Wealth & Income Inequality
- Thread starter Eboue
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Today I was reading about the bailout of some portuguese banks, and how they kept providing credit to large debtors that they knew would eventually be unrecoverable, sometimes at the cost of giving credit to more viable companies.
The explanation was that as soon as they stopped giving credit to these companies, they would become insolvent, declare bankruptcy, and the debts written as losses in the bank books. Whereas if they kept conceding credit they could keep the problem hidden for longer, and pretend that the bank, as well as their biggest debtors, were doing OK. The reason they did this, because they knew they would be bailed out when it all came crashing down at once, too important to fail.
And then one thinks what happens to the average Joe who misses 3 payments on his mortgage...
The world is stupid.
The explanation was that as soon as they stopped giving credit to these companies, they would become insolvent, declare bankruptcy, and the debts written as losses in the bank books. Whereas if they kept conceding credit they could keep the problem hidden for longer, and pretend that the bank, as well as their biggest debtors, were doing OK. The reason they did this, because they knew they would be bailed out when it all came crashing down at once, too important to fail.
And then one thinks what happens to the average Joe who misses 3 payments on his mortgage...
The world is stupid.
Nah, we're all just "temporarily embarrassed millionaires" looking for our own quick get-rich moment. We want to belong to the wealthy and powerful ourselves. At least that's what I read somewhere.
Nice one.
The dude from Yahoo surely also knows that US unemployment numbers don’t reflect those who’ve been out of work past a certain time period, and the underemployed, and I’m sure there’s others who fall through the cracks of those stats as well.
Yeah @Eboue hates being called a populist
Also Trump is a fake populist. Tax cuts for the super rich are populist?
Also “Obamacare the miracle solution”
https://www.huffingtonpost.com/entry/billionaires-tax-the-rich_us_5c51ea30e4b0ca92c6dcafc6
Should Billionaires Even Exist?
Alexandria Ocasio-Cortez and Elizabeth Warren believe some Americans have too much money, and they’re not alone.
Should Billionaires Even Exist?
Alexandria Ocasio-Cortez and Elizabeth Warren believe some Americans have too much money, and they’re not alone.
no
https://www.theguardian.com/society/2019/feb/07/the-class-pay-gap-why-it-pays-to-be-privileged
A good argument against the idea that people who are in well paying, high positions are there because they're just better than the rest of us
A good argument against the idea that people who are in well paying, high positions are there because they're just better than the rest of us
I'm sure people will continue to think this. Unfortunately.
Oh man...
The problem is that in America, the working-middle class thinks that wealth redistribution means giving their money to people that have less. So they vote no.
They’re too stupid to realise that everyone that earns more than them is taking advantage of them.
My thinking starts with Hegel but different interpretation than Marx.
Capitalism and socialism need to synthesize into mixed economies. I think we are in a phase in history where society is trying to sort out the configuration of that synthesis for the future. The top .1% however benefit more from simply preventing an optimal synthesis and stalling the evolution of political economies in a capitalism vs. socialism phase.
That whole phase is misapplied too in my opinion.
When millions of the bottom 90% lose assets and long term wealth in having to bailout corporate/financial malfeasance by billions of dollars, wealth has been redistributed from the bottom to the top. When people pay the human costs of things from pollution to energy de-regulation schemes designed to enrich special interests instead of advancing public interest then wealth has been redistributed from the bottom to the top.
What much greater marginal taxes on the hyper-wealthy and giant corporations actually is, is not re- anything. Its them paying their fair share for using the mechanism of government and law making to their for-profit advantage. The wealthiest and the biggest corporations benefit exponentially more than the average person its not even funny.
On a very basic level if you are rich you have much lower police response time. So on a very real level public emergency services respond to the richest people much faster. The military protects the interests of multi-national corporations far more than the average worker. As was true in much of history the average worker's lot generally remained unchanged by a change in regime. It was the richest under the status quo whose interests are protected by the military-industrial complex.
