Wealth Inequality in America (1 Viewer)

[Rush Limbaugh Fan]

I stumbled across this video on submitted to reddit the other day.Not sure if it's a repost or not. Thoughts?http://youtu.be/QPKKQnijnsM

 

[Abraham]

Tl;dw.

 

[Foosball God]

Is this the actual Rush Limbaugh?

 

[Cliff Clavin]

Is this the actual Rush Limbaugh?

Mods> Could you please clarify if this is indeed Rush Limbaugh?

 

[Jewell]

Is this the actual Rush Limbaugh?

Mods> Could you please clarify if this is indeed Rush Limbaugh?

The first indication that it's not the real Rush Limbaugh is that he's trying to draw attention to wealth inequality.

 

[Clifford]

This is far more interestinghttp://youtu.be/iIhOXCgSunc

 

[McGarnicle]

Is this the actual Rush Limbaugh?

Mods> Could you please clarify if this is indeed Rush Limbaugh?

If it is, do I get a pass if I tell him to kill himself?

 

[Clifford]

Is this the actual Rush Limbaugh?

Mods> Could you please clarify if this is indeed Rush Limbaugh?

If it is, do I get a pass if I tell him to kill himself?

As bad as Rush is, I've actually never heard of him doing something as bad as what Maude admitted to.So no.

 

[Christo]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

 

[Rush Limbaugh Fan]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

Wealth inequality also means political inequality. If that doesn't matter to you then I guess nothing does.

 

[Christo]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

Wealth inequality also means political inequality. If that doesn't matter to you then I guess nothing does.

So the guy who posted the link missed the point. There's a surprise. There has always been and will always be income inequality. The point of the link you posted is that income inequality has increased recently. But Bill Gates has no more political clout than Andrew Carnegie did 100 years ago.

 

[Rush Limbaugh Fan]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

Wealth inequality also means political inequality. If that doesn't matter to you then I guess nothing does.

So the guy who posted the link missed the point. There's a surprise. There has always been and will always be income inequality. The point of the link you posted is that income inequality has increased recently. But Bill Gates has no more political clout than Andrew Carnegie did 100 years ago.

Who mentioned Bill Gates? Take the straw-mans elsewhere.

 

[Christo]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

Wealth inequality also means political inequality. If that doesn't matter to you then I guess nothing does.

So the guy who posted the link missed the point. There's a surprise. There has always been and will always be income inequality. The point of the link you posted is that income inequality has increased recently. But Bill Gates has no more political clout than Andrew Carnegie did 100 years ago.

Who mentioned Bill Gates? Take the straw-mans elsewhere.

I mentioned Bill Gates.

 

[Rush Limbaugh Fan]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

Wealth inequality also means political inequality. If that doesn't matter to you then I guess nothing does.

So the guy who posted the link missed the point. There's a surprise. There has always been and will always be income inequality. The point of the link you posted is that income inequality has increased recently. But Bill Gates has no more political clout than Andrew Carnegie did 100 years ago.

Who mentioned Bill Gates? Take the straw-mans elsewhere.

I mentioned Bill Gates.

Great strawman by the way.

 

[Juxtatarot]

I've always thought that income distibutions are more important to look at than wealth distribution. It's no surprise that a lot of the poorer half is going to spend all their money.

 

[Christo]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

Wealth inequality also means political inequality. If that doesn't matter to you then I guess nothing does.

So the guy who posted the link missed the point. There's a surprise. There has always been and will always be income inequality. The point of the link you posted is that income inequality has increased recently. But Bill Gates has no more political clout than Andrew Carnegie did 100 years ago.

Who mentioned Bill Gates? Take the straw-mans elsewhere.

I mentioned Bill Gates.

Great strawman by the way.

I don't think you know what that word means.

 

[Christo]

I've always thought that income distibutions are more important to look at than wealth distribution. It's no surprise that a lot of the poorer half is going to spend all their money.

More important to what?

