Income Disparity Is Good. Seriously.

Is income disparity good? I guess it depends who you ask.  I like it.  I mean, I always knew I wanted to make more than the next guy. That notion of wanting something better for myself and my family has always driven me to push myself to continue to excel, learn more, take risks, work harder, and ultimately, earn more money and forgo the easy route……..

Continue Reading Why Income Disparity is Good

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llpoh
llpoh

I am not sure I would call it good. I would call it unavoidable and the natural order of things. Any attempt to artificially support it (as we currently see vis a vis the power and influence of the financial sector) or limit it (ie socialism/communism) has shown to fail. The markets need to operate freely, and fairly. If this happens, there will be severe inequality – but that is the natural order of things. Those that can value add, who plan and save and invest, will come out on top. And some of those will comeout very far on top indeed. We need to get rid of the corrupt inequality. Simply targeting inequality will fail, as it always has, as it kills incentive for those capable of value adding.

howard in nyc

this issue is rarely discussed freely, but almost always used as a cudgel to boost a political ideology or to promote a special interest.

i have not read or studied the question much, because i get frustrated at all the biased crap. and i haven’t made the effort to learn enough to get past the crap.

so, i’m admitting ignorance. like that’ll stop me from having an opinion.

it seems, that the spread from top to bottom has ebbed and flowed over america’s history. there also seems to me a loose correlation of that ebb and flow to the degree of ‘democratic’ responsiveness of the government to the needs of the mass of citizens.

if that correlation is true, any conclusion about cause/effect, or cart/horse, remains elusive.

part of the zeitgeist of the 60s and 70s was that literal starvation, lack of medical care, and truly millions of ‘dirt poor’ americans was inexcusable for such a wealthy nation. a true life saving ‘safety net’, provided by society (either government or privately), is a requirement for a civil society, much less the wealthiest in the history of humanity. i solidly share this conclusion.

but that has been solved. there are no millions of americans suffering hunger, living in dirt floor shacks, or denied emergency life-saving medical treatment. the solutions were not exactly efficient, and carried a bunch of unforeseen consequences. and they were not 100% effective. but we went from millions suffering these conditions to far less than 1% of americans.

‘safety net’, ‘affordable health care’, homelessness, too often cloud the other question of income spread. and shove people into their ideological corners.

something related i am satisfied is a fact: the concentration of wealth we have seen in the past 30 years is a direct consequence of specific government actions (and inactions) to funnel the wealth upward. and those actions are a direct response to money controlling politics, at the expense of democratic responsiveness of govt to the masses of people.

this is historic record. this is the force behind both the tea party and OWS.

however, whether this is the inevitable end game of capitalism, the usual repeat of historic cycles, or an historic anomaly, particular to this slice of 30 years (due to technology, fluke of history, energy cycles, whatever) remains wide open.

iow, the income disparity we see now is bad. because it is a result of capture of government, money creation and finance by a small elite. and that small elite has greatly increased its wealth (wtf would be the point?)

whether it is always doomed to be thus, or even whether it has always been thus, is open for discussion.

one more thing. it wasn’t like this 30-40 years ago. even though a wealthy elite existed, there was money in politics, and america was the wealthiest group of humans ever.

that is why i like trying to figure out what worked so recently, and trying to get back to that. but if cheap oil is a prerequisite, that dog won’t hunt.

KaD
KaD

Income disparity is good-up to a point. There is such a thing as too much. Research seems to show that democracy cannot exist after a certain point is reached; and the system flips to something else, usually dictatorship or anarchy.

AKAnon
AKAnon

Darwin, your basic premise seems to be that getting more than someone else is a worthy goal in and of itself. This sounds more like competition (keeping up with, or “beating” the Joneses) than self improvement. I would argue that getting more for yourself (i.e., raising your own standard of living) is an inherently worthy goal, but I don’t see how “beating” someone else is helpful. I agree w/ llpoh that income disparity is inevitable, but I don’t see it as inherently desirable. Hypothetically, if everyone to whom you compare yourself is as hardworking and clever as yourself, ought they not do as well as you?

Please don’t misunderstand and think I support giving “free shit” to those who choose not make the effort or make good choices, or to take from those who do-I do not. But I don’t see where some doing much better than others is an especially desirable condition. Inevitable, yes, but not inherently good.

llpoh
llpoh

AKA – i do not think income disparity is inherently good as such. I think rather that income disparity – in a free market unencumbered by political influence – reflects one’s ability to value add to the economy. Those that value add get wealth, and those that do not do not. If people want an I-phone and someone is smart enough to come up with it – they will get rich beyond all reason. If someone dreams up Harry Potter and every kid in America or the world wants to buy each book and see each movie – the creator will become a billionaire.