When Halliburton earns massive government contracts while their former CEO is Vice President, then use legal loopholes to avoid lawsuits for corporate malfeasance the government is functioning exponentially more in the interests of the specialized interests than public interest of the great majority.
So the richest need to pay their fair share, in percentage of wealth and earnings to both make up for the billions of lost wealth due to their malfeasance from pollution to financial shenanigans and the fact they benefit to much greater degree to the government as Rep. Ocasio-Cortez so perfectly illustrated yesterday.
(examples are directed at you but more the people that use wealth redistribution to only refer to taxes and ignore other forms of law making profiteering)
As I said after the crisis what I said is that socialism exists. Companies capitalizes benefits and socializes loses
Good way to showcase the fact most have some sort of privilege of another, but he lost me when he said "most of these black dudes would smoke you if you all started on the same line" - was he implying only black guys start from zero? As there were white dudes there too (I'd be one of them) and I'm sure black women and white women there too, or is he saying black guys are faster than everyone?
If he was trying to make a point he shouldn't have thrown in a racial stereotype, would have been better to say "some of those people at the start would smoke you".
On the wealth gap though, my girlfriend is watching a show called "yummy mummies" and some of the crap I see there is genuinely shocking, spending $600 on a Gucci baby blanket only to throw it out the first time her new born craps on it should be ridiculed.
They do all this stuff, like never wear the same item of clothing twice, buy more homes than they can possibly live in, pay for these stupidly expensive meals yet don't think they should pay more tax?
Think there should be a limit of the number of homes you can buy, cars, yachts etc, there is no possible way to spend all your money if you're spending it wisely.
Don't get me wrong I aspire to be rich, as does everyone, I will never get there, but I know for a fact if I were, I wouldn't be buying clothes just to wear once, or spend thousands on a meal that wasn't worth £100.
Unfortunately our society is too far down the rabbit hole to change.
Two questions on that:
1. In what qualitative ways would that envisaged synthesis differ from a capitalist system with an extended public sector/welfare system?
I'm asking because I don't understand these arrangements as manifestations of a mixed economy, but as a luxury wealthy capitalist societies can afford as a stabilising class compromise. (So far I understand UBI along the same lines, despite its unconventional nature, but I haven't given it a lot of thought yet.)
2. Would that synthesis be possible on a global scale, i.e. in countries who don't have a large GDP per capita?
Picking up on the "Scandinavia model" discussion from a few days ago (you saw these countries as examples of mixed economies, iirc): I noticed those model nations are high up that list, especially when editing out the tax havens. The question would especially arise if part of the answer to 1. is UBI.
What you described is a mixed economy. Which is kind of my point that a big part of the problem I see is that the entire framing as capitalist vs socialist is misleading and lends itself to really ignorant dead-end debates instead of the types of discussions we should be having. The debate isn't really between capitalism (as a pure system) vs. socialism (as a pure system) but really the question is how to structure a system that mixes elements of both, which is what all modern economies do anyway just in different degrees.
What people like the fans of Von Mises, Hayek want is capitalism in its pure form - unrestrained free market in every sector where instead of any social safety there is just "charity" organizations. This is the view that is constantly perpetrated by right wing and even center-right talk radio in America. That no matter what the problem is, the 'free market' is always the solution. They literally think like the cliche of 'when you have a hammer everything looks like a nail'.
They don't accept that a public sector/welfare system is even desirable or offers any benefits. So instead of accepting that mixed economies are the only stable economies of the 20th century they keep trying to re-debate something that history (and now experimental economics) have already answered.
Its not just that luxury capitalist economies can "afford" a mixed economy. We have examples of nations advancing through the phases of industrialization to information age with mixed economies rather than any pure capitalist or socialist experiment (Taiwan, South Korea following Japan are common examples here where they combined market based and government involvement). Could also point out it was a mixed economy that brought US out of depression cause by laissez faire market fundamentalism.
I'll come back and answer (2) in a little bit
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@oneniltothearsenal
Thanks for the reply, I can probably answer tomorrow evening.
