Capitalism and Inequality (1 Viewer)

[Brony]

I don't have data to back this up, but I suspect that most people would want to live in the country with most billionaires (even if they don't realize this).  I suspect that a lot of the historic success of America (in building overall wealth, GDP) vs other countries, is that if you have an innovative idea, America is still where you want to build it, the product and company.  From this, comes the leading international companies (Apple, Google, Netflix, etc).  We need to be careful that we don't lose that reputation.  I don't think this happens with a small tax increase on the wealthiest, but there is some rate that would trigger a tipping point and we should be mindful of this. 

 

[fatguyinalittlecoat]

I don't have data to back this up, but I suspect that most people would want to live in the country with most billionaires (even if they don't realize this).  

Can you flesh this out a little? Because this isn’t obvious to me.

 

[Brony]

Can you flesh this out a little? Because this isn’t obvious to me.

I'm only speculating that # of billionaires correlates with economic growth, employment, etc.  I fully get that there are extreme examples that run counter to this (pharoahs v. slaves), but on average for western developed countries, the country with more billionaires should be doing better on average.  A quick glance at median income for OECD countries confirms that U.S. is doing pretty good (rank #6 ). Rising tide lifts all boats, etc.

 

[Industrialism]

@Joe Bryant your original post outlined what capitalism is and how it should work. What we have going on at the corporation level is no longer capitalism, rather industrialism. 

Seth Godin wrote this post back in 2012. It rang true then and even more so today. 

Industrialists are not capitalists.

Capitalists take risks. They see an opportunity, an unmet need, and then they bring resources to bear to solve the problem and make a profit.

Industrialists seek stability instead.

Industrialists work to take working systems and polish them, insulate them from risk, maximize productivity and extract the maximum amount of profit. Much of society's wealth is due to the relentless march of productivity created by single-minded industrialists, particularly those that turned nascent industries (as Henry Ford did with cars) into efficient engines of profit.

Industrialists don't mind government regulations if they write them, don't particularly like competition or creativity or change. They are maximizers of the existing status quo.

Of course, they can't abide humanity when it comes to work, because humanity is inconsistent and interested in things other than the last zero. The best employee is a robot that can be plugged into a wall.

The stock market rewards the single-minded industrialist with short-term applause and then the relentless desire for ever more of the same growth and productivity that got them applause yesterday.

Today's industrialists define our economy, but they offer very little promise for tomorrow. They've long bought ads to polish their image, but mostly work to alter the culture in ways that will ensure they'll get just a little bit more yield out of each of us. 64 ounce Coke, anyone?

As long as industrialists are measuring productivity, engaging in scientific management and focused on ROI and predictability, there will always be a gap between the dreams of those they interact with and the demands of their shareholders.

There are lots of ways to justify the work of industrialists, to point to the efficiencies and productivity they create. That doesn't mean that we must aspire to nothing more.

 

[fatguyinalittlecoat]

I'm only speculating that # of billionaires correlates with economic growth, employment, etc.  I fully get that there are extreme examples that run counter to this (pharoahs v. slaves), but on average for western developed countries, the country with more billionaires should be doing better on average.  A quick glance at median income for OECD countries confirms that U.S. is doing pretty good (rank #6 ). Rising tide lifts all boats, etc.

Are there a lot of billionaires in Sweden and Norway?

 

[Leroy Hoard]

Do low income people even pay taxes?

Every time they buy gas. Every time they buy a non food item like soap or clothes. Every time they spend money on almost anything.

 

[Leroy Hoard]

Can you flesh this out a little? Because this isn’t obvious to me.

Same reason some people voted for Trump. Even if they have little money themselves, they want to be associated with someone who does.

 

[Shula-holic]

I was also trying to guess what a graph would look like (percentage of total tax to income on Y axis, total income on X asis).  I'm guessing that total percentage of tax starts decreasing at higher incomes.  I'm not sure how things would look for the poor.  I'm guessing it would be a lot higher than many people realize.

Basically what you're saying is that the higher income people would be largely deriving their income from capital gains and therefore would be taxed mostly at the long term capital gains rate and not at the top marginal rate.  I'd say that's likely. I'm not sure where we could find the stats.  I would also suspect that as you get further above that 37% threshold of $500K in annual income, the larger that deviation would be.  Where I would suspect you would find the largest percentage of tax as a ratio to income would be those making $500K-$700K who derive all of that income from wages.  Obviously someone in that category who derives income from wages will pay a larger share the futher above $500K they go.  So you're mostly looking at top management levels in corporations or successful small business owners.

 

[Maurile Tremblay]

Are there a lot of billionaires in Sweden and Norway?

There are more billionaires per capita in Sweden than there are in the U.S.

https://slate.com/business/2013/11/swedens-billionaires-they-have-more-per-capita-than-the-united-states.html

 

[Summer Wheat]

There are more billionaires per capita in Sweden than there are in the U.S.

https://slate.com/business/2013/11/swedens-billionaires-they-have-more-per-capita-than-the-united-states.html

Surprising stat...

 

[fatguyinalittlecoat]

This book sounds pretty interesting:  The Velvet Rope Economy

It seems particularly useful in rebutting the argument that lots of folks make that inequality doesn't matter as long as everyone's income is going up. 

 

[kface]

There are more billionaires per capita in Sweden than there are in the U.S.

https://slate.com/business/2013/11/swedens-billionaires-they-have-more-per-capita-than-the-united-states.html

I'm not sure i feel like per capita is a super relevant stat because the distortions in population here.  Obviously what to look for would be overall income inequality

 

[jon_mx]

There are more billionaires per capita in Sweden than there are in the U.S.

https://slate.com/business/2013/11/swedens-billionaires-they-have-more-per-capita-than-the-united-states.html

Some interesting points in that article.  Sweden has actually less economic regulations than the US does and lower corporate tax rates, preferring consumption based taxes instead.   Licencing rules are actually a significant barrier to entrepreneurs in this country, which is probably the biggest economic advantage Sweeden has over the US.  In the US for instance, there are all kinds of protectionist policies which protect businesses ranging from Auto, Real Estate and Liquor sales which prevent us from creating a more efficient and cost-effective solutions. 

 

[Shula-holic]

Some interesting points in that article.  Sweden has actually less economic regulations than the US does and lower corporate tax rates, preferring consumption based taxes instead.   Licencing rules are actually a significant barrier to entrepreneurs in this country, which is probably the biggest economic advantage Sweeden has over the US.  

VATs would have to be a tenet of taxation here for many of the nanny state things that are being proposed.  It's easier to talk about the millionaires, billionaires, 1%, whoever.  But reality is VATs/consumption taxes are necessary to pay for those things.  

 

[IvanKaramazov]

This book sounds pretty interesting:  The Velvet Rope Economy

It seems particularly useful in rebutting the argument that lots of folks make that inequality doesn't matter as long as everyone's income is going up. 

I'm probably just wired differently than other people.  I just can't bring myself to care if somebody pays thousands of dollars for a private tour of Disney.  It's none of my business.

 

[fatguyinalittlecoat]

I'm probably just wired differently than other people.  I just can't bring myself to care if somebody pays thousands of dollars for a private tour of Disney.  It's none of my business.

The reason that "regular" people need to wait on longer lines is because the rich people that pay for the private tour gets to cut all the lines.  You might care if you paid over $100 for a ticket and were waiting on a two hour line for a ride with a whiny kid.

 

[Shula-holic]

The reason that "regular" people need to wait on longer lines is because the rich people that pay for the private tour gets to cut all the lines.  You might care if you paid over $100 for a ticket and were waiting on a two hour line for a ride with a whiny kid.

I was just there less than a month ago.  I literally saw one group in an entire week that had the guide cutting lines.  It was an NFL player and his family.

 

[jon_mx]

The reason that "regular" people need to wait on longer lines is because the rich people that pay for the private tour gets to cut all the lines.  You might care if you paid over $100 for a ticket and were waiting on a two hour line for a ride with a whiny kid.

But it is not like this is restricted to Billionares.  There are quite a few FBGers who fly first class, and probably some who do the Disney thing.  If the difference between regular people and the elite consists of waiting in lines at Disney World we are in pretty good shape.  

 

[fatguyinalittlecoat]

But it is not like this is restricted to Billionares.  There are quite a few FBGers who fly first class, and probably some who do the Disney thing.  If the difference between regular people and the elite consists of waiting in lines at Disney World we are in pretty good shape.  

The Vox interview with the author that I linked above talks about how these same issues that seem relatively trivia when discussing Disney or sports stadiums are also going on with respect to important things like health care and education.  

I'm hoping to read the book at some point because it sounds interesting but I haven't read it yet, so I'm by no means an expert on this stuff.  But I think you're diminishing the real stakes by focusing on Disney World.  That's just one example.

 

[fatguyinalittlecoat]

I was just there less than a month ago.  I literally saw one group in an entire week that had the guide cutting lines.  It was an NFL player and his family.

From the article:

Theme parks are very clever. The places where the different groups come together for the rides, they call that the merge point. Often the merge point will be in the dark so you don’t see the people cutting in front. 

 

[parasaurolophus]

The reason that "regular" people need to wait on longer lines is because the rich people that pay for the private tour gets to cut all the lines.  You might care if you paid over $100 for a ticket and were waiting on a two hour line for a ride with a whiny kid.

False. The reason lines are longer is because attendance is so much higher than it was ten years ago despite massive price increases all the way around. 

 

[Shula-holic]

From the article:

They could be right, I'm not versed on it enough to say.  I know what we paid and if these other people are paying that much more, better them than me is all I could say.  I paid enough.

 

[fatguyinalittlecoat]

False. The reason lines are longer is because attendance is so much higher than it was ten years ago despite massive price increases all the way around. 

There can be more than one reason. 

 

[parasaurolophus]

There can be more than one reason. 

You are right. The number of motorized wheelchairs in the place slows down ride lines a ton too. 

But uber wealthy tour groups are a fraction of the crowds. 

 

[IvanKaramazov]

The reason that "regular" people need to wait on longer lines is because the rich people that pay for the private tour gets to cut all the lines.  You might care if you paid over $100 for a ticket and were waiting on a two hour line for a ride with a whiny kid.

No it isn't -- rich people paying thousands of dollars to cut the line probably adds like 60 seconds to my wait time.  The other 119 minutes is due to all the other schnooks like me visiting the park that day.

 

[fatguyinalittlecoat]

No it isn't -- rich people paying thousands of dollars to cut the line probably adds like 60 seconds to my wait time.  The other 119 minutes is due to all the other schnooks like me visiting the park that day.

I have no idea how much it adds to your wait time.  But whatever it inconveniences you, it’s doing the same thing to all of the thousands of regular park goers.  Taking a few minutes of time from a huge number of people is like taking a small amount of money from a huge number of people.  It might not be a huge deal to each victim, but in total it’s a much bigger deal.

 

[Shula-holic]

I have no idea how much it adds to your wait time.  But whatever it inconveniences you, it’s doing the same thing to all of the thousands of regular park goers.  Taking a few minutes of time from a huge number of people is like taking a small amount of money from a huge number of people.  It might not be a huge deal to each victim, but in total it’s a much bigger deal.

The same can be said of first class plane tickets, club seats at a sports venue, the guy driving the Mercedes instead of the Chevrolet.  Businesses have packages/products that cater to those high end customers.  It's a niche business though as a rule.  Many sports teams are finding this out as they built stadiums to tailor to that client base and they are finding the demand isn't what they modeled it to be.  I have no problem if someone wants to pay that rate, in theory their extra dollars in are defraying my cost as well.

 

[Leroy Hoard]

There can be more than one reason. 

The one fact that every one forgets. Or there could be more than one.

 

[parasaurolophus]

Air travel is a poor example as well. It has become far more inclusive. In 2015 50% of all flyers were from incomes below 75k and 45% of americans reported taking a flight. 

People with income under 50K are far more likely to travel than even compared to 1998, let alone further back.  

 

[Sheriff Bart]

I was just there less than a month ago.  I literally saw one group in an entire week that had the guide cutting lines.  It was an NFL player and his family.

I know it wasn't Alexander Mattison because they guy can't cut through a line when YOU are paying HIM.

 

[IvanKaramazov]

Air travel is a poor example as well. It has become far more inclusive. In 2015 50% of all flyers were from incomes below 75k and 45% of americans reported taking a flight. 

People with income under 50K are far more likely to travel than even compared to 1998, let alone further back.  

But some guy got to board the plane five minutes before me, and now I'm seething with anger.

 

[parasaurolophus]

But some guy got to board the plane five minutes before me, and now I'm seething with anger.

People that couldnt afford to fly and had to take the bus now are now worse off because somebody up front has more leg room.