Posted on Sep 15, 2020
‘We were shocked’: RAND study uncovers massive income shift to the top 1%
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I think we all know income inequality is a huge problem in this country, but how huge is it. As it turns out, perhaps a lot worse than we thought and getting even more problematic.
Unfortunately the protections that stopped this from happening have mostly (and inaccurately) been labeled as socialism and stripped away. Narratives most likely being fed by those who have the most to gain.
Luckily, I'm in the one bracket that wouldn't have moved much at all.
Unfortunately the protections that stopped this from happening have mostly (and inaccurately) been labeled as socialism and stripped away. Narratives most likely being fed by those who have the most to gain.
Luckily, I'm in the one bracket that wouldn't have moved much at all.
‘We were shocked’: RAND study uncovers massive income shift to the top 1%
Posted from fastcompany.com
Economy
Income
Equality
Edited 4 y ago
Posted 4 y ago
Responses: 3
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SPC Kevin Ford
Maj John Bell A millionaire is nothing, that's middle class. It may have meant something when we were kids, but that's no longer the case. For that matter I'm a millionaire but I'm not wealthy or anything close to wealthy. I'm lucky to be in the class of highly skilled people so I still have negotiating power. I don't think I'm who we are talking about. (Lucky probably isn't the right word for all of it, I took my talents and opportunities the military gave me and leveraged them the best I could. There was some luck; my parents were middle class, I went to good primary schools, I didn't have to worry about crime, etc. but I leveraged the hand I was dealt.) The reason we have so many new millionaires is inflation. For us, millionaires are middle class, for our parents they were rich people.
The problem here is that we had this a good system and we threw it away, to some extent in pursuit of Laissez-Faire capitalism. A lot of people like Rand but Rand generally ignores the underlying principles behind those supply and demand curves, and unfortunately for many things those principles don't exist. They mostly just exist for commodities like gasoline.
For example, health care. In order for those supply and demand curves to work we've got to be able to have perfect information on the product and the ability to select what product to buy or not buy at all. But that situation doesn't exist for healthcare. It is a product we have very little information on and very little choice but to buy. For profit organizations over time will move to a profit maximizing price. What's the profit maximizing price for a product with little or no effective competition that we have no choice but to buy? Everything we own. That's ultimately the real reason why health care costs continue to increase and will continue to do so.
Back to John Galt, as long as people are allowed to accumulate excess wealth and power, John's oath will not come to pass. When a small group of people control most of society's resources, most of society have no choice but to live for the sake of those people. Their alternative is homelessness, untreated disease and starvation.
The problem here is that we had this a good system and we threw it away, to some extent in pursuit of Laissez-Faire capitalism. A lot of people like Rand but Rand generally ignores the underlying principles behind those supply and demand curves, and unfortunately for many things those principles don't exist. They mostly just exist for commodities like gasoline.
For example, health care. In order for those supply and demand curves to work we've got to be able to have perfect information on the product and the ability to select what product to buy or not buy at all. But that situation doesn't exist for healthcare. It is a product we have very little information on and very little choice but to buy. For profit organizations over time will move to a profit maximizing price. What's the profit maximizing price for a product with little or no effective competition that we have no choice but to buy? Everything we own. That's ultimately the real reason why health care costs continue to increase and will continue to do so.
Back to John Galt, as long as people are allowed to accumulate excess wealth and power, John's oath will not come to pass. When a small group of people control most of society's resources, most of society have no choice but to live for the sake of those people. Their alternative is homelessness, untreated disease and starvation.
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Maj John Bell
SPC Kevin Ford - There are many problems with the "finances" healthcare.
Government does everything it can increase demand, precious little to increase supply. Think back to the time before Nixon's wage and price freezes. Most people did not have healthcare insurance. Under the wage and price freezes, healthcare insurance became a way to bypass the freezes an compete for top talent. Gradually healthcare insurance became the norm. When big anonymous pockets pay, it takes the consumer out of the decision and prices runaway. Same thing happened when the government stuck its nose into college tuition. Increase demand, do nothing to increase supply.
Also, damn few industries are allowed to tell you the cost AFTER they provide the service.
Wealthy people do not convert their fortunes int gold and swim in it like Scrooge McDuck. They invest it in other money making enterprises or engage in conspicuous consumption. Then other entrepreneur's see the need, then fill the need. Then some other entrepreneur find's away to bring that solution to the masses and becomes the next millionaire or billionaire.
It isn't just millionaires that are self-made. How many Billionaires inherited their wealth?
What is excess wealth?
Government does everything it can increase demand, precious little to increase supply. Think back to the time before Nixon's wage and price freezes. Most people did not have healthcare insurance. Under the wage and price freezes, healthcare insurance became a way to bypass the freezes an compete for top talent. Gradually healthcare insurance became the norm. When big anonymous pockets pay, it takes the consumer out of the decision and prices runaway. Same thing happened when the government stuck its nose into college tuition. Increase demand, do nothing to increase supply.
Also, damn few industries are allowed to tell you the cost AFTER they provide the service.
Wealthy people do not convert their fortunes int gold and swim in it like Scrooge McDuck. They invest it in other money making enterprises or engage in conspicuous consumption. Then other entrepreneur's see the need, then fill the need. Then some other entrepreneur find's away to bring that solution to the masses and becomes the next millionaire or billionaire.
It isn't just millionaires that are self-made. How many Billionaires inherited their wealth?
What is excess wealth?
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SPC Kevin Ford
Maj John Bell - About 30% of billionaires inherited their wealth. Now let me ask you a question. Of the 70% who are left, how many of them were born before 1980? (That is to say how many were born into the old system without a high degree of consolidated wealth and were able to ride the loosening of restrictions?). What you really need to ask yourself is what portion of people born today will be able to do the same (adjusted for inflation) and what has been happening to upward mobility?
Statistically if you were borth today, what chance do you have of out earning your parents? Very low, much lower than when we were kids. The people haven't changed, but the opportunity has. This is what happens when you allow a very few (the .01%) to accumulate access to a large amount of the nation's wealth.
https://www.visualcapitalist.com/the-decline-of-upward-mobility-in-one-chart/
If an increasing number of people don't have access to resources and capital then the chance of them being successful is very low.
No, wealthy people are not swimming in their money, but they are not spending it either except to give themselves almost unfettered access to whatever societal resources they want.
Another myth is the idea that giving wealthy people more money will stimulate the economy. It won't, we've been looking at that for 50 years now, the only thing it results in is further consolidation of wealth. Why doesn't it work? Because people create jobs and business based on opportunity and generally if they already have sufficient wealth, they will use that to pursue that opportunity. If we just lower their tax rate, they will not create more jobs because it isn't tied to any opportunity, that is to say they won't create jobs and expense they don't need simply because some extra money shows up. If the opportunity was there, they would have already found a way (even leverage) to take advantage of it.
Statistically if you were borth today, what chance do you have of out earning your parents? Very low, much lower than when we were kids. The people haven't changed, but the opportunity has. This is what happens when you allow a very few (the .01%) to accumulate access to a large amount of the nation's wealth.
https://www.visualcapitalist.com/the-decline-of-upward-mobility-in-one-chart/
If an increasing number of people don't have access to resources and capital then the chance of them being successful is very low.
No, wealthy people are not swimming in their money, but they are not spending it either except to give themselves almost unfettered access to whatever societal resources they want.
Another myth is the idea that giving wealthy people more money will stimulate the economy. It won't, we've been looking at that for 50 years now, the only thing it results in is further consolidation of wealth. Why doesn't it work? Because people create jobs and business based on opportunity and generally if they already have sufficient wealth, they will use that to pursue that opportunity. If we just lower their tax rate, they will not create more jobs because it isn't tied to any opportunity, that is to say they won't create jobs and expense they don't need simply because some extra money shows up. If the opportunity was there, they would have already found a way (even leverage) to take advantage of it.
The Decline of Upward Mobility in One Chart
Each generation of Americans has historically earned more than their parents, but declining upward mobility is putting this growth at risk.
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Maj John Bell
SPC Kevin Ford - What your graph does not address is lifestyle? Nor does it address delayed gratification and saving/investment. Most people who become upwardly mobile don't get their from their job. They develop side hustles and multiple streams of revenue. I've never been "highly paid." But my wife and I have investments that would sustain a good lifestyle even if we both completely retired, got no social security, and no retirement checks. All that and I'm not some brilliant entrepreneur.
_How many Americans finance their cars, and get a new one BEFORE they finish paying off the first one? I've never financed a car. I save and when I need the next vehicle, I know what I can spend.
_I know kids who are teenager who have had more cell phones than I have. I'm 60 years old. I've had two cell phones. I replaced the first one because it fell in the horses water trough.
_I watch home buying shows where unmarried couples buy homes as nice or NICER than their parents home, despite the fact that their parents are 20-35 years older then they are.
_How many Americans finance their cars, and get a new one BEFORE they finish paying off the first one? I've never financed a car. I save and when I need the next vehicle, I know what I can spend.
_I know kids who are teenager who have had more cell phones than I have. I'm 60 years old. I've had two cell phones. I replaced the first one because it fell in the horses water trough.
_I watch home buying shows where unmarried couples buy homes as nice or NICER than their parents home, despite the fact that their parents are 20-35 years older then they are.
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So let's make things simple. How much money needs to be taken (because that's what we're talking about) from the "wealthy" to balance the scales? Is it 50%, 70%, or 90%? Once that's done, who gets this redistributed wealth... and how much will they get? Will people making $100,000/yr get some or none? Will a single income family earning $50,000/yr get more than individuals earning $40,000/yr? Will all the money go into existing, or new social programs? Is there any long-term plan for how to re-generate that wealth once it's spent (because it's doubtful the wealthy will simply keep producing wealth under those tax rates)? It's easy to point out that we have a problem, but what I don't hear are any detailed solutions for how to make it work.
Here are some ideas I have: First, review existing anti-trust laws and how they apply to very large corporations. Next, impose higher taxes on corporations that employ more than say 50% of their workforce overseas-translation; channel more profits into job creation and benefits packages. Institute a work-based degree credit program- In other words, equate so many months/years of work experience in given field to so many hours towards academic credentials, thereby giving an incentive for labor while reducing the debt-load of college loans. Finally, create incentives in the form of tax credits for corporations who invest in smaller cities, towns, and communities... this will not only create jobs, but revitalize blighted communities, reduce crime rates, and reverse the consolidation of the population around urban centers where the cost of living is higher.
Here are some ideas I have: First, review existing anti-trust laws and how they apply to very large corporations. Next, impose higher taxes on corporations that employ more than say 50% of their workforce overseas-translation; channel more profits into job creation and benefits packages. Institute a work-based degree credit program- In other words, equate so many months/years of work experience in given field to so many hours towards academic credentials, thereby giving an incentive for labor while reducing the debt-load of college loans. Finally, create incentives in the form of tax credits for corporations who invest in smaller cities, towns, and communities... this will not only create jobs, but revitalize blighted communities, reduce crime rates, and reverse the consolidation of the population around urban centers where the cost of living is higher.
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SPC Kevin Ford
Maj John Bell - No, what they did instead was change the public policy to remove restrictions on how they can do business, lower their tax rates and by extension remove investment in the public at large. That is to say, they set up a system where they could leverage their current wealth to consolidate an ever increasing amount of society's capital.
Sure, the public didn't have to buy from Walmart, but they had to buy somewhere. Since Walmart was large enough to create synergies and buy at discounted pricing due to scale and ability to buy offshore they were able to undercut local competition. As local businesses were destroyed it further destroyed local wealth and made the public at large even more dependent on the low cost supplier of goods, who they happened to be. Again and again we say that play out.
Sure, the public didn't have to buy from Walmart, but they had to buy somewhere. Since Walmart was large enough to create synergies and buy at discounted pricing due to scale and ability to buy offshore they were able to undercut local competition. As local businesses were destroyed it further destroyed local wealth and made the public at large even more dependent on the low cost supplier of goods, who they happened to be. Again and again we say that play out.
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Maj John Bell
SPC Kevin Ford - What do you consider "investment in the public at large?"
"...to consolidate an ever increasing amount of society's capital." Society's capital not subject to zero sum gain. Value added means the NET worth of America continues to grow.
I don't know how to interpret your perspective on Walmart. Should we end competition in the market place and go to a centralized economy where a third party (perhaps the government) establishes "fair market value," and fixes prices?
The public is not "dependent" on low priced goods. They purchased those goods when they were not low-priced, or they got along without them. The entrepreneurs improved the system and made goods available to people who could not afford them before. When cellular phones first came out, who could afford them? Now, who cannot afford them? Very few.
"...to consolidate an ever increasing amount of society's capital." Society's capital not subject to zero sum gain. Value added means the NET worth of America continues to grow.
I don't know how to interpret your perspective on Walmart. Should we end competition in the market place and go to a centralized economy where a third party (perhaps the government) establishes "fair market value," and fixes prices?
The public is not "dependent" on low priced goods. They purchased those goods when they were not low-priced, or they got along without them. The entrepreneurs improved the system and made goods available to people who could not afford them before. When cellular phones first came out, who could afford them? Now, who cannot afford them? Very few.
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SPC Kevin Ford
Maj John Bell - "investment in the public at large" means what it always has meant. Access to education, health care, capital for those that show they are deserving of the investment.
Money is not a zero sum game, money is just a proxy for underlying resources and that very much is a zero sum game or a least a limited one to societal capacity breaks. You can make an argument that societal capital is theoretically unbounded, but individual capital very much is. Individuals with low access to capital will be very unlikely to be able to leverage that to create wealth for themselves without the assistance of those that do have capital.
The public is very much dependant on low cost goods now. No they were not before, but that was because they had more access to capital then. That's just an indisputable fact.
To be clear, if everyone had to purchase those phones outright, very few people would have bought them to start with. Instead we made them part of our credit system where to take advantage of people's poor understanding of the total cost of ownership. At this point we almost have to have a phone to work and most people have to buy them on credit (make no mistake, that's what all those plans are). BTW, that is why I always buy my phones outright.
Money is not a zero sum game, money is just a proxy for underlying resources and that very much is a zero sum game or a least a limited one to societal capacity breaks. You can make an argument that societal capital is theoretically unbounded, but individual capital very much is. Individuals with low access to capital will be very unlikely to be able to leverage that to create wealth for themselves without the assistance of those that do have capital.
The public is very much dependant on low cost goods now. No they were not before, but that was because they had more access to capital then. That's just an indisputable fact.
To be clear, if everyone had to purchase those phones outright, very few people would have bought them to start with. Instead we made them part of our credit system where to take advantage of people's poor understanding of the total cost of ownership. At this point we almost have to have a phone to work and most people have to buy them on credit (make no mistake, that's what all those plans are). BTW, that is why I always buy my phones outright.
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Maj John Bell
SPC Kevin Ford - I think were are too far apart to have a meaningful discussion within the limits of this forum. What is "excess wealth?" and how would you prevent someone from acquiring it?
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