[Kerrigan]

Let's have a little economic discussion, rather than the usual political hysteria. Obama proposes to double the federal capital gains tax. Factoring in state capital gains, the United States already has the second highest capital gains tax in the world, after Japan. (And I'm talking here about individual and corporate tax rates)

If you have an informed opinion or analysis, share your view on how such taxation will affect the US economy. How will output be affected? Is this correcting some inefficiency? What will the deadweight loss be? Will a decrease in output affect employment? All of these questions may seem strictly theoretical but their implications will affect your wallet over the next few years.

[Doofy]

Doubling capital gains tax? Along with the new expatriation tax, this can only mean one thing:
America's economy is really, really, really, really screwed.

[nonhuman]

Well, I guess it's a good thing I sold most of my investments a couple years ago to make a down payment on a house...

Doubling the capital gains tax is ridiculous. Hell, the capital gains tax itself is ridiculous. If the government really feels the need to reduce people's income, why should those who invest be punished more than those who simply earn? It's like they want to discourage wealth generation!

If it's absolutely necessary to tax capital gains, which I really don't think it is because it's essentially just punishing people for being smart with their money, just group it in with regular income tax. There's no need to create a whole new class of taxes for it.

[Doofy]

Originally Posted by nonhuman 

Doubling the capital gains tax is ridiculous. Hell, the capital gains tax itself is ridiculous. If the government really feels the need to reduce people's income, why should those who invest be punished more than those who simply earn? It's like they want to discourage wealth generation!

And that's exactly what capital gains tax is designed to do. The government doesn't want loads of independently wealthy people running around - it wants loads of people who're living hand-to-mouth and are thus dependent on politicians. It's a type of power/control retention - the last thing any politicians want is a bunch of people who don't need politicians.

[Dakar the Fourth]

Assuming the OPs statement is accurate, it sounds like a heavy-handed attempt at slowing or reversing the income gap.

[Horsepoo!!!]

*sigh*

[Uncle Skeleton]

One of the things I've liked about Obama so far is that he's like the opposite of stubborn. When he realizes one of his policies is universally unliked and a mistake, he changes it. Therefore I'm pretty confident he'll reverse this decision long before it's enacted.

[CreepDogg]

Capital gains are taxed at a preferential rate to income to stimulate wealth generation. The current rate is 15%, I believe for long-term gains. A quick search led me to conclude Obama looked to raise it no higher than 28% - still lower than the income brackets investors are likely to be in, and is basically rolling back the cuts that were made during the Bush years. So we've been there before, in a flourishing economy even.

I'm not fond of creating more disincentive to saving and investing, especially in a climate of rampant spending, but I'm not going to get hysterical about it either.

[CreepDogg]

Originally Posted by Doofy 

And that's exactly what capital gains tax is designed to do. The government doesn't want loads of independently wealthy people running around - it wants loads of people who're living hand-to-mouth and are thus dependent on politicians. It's a type of power/control retention - the last thing any politicians want is a bunch of people who don't need politicians.

Lots of wealthy people donate to politicians. Why would they do that if they didn't need them? They do need them, because they want to keep other politicians whose policies favor the wealthy less out of office.

[k2director]

Yet another reason why I'd never vote for Obrainless. His insisting that the Surge would never work (and being so pathetically wrong about that) is another.

So much for his "good judgement over experience" song and dance.

[CreepDogg]

Originally Posted by Kerrigan 

Let's have a little economic discussion, rather than the usual political hysteria.

Well, so much for that....

[Helmling]

Originally Posted by Doofy 

And that's exactly what capital gains tax is designed to do. The government doesn't want loads of independently wealthy people running around - it wants loads of people who're living hand-to-mouth and are thus dependent on politicians. It's a type of power/control retention - the last thing any politicians want is a bunch of people who don't need politicians.

Oh, now, you know that's not it. Just the other day I was looking at data on the Gini coefficients (which measure income distribution) of the world's countries. The United States is, in terms of income inequality, on par with Mexico now. Most of the rest of the developed world is ten points lower than us (well, since Gini coefficients are from 0 to 1, it's actually a full tenth of a point).

This is the kind of thing that cries out for a little social engineering. I mean, if this was all the product of a goold ole libertarian paradise like you want, then maybe I could accept it, but this status quo has not happened through the invisible hand and it hasn't happened by chance. America's wealthy elite (what is it, 2% of the population controls 50% of the wealth?) has bought and paid for a political system that caters conditions to perpetuate this economic disparity. This isn't the result of a free market, at all. The government serves the wealthy and generally the wealthy are the government. People like Obama who genuinely care about poverty are looking for ways to combat this and since the rich generally wriggle out of a lot of taxes, they look for other ways to pinch 'em.

That said, I agree that doubling the capital gains tax is hardly a solution. All it would do is discourage middle class investment. The truly wealthy will find ways around the full force of the tax no matter what.

That's why I say--as I was just suggesting in another thread--make the taxes so that the only way out of them is to behave in a more socially responsible way.

[Helmling]

Originally Posted by Uncle Skeleton 

One of the things I've liked about Obama so far is that he's like the opposite of stubborn. When he realizes one of his policies is universally unliked and a mistake, he changes it. Therefore I'm pretty confident he'll reverse this decision long before it's enacted.

And yet, this ability to compromise, the cornerstone of a representational democracy is heavily criticized by both political parties.

[Helmling]

Originally Posted by CreepDogg 

Well, so much for that....

Oh, it was a loaded question anyway. We all know what politics led him to post it, and he knew exactly what political points of view would dictate the responses.

[CreepDogg]

I can live with that. I was reacting to the prior post that wasn't even remotely on topic and was just a bunch of talking-point drivel...

[Doofy]

Originally Posted by Helmling 

That's why I say--as I was just suggesting in another thread--make the taxes so that the only way out of them is to behave in a more socially responsible way.

And who, exactly, says what "socially responsible" is?

Don't forget I live in a country where the government has been engaging in social engineering for the last 11 years and the whole place is now really, really screwed (both socially and financially). Social engineering forces society into a certain direction too quickly, when what's required is a natural, "organic" evolution.

[Shaddim]

Well if this happens it'll be time to dump what's left of my stocks/mutuals and buy more land.

[nonhuman]

Income disparity isn't really all that important. It doesn't matter so much if the divide between the rich and the poor in a single country is large. What matters more is the divide between the poor in one country and the poor in another. Sure we have have a Gini coefficient similar to that of Mexico, but it is quite clearly the case that the poor in America are significantly better off than the poor in Mexico. Why do you think we have such a 'problem' with illegal immigration?

[Helmling]

Originally Posted by nonhuman 

Income disparity isn't really all that important. It doesn't matter so much if the divide between the rich and the poor in a single country is large. What matters more is the divide between the poor in one country and the poor in another. Sure we have have a Gini coefficient similar to that of Mexico, but it is quite clearly the case that the poor in America are significantly better off than the poor in Mexico. Why do you think we have such a 'problem' with illegal immigration?

I'm pretty sure the poor here feel differently. And as that gap continues to widen, as it has over the last 30 years, more and more middle class are going to see that disparity as significant as well. This really is a new Gilded Age and inequality like this is a threat to both stability and liberty. The ultra-wealthy interests--be they individuals or, as is often the case, corporations--are threats to the balance of power within our nation. It is not only tyranny by government that can deprive us of our freedoms.

[Helmling]

Originally Posted by Doofy 

And who, exactly, says what "socially responsible" is?

Don't forget I live in a country where the government has been engaging in social engineering for the last 11 years and the whole place is now really, really screwed (both socially and financially). Social engineering forces society into a certain direction too quickly, when what's required is a natural, "organic" evolution.

11 years? Surely you jest.

This government has been engaging in social engineering for more than a century, much of it in other countries. We have used influence, debt and naked force to create "free" markets wherever we felt we could gain a foothold. We use subsidies right now, not to provide our own people with food, but to ensure that no other nation can threaten our dominance in the global agriculture market. The same sort of cynical exploitation is at work within our borders, except it is usually executed with at least some measure of subtlety.

I get where you guys are coming from, I really do. I feel like you're fooling yourselves, though. If we were talking about laissez faire economics, then it would be one thing. I could see how that, philosophically, you'd be primed to embrace it. But this is anything but. Our government is hip-deep in engineering our society--but its agenda is set by the wealthy, not by society.

So it should be all of us--all of the voting population--who set the standard of social responsibility. Right now, though, with an electoral process dominated by money, it is only the profit-motive that dictates terms to the "engineers."

[Helmling]

Originally Posted by k2director 

Yet another reason why I'd never vote for Obrainless. His insisting that the Surge would never work (and being so pathetically wrong about that) is another.

So much for his "good judgement over experience" song and dance.

The surge only appears to have "worked" because Iraq's neighborhoods have already been purged of minority groups. If that's "working" then I want no part of it. We have, yet again, sided with monsters to create the illusion of victory.

[Kerrigan]

It's a loaded question but it's an important question, and for the sake of finding the answers it doesn't matter if the person "rolling" back the capital gains tax reduction is Obama or McCain (who knows, it could be the latter who would do such a thing next year).

But, back to the significance of this tax. The US has the second highest rate when you figure in state level taxes. I'm positive that it is at least double the rate that Ireland charges, and it is about 10 percentage points higher than the other western European countries.

Now, all things being equal, if I were looking to headquarter a company or make a foreign direct investment in either the US or Belgium, the obvious choice would be Belgium. I realize that it is not that simple in real life but it does lend credence to the support of Anheuser's shareholders in merging with a company headquartered in Leuven. This could seriously heart foreign investment.

[Lava Lamp Freak]

This is a little misleading. He said he'd raise capital gains taxes on people who make over $250k a year.

He wants to give $300 billion worth of tax breaks to big corporations and the wealthiest Americans. Under his plan, more than 100 million middle class families won't see a penny in direct tax relief. I want to put a tax cut of up to $1,000 into the pockets of 95% of working Americans. And if you're a family making less than $250,000 a year, my plan won't raise your taxes one penny -- not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes.

Senator McCain is opposed to regular increases in the minimum wage -- I want to index it so that it rises with rising costs. He thinks the Earned Income Tax Credit is fine as it is -- I want to expand it. He has no plans to make childcare more affordable or help people get paid sick leave -- while I do.

http://www.youtube.com/watch?v=4LOzxNcU6Kc

[nonhuman]

Originally Posted by Helmling 

I'm pretty sure the poor here feel differently. And as that gap continues to widen, as it has over the last 30 years, more and more middle class are going to see that disparity as significant as well. This really is a new Gilded Age and inequality like this is a threat to both stability and liberty. The ultra-wealthy interests--be they individuals or, as is often the case, corporations--are threats to the balance of power within our nation. It is not only tyranny by government that can deprive us of our freedoms.

Yes it feels that way, but in actual fact America's 'poor' would be considered rich in most of the world. And I'm not sure where you get the idea that things were unstable and tyranny rampant in the Gilded Age. The big families of the Gilded Age contributed hugely to America both economically and socially. The Vanderbilts alone employed thousands of people all of whom were provided with relatively comfortable lives and whose children were given excellent private schools to attend (at the Vanderbilts' expense). They even sent many of the children of their employees to college.

Take a look at what the modern super wealthy individuals and families are doing. The Gates' have the Bill & Melinda foundation which does a lot of good all over the world, not to mention the money and resources that they and Microsoft donate to people and organizations around the country. Warren Buffett gave over a huge amount of his money to the Bill & Melinda foundation, because of the good they do. Google has amassed massive amounts of wealth and is now using it to fund and invest in green technology among other things. The other original Microsoft founders and investors are all putting their wealth into causes that they believe in, as are probably the vast majority of the people who've made their fortunes on the computer and internet revolutions.

People always try to claim that the wealthy are just greedy. That they build up these vast fortunes and then hold on to them for themselves. But that's simply not true. In general the wealthy and extremely wealthy are contributing hugely to the economy and society. They aren't like Scrooge McDuck, holding all their assets in a giant vault for their own pleasure. They're driving the market, creating new jobs, and even just giving their own money away to those who need it more.

[Helmling]

Originally Posted by nonhuman 

Yes it feels that way, but in actual fact America's 'poor' would be considered rich in most of the world. And I'm not sure where you get the idea that things were unstable and tyranny rampant in the Gilded Age. The big families of the Gilded Age contributed hugely to America both economically and socially. The Vanderbilts alone employed thousands of people all of whom were provided with relatively comfortable lives and whose children were given excellent private schools to attend (at the Vanderbilts' expense). They even sent many of the children of their employees to college.

Take a look at what the modern super wealthy individuals and families are doing. The Gates' have the Bill & Melinda foundation which does a lot of good all over the world, not to mention the money and resources that they and Microsoft donate to people and organizations around the country. Warren Buffett gave over a huge amount of his money to the Bill & Melinda foundation, because of the good they do. Google has amassed massive amounts of wealth and is now using it to fund and invest in green technology among other things. The other original Microsoft founders and investors are all putting their wealth into causes that they believe in, as are probably the vast majority of the people who've made their fortunes on the computer and internet revolutions.

People always try to claim that the wealthy are just greedy. That they build up these vast fortunes and then hold on to them for themselves. But that's simply not true. In general the wealthy and extremely wealthy are contributing hugely to the economy and society. They aren't like Scrooge McDuck, holding all their assets in a giant vault for their own pleasure. They're driving the market, creating new jobs, and even just giving their own money away to those who need it more.

They also had lavish galas so extravagant that they blacked the windows out and hired the police to guard against people. Public sentiment ran against the titans of the Gilded age and it directly led to the popularity of socialism in the early twentieth century. It's excesses set the stage for the great depression.

Yes, some give to charities and created jobs, but if jobs are low quality and exploitive then they're going to lead to resentment.

Unrepentant capitalism is short-sighted. Greed has consequences.

I applaud the efforts of truly altruistic people like the Gates, but the fact is that most corporations and those made rich by them contribute to causes in relatively small amounts and usually only then as a tax dodge. I've quoted the figure before and it's so absurdly out of kilter that it doesn't even matter how poor my memory is: something like 1 - 2 % of the population controls 50% of the wealth. There's no way around it: This is a form of injustice and a threat to liberty...and stability.

My post above to Doofy also has bearing on this, if you wouldn't mind reading that one a well...

[nonhuman]

Originally Posted by Helmling 

They also had lavish galas so extravagant that they blacked the windows out and hired the police to guard against people. Public sentiment ran against the titans of the Gilded age and it directly led to the popularity of socialism in the early twentieth century. It's excesses set the stage for the great depression.

Yes, some give to charities and created jobs, but if jobs are low quality and exploitive then they're going to lead to resentment.

Unrepentant capitalism is short-sighted. Greed has consequences.

I applaud the efforts of truly altruistic people like the Gates, but the fact is that most corporations and those made rich by them contribute to causes in relatively small amounts and usually only then as a tax dodge. I've quoted the figure before and it's so absurdly out of kilter that it doesn't even matter how poor my memory is: something like 1 - 2 % of the population controls 50% of the wealth. There's no way around it: This is a form of injustice and a threat to liberty...and stability.

My post above to Doofy also has bearing on this, if you wouldn't mind reading that one a well...

If 50% of the wealth is sufficient for 99% of the population, then what's the problem if the remaining 1% has the other 50%? I fail to see what is so wrong with some people being richer than others. Poverty, essentially, does not exist in the United States. Sure we've decided that people below a certain income level are impoverished, but compare their lives to that of the vast majority of humanity and they're living like kings. People would rather be poor, illegal immigrants in the US than stay in their home countries. Why? Because our poor are relatively well off!

Yes, there are people out there who are suffering. Yes, that sucks. Yes, I would like to do something to alleviate their suffering. But lets not pretend that the root of their suffering is the fact that someone else has more money than they do.

[Dakar the Fourth]

Originally Posted by nonhuman 

If 50% of the wealth is sufficient for 99% of the population, then what's the problem if the remaining 1% has the other 50%? I fail to see what is so wrong with some people being richer than others.

Money is power, so half of the power is concentrated in 1% of the population (roughly speaking).

[Uncle Skeleton]

The same response applies no matter if you call it "money" or "power:" so what? If 50% of the "power" is sufficient for 99% of the population, then what's the problem if the remaining 1% has the other 50%?

You're never going to reach a state where everyone has the same amount of money (or power). Some people choose to work harder or take bigger risks, and other people choose to skate by. Both are valid choices. If 1% of the people are doing 50% of the work, why shouldn't they have amassed 50% of the {wealth/money/power/whatever you want to call it}?

[Dakar the Fourth]

What's your definition of sufficient? In the case with money, I assume nonhuman was referring to standard of living.

[Uncle Skeleton]

Money is power, so whatever amount of money is sufficient, that amount of power is also sufficient.

[Dakar the Fourth]

Originally Posted by Uncle Skeleton 

Money is power, so whatever amount of money is sufficient, that amount of power is also sufficient.

That's a gross oversimplification I don't agree with.

[CreepDogg]

Originally Posted by Uncle Skeleton 

You're never going to reach a state where everyone has the same amount of money (or power). Some people choose to work harder or take bigger risks, and other people choose to skate by. Both are valid choices. If 1% of the people are doing 50% of the work, why shouldn't they have amassed 50% of the {wealth/money/power/whatever you want to call it}?

What we strive for is equality in opportunity to earn. There are many ways, some described above, in which an unbendable disparity in wealth gets in the way of that. While it's not right that someone can work much less than you and earn the same, it's also not right that some must work twice as hard as you to get to the same place (even assuming same profession, etc.). I would call for a balance of those two competing interests.

Also - do you think the statement in bold above is really true in the US? I don't. Having wealth <> doing work/contributing to society (and I'm saying that with the understanding that wealth can spur economic activity).

[Dakar the Fourth]

Edit:

Originally Posted by Uncle Skeleton 

The same response applies no matter if you call it "money" or "power:" so what? If 50% of the "power" is sufficient for 99% of the population, then what's the problem if the remaining 1% has the other 50%?

You're never going to reach a state where everyone has the same amount of money (or power). Some people choose to work harder or take bigger risks, and other people choose to skate by. Both are valid choices. If 1% of the people are doing 50% of the work, why shouldn't they have amassed 50% of the {wealth/money/power/whatever you want to call it}?

I believe you added to this post since I responded to it.

You're never going to reach a state where everyone has the same amount of money (or power).

And nowhere did I state that's what I wanted.

Originally Posted by Uncle Skeleton 

The same response applies no matter if you call it "money" or "power:" so what? If 50% of the "power" is sufficient for 99% of the population, then what's the problem if the remaining 1% has the other 50%?

The short answer is it undermines our form of government.

[Uncle Skeleton]

Originally Posted by Dakar the Fourth 

That's a gross oversimplification I don't agree with.

You said it! Remember this: "Money is power, so half of the power is concentrated in 1% of the population (roughly speaking)." ??????

Honest question: why does this gross oversimplification work for your post and not for mine?

(and yes I am shocked I have to explain the concept of "irony" to someone with roughly 40,000 posts of it under his belt. Are you the real Dakar?)

[Dakar the Fourth]

Originally Posted by Uncle Skeleton 

You said it! Remember this: "Money is power, so half of the power is concentrated in 1% of the population (roughly speaking)." ??????

That's why I put in the "roughly speaking". As in this lacks refinement and precision.

Originally Posted by Uncle Skeleton 

Honest question: why does this gross oversimplification work for your post and not for mine?

Obviously it didn't.

Originally Posted by Uncle Skeleton 

(and yes I am shocked I have to explain the concept of "irony" to someone with roughly 40,000 posts of it under his belt. Are you the real Dakar?)

And now we're into gross exaggerations.

[Uncle Skeleton]

Originally Posted by CreepDogg 

What we strive for is equality in opportunity to earn. There are many ways, some described above, in which an unbendable disparity in wealth gets in the way of that.

Wealth disparity gives you absolutely no insight into upward mobility. 1% of the people may control 50% of the wealth, but those actual people were not necessarily in the top 1% when they started out. People at the bottom can rise to the top (and often do), and people at the top can drop to the bottom (and often do). Do you dispute this?

Also - do you think the statement in bold above is really true in the US? I don't. Having wealth <> doing work/contributing to society (and I'm saying that with the understanding that wealth can spur economic activity).

There are exceptions, of course, but yes, some people do a disproportionately large amount of producing goods, either by hard work or by smart investments (or both), and an inevitable byproduct of this will be wealth disparity. Therefore, if you object to wealth disparity, you will have to somehow prevent these overachievers from overachieving (or let them do it but not let them benefit from it).

Bill Gates, for example, invested in a product that turned out to be so useful that roughly everyone now owns one. It was wildly successful due in large part because it raised the standard of living for everyone (in theory). Why shouldn't he come out with great wealth in exchange for that? It could just as easily have failed, and he would have lost his investment (in $$$ and in effort), but instead it succeeded, because it was a quality product (in theory). He's better off (obviously), but also all the rest of us are better off because now we can benefit from the product he created. Now here's where your argument breaks down: all parties are better off for it, and he has increased the overall disparity of wealth. What's the problem? If wealth disparity is so vulgar in your view, how would you like this scenario to play out instead, punishing Gates for creating a product that everyone wants?

[Uncle Skeleton]

Originally Posted by Dakar the Fourth 

And nowhere did I state that's what I wanted.

Then what exactly do you want?

The short answer is it undermines our form of government.

This contradicts what you just said above. As I see our form of government, it's based on the notion that everyone should have an equal say. Since you have asserted that money is power and wealth disparity therefore undermines our form of government, this leads to the conclusion that everyone must have equal wealth in order for our government to not be undermined. But you just stated that's not what you want. So again, what is it you do want?

[Dakar the Fourth]

Originally Posted by Uncle Skeleton 

Then what exactly do you want?

I can't give you exactly what I want. What I can tell you is I don't think 1% holding 50% of the wealth is a healthy situation, economically or politically.

Originally Posted by Uncle Skeleton 

This contradicts what you just said above. As I see our form of government, it's based on the notion that everyone should have an equal say. Since you have asserted that money is power and wealth disparity therefore undermines our form of government, this leads to the conclusion that everyone must have equal wealth. But you just stated that's not what you want. So again, what is it you do want?

Everyone need not have equal wealth -- reducing the influence money has within politics/government would go a long way. Obviously it can not be wholly eliminated (much in the way it's not feasible to give everyone equal wealth), but any reduction is beneficial.

[Uncle Skeleton]

Originally Posted by Dakar the Fourth 

I can't give you exactly what I want. What I can tell you is I don't think 1% holding 50% of the wealth is a healthy situation, economically or politically.

It seems to me like you have a feeling about this, but you don't have any reason to justify it. I am asking for a reason. Do you have one? I gave you a reason to the contrary, if you read my last post to CreepDogg. Can you please return the favor?

Everyone need not have equal wealth -- reducing the influence money has within politics/government would go a long way.

It seems to me that the problem is the influence money has within politics, not that people have different amounts of money. If you can fix that, then no amount of wealth disparity would undermine our form of government.

[CreepDogg]

Originally Posted by Uncle Skeleton 

Wealth disparity gives you absolutely no insight into upward mobility. 1% of the people may control 50% of the wealth, but those actual people were not necessarily in the top 1% when they started out. People at the bottom can rise to the top (and often do), and people at the top can drop to the bottom (and often do). Do you dispute this?

Yes - I would dispute the use of 'often'. Of course it happens, but the cases you see such as Bill Gates are more anecdotal than the norm.

There are exceptions, of course, but yes, some people do a disproportionately large amount of producing goods, either by hard work or by smart investments (or both), and an inevitable byproduct of this will be wealth disparity. Therefore, if you object to wealth disparity, you will have to somehow prevent these overachievers from overachieving (or let them do it but not let them benefit from it).

Bill Gates, for example, invested in a product that turned out to be so useful that roughly everyone now owns one. It was wildly successful due in large part because it raised the standard of living for everyone (in theory). Why shouldn't he come out with great wealth in exchange for that? It could just as easily have failed, and he would have lost his investment (in $$$ and in effort), but instead it succeeded, because it was a quality product (in theory). He's better off (obviously), but also all the rest of us are better off because now we can benefit from the product he created. Now here's where your argument breaks down: all parties are better off for it, and he has increased the overall disparity of wealth. What's the problem? If wealth disparity is so vulgar in your view, how would you like this scenario to play out instead, punishing Gates for creating a product that everyone wants?

Yes, I agree, and props to Bill Gates for making an opportunity work for him and in an 'everybody wins' sort of way. (I'll ignore the irony of that argument in a Mac forum... ) Although I don't think it's hard to argue in a Mac forum that it's not really 'everybody wins' and that there have been negative consequences for the industry. Microsoft has used that wealth disparity in some pretty predatory ways that have hampered other innovation and limited other opportunities. That's another example of where the disparity gets in the way of opportunity.

Also - this is an anecdotal example that doesn't support the contention that the 1% wealthiest are doing 50% of the work (or are responsible for 50% of GDP or however you want to frame it).

I don't view wealth disparity in and of itself as vulgar, and I wouldn't advocate eliminating it. I'm not asking the 1% to give it all back. I'm asking for policy that limits the vulgar consequences that result in limiting other opportunities. That may include the people (government) dictating some of how Bill has to 'share the wealth' through taxation and regulation of his business. I'm OK with that.

We want to give people incentive to be successful. I would argue it's also good for everyone to avoid disenfranchising 50% of the population. There are times where those two items come into conflict, and we have to balance them. It's not 'all or nothing' one way or the other - neither produces a desirable outcome.

[CreepDogg]

Originally Posted by Uncle Skeleton 

It seems to me that the problem is the influence money has within politics, not that people have different amounts of money. If you can fix that, then no amount of wealth disparity would undermine our form of government.

I would argue that it we were able to do that, a natural consequence would be a significant reduction in wealth disparity. Nobody would be able to stack the deck.

[Dakar the Fourth]

Originally Posted by Uncle Skeleton 

It seems to me like you have a feeling about this, but you don't have any reason to justify it. I am asking for a reason. Do you have one? I gave you a reason to the contrary, if you read my last post to CreepDogg. Can you please return the favor?

As I've said in various places in this forum, I'm no economist, and yes, your assertion that I'm working on feeling is correct. It's my understanding that this is a consumer driven economy. Therefore, unless the 1% is investing and spending the vast majority of their wealth, there has to be a significant chunk of our money that is inert (even after banks doing give out loans and such).

This country's upward mobility is one it's greatest strengths. I don't dispute that people can change places, but it's harder to gain wealth than maintain it.

Do you think the income gap doesn't matter, or do you prefer it larger/smaller?

Originally Posted by Uncle Skeleton 

It seems to me that the problem is the influence money has within politics, not that people have different amounts of money. If you can fix that, then no amount of wealth disparity would undermine our form of government.

I can agree with this statement. (As I said) I don't think money's influence on politics can be wholly eliminated -- do you?

If such a thing were achieved, however, I think it might go a long way towards improving upward mobility and the income gap.

[Uncle Skeleton]

Originally Posted by CreepDogg 

Yes - I would dispute the use of 'often'. Of course it happens, but the cases you see such as Bill Gates are more anecdotal than the norm.

Then what is the norm? Do you think most of the top 1% got there by abusing government? The favorite punching bag is oil companies, but don't they provide pretty much the single most useful and quality-of-life-improving product in existence? Please tell me because I'm very curious, what do you think the norm is, if producing or financing development of a genuinely quality product and improving the lives of those who choose to buy it is the exception and not the rule?

it's not really 'everybody wins' and that there have been negative consequences for the industry. Microsoft has used that wealth disparity in some pretty predatory ways that have hampered other innovation and limited other opportunities.

But really, have the negatives outweighed the positives? Obviously, there will be problems in any situation, but are those problems really worse than the benefits, in this case or in general?

That's another example of where the disparity gets in the way of opportunity.

Wait a minute there, buster. If this is "another example," what was the first example? And what exactly is this example? You totally glossed over it by saying M$ was anticompetitive, but never even hinted at in what way, and how that way was undesirable. I would appreciate if you could spell it out a little please.

Also - this is an anecdotal example that doesn't support the contention that the 1% wealthiest are doing 50% of the work (or are responsible for 50% of GDP or however you want to frame it).

Yes it does support that contention. If it wasn't worth the money he's collecting on it, why are people choosing to pay that money to him? The whole basis for capitalism in the first place is that since transactions are voluntary, they must have the net effect of wealth creation, in a way that benefits both parties (ie 'everybody wins'). How is this anecdote any different?

I tried to phrase this anecdote so that it could be generalized, as in: Person X creates Product Y that is so successful that X makes Z tons of money, thus increasing wealth disparity; this can only happen if Product Y benefits everyone else so much that they would choose to give up their aggregate Z tons of money in exchange for Y. Everybody wins. How is this not generalizable to the contention that the wealthiest A% are contributing Z tons of money worth to the public good?

I don't view wealth disparity in and of itself as vulgar, and I wouldn't advocate eliminating it. I'm not asking the 1% to give it all back. I'm asking for policy that limits the vulgar consequences that result in limiting other opportunities.

How do you make a policy that limits the vulgar consequences but DOESN'T at the same time limit the good consequences (ie rewarding people for creating things that improve our lives, and encourage them and others to do the same in the future)?

I would argue it's also good for everyone to avoid disenfranchising 50% of the population.

I have no idea what you're referring to here. Can you please elaborate? Who is disenfranchised as things stand right now?

[Uncle Skeleton]

Originally Posted by Dakar the Fourth 

Therefore, unless the 1% is investing and spending the vast majority of their wealth

I'm no economist either, but I don't think that's right. What possible way could their wealth not be either invested or spent? All I can think of is if it's under their mattress, and I highly doubt that's where the top 1% store their wealth. My understanding is that it's exactly in investments, just like you say it's not. And even if you don't count bank accounts as investments, that money would still be loaned out and contribute to the economy. Maybe I'm missing something though. Are any MacNN readers in the top 1%?

but it's harder to gain wealth than maintain it.

And that's a problem? BTW, it's also harder to maintain it than it is to lose it. I don't see what that has to do with anything.

This might be the issue: there is not some finite amount of wealth we're all fighting each other over. Every time someone goes to work and does their job, more wealth is created (at least if they do a good job it is). There's enough to go around; even if the top 1% never lose any, the rest are still free to increase theirs.

Do you think the income gap doesn't matter, or do you prefer it larger/smaller?

No, it does not matter. It's a reflection of envy, nothing more. The working poor these days have cell phones, air conditioning, laptop computers, VCRs, cable TV, internet, many have multiple cars, tons of great things that a generation ago would have been unthinkable. But all they can do is feel bad because the rich have even more than that? Please cry me a river.

The reason all these great things are ubiquitous in modern life is because of the early adopters in the top 1% made it possible. Without wealth disparity those products wouldn't have been refined and we wouldn't have them now, and if the bottom 99% is too dumb to realize how good we have it just because someone else has it even better, I have no sympathy for them.

[CreepDogg]

Originally Posted by Uncle Skeleton 

Then what is the norm? Do you think most of the top 1% got there by abusing government? The favorite punching bag is oil companies, but don't they provide pretty much the single most useful and quality-of-life-improving product in existence? Please tell me because I'm very curious, what do you think the norm is, if producing or financing development of a genuinely quality product and improving the lives of those who choose to buy it is the exception and not the rule?

As stated, I was disputing the term 'often'. That implies that who is in the top 1% is very fluid when in fact it's quite stagnant. In fact - even Gates has been in there for, what, 20 years? That's one guy out of 3,000,000 - so if we want to continue to use him as the example, then the turnover rate is 1/3,000,000/20 years = 1.67e(-6)% annually. That wouldn't qualify as 'often' in my book.

But really, have the negatives outweighed the positives? Obviously, there will be problems in any situation, but are those problems really worse than the benefits, in this case or in general?

Hard to say, really. We all know there was an equally good or better competing product at the time, albeit more costly. What if it had been that successful? Would we be better or worse off? We don't know. Also hard to say whether some really killer web app that would have benefited everyone has been stifled because of the anticompetitive behavior with IE.

Wait a minute there, buster. If this is "another example," what was the first example? And what exactly is this example? You totally glossed over it by saying M$ was anticompetitive, but never even hinted at in what way, and how that way was undesirable. I would appreciate if you could spell it out a little please.

I'm trying to balance brevity with getting my point across in my posts. I apologize if the level of detail is insufficient for you. Other examples in this thread were Helmlings talk of the Gilded Age, and the fact that the government itself is controlled by money, and hence, by the top 1%. Do you really want me to go into ways the M$ was anticompetitive? We could start with the the DoJ findings. I'm guessing that's material for another thread. You really can't make the leap that those actions stifled competition, and thus, opportunity for others?

Yes it does support that contention. If it wasn't worth the money he's collecting on it, why are people choosing to pay that money to him? The whole basis for capitalism in the first place is that since transactions are voluntary, they must have the net effect of wealth creation, in a way that benefits both parties (ie 'everybody wins'). How is this anecdote any different?

I tried to phrase this anecdote so that it could be generalized, as in: Person X creates Product Y that is so successful that X makes Z tons of money, thus increasing wealth disparity; this can only happen if Product Y benefits everyone else so much that they would choose to give up their aggregate Z tons of money in exchange for Y. Everybody wins. How is this not generalizable to the contention that the wealthiest A% are contributing Z tons of money worth to the public good?

That would imply that everyone in the top A% invented some product that is in high demand, and that all their wealth comes from their singular contribution to creating that product. In most cases, many are involved in such creation, and on top of that, a lot of wealth is earned and maintained not through creating some product in demand, but through wealth itself. Heck, even with M$, Bill didn't create Windoze, thousands of other programmers did. A lot went into creating what is that valuable asset. Yes, Bill founded M$ and assumed the brunt of the risk, and market rules today are formed in such a way that it places a much higher value on the 'work' he did in its creation than in the 'work' others did. And even for that - he used the existing wealth disparity M$ already had - the programmers for Windoze would have gotten a lot more - probably even royalties - for creating it had M$ been a start-up at that point, evening out the disparity.

I still don't see how this argument justifies that the work of 1% is creating 50% of the overall value.

How do you make a policy that limits the vulgar consequences but DOESN'T at the same time limit the good consequences (ie rewarding people for creating things that improve our lives, and encourage them and others to do the same in the future)?

Well, pardon the heavy-handed attempt at getting back on topic, but a capital gains tax that doesn't actually take all the rewards, and in fact takes less than at the income rate is one way. Restrictions and enforcement on opportunity-limiting behavior is another.

I have no idea what you're referring to here. Can you please elaborate? Who is disenfranchised as things stand right now?

If 50% of the population sees no opportunity to get ahead, and sees that they'd have to work much harder than the other 50% to even achieve the same level of success, that's disenfranchising. Look at the poor in the US right now. Yes, some are in that position by choice, and others are disenfranchised. If you look closely you can often even tell the difference.

[Uncle Skeleton]

Originally Posted by CreepDogg 

As stated, I was disputing the term 'often'. That implies that who is in the top 1% is very fluid when in fact it's quite stagnant. In fact - even Gates has been in there for, what, 20 years? That's one guy out of 3,000,000 - so if we want to continue to use him as the example, then the turnover rate is 1/3,000,000/20 years = 1.67e(-6)% annually. That wouldn't qualify as 'often' in my book.

I expect a relatively "fluid" upper echelon to turnover on the order of generations, not years. If you expect a significant portion of the workforce to change social status every year in an ideal situation, you have a lot of explaining to do. I just don't see how that could ever be possible under any system, theoretical or practical.

But you didn't answer my question. You said that Gates was the exception. What I wanted to know is what type of person is not the exception in your view. What is the typical case for the top 1% and how they became so wealthy, in your view?

I'm trying to balance brevity with getting my point across in my posts. I apologize if the level of detail is insufficient for you. Other examples in this thread were Helmlings talk of the Gilded Age, and the fact that the government itself is controlled by money, and hence, by the top 1%. Do you really want me to go into ways the M$ was anticompetitive? We could start with the the DoJ findings. I'm guessing that's material for another thread. You really can't make the leap that those actions stifled competition, and thus, opportunity for others?

My question was a bit muddled, sorry, but you touched on the correct answer. Namely, the DoJ findings. These anticompetitive activities are already illegal. The DoJ can take care of them. I don't see how preventing wealth disparity is an appropriate tactic, when improving the enforcement through the DoJ or similar would be much more specific. As for the Gilded Age, these practices weren't illegal then (correct?), they were made illegal by people exactly like yourself, who looked around at the situation and said "it shouldn't be like this." Making those specific actions illegal was a far more targeted solution, and if 100 years later those measures are not working to your satisfaction, what makes you think that the blunter tool of somehow preventing wealth disparity will work any better?

That would imply that everyone in the top A% invented some product that is in high demand, and that all their wealth comes from their singular contribution to creating that product.

I already gave another example in the oil companies. They didn't invent oil, but they did invest a huge pile of resources into the heavy machinery and infrastructure that allows us to enjoy gasoline at the frankly unbelievably low price of $4/gallon today. I've now named 2 examples of the 'everybody wins' paradigm; will you please provide one counter-example now, so that I can finally find out how you see the 1% group?

Heck, even with M$, Bill didn't create Windoze, thousands of other programmers did. A lot went into creating what is that valuable asset. Yes, Bill founded M$ and assumed the brunt of the risk, and market rules today are formed in such a way that it places a much higher value on the 'work' he did in its creation than in the 'work' others did. And even for that - he used the existing wealth disparity M$ already had - the programmers for Windoze would have gotten a lot more - probably even royalties - for creating it had M$ been a start-up at that point, evening out the disparity.

I still don't see how this argument justifies that the work of 1% is creating 50% of the overall value.

He created a company. Think about it for a minute. He created a company that created 1000s of jobs. HIGHLY desirable jobs. MS employees are the prototype of our rich bastard neighbors around here (seattle). "That guy is loaded, what's his story?" "Works at MS." "Ohhhh." You honestly don't think that MS employees are fairly compensated (and if not, why didn't they break off their own company and make more)? They don't have to take any risks. They just have to show up to work and write the code they're told. And they make BANK for it. It's the founders of the company that take the risks, have the vision, hand out assignments, PAY THE SALARIES, and put it on the line. I certainly wouldn't want that job. I'm not the type to take risks and be stressed out all the time. I would much rather take the 9-to-5, do what I know needs to get done because someone told me it does, and take home a guaranteed paycheck.

Well, pardon the heavy-handed attempt at getting back on topic, but a capital gains tax that doesn't actually take all the rewards, and in fact takes less than at the income rate is one way. Restrictions and enforcement on opportunity-limiting behavior is another.

I don't understand what you're saying with this. Those are both things we have right now. Are you saying the status quo is the way you want it?

If 50% of the population sees no opportunity to get ahead, and sees that they'd have to work much harder than the other 50% to even achieve the same level of success, that's disenfranchising. Look at the poor in the US right now. Yes, some are in that position by choice, and others are disenfranchised. If you look closely you can often even tell the difference.

Who? See I thought we were talking about the top 1% vs the other 99%. Who is this 50% you've just brought up? How does this relate to what we were talking about?

[tie]

Originally Posted by nonhuman 

Doubling the capital gains tax is ridiculous. Hell, the capital gains tax itself is ridiculous. If the government really feels the need to reduce people's income, why should those who invest be punished more than those who simply earn? It's like they want to discourage wealth generation!

If it's absolutely necessary to tax capital gains, which I really don't think it is because it's essentially just punishing people for being smart with their money, just group it in with regular income tax. There's no need to create a whole new class of taxes for it.

The capital gains tax is lower than the income tax. Your post makes no sense.

[tie]

Originally Posted by Uncle Skeleton 

The reason all these great things are ubiquitous in modern life is because of the early adopters in the top 1% made it possible. Without wealth disparity those products wouldn't have been refined and we wouldn't have them now, and if the bottom 99% is too dumb to realize how good we have it just because someone else has it even better, I have no sympathy for them.

A whole other class of the wealthy is those who inherited wealth. I don't see any way of linking inheritances to innovation. The inheritance tax is really the fairest of all, and I think it serves the best social purpose---not punishing innovators, but not creating a leisure class either.

[Uncle Skeleton]

What's funny is this year I paid a higher rate on cap gains than I did on income. Because I'm in grad school (stupidly low income) and I have a mortgage. So for me and probably a dozen other people across the country, nonhuman's point rings true.

[Uncle Skeleton]

Originally Posted by tie 

A whole other class of the wealthy is those who inherited wealth. I don't see any way of linking inheritances to innovation. The inheritance tax is really the fairest of all, and I think it serves the best social purpose---not punishing innovators, but not creating a leisure class either.

You don't think that innovators should be allowed to give their children a life of luxury if they want, as part of the reward for their innovation? The money originally came from something. If it wasn't from fair competition, what was it from? I've asked 3 times now and haven't gotten one answer yet.