Thanks for the reply, I can probably answer tomorrow evening.
Like some of the discussion on the nuanced differences between the Scandinavian countries, each nation-state is going to have its unique quirks and adaptable conditions.
There are some examples like the Asian tigers (Singapore, South Korea, Hong Kong, Taiwan) that implement different combinations of market solutions, government stimulus and regulations and welfare to mixed degrees of inequality. South Korea and Japan are both good models to learn from as they both advanced very well with good growth while maintaining solid middle class. Japan's 90s recession is a learning experience of where some limits of government-corporation interaction should be placed.
For developing nations I had a professor whose idea was the first most important thing for a developing nation was something addressed by neither capitalism nor socialism: a fair and functional legal system. For developing nations it seems to be one of the most important indicators if a nation-state can develop steadily and fairly. Market economies need fair enforcement of contract law to function even close to intended. Criminal justice needs to be as fair as possible to limit the amount of corruption and graft and both private and public sector. One commonality of just about every nation-state trapped in a development phase is a dysfunctional legal system. I would even argue its a significant part of the problem in the US too and why GINI is so bad in the US comparatively.
The importance of as fair as possible legal systems has always seemed true of anything I've read on developing nations (that isn't my specialty though) so that's the one thing I have confidence always recommending.
Man, I love how articulate you are on your explanations. I could not do it as that even in my native language. And yes, I agree 100%
I guess he said it because the last row was fool of black guys, but yes, even so not fortunate at all. But the main point I think it reinforces @Mogget article.
And yes, you probably would not do what those superrich people do, but because you come from where you come. But if you would be born on the same familyt than them, the odds of doing it would increase drastically, is called values, and you appreciate the value of the goods and services that you have because you go out your home to gain them everyday with your time when you go work. For them, a gucci blanket has the same value as a tissue paper. Think yourself the times that you throw food that you could not eat, maybe in a restaurant? and think a poor person in a developing country think about it (or our grandparents having past a war). I don't justify them and is sort of disgusting, but probably they think the same as us in some things that we do daily and we are not even aware (or we don't want to be aware
Well there was a few white guys there too, I just didn't like that comment, though the point was accurate.
Your second point is an excellent one, I guess it's all relative, we all live to excess in our own ways, I take home a little under £1500 a month, rent a nice apartment with the girlfriend and am 3 weeks away from taking a trip to Hong Kong. My life, compared to many on this planet could be considered excessive.
All comes down to what point do we all pay more tax? If you halved my income I'd be on the streets, if you halved the top 1% they'd still be buying Gucci blankets for new born babies only to throw them away after one use.
Yo are right and believe me, I got your point and agreed 100% with you. Somehow I was telling that to myself more than to you to realize how privileged we are in our own way and I try to remind myself as an exercise every time that I moan when I have to endure my "1st world problems"
And believe me, some of the top 1% would feel more devastated to lose their way of life on the top and getting demoted between the 1-2% than you going on wellfare. They are cnuts that they only care about their position. You would be happier with your family on 750 a month
Yeah I try not to moan about my issues, there will will always be someone worse off than me.
That's true, the thing is I know a lottery winner that come from a crappy background to become a cnut, I firmly believe that money exacerbates your inner qualities, I'm rambling but guess I'm just trying to say a lot of people are assholes, rich or poor.
I have no family but I see your point!
If I break down our differences to the most fundamental point, I'm quite sure it's about this:
The idea of a mixed economy - a mix of capitalist and socialist elements - seems to largely identify capitalism with markets and socialism with state supervision of economic and social matters. I don't agree with that basic idea, as I think both market and state are indispensable components of capitalism itself. I don't think a market economy could even exist without limiting and stabilising state regulation. (You mentioned that as well in your post.)