 

[Juxtatarot]

I've always thought that income distibutions are more important to look at than wealth distribution. It's no surprise that a lot of the poorer half is going to spend all their money.

More important to what?

A thriving economy and the happiness of the citizens.

 

[Christo]

I've always thought that income distibutions are more important to look at than wealth distribution. It's no surprise that a lot of the poorer half is going to spend all their money.

More important to what?

A thriving economy and the happiness of the citizens.

You're begging the question. What evidence do you have that income inequality inhibits the economy or makes citizens unhappy? If I'm living paycheck to paycheck, what does it matter to me that some CEO is making $50MM/year as opposed to $25MM/year.

 

[Maurile Tremblay]

I stumbled across this video on submitted to reddit the other day.Not sure if it's a repost or not. Thoughts?http://youtu.be/QPKKQnijnsM

This is far more interestinghttp://youtu.be/iIhOXCgSunc

I didn't make it through the entirety of either video, but they seem to contradict each other.The first one says that only rich people are investors in stocks and bonds and stuff.The second one says that it's a myth that jobs are created by rich people.It should be obvious that both claims cannot be true. Nearly every business requires capital investment. If it's only the rich people who are investing, then yes, the rich are the ones creating jobs.(The main point of the second video seemed to be that raising taxes on the rich does not increase unemployment. He may be right about that, but he doesn't need to pretend that the rich don't create jobs in order to make that point.)Anyway, the first video was frustrating because it was so hard to figure out what he was saying. The title was about wealth distribution, but a lot of the narration was about income distribution. Not the same thing. (A lot of old people are wealthy but have little income, for example.) Also, were the figures based on households or individuals? Were kids included? Was it based on lifetime totals, or a snapshot of some particular year? And so on. I think a very good graphical presentation could be made about wealth (or income) distribution, but it needs to be clearer about what it's saying.

 

[Juxtatarot]

I've always thought that income distibutions are more important to look at than wealth distribution. It's no surprise that a lot of the poorer half is going to spend all their money.

More important to what?

A thriving economy and the happiness of the citizens.

You're begging the question. What evidence do you have that income inequality inhibits the economy or makes citizens unhappy? If I'm living paycheck to paycheck, what does it matter to me that some CEO is making $50MM/year as opposed to $25MM/year.

There have been plenty of studies that have shown that happiness increases with income up to a point. I'm sure you know this. In general, the poorer countries in the world have more income inequality. I'm sure you know this, too.Regarding your hypothetical, paycheck-to-paycheck is a term that measures wealth, not necessarily income. However, if that $25 million in profits is distributed more widely, it might help some of those struggling Christos.

 

[Maurile Tremblay]

Adding to the list, I'll link to

in income inequality by Emmanuel Saez. I haven't watched it yet, but it was linked to by Greg Mankiw.

 

[Maurile Tremblay]

If I'm living paycheck to paycheck, what does it matter to me that some CEO is making $50MM/year as opposed to $25MM/year.

However, if that $25 million in profits is distributed more widely, it might help some of those struggling Christos.

I think any good answer to Christo's question will have to avoid thinking of the economy as a zero-sum game. Because the economy is not zero-sum, more income for Person A does not imply less for Person B.

 

[Juxtatarot]

If I'm living paycheck to paycheck, what does it matter to me that some CEO is making $50MM/year as opposed to $25MM/year.

However, if that $25 million in profits is distributed more widely, it might help some of those struggling Christos.

I think any good answer to Christo's question will have to avoid thinking of the economy as a zero-sum game. Because the economy is not zero-sum, more wealth for Person A does not imply less for Person B.

Of course. However, it's also quite reasonable to assume that this CEO's production and profitablity to his company is not solely related to his salary.

 

[Maurile Tremblay]

If I'm living paycheck to paycheck, what does it matter to me that some CEO is making $50MM/year as opposed to $25MM/year.

However, if that $25 million in profits is distributed more widely, it might help some of those struggling Christos.

I think any good answer to Christo's question will have to avoid thinking of the economy as a zero-sum game. Because the economy is not zero-sum, more wealth for Person A does not imply less for Person B.

Of course. However, it's also quite reasonable to assume that this CEO's production and profitablity to his company is not solely related to his salary.

No doubt. It is related to his bonuses and stock options as well.

 

[Clifford]

I stumbled across this video on submitted to reddit the other day.Not sure if it's a repost or not. Thoughts?http://youtu.be/QPKKQnijnsM

This is far more interestinghttp://youtu.be/iIhOXCgSunc

I didn't make it through the entirety of either video, but they seem to contradict each other.The first one says that only rich people are investors in stocks and bonds and stuff.The second one says that it's a myth that jobs are created by rich people.It should be obvious that both claims cannot be true. Nearly every business requires capital investment. If it's only the rich people who are investing, then yes, the rich are the ones creating jobs.(The main point of the second video seemed to be that raising taxes on the rich does not increase unemployment. He may be right about that, but he doesn't need to pretend that the rich don't create jobs in order to make that point.)Anyway, the first video was frustrating because it was so hard to figure out what he was saying. The title was about wealth distribution, but a lot of the narration was about income distribution. Not the same thing. (A lot of old people are wealthy but have little income, for example.) Also, were the figures based on households or individuals? Were kids included? Was it based on lifetime totals, or a snapshot of some particular year? And so on. I think a very good graphical presentation could be made about wealth (or income) distribution, but it needs to be clearer about what it's saying.

You should actually watch the second video. It's quite clear and something I have been saying in threads like this one for a long time. All he's saying is that for a capitalist running a company, hiring is a last resort. Hiring only happens when demand outpaces means for production. So his point (He's a billionaire that has started and run multiple companies) is that in our current political climates there are two ideas that are accepted as truth even though they are demonstrably false: that the Rich are job creators, and that lower taxes on the rich mean that the rich will take the money they are saving and hire people, thus creating jobs. IOW, the rich are the job creators and lower taxes on the rich = new jobs.You might have heard this repeated about ten billion times the last election cycle. His point is that the rich (IE the 1%) can not possibly spend as much as the 1,000 median income people their wages would support. So by giving tax breaks to the rich and not to the middle class, they are placing spendable money in the wrong hands, and not creating near as much demand as there would be with a moderately well-off middle class. So the government is essentially misplacing its bet, thinking that by giving more money to the rich, they will use those extra funds to create new jobs via hiring. Anyone who knows anything about business knows that having the money to hire somoene is not a reason a job gets created. His point is that jobs are only created by demand. Demand is created by a large middle class with enough money to purchase goods and services. So if the government taxed the rich more, and used those funds to create tax breaks for the middle class that allowed them to buy more, the rich would actually get a lot richer via increased demand for the products and services they sell, and they would be FORCED to hire more people in order to meet the increased demand.It's only five minutes and is a good talk from someone who obviously knows what the hell they are talking about.ETA: I have no idea how you got this being the point. You should really watch the video"The main point of the second video seemed to be that raising taxes on the rich does not increase unemployment. "

 

[17seconds]

(The main point of the second video seemed to be that raising taxes on the rich does not increase unemployment. He may be right about that, but he doesn't need to pretend that the rich don't create jobs in order to make that point.)

He was saying the rich don't create jobs just because they are rich. They create them when it makes sense, and they look at demand to make that decision.Everything starts with demand. More demand exists when millions have a little more vs. a few having a lot more.

 

[Maurile Tremblay]

ETA: I have no idea how you got this being the point. You should really watch the video"The main point of the second video seemed to be that raising taxes on the rich does not increase unemployment. "

I got it from the same place you did, evidently.

So his point ... is that [it is] demonstrably false ... that lower taxes on the rich mean that the rich will take the money they are saving and hire people, thus creating jobs. IOW, [it is demonstrably false that] lower taxes on the rich = new jobs.

 

[Juxtatarot]

If I'm living paycheck to paycheck, what does it matter to me that some CEO is making $50MM/year as opposed to $25MM/year.

However, if that $25 million in profits is distributed more widely, it might help some of those struggling Christos.

I think any good answer to Christo's question will have to avoid thinking of the economy as a zero-sum game. Because the economy is not zero-sum, more wealth for Person A does not imply less for Person B.

Of course. However, it's also quite reasonable to assume that this CEO's production and profitablity to his company is not solely related to his salary.

No doubt. It is related to his bonuses and stock options as well.

Sure, my silly mistake for typing salary instead of income or compensation. My point remains, however. Just because you compensate a CEO more does not mean you'll see the results in profitability. (Unless you're tying extra compensation directly to that.)

 

[Maurile Tremblay]

You might have heard this repeated about ten billion times the last election cycle. His point is that the rich (IE the 1%) can not possibly spend as much as the 1,000 median income people their wages would support. So by giving tax breaks to the rich and not to the middle class, they are placing spendable money in the wrong hands, and not creating near as much demand as there would be with a moderately well-off middle class.

I think it would take a lot of work to establish that. It's not obvious that "spendable money" ends up in different places depending on the progressiveness of tax policies. Spendable money includes money lent and borrowed; it doesn't have to come from directly from the spender's savings account.

So the government is essentially misplacing its bet, thinking that by giving more money to the rich, they will use those extra funds to create new jobs via hiring.

Is "giving more money to the rich" another way of saying "taking less money from the rich"?

Anyone who knows anything about business knows that having the money to hire somoene is not a reason a job gets created. His point is that jobs are only created by demand.

Jobs are created by businesses with the capital (sometimes borrowed) to create them, and a business plan to support them. It takes both capital and demand. Both are relevant to unemployment rates, but I don't think either one is the main limiting factor on employment. That's a pretty complicated subject, though; and again, I think it would take a lot of work to convincingly make the guy's point.

So if the government taxed the rich more, and used those funds to create tax breaks for the middle class that allowed them to buy more, the rich would actually get a lot richer via increased demand for the products and services they sell, and they would be FORCED to hire more people in order to meet the increased demand.

This seems very unlikely. If you take $10 from a rich dude and give it to a poor dude, and the poor dude uses it to buy $10 worth of stuff from the rich dude, the rich dude did not "get a lot richer via increased demand." He got poorer. He got the $10 back, but he increased his cost of goods sold, so he lost overall.In general, you cannot make somebody richer by taking money from him and giving it to somebody else.

 

[Christo]

I've always thought that income distibutions are more important to look at than wealth distribution. It's no surprise that a lot of the poorer half is going to spend all their money.

More important to what?

A thriving economy and the happiness of the citizens.

You're begging the question. What evidence do you have that income inequality inhibits the economy or makes citizens unhappy? If I'm living paycheck to paycheck, what does it matter to me that some CEO is making $50MM/year as opposed to $25MM/year.

There have been plenty of studies that have shown that happiness increases with income up to a point. I'm sure you know this. In general, the poorer countries in the world have more income inequality. I'm sure you know this, too.Regarding your hypothetical, paycheck-to-paycheck is a term that measures wealth, not necessarily income. However, if that $25 million in profits is distributed more widely, it might help some of those struggling Christos.

1. Happiness may increase with an increase in income. But what does that have to do with income inequality?2. Poorer countries having more income inequality (I'm accepting this for the sake of discussion. I don't know it to be true.) does not prove that income inequality in the US inhibits the economy.3. Then again, it might not. But I'm not the one who's #####ing about all of this.

 

[Maurile Tremblay]

Sure, my silly mistake for typing salary instead of income or compensation. My point remains, however. Just because you compensate a CEO more does not mean you'll see the results in profitability. (Unless you're tying extra compensation directly to that.)

I actually wasn't sure what you were trying to say, so I just made a joke instead of giving a serious response.Now that I understand . . . of course people don't fully adjust their productive output based on their compensation. (To the extent that production and compensation are approximately matched, it's much more because business owners can estimate what an employee's expected output is worth, and then they compete with each other for his services and bid up his compensation to the level of his expected output.)But I don't see what that has to do with Christo's question about why Person A should care what Person B is making.

 

[Maurile Tremblay]

1. Happiness may increase with an increase in income. But what does that have to do with income inequality?

I think the point is the decreasing marginal utility of money. If two people have the same (marginally decreasing) utility function for money, their total happiness will be maximized if any money is split evenly between them.The complications are that not everybody has the same utility function for money, and redistribution can affect the size of the pie, which therefore can't be held constant.

 

[Juxtatarot]

Now that I understand . . . of course people don't fully adjust their productive output based on their compensation. (To the extent that production and compensation approximate each other, it's much more because bosses can estimate what an employee's output is worth, and then they compete with each other for his services and bid up his compensation to the level of his expected output.)But I don't see what that has to do with Christo's question about why Person A should care what Person B is making.

Many people (including me) see the CEO market as broken. Sure, there are some that "earn" their compensation but far too many have been rewarded by playing the Old Boys Network game well. It has become a gift from those in power. That's why Person A should care. It's like caring about the business owner's goofball son who makes a large salary but comes in late every morning and doesn't do anything productive. His compensation is a drain on company resources. And that can hurt everyone else.

 

[Maurile Tremblay]

Now that I understand . . . of course people don't fully adjust their productive output based on their compensation. (To the extent that production and compensation approximate each other, it's much more because bosses can estimate what an employee's output is worth, and then they compete with each other for his services and bid up his compensation to the level of his expected output.)But I don't see what that has to do with Christo's question about why Person A should care what Person B is making.

Many people (including me) see the CEO market as broken. Sure, there are some that "earn" their compensation but far too many have been rewarded by playing the Old Boys Network game well. It has become a gift from those in power. That's why Person A should care. It's like caring about the business owner's goofball son who makes a large salary but comes in late every morning and doesn't do anything productive. His compensation is a drain on company resources. And that can hurt everyone else.

That's a good answer. I don't really have an opinion on whether CEO compensation is broken, but it certainly may be.

 

[fatguyinalittlecoat]

Because the economy is not zero-sum, more income for Person A does not imply less for Person B.

What if the economy is not zero-sum, but also is not infinity-sum? The economy seems to grow at a somewhat steady clip. We don't seem to have years where GDP suddenly goes up by 100% over the previous year.

 

[shader]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

Wealth inequality also means political inequality. If that doesn't matter to you then I guess nothing does.

So the guy who posted the link missed the point. There's a surprise. There has always been and will always be income inequality. The point of the link you posted is that income inequality has increased recently. But Bill Gates has no more political clout than Andrew Carnegie did 100 years ago.

Who mentioned Bill Gates? Take the straw-mans elsewhere.

I mentioned Bill Gates.

Great strawman by the way.

I don't think you know what that word means.

I don't think most people know what it means. Most people think that by saying "strawman"! they win the argument.

 

[Da Guru]

Where is wealth equal??

 

[Christo]

Now that I understand . . . of course people don't fully adjust their productive output based on their compensation. (To the extent that production and compensation approximate each other, it's much more because bosses can estimate what an employee's output is worth, and then they compete with each other for his services and bid up his compensation to the level of his expected output.)But I don't see what that has to do with Christo's question about why Person A should care what Person B is making.

Many people (including me) see the CEO market as broken. Sure, there are some that "earn" their compensation but far too many have been rewarded by playing the Old Boys Network game well. It has become a gift from those in power. That's why Person A should care. It's like caring about the business owner's goofball son who makes a large salary but comes in late every morning and doesn't do anything productive. His compensation is a drain on company resources. And that can hurt everyone else.

That's a good answer. I don't really have an opinion on whether CEO compensation is broken, but it certainly may be.

I think the CEO pay question is only a very small part of what we're discussing. The top 1% are not guys who were brought in as CEO to turn around a corporation, things didn't go well and they received $25MM golden parachute after three years. Just look at the Forbes 400 list: Gates, Buffett, the Kochs, the Waltons, Bezos, Soros, the Mars, Dell, Knight, Murdoch, Zuckerberg, etc., etc., etc. These are the billionaires who are responsible for the recent explosion in wealth inequality. These are the people who had ideas, created companies, built something from nothing. You cannot tell me that the vast wealth these people have accumulated because of their accomplishments is bad for the economy or makes people unhappy.

 

[Juxtatarot]

Where is wealth equal??

I don't think you'll find anyone here that thinks it should be equal.

 

[Rush Limbaugh Fan]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

Wealth inequality also means political inequality. If that doesn't matter to you then I guess nothing does.

So the guy who posted the link missed the point. There's a surprise. There has always been and will always be income inequality. The point of the link you posted is that income inequality has increased recently. But Bill Gates has no more political clout than Andrew Carnegie did 100 years ago.

Who mentioned Bill Gates? Take the straw-mans elsewhere.

I mentioned Bill Gates.

Great strawman by the way.

I don't think you know what that word means.

I don't think most people know what it means. Most people think that by saying "strawman"! they win the argument.

He brought up a BS comparison of Bill Gates and Carnigie, as if that has a point to make.It's obvious I am referring to lobbying...the rich throwing money to get legislation passed their way.What does Gates' and Carnigie's political clout have to do with it?

 

[Maurile Tremblay]

Because the economy is not zero-sum, more income for Person A does not imply less for Person B.

What if the economy is not zero-sum, but also is not infinity-sum? The economy seems to grow at a somewhat steady clip. We don't seem to have years where GDP suddenly goes up by 100% over the previous year.

It doesn't need to be infinity-sum. The point is that when one guy grows his income by $20,000 (or any other amount), it doesn't mean that everyone else's collective income has to shrink by that amount. Bill Gates got extremely rich, but he didn't impoverish the rest of the world to do it. On net, he very likely enriched the rest of the world. (There are specific people who were made poorer by Gates's success, but many more who were likely made richer.)This is easy to model in very simple situations. Suppose that you and I each own parcels of dirt. The number of ashtrays you can fashion out of clay is independent of the number that I make. Suppose we both make two ashtrays one year for our own personal use. The next year, I decide to make three. That doesn't mean that you can make only one. You can still make two, or however many you want. The fact that my income increased by one ashtray in year two doesn't mean that your income had to decrease by one ashtray.Things are way more complicated when the economy involves currency and trade and multiple goods and services, etc., but the same principle remains. Just because I become more productive doesn't mean that anybody else has to be less productive. And just because my income increases as a reflection of my increased productivity doesn't mean that anybody else's income has to decrease. (If there are a fixed number of dollars in circulation, it might be true that my increase in nominal income necessitates a decrease in other people's nominal income. But it's real income that matters, and that's based on total productivity, which is not zero-sum.)

 

[Rush Limbaugh Fan]

Now that I understand . . . of course people don't fully adjust their productive output based on their compensation. (To the extent that production and compensation approximate each other, it's much more because bosses can estimate what an employee's output is worth, and then they compete with each other for his services and bid up his compensation to the level of his expected output.)But I don't see what that has to do with Christo's question about why Person A should care what Person B is making.

Many people (including me) see the CEO market as broken. Sure, there are some that "earn" their compensation but far too many have been rewarded by playing the Old Boys Network game well. It has become a gift from those in power. That's why Person A should care. It's like caring about the business owner's goofball son who makes a large salary but comes in late every morning and doesn't do anything productive. His compensation is a drain on company resources. And that can hurt everyone else.

That's a good answer. I don't really have an opinion on whether CEO compensation is broken, but it certainly may be.

I think the CEO pay question is only a very small part of what we're discussing. The top 1% are not guys who were brought in as CEO to turn around a corporation, things didn't go well and they received $25MM golden parachute after three years. Just look at the Forbes 400 list: Gates, Buffett, the Kochs, the Waltons, Bezos, Soros, the Mars, Dell, Knight, Murdoch, Zuckerberg, etc., etc., etc. These are the billionaires who are responsible for the recent explosion in wealth inequality. These are the people who had ideas, created companies, built something from nothing. You cannot tell me that the vast wealth these people have accumulated because of their accomplishments is bad for the economy or makes people unhappy.

Wealth should not congregate at the top. Taxes need to go way up on the top percent, but they never do because they use wealth to push legislation their way.The rich keep getting richer. Who knows how much more skewed it will be in 20-30 years.

 

[Juxtatarot]

Now that I understand . . . of course people don't fully adjust their productive output based on their compensation. (To the extent that production and compensation approximate each other, it's much more because bosses can estimate what an employee's output is worth, and then they compete with each other for his services and bid up his compensation to the level of his expected output.)

But I don't see what that has to do with Christo's question about why Person A should care what Person B is making.

Many people (including me) see the CEO market as broken. Sure, there are some that "earn" their compensation but far too many have been rewarded by playing the Old Boys Network game well. It has become a gift from those in power. That's why Person A should care. It's like caring about the business owner's goofball son who makes a large salary but comes in late every morning and doesn't do anything productive. His compensation is a drain on company resources. And that can hurt everyone else.

That's a good answer. I don't really have an opinion on whether CEO compensation is broken, but it certainly may be.

I think the CEO pay question is only a very small part of what we're discussing. The top 1% are not guys who were brought in as CEO to turn around a corporation, things didn't go well and they received $25MM golden parachute after three years. Just look at the Forbes 400 list: Gates, Buffett, the Kochs, the Waltons, Bezos, Soros, the Mars, Dell, Knight, Murdoch, Zuckerberg, etc., etc., etc. These are the billionaires who are responsible for the recent explosion in wealth inequality. These are the people who had ideas, created companies, built something from nothing. You cannot tell me that the vast wealth these people have accumulated because of their accomplishments is bad for the economy or makes people unhappy.

Are you sure the bolded is true? My understanding is it's more systemic than that.

 

[17seconds]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

You are missing the point. The concepts being discussed in the links are about overall distribution, not one individual vs. another.You must agree that income/wealth distribution affects the economy, right? I've never met anyone who would say a flat, socialistic distribution leads to the same economic prosperity and growth as ramp or exponential distribution does.If you agree with that, then there must be distributions that are better or worse. Yet you say you don't care. So you must think the current distribution is ideal?

 

[Christo]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

Wealth inequality also means political inequality. If that doesn't matter to you then I guess nothing does.

So the guy who posted the link missed the point. There's a surprise. There has always been and will always be income inequality. The point of the link you posted is that income inequality has increased recently. But Bill Gates has no more political clout than Andrew Carnegie did 100 years ago.

Who mentioned Bill Gates? Take the straw-mans elsewhere.

I mentioned Bill Gates.

Great strawman by the way.

I don't think you know what that word means.

I don't think most people know what it means. Most people think that by saying "strawman"! they win the argument.

He brought up a BS comparison of Bill Gates and Carnigie, as if that has a point to make.It's obvious I am referring to lobbying...the rich throwing money to get legislation passed their way.What does Gates' and Carnigie's political clout have to do with it?

 

[Rush Limbaugh Fan]

http://www.thenation.com/blog/173171/if-switzerland-can-crack-down-ceos-why-not-us

 

[Christo]

Thoughts?

Why should I care? What difference does it make to you or me that someone we've never met has a buttload of money?

You are missing the point. The concepts being discussed in the links are about overall distribution, not one individual vs. another.You must agree that income/wealth distribution affects the economy, right? I've never met anyone who would say a flat, socialistic distribution leads to the same economic prosperity and growth as ramp or exponential distribution does.If you agree with that, then there must be distributions that are better or worse. Yet you say you don't care. So you must think the current distribution is ideal?

I'm not missing the point. The overall distribution is based on individuals. And as MT has already stated, there are many more factors that go into making a healthy economy than just income distribution. Focusing on one factor is meaningless.

 

[Christo]

Now that I understand . . . of course people don't fully adjust their productive output based on their compensation. (To the extent that production and compensation approximate each other, it's much more because bosses can estimate what an employee's output is worth, and then they compete with each other for his services and bid up his compensation to the level of his expected output.)

But I don't see what that has to do with Christo's question about why Person A should care what Person B is making.

Many people (including me) see the CEO market as broken. Sure, there are some that "earn" their compensation but far too many have been rewarded by playing the Old Boys Network game well. It has become a gift from those in power. That's why Person A should care. It's like caring about the business owner's goofball son who makes a large salary but comes in late every morning and doesn't do anything productive. His compensation is a drain on company resources. And that can hurt everyone else.

That's a good answer. I don't really have an opinion on whether CEO compensation is broken, but it certainly may be.

I think the CEO pay question is only a very small part of what we're discussing. The top 1% are not guys who were brought in as CEO to turn around a corporation, things didn't go well and they received $25MM golden parachute after three years. Just look at the Forbes 400 list: Gates, Buffett, the Kochs, the Waltons, Bezos, Soros, the Mars, Dell, Knight, Murdoch, Zuckerberg, etc., etc., etc. These are the billionaires who are responsible for the recent explosion in wealth inequality. These are the people who had ideas, created companies, built something from nothing. You cannot tell me that the vast wealth these people have accumulated because of their accomplishments is bad for the economy or makes people unhappy.

Are you sure the bolded is true? My understanding is it's more systemic than that.

What is systemic about the wealth accumulated by the individuals I listed?

 

[Juxtatarot]

Because the economy is not zero-sum, more income for Person A does not imply less for Person B.

What if the economy is not zero-sum, but also is not infinity-sum? The economy seems to grow at a somewhat steady clip. We don't seem to have years where GDP suddenly goes up by 100% over the previous year.

It doesn't need to be infinity-sum. The point is that when one guy grows his income by $20,000 (or any other amount), it doesn't mean that everyone else's collective income has to shrink by that amount. Bill Gates got extremely rich, but he didn't impoverish the rest of the world to do it. On net, he very likely enriched the rest of the world. (There are specific people who were made poorer by Gates's success, but many more who were likely made richer.)This is easy to model in very simple situations. Suppose that you and I each own parcels of dirt. The number of ashtrays you can fashion out of clay is independent of the number that I make. Suppose we both make two ashtrays one year for our own personal use. The next year, I decide to make three. That doesn't mean that you can make only one. You can still make two, or however many you want. The fact that my income increased by one ashtray in year two doesn't mean that your income had to decrease by one ashtray.Things are way more complicated when the economy involves currency and trade and multiple goods and services, etc., but the same principle remains. Just because I become more productive doesn't mean that anybody else has to be less productive. And just because my income increases as a reflection of my increased productivity doesn't mean that anybody else's income has to decrease. (If there are a fixed number of dollars in circulation, it might be true that my increase in nominal income necessitates a decrease in other people's nominal income. But it's real income that matters, and that's based on total productivity, which is not zero-sum.)

I don't claim to be an original thinker, but one thing I've thought about is how many businesses might act in a near zero-sum way. Let's say I open a new restaurant in town. It's successful and I'm celebrated for creating new jobs. But did I really? Are people going out to eat more and spending more money because of my restaurant or is my business merely getting a piece of the pie that was going to other restaurants? Maybe my restaurant's opening even caused a restaurant down the street to close. Now that likely isn't a bad thing assuming my restaurant is better and making people happier, but the magnitude of its benefit on the economy as a whole is more questionable.