big earner such as Blankfein clearly makes it worse. But if people from the wrong side of the tracks are angry not so much because they earn less than their neighbors but because, rightly or wrongly, they don’t think they could ever become, say, a Wall Street CEO, Blankfein should be a role model. His father was a postal worker in New York City. That he made it to Harvard and to the top of Wall Street should be an inspiration.
The brief here is that policies designed to increase the number of Blankfeins will do more good than policies designed to level income disparities.
When social policy is viewed through the prism of inequality, you get some wacky results. If someone on your block won the lottery, that would be a bad thing (raises inequality), right? Of course not. Okay, that example is facetious.
Here’s a real one: Critics have griped that whatever city Amazon.com chooses for its second headquarters will in fact be a loser because when Amazon moves in and creates 50,000 jobs, rents will rise and “inequality” will increase. (Amazon chief executive Jeffrey P. Bezos owns The Washington Post.)
That’s not only a real example, it’s an absurd one. More people working at good salaries cannot be a bad thing (if it were, economic policy would be easy: Just make every employer close its doors and watch all rents go to zero).
Rising inequality, although a fact, is also very hard to find a culprit for. Not that economists haven’t tried. Some of the common suspects include globalism, immigration and the decline of labor unions. Jonathan Rothwell, an economist at Gallup, debunked all three — at least, he demonstrated that there is no clear correlation between those trends and rising inequality.
No clear cause means no clear remedy. “Inequality,” moreover, is not as simple as is often assumed. The term is used as though it were measuring a single quantity, such as poverty. More poverty is bad; that’s true, and it is always true.
But inequality, by definition, describes two things — it refers to inequality between one group and some other group. It depends on which two groups are being measured, and it matters, or should matter, if inequality is rising because the lower group is falling or stagnant, or because the higher group is rising.
In the United States over recent decades, two things have been happening. Wage gains have been very slow across most income groups. And incomes in the top 1 percent (and especially the top tenth of a percent) have been skyrocketing. It’s clear that returns to professionals have soared; it’s much debated why this is so.
It’s also far from proved — to me, it’s not even intuitive — that high incomes on Wall Street and elsewhere are the reason for, say, flatter wages in manufacturing. The fact that Mark Zuckerberg is so rich is annoying, and his separateness from Main Street may not be a great thing socially, but in an economic sense, his fortune did not “come from” the paychecks of ordinary workers. Most of the increase in inequality in the United States has occurred in or close to the Zuckerberg stratum, in the 1 percent and the 0.1 percent. On the other hand, income ratios between people at the 90th percentile and the 50th percentile haven’t changed very much.
What’s really a big concern is that mobility in the sub-Zuckerberg stratum is stagnant and by some measures falling. A study by six scholars led by Raj Chetty released a month after the Trump election looked at children born in the 1980s and found that only half, by age 30, were making more than their parents did at a comparable age — whereas two generations earlier, 90 percent were earning more than their folks. By that measure, mobility in the United States is falling through the floor.
That conclusion could be overstated. Greg Mankiw, author of a best-selling college economics textbook, has argued that due to innovations ranging from antibiotics to air conditioning that inflation statistics fail to capture, people today are living better off, relative to the past, than it might appear.
There is another way to think about mobility: How often do people at the bottom of the ladder rise to the top (or rise from the bottom to the middle, and so on). By that yardstick, mobility isn’t falling so fast, but it certainly isn’t as high as we’d like.
Raising mobility should be a priority — and as a guide to policy, it is less controversial, and less politicized, than inequality. More social mobility (however it’s measured) is always a good thing.
And we know something about how to engineer upward mobility: in a phrase, more and better education. A landmark 2017 study (co-authored by Chetty), showed that lower-income students who get to college do about as well as higher-income students at similar institutions. As the authors put it, “most colleges successfully level the playing field.”
Fortunately, more lower-income students are entering college. However, many are in community colleges, where dropout rates tend to be high and economic results are lower.
Lower-income students at elite private universities get very good outcomes, but not many go to such schools. (Indeed, a child born to the poorest fifth of the population is 77 times less likely to attend an Ivy League college than a child of the 1 percent.)
The authors suggest it is more critical to admit, and support, greater numbers of low-income students at quality public universities. Their study identified several — California State University at Los Angeles, City University of New York and the University of Texas at El Paso — that accept large numbers of low-income students and generate “very good outcomes.” Such colleges could provide a “scalable model for increasing upward mobility” — and at an instructional cost of $8,000 per student, compared with $54,000 at elite private colleges. Not enhancing taxpayer support for such schools would seem criminal. That’s just one idea — but it’s a big one.
Of course, taxes come from someplace, and the wealthy need to pay a higher share. But taxing the wealthy to pay for social goods is different from targeting the gap, per se, as the problem. One approach uses government to level, the other to promote opportunity and advancement.
The latter was enthusiastically embraced by Abraham Lincoln. The 16th president defended wealth because, he said, it was proof to the poor man that he could become rich.
“I want every man to have the chance,” he declared in a campaign speech in 1860, pointedly adding, “And I believe a black man is entitled to it — in which he can better his condition — when he may look forward and hope to be a hired laborer this year and the next, work for himself, and finally to hire men to work for him.”
Lincoln, a rail splitter turned railroad lawyer, understood the concept of social mobility, the American Dream.
This country could use more people like Blankfein.
It has become axiomatic that inequality is the United States’ leading social problem, and by that metric, Blankfein, if not quite public enemy one, is certainly a social undesirable. Indeed, Blankfein’s firm has the rare distinction of being an anathema to both supporters of Bernie Sanders and of Donald Trump.
But what if inequality is the wrong metric. Herewith a modest proposition: economic inequality is not the best yardstick. What we should be paying attention to is social mobility.
The concepts are similar enough to often be confused. For instance, if you lived in a country where all the wage gains were captured by a very few (inequality), it would be hard for anyone else to make progress (lack of mobility). And that’s not so far off from describing the United States today.
But the distinctions are important, and they lead to different sorts of conclusions. If the problem is defined as inequality, a big earner such as Blankfein clearly makes it worse. But if people from the wrong side of the tracks are angry not so much because they earn less than their neighbors but because, rightly or wrongly, they don’t think they could ever become, say, a Wall Street CEO, Blankfein should be a role model. His father was a postal worker in New York City. That he made it to Harvard and to the top of Wall Street should be an inspiration.
The brief here is that policies designed to increase the number of Blankfeins will do more good than policies designed to level income disparities.
When social policy is viewed through the prism of inequality, you get some wacky results. If someone on your block won the lottery, that would be a bad thing (raises inequality), right? Of course not. Okay, that example is facetious.
Here’s a real one: Critics have griped that whatever city Amazon.com chooses for its second headquarters will in fact be a loser because when Amazon moves in and creates 50,000 jobs, rents will rise and “inequality” will increase. (Amazon chief executive Jeffrey P. Bezos owns The Washington Post.)
That’s not only a real example, it’s an absurd one. More people working at good salaries cannot be a bad thing (if it were, economic policy would be easy: Just make every employer close its doors and watch all rents go to zero).
Rising inequality, although a fact, is also very hard to find a culprit for. Not that economists haven’t tried. Some of the common suspects include globalism, immigration and the decline of labor unions. Jonathan Rothwell, an economist at Gallup, debunked all three — at least, he demonstrated that there is no clear correlation between those trends and rising inequality.
No clear cause means no clear remedy. “Inequality,” moreover, is not as simple as is often assumed. The term is used as though it were measuring a single quantity, such as poverty. More poverty is bad; that’s true, and it is always true.
But inequality, by definition, describes two things — it refers to inequality between one group and some other group. It depends on which two groups are being measured, and it matters, or should matter, if inequality is rising because the lower group is falling or stagnant, or because the higher group is rising.
In the United States over recent decades, two things have been happening. Wage gains have been very slow across most income groups. And incomes in the top 1 percent (and especially the top tenth of a percent) have been skyrocketing. It’s clear that returns to professionals have soared; it’s much debated why this is so.
It’s also far from proved — to me, it’s not even intuitive — that high incomes on Wall Street and elsewhere are the reason for, say, flatter wages in manufacturing. The fact that Mark Zuckerberg is so rich is annoying, and his separateness from Main Street may not be a great thing socially, but in an economic sense, his fortune did not “come from” the paychecks of ordinary workers. Most of the increase in inequality in the United States has occurred in or close to the Zuckerberg stratum, in the 1 percent and the 0.1 percent. On the other hand, income ratios between people at the 90th percentile and the 50th percentile haven’t changed very much.
What’s really a big concern is that mobility in the sub-Zuckerberg stratum is stagnant and by some measures falling. A study by six scholars led by Raj Chetty released a month after the Trump election looked at children born in the 1980s and found that only half, by age 30, were making more than their parents did at a comparable age — whereas two generations earlier, 90 percent were earning more than their folks. By that measure, mobility in the United States is falling through the floor.
That conclusion could be overstated. Greg Mankiw, author of a best-selling college economics textbook, has argued that due to innovations ranging from antibiotics to air conditioning that inflation statistics fail to capture, people today are living better off, relative to the past, than it might appear.
There is another way to think about mobility: How often do people at the bottom of the ladder rise to the top (or rise from the bottom to the middle, and so on). By that yardstick, mobility isn’t falling so fast, but it certainly isn’t as high as we’d like.
Raising mobility should be a priority — and as a guide to policy, it is less controversial, and less politicized, than inequality. More social mobility (however it’s measured) is always a good thing.
And we know something about how to engineer upward mobility: in a phrase, more and better education. A landmark 2017 study (co-authored by Chetty), showed that lower-income students who get to college do about as well as higher-income students at similar institutions. As the authors put it, “most colleges successfully level the playing field.”
Fortunately, more lower-income students are entering college. However, many are in community colleges, where dropout rates tend to be high and economic results are lower.
Lower-income students at elite private universities get very good outcomes, but not many go to such schools. (Indeed, a child born to the poorest fifth of the population is 77 times less likely to attend an Ivy League college than a child of the 1 percent.)
The authors suggest it is more critical to admit, and support, greater numbers of low-income students at quality public universities. Their study identified several — California State University at Los Angeles, City University of New York and the University of Texas at El Paso — that accept large numbers of low-income students and generate “very good outcomes.” Such colleges could provide a “scalable model for increasing upward mobility” — and at an instructional cost of $8,000 per student, compared with $54,000 at elite private colleges. Not enhancing taxpayer support for such schools would seem criminal. That’s just one idea — but it’s a big one.
Of course, taxes come from someplace, and the wealthy need to pay a higher share. But taxing the wealthy to pay for social goods is different from targeting the gap, per se, as the problem. One approach uses government to level, the other to promote opportunity and advancement.
The latter was enthusiastically embraced by Abraham Lincoln. The 16th president defended wealth because, he said, it was proof to the poor man that he could become rich.
“I want every man to have the chance,” he declared in a campaign speech in 1860, pointedly adding, “And I believe a black man is entitled to it — in which he can better his condition — when he may look forward and hope to be a hired laborer this year and the next, work for himself, and finally to hire men to work for him.”
Lincoln, a rail splitter turned railroad lawyer, understood the concept of social mobility, the American Dream.
Blankfein has no conscience and cares about nothing except greed