So I don't understand the interactions and contradictions between them as the interactions of different social models, but as a spectrum completely within capitalism, inside which very different arrangements are possible. Therefore a government-heavy model is not leaning towards "socialist" elements, but merely represents a mode of regulation that leans towards the state side inside the politico-economical spectrum of capitalism. Likewise, economic liberalism, laissez faire capitalism, etc. (which you used as examples of "(pure) capitalism", as opposed to socialism) are merely leaning towards the market side of the very same spectrum, however heavily.
In short: I don't think there's something like a mixed economy. All capitalism is somewhat state-regulated, and in my understanding we're just talking about different degrees and specifics of state intervention in economic and social matters (without denying that the differences can be quite significant). To me, the difference between capitalism and socialism should rather be understood as one of fundamentally different social formations, without going further into that now.
Now, an obvious question is: Why does it matter - isn't it just a problem of different definitions? We don't seem to have a larger disagreement on what happens*, but rather on how to call it. But I do think it's crucial, as it's concerned with fundamentals about the relationship between economy and politics, and therefore has important political implications.
I will continue at this point (and read your second post) sometime later, as it has been busy days for me, and still is.
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*That goes for social spendings, too: you're right that a different word than "luxury" would probably do more justice to its essential role for stability and also economic development (although the latter point is not absolute, imo). What I meant is that spendings on the public/social sector channel monetary value into programs that are often unprofitable in the immediate sense, and beneficial only long-term, which even the richest capitalist societies can only afford to a degree. And less wealthy ones less than that, etc.
I believe it matters because in the US at least (if you live in Europe I imagine there is not a small difference) there is still a powerful movement that doesn't accept your definition of a government heavy model as capitalism. You have the hardcore Austrians (followers of von Mises), all the neo-classically trained Chicago school and all their derivatives from Rush and Hannity talk radio to local radio I hear every day when I drive in California that is constantly hammering on how any form of government 'intervention" (regulation) or social welfare literally is socialism.
So that's what I have to fight whenever I discuss these issues on a daily basis. You're right it could be labeled something else. I know many used the term "welfare capitalism" to discuss FDR New Deal style organization from the laissez-faire market fundamentalism that came before it in the robber baron era (1880s-1920s) but then in the 1990s both Republicans and Democrats turn "welfare" into a pejorative, a dirty word. So on the one level you are right that its a difference in semantics but its actually a difference I feel is necessary because of how both parties have been framing things the last 30 years.
You might be right that "mixed-economy" is not the best way to frame it. But there absolutely needs to be a term used to distinguish a system with strong social safety net, welfare and strong government regulations from just 'capitalism' because that word already has such strong associations (at least in the US) that hundreds of millions of people instantly think no regulation, laissez-faire market fundamentalism is and only is "capitalism".
A lot of my language recommendations are strongly influenced by the ideas of Lakoff (https://www.amazon.com/Dont-Think-Elephant-Debate-Progressives/dp/1931498717 and https://www.amazon.com/Moral-Politics-Liberals-Conservatives-Think/dp/0226467716)
There is constant media repetition of what really amounts to Austrian school propaganda to the lowest common denominator that "the free market is always better and more efficient than when government gets involved", "government IS the problem", "profit motive always makes any sector better no matter what sector", etc, etc.
Based on Lakoff's cognitive linguistics, I personally have found that arguing within the "capitalism" frame of associations is not the most effective. At least in the circles I've ended up debating with family, classmates, co-workers, random people. One of the problems is that for too long, far too many liberals, progressives simply eschewed the study of economics. It was weird when I was in Uni taking econ classes and hearing the strange, misjudgments of some liberals that just 'hate economics' because literally their only exposure to the field must have been hardcore Austrians always just proclaiming their unempirical market solutions. They had no idea what behavioral and experimental economists study. So i fully accept that maybe in your circles different terminology might be needed. Its the core concepts that are important - excessive deregulation only enriches the top1% and screws over the bottom, without a strong safety net unrestrained market fundamentalism leads to disaster,
Anyway I do try and use the specific terms laissez-faire and market fundamentalism as much as possible to reinforce in my small circle of interaction that the ideas pushed by Austrian or Chiacago types are actually the radical ideas unsupported by history and experiments. The type of people that don't realize Adam Smith also wrote the Theory of Moral Sentiments not just Wealth of Nations.