I only object if these creators then are able to influence political decision with their money so as to continue to concentrate the wealth into their own hands. That is inherently wrong.

But simply earning enormous wealth is not a sin in and of itself. It is how that it is accomplished that matters.

AKAnon
AKAnon

llpoh-As usual, you & I are on the same page. As long as the methods means are legal and moral, there is no sin in wealth, nor in the choice not to seek wealth.To paraphrase Ben Franklin, to satisfy your needs, either increase your means or lower your standards.

King-shat
King-shat

The Founding Fathers saw Corporations as bad. They were to serve a short term service and then dissolved. If it weren’t for Corporations, this degree of inequality would have never been achieved.

SSS

King-shat said, “The Founding Fathers saw Corporations as bad. ”

Ok, I’ll bite. Which Founding Fathers? And what did they say about corporations?

Thank you for your attention to this matter.

Persnickety
Persnickety

Llpoh hits a home run and a half, I think.

I’m not really adding much new, but to state it in my own words: income inequality isn’t good, but it’s a natural result of normal variations in ability, effort and opportunity in ANY system. The only way you might avoid inequality would be an extremely comprehensive and oppressive system to equalize everything – which does not seem to have existed so far, as even the most communist countries have had elites and wide ranges of living standards.

What little I will add is that income inequality becomes negative past a certain point, and the enormous disparities we see in the US today are harmful to society and do not seem to be the natural result of individual ability and effort in anything resembling a fair game. I’m not saying that there is no correlation, only that the correlation is well under 1.0 and there appears to be hardly any correlation at the top 0.01%; in other words, if you were to give me definitive information about the abilities and hard work of 10,000 individuals, I do not think there would be a statistically meaningful way to differentiate between which of those individuals arrived at the 95th percentile and which arrived at the 99.99th percentile.

llpoh
llpoh

Woohoo! A home run! I have been trying to leg out bunt singkes as of late – and with my speed, that ain’t working out too well. I could have been a major leaguer except for the need to field, hit a curveball, and run. I could throw, tho i- too bad about the accuracy bit. Strike zone – thoses are for pussies too scared to take their chances with wild pitches.

But I digress – thanks Persnickety.

AKA – as always, a pleasure dealing with a reasonable man! The Admin could learn a thing or too from us!

KaD
KaD

I have to disagree with ‘inevitable’ though. DEATH is inevitable. Our current economic system is a man made creation; there is nothing natural or inevitable about it.

KaD
KaD

SSS:

here is what Thomas Jefferson thought about them. In an 1802 letter to Secretary of State Albert Gallatin, Jefferson said,

“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.”

Thomas Jefferson also said this in 1816,

“I hope that we shall crush in its birth the aristocracy of our monied corporations, which dare already to challenge our government to a trial of strength, and bid defiance to the laws of our country.”

Jefferson wasn’t the only founding father to make statements about corporations. John Adams also had an opinion.

“Banks have done more injury to the religion, morality, tranquility, prosperity, and even wealth of the nation than they can have done or ever will do good.”

The money powers prey upon the nation in times of peace and conspire against it in times of adversity. The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies all who question their methods or throw light upon their crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe.”

And in a November 21, 1864 letter to Col. William F. Elkins, Lincoln wrote,

“We may congratulate ourselves that this cruel war is nearing its end. It has cost a vast amount of treasure and blood … It has indeed been a trying hour for the Republic; but I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war. God grant that my suspicions may prove groundless.”

President Grover Cleveland witnessed how corporations treated its labor force and had this to say in 1888,

“As we view the achievements of aggregated capital, we discover the existence of trusts, combinations, and monopolies, while the citizen is struggling far in the rear, or is trampled beneath an iron heel. Corporations, which should be the carefully restrained creatures of the law and the servants of the people, are fast becoming the people’s masters.”

TeresaE
TeresaE

Money only motivates MOST people until their basic needs are met.

Sales manager training 101.

The problem with the “good” ideal of a government entity taking the contributing citizens wealth to give to the “needy,” is that once you have housed, and fed, and entertained, the new “needy” they have NO motivation to do anything else. Every job becomes an math equation – how much will they “take away” if I get off my ass. Just so you know, it is usually too much to even consider a job.

I grew up in a working poor household, and grew up raised to believe that you had to actually WORK in this life. My dad wasn’t big on improving himself, so we plugged along right on the edge of disaster. My sister seemed to have missed the lesson. Or something. But the rest of us learned.

People now have been on the dole for so long that their offspring think not working – or barely working – yet eating, was normal. NORMAL. My 20 y.o. nephew has a kid and walked away from a factory job to NO job, because he was “disrespected by his boss.” WTF?!? And I wish that his story was the only one, but the entire state of Michigan (and probably the country), has thousands more exactly like it.

It sickens me. And I see it in the offspring, and theirs, of what once was a minority of my former peers from my rural hometown.

BUT, you also have to understand their is a HUGE difference now. When I was hitting work in the ’80s, there were literally hundreds of jobs in my hometown. By 1990, we had lost some, and most moved to larger cities within 40 miles or so, but they were still there.

Now, the bulk of the jobs are long gone. Long gone. And so went the local (police, fire, schools) tax revenue, but that is another story.

So, as long as we continue to meet millions of people’s basic needs, your wealth, effort and production, (and mine, and most others here), will be eroded to pay for the growing number of people that find apathy and poverty acceptable.

Credit expansion allowed this to happen. If not for easy money, and Y2K, the war on drugs, the war on terrorism, the war on prostitution, we would never have afforded foreign made electronics and two phone bills with a $200 a month cable bill like we . My first credit card had a $250 limit and charged 24.99%. You didn’t even consider spending $400 for a tv, let alone a phone, tv, ipad and the like.

Anyway, I applaud your drive, it was mine that took me from a high school dropout to running an accounting company, to headhunting accountants and making more money than I had even thought I could.

Meanwhile, in the real world, we are being attacked and fewer and fewer of us will do the work it takes to pull yourself up from free food and apathy.

By the time most figure it out (because their checks get cut and the things we buy are too expensive to have), it will be way too late.

Fiat on. Nice article.

ragman
ragman

I agree that healthy competition is good…to a point. I hate to admit it, but many(if not most) boomers took healthy, fair competition to the next level. It became “fuck your buddy” to the extreme. Do whatever it takes to get ahead. Step on anyone and everyone to get to the top rung. Now, much later in life, these worthless assholes don’t understand why the rest of us can’t stand to be around them. I don’t blame all corporations nor do I condemn all of them as evil. It seems to be that when the corporations team up with the govt is when the serious problems arise. Just look at the relationship between the banksters, Wall Street, and the FED/Treasury Dept. This is where the real problems lie.

DaveP
DaveP

I don’t know where I am on the income disparity scale, but wherever it is, I got there by work, saving, luck, God’s help, etc., and therefore I am where I was meant to be. That came about because I lived in a country that would let me improve my lot in life.

Now, if you got to the top by lying, cheating, stealing, etc., because living here seems to allow that too sometimes, then it’s time you got knocked off the ladder.

DaveP
DaveP

It seems that this country needs a cleansing, and tons of Exlax ain’t going to be enough. Start the fans.

Stucky

or me I suppose it comes down to the question of whether or not having wealth is a zero sum game.

Definition of zero sum from investopedia.com (emphasis mine)

“A situation in which one participant’s gains result ONLY from another participant’s equivalent losses. The net change in total wealth among participants is zero; the wealth is just shifted from one to another.”

So, I don’t give a rats ass if other folks are rich as long as their rich-ness was not a result of my loss.

llpoh
llpoh

I think wealth can be created – so one person’s wealth isn’t necessarily achieved through another’s loss. But sometimes it is.

Money isn’t always a motivator – especially of employees. However, without the prospect of significant reward, who would risk their capital starting a small business, for instance? Something like 95+ percent of small businesses fail. You need a minimum of 20 to 1 return to entice anyone in, based on standard return on investent theory, for the ones that are successful. I suspect the number really needs to be more like 100 to one when you consider the stress levels and hours involved. So that being the case, if you want small businesses to exist at all, you are going to have some extreme wealth inequalities. The small businessmman who is successful and has invested his 100k and then grows it to 10 million is to be congratulated and not scorned. He or she has beaten the odds and has done something good for society.

Remove the incentive and small businesses will collapse even faster than they are now.

Opinionated Bloviator
Opinionated Bloviator

We all have the right to be unequal according to our ambition, ability, willingness to put in the hard yards necessary and a little luck.

The issue is what is the driver of the income inequality – Differences due to the above OR Spread the loot fascist bailouts to connected cronies via an unaccountable, corrupt federal government that strives to enslave it’s citizens into debt serfdom for political advantage.

The latter is the dymanic in third world countries/failing states and a key reason for their poverty. NO prosperity without the Rule Of Law.

Opinionated Bloviator
Opinionated Bloviator

To clarify – Connected cronies include everyone sucking on the free shit teat (corporations such as GE, Freddie, Fannie, GM, the TBTF banks and “Wall Streeters”, Democrats, Republicans, welfare kings and queens, illegal immigrants, lazy good for nothing dope smoking hippies…)

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