sorry for incomplete thoughts, I have to go now
America Is a Socialist Country for the Rich
"In the conservative mind, socialism means getting something for doing nothing. That pretty much describes the $21 billion saved by the nation’s largest banks last year thanks to Trump’s tax cuts, some of which went into massive bonuses for bank executives. On the other hand, more than 4,000 lower-level bank employees got a big dose of harsh capitalism. They lost their jobs...
Trump is promoting socialism for the rich and harsh capitalism for everyone else in other ways. Since he was elected, GM has got more than $600 million in federal contracts plus $500 million in tax breaks. Some of this has gone into the pockets of GM executives. Chairman and CEO Mary Barra raked in almost $22 million in total compensation in 2017 alone.
But GM employees are subject to harsh capitalism. GM is planning to lay off more than 14,000 workers and close three assembly plants and two component factories in North America by the end of 2019...
Under socialism for the rich, you can screw up big time and still reap big rewards. Equifax’s Richard Smith retired in 2017 with an $18 million pension in the wake of a security breach that exposed the personal information of 145 million consumers to hackers.
Wells Fargo’s Carrie Tolstedt departed with a $125 million exit package after being in charge of the unit that opened more than 2 million unauthorized customer accounts.
Around 60 percent of America’s wealth is now inherited. Many of today’s super rich have never done a day’s work in their lives.
Trump’s response has been to cut the estate tax to apply only to estates valued at over $22 million per couple. Senate Majority Leader Mitch McConnell is now proposing that the estate tax be repealed altogether."
https://www.truthdig.com/articles/robert-reich-america-is-a-socialist-country-for-the-rich/
"In the conservative mind, socialism means getting something for doing nothing. That pretty much describes the $21 billion saved by the nation’s largest banks last year thanks to Trump’s tax cuts, some of which went into massive bonuses for bank executives. On the other hand, more than 4,000 lower-level bank employees got a big dose of harsh capitalism. They lost their jobs...
Trump is promoting socialism for the rich and harsh capitalism for everyone else in other ways. Since he was elected, GM has got more than $600 million in federal contracts plus $500 million in tax breaks. Some of this has gone into the pockets of GM executives. Chairman and CEO Mary Barra raked in almost $22 million in total compensation in 2017 alone.
But GM employees are subject to harsh capitalism. GM is planning to lay off more than 14,000 workers and close three assembly plants and two component factories in North America by the end of 2019...
Under socialism for the rich, you can screw up big time and still reap big rewards. Equifax’s Richard Smith retired in 2017 with an $18 million pension in the wake of a security breach that exposed the personal information of 145 million consumers to hackers.
Wells Fargo’s Carrie Tolstedt departed with a $125 million exit package after being in charge of the unit that opened more than 2 million unauthorized customer accounts.
Around 60 percent of America’s wealth is now inherited. Many of today’s super rich have never done a day’s work in their lives.
Trump’s response has been to cut the estate tax to apply only to estates valued at over $22 million per couple. Senate Majority Leader Mitch McConnell is now proposing that the estate tax be repealed altogether."
https://www.truthdig.com/articles/robert-reich-america-is-a-socialist-country-for-the-rich/
Trump is pro-rich. Surely this is expected.
They did that in Hong Kong, which actually worked quite well as it attracted a lot of wealth from overseas to be parked in HK and probably benefited the city as a whole.
I guess it may be more problematic in the US
Isn't there a massive housing crisis in HK because of the large sums of money (foreign and domestic) going into luxury real estate?
There’s been a massive housing crisis in HK for the last 50 years, it’s more to do with over population in a tiny city than any policy regarding inheritance
New Territories is very big, and when I was there parts of Kowloon hadn't been built up fully.
Yet this is what a house can look like for people who can't afford it:
Quoting from wiki: