Inequality: Should the government be concerned about it?

[Ken-1122]

Right, we will never eliminate all problems. Jesus himself told us there will always be poor people. But that does not mean we stop helping.

So do you agree with me that the problem is low wages for the poor, and Income Inequality is not the problem but just a symptom of the problem?

Ken

 

[ThatRobGuy]

.

You could settle this issue with a simple answer:

Do you or do you not think that all taxation is stealing?

I know this question wasn't directed at me, but I'll answer.

The following forms are stealing:
Property Tax
Income Tax (if excessive - meaning, you're being charged an amount higher than what you actually utilize in terms of public services)
Capital Gains Tax
School tax (if you don't have kids)
Unemployment tax

The following forms are not stealing:
"Found money" Tax (lottery winnings, estate tax, etc...)
Sales Tax

 

[ThatRobGuy]

So do you agree with me that the problem is low wages for the poor, and Income Inequality is not the problem but just a symptom of the problem?

Ken

Having the government involved in trying to address wage inequality is a double-edged sword.

First things first, inequality, in itself, isn't a problem. Certain jobs are worth more than other jobs. The fact that a Doctor makes 10x more than a 16 year old kid working retail isn't a problem.

The real thing that I think people are trying to address is over payment and under payment of individuals.

Trying to address it is just too much for one entity to try to manage (correctly that is).

First, you'd have to try to do an honest and objective assessment of what each vocation is worth based on complexity & difficulty of the task, as well as the rarity of the skill(s) needed to perform that task. (as it compares to other vocations)

Next, you'd need to evaluate the cost of living in the area where that task is being performed.

Then, you'd need to do a complete evaluation of each individual employee in that vocation and grade their performance vs. that of their peers (both within their company and outside their company)

If the government can't performed 160 million detailed and comprehensive annual performance reviews for employees spanning hundreds of job sectors (which it can't, not enough time in the day to do that), then the government isn't in a qualified position to be able decide what a fair wage for everyone should be....plain & simple. So they do what they feel is the next best thing, specifically target the group that they perceive to be overpaid fat cats in order to help out the group they perceive to be poor struggling hard workers.
(based on one-off narratives)

People try to over-simplify this problem based common perceptions in efforts to justify the notion of redistribution... The false perception of the hard working person scraping by on $8/hour, and the false perception of a CEO getting paid $10million/year to play golf and lounge in their office. That's not reality. If a person is 35 years old and working entry-level retail, I think it's fair to say that there are some things in their life they wish they would've done differently...not trying to be mean, I just feel that's reality. In the same note, if being a multi-million dollar CEO was as simple as playing golf and being a suck-up, then we'd all be CEOs.

The reality is that 80% of millionaires are first-generation wealthy...starting off like the rest of us, taking calculated risks (whether it be investing or starting a business) and succeeding in their efforts. For every Paris Hilton or Rich Kid being given a cushy position in their parents' company, there's 10 hard working CEO's who work 60-hour weeks running the business and spending weeks per year on the road away from their families. For every hard working minimum wage earner who's struggling due to truly unfortunate circumstances, there a handful more that are in the situation due to poor choices they've made in life (whether it be dropping out of school, drug use, unplanned pregnancy, etc...)

Would it be nice if we could make every Paris Hilton of the world earn her keep, and reward every minimum wage earner who busts his hump with a bigger salary? Of course...

However, the problem is more complex and simply drawing a line in the sand and saying "we're going to take from everyone who makes over $XXX and give to everyone who make under $XX" is just a faulty solution that's going to end up ticking off half of the population no matter where that line is drawn.

People also attempt to solve this problem with short-sighted fantasies of "let's raise the minimum wage up to $12/hour!"...and then justify it by saying "well, I saw study that showed that if Wal-mart had to pay their employees $12, it would only raise their prices by an average of $0.02 per product"...completely ignoring the fact that not every store is walmart and that the only stores that could absorb an increase like that would be big box retailers...so it would end up giving wal-mart an even bigger advantage over mom&pop shops than it already has (IE: end up hurting the people they're intending to help).

People will need to accept the fact that not every job is worth enough to pay a living wage, it sounds cold and heartless, but it's the truth.

 

[doubtingmerle]

So do you agree with me that the problem is low wages for the poor, and Income Inequality is not the problem but just a symptom of the problem?

Ken

Not exactly.

Mathematically, we could state that the total amount of goods and services obtained by the the poor in America each year is equal to A * B, where A is the total amount obtained by everybody each year, and B is the proportion that is obtained by the poor.

The only way to increase the amount that the poor have is to either increase A or increase B.

But A cannot be changed instantaneously, and I contend that it may not increase much at all ever.

So the only way we could increase the amount of goods and services to the poor is to increase B.

But again, my interest here is more in stressing the need for a variety of programs to help the poor, and not specifically to recommend a direct wealth transfer.

 

[doubtingmerle]

I know this question wasn't directed at me, but I'll answer.

The following forms are stealing:
Property Tax
Income Tax (if excessive - meaning, you're being charged an amount higher than what you actually utilize in terms of public services)
Capital Gains Tax
School tax (if you don't have kids)
Unemployment tax

The following forms are not stealing:
"Found money" Tax (lottery winnings, estate tax, etc...)
Sales Tax

Income tax is stealing but sales tax is not? How did you come to that conclusion?

 

[doubtingmerle]

it sounds cold and heartless, but it's the truth.

Yes, some of that does sound cold and heartless.

We have discussed many government programs to help the poor here. To get an idea where you are coming from, can you let me know which of the following you would want to eliminate?

Social Security
Medicare
Medicaid
Unemployment Insurance
Welfare
Free schooling up to 12th grade.
Assistance with college costs.
Laws favoring labor union rights.
Minimum wage.
Progressive income tax.
Food stamps.
Laws requiring emergency rooms to treat those who cannot pay.
Affordable Care Act.

 

[KarateCowboy]

As I said, increasing everybody's real wealth significantly in our finite world is probably not possible.

If you think about it, it has already happened many times. If it had not, then the world economy could only support Adam & Eve. There are more people today than five centuries ago, and more wealthy people today than five centuries ago. Don't ask me exactly what caused that, as I can't give a good answer. My answer would have something to do with printing presses, steam engines, electricity, and free market enterprise; all very nice answers but nothing concrete.

 

[doubtingmerle]

Income Tax (if excessive - meaning, you're being charged an amount higher than what you actually utilize in terms of public services)

Which is very difficult to calculate.

Take an example. A young man comes up with a great idea and builds a factory to make his widgits. 30 years later he has large plants across the country and he brings in $100 million a year in personal income. How much does he owe society?

Well first we have to consider all the land his factories are on. Who gave him the right to put his factories there? Ok, he paid for a deed that says he owns the land. Yes, but who says his deed proves he owns the land? (If buying a piece of paper proves you own it, then there are many people who own the Brooklyn Bridge!) OK, the people of the United States set up government and that government decreed that a certain trail of land ownership is valid, and therefore he "owns" the property. But does that truly mean that he owns the property? The American Indians might have a different idea of who owns that property. The Spanish might have a different idea. But the people of the United States decided that we own that property and that the deeds that our government issues are the valid ones. Let's ignore for a minute whether the American claim is valid instead of the French claim or the Indian or Dutch claims. For the sake of argument, let's just say that the American people now have it, and they get to decide what to do with it. Now the government they elected has then decided (sort of) that a trail of deeds leading to this man is valid, so he gets to use it. Oh but wait! We really didn't give it to him! No, sir! We still have laws of eminent domain which say that we still have ultimate control of it, not him. The term comes from:

The property of subjects is under the eminent domain of the state, so that the state or he who acts for it may use and even alienate and destroy such property, not only in the case of extreme necessity, in which even private persons have a right over the property of others, but for ends of public utility, to which ends those who founded civil society must be supposed to have intended that private ends should give way.​

So hey he doesn't really own the land. We got it (whether legal or not) and we decided his deed is valid up until the point where we decide to take it back by eminent domain.

OK, all that to get to the point: How much do the American people through the American government get to charge this man for the land they allow him to use? How much do they get to charge him for the land they fought wars for, defended with vast armies, and maintained ownership for years? Short answer: The free market applies! We can charge him anything we jolly well please!

OK, and he uses many megawatts to run his factories, and let's say that comes from coal mined in America. OK, who owns the land where the coal was mined? The Indians? The French? The Spanish? The USA? Who owns the coal in the land where it was mined? The American people took control of that land and they now "own" it. How much do we get to charge this man for the electricity that results from the coal pulled from our land?

How much do we get to charge him for the oil that came from under this land? How much for the oil brought in from other lands? How much do we get to charge him for the iron ore? How much for the copper? How much for the water? On, and on, and on, let's add up the bill. How much does he owe us?

Let's look at it another way. Suppose he had no gasoline, no coal, no metal, no water, no land, no sunshine, no Oxygen. How much is he earning now? Zero?

Okay who owns the Oxygen, the sunshine, the water, the oil, the coal, the minerals, etc.? He has no right to claim that he owns that. And without it his net income is zero.

We as Americans claimed the resources of this land. How much should we charge those who benefit from it? How much should we pay those who might have other claims to it? We get to decide! Because we are in charge.

And we Americans decided, as decreed in the Declaration of Independence, that the people get to "institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. "

Question: Would the government you propose be the one that would best effect the Safety and Happiness of the poor? I think not. OK, so what did our Founding Fathers want the people to do if the government you propose did not best effect their Safety and Happiness? According to the Declaration, the governments derive "their just powers from the consent of the governed". Well guess what? Folks might not consent to your plans. What should the people do about it? According to the Declaration, "whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness". Got it? So you need to ask if the government you argue for best effects their happiness. Because if not, then the Founding Fathers declared that it is self evident--yes, self evident-- that they have the right to abolish your government. And in the extreme, Jefferson wrote that," it is their duty, to throw off such Government".

So think about your proposals. Are those the things that are best for the common people? If not, Jefferson allowed that it can be the duty--the duty!--of the people to throw off your government.

So who owns the land, the water, the minerals that we Americans took control of? We Americans decided that we do, and we created a government to control that as we directed, and we decided that this government should use those resources to best effect our happiness, or we get to overthrow it. That's what Jefferson and his cohorts wrote. If you don't like it, take it up with them, not me.

 

[doubtingmerle]

If you think about it, it has already happened many times. If it had not, then the world economy could only support Adam & Eve. There are more people today than five centuries ago, and more wealthy people today than five centuries ago. Don't ask me exactly what caused that, as I can't give a good answer. My answer would have something to do with printing presses, steam engines, electricity, and free market enterprise; all very nice answers but nothing concrete.

Oh, yes and it has been getting colder every week for the last 4 months. Just imagine how cold it will be next August!

Oh wait, trends don't always continue in the same direction as they did in the past.

Yes technology has been increasing but also we have been rapidly consuming the cheapest resources. Most of the readily available supplies of many raw materials are gone, presenting serious problems for our future. Many think a peak in world prosperity is here or just around the corner. See The Crash Course | Peak Prosperity .

 

[doubtingmerle]

The real thing that I think people are trying to address is over payment and under payment of individuals.

Trying to address it is just too much for one entity to try to manage (correctly that is).

You say a lot about how not to decide how much workers should be paid, but really don't say much about how you think it should be decided.

So how should it get decided in your view? Should we eliminate minimum wage laws and let WalMart pay whatever they choose? And if they choose to pay a hard working person $3 an hour without benefits, and another person $30 for the same job, is that just fine with you?

And does the same free market apply to the amount we get to charge WalMart for its right to have its store in our country? Does the free market apply there also? Do we the people get to charge anything we jolly well please?

If the rich can pay any wage they choose, why cannot we, the people, charge them anything we please for their right to do business? Or is the free market argument allowed only when it benefits the rich, and not when it benefits the poor?

 

[Ken-1122]

Not exactly.

Mathematically, we could state that the total amount of goods and services obtained by the the poor in America each year is equal to A * B, where A is the total amount obtained by everybody each year, and B is the proportion that is obtained by the poor.

The only way to increase the amount that the poor have is to either increase A or increase B.

But A cannot be changed instantaneously, and I contend that it may not increase much at all ever.

So the only way we could increase the amount of goods and services to the poor is to increase B.

But again, my interest here is more in stressing the need for a variety of programs to help the poor, and not specifically to recommend a direct wealth transfer.

You didn't answer my question. I didn't ask for a solution to the problem; first things first! Let's address what the problem is first, then we can discuss a solution.

Again; Can we agree that the problem is low wages for the bottom income earners, and that income inequality is not the problem but just a symptom of the problem? Can we at least agree on that first? If not, please explain why.



Ken

 

[ThatRobGuy]

Income tax is stealing but sales tax is not? How did you come to that conclusion?

Taxing a purchase vs. taxing your earnings

 

[ThatRobGuy]

Yes, some of that does sound cold and heartless.

We have discussed many government programs to help the poor here. To get an idea where you are coming from, can you let me know which of the following you would want to eliminate?

Will do...

First off, I don't think totally eliminating all of the following programs is the way to go, but I would vastly change a few of them, I'll address them below...

Social Security

Major overhaul.

This should be an optional program, not mandatory.
Also, it should be treated more like "insurance"...meaning, it's there to cover the "what ifs" that a person might have in life.

As it stands right now, we have people who have a comfortable retirement plan through their employer, nice savings accounts...and yet, still get a government check for $500+ every month.

If other insurance companies ran the same way Social Security currently operates, state farm would be out of business in a week.

Medicare
Medicaid
Unemployment Insurance

Again, let's make those optional...

Welfare

Mandatory drug, alcohol, and nicotine screening every month...no exceptions.

If you can afford to buy those things...you don't need my money.

Also, mandatory job training and participation in employment assistance programs are a must. We shouldn't just be pouring money down a hole, there should be an end goal in mind...that goal being, getting that person to a position where they no longer need to live off of the state. That's actually something Clinton did rather well, despite the fact I staunchly disagree with him on 75% of his fiscal policies...I did agree with his approach to more emphasis on education than on welfare. (teach a man to fish adage)

Free schooling up to 12th grade.

I'm okay with this, so long as we make some serious changes to how it's funded. People with children should be paying more than people without, not paying based on the value of their home.

Also, no more levy money for athletics...while playing sports is fun, it's not a necessity. If the school and team booster groups can't raise the money through voluntary donations from the parents of the players, then bye bye football team...

Assistance with college costs.

I'm okay with this provided that the recipients have academic metrics they have to meet. C average or better. Any classes they fail for willfully drop? That balance gets transferred to them to pay back. We shouldn't be paying for kids to party, if you're taking our money to get an education, then we should expect you to do just that.

Laws favoring labor union rights.

Abolish them...we shouldn't have legislative measure favoring or opposing unions. While I disagree with the union mentalities that exist in many sectors, it's not the government's place to endorse or squash them. Unionization is a private sector matter.

Minimum wage.

A well-intentioned yet short-sighted concept. As noted in my prior post, the higher the minimum wage goes, the harder it becomes for small businesses to compete with industry powerhouses as the bigger volume you deal in, the more efficiently you can absorb the increase. These increases help big box stores like Wal-Mart in the long run.

Progressive income tax.

Abolish it in favor of a 20% sales tax. Best of both worlds...rich people buy more stuff so they'll end up paying more, plus no more hiding money at tax time. With an income tax model, people can abuse loopholes...when it's wrapped in a sales tax instead, makes it kinda difficult to abuse the system. When you're at the checkout line, you can't avoid the sales tax, if you don't pay the price they have, you don't leave with the merch.

Progressive income tax is a joke to begin with. The notion that a person who makes $80k isn't using the roads more than a person who makes $20k...so why should they have to pay more for road upkeep? It be like charging average Joe $1 for a hamburger, and then turning around and charging Bill Gates $40 for his hamburger simply on the premise of "well, he can afford it". Government services are just that...services. When you purchase any other service, they set the price for the service...they don't ask you what you make, and then adjust their prices...why are government services treated any differently?

Food stamps.

Okay as long as they're being used by people who really need it with the goal of eventually getting them back on their feet...what I said about welfare earlier would apply here as well.

Laws requiring emergency rooms to treat those who cannot pay

Definitely need some changes here too...people who cannot pay at the time of service should be put on a payment plan that involves modest monthly payments, and offer an option to let them work off the debt with community service (similar to volunteer work) at the hospital if need be.
...referring to adults of course.

If we're talking about a child, then I'm okay with them being treated...whatever mistakes their parents made shouldn't impact them being able to be treated.

Affordable Care Act.

Remove the penalty for not having health care. If a person is so hard up for cash that they can't afford insurance as it is, hitting them with a mandate that states "get health care or pay the penalty tax" isn't helping their situation.

 

[ThatRobGuy]

You say a lot about how not to decide how much workers should be paid, but really don't say much about how you think it should be decided.

So how should it get decided in your view? Should we eliminate minimum wage laws and let WalMart pay whatever they choose? And if they choose to pay a hard working person $3 an hour without benefits, and another person $30 for the same job, is that just fine with you?

And does the same free market apply to the amount we get to charge WalMart for its right to have its store in our country? Does the free market apply there also? Do we the people get to charge anything we jolly well please?

If the rich can pay any wage they choose, why cannot we, the people, charge them anything we please for their right to do business? Or is the free market argument allowed only when it benefits the rich, and not when it benefits the poor?

I would let the market decide. Then you'd actually see a valid purpose for unions. (instead of what they do today which is just guarantee a raise simply because the person has been there another year).

People have this vision that if we got rid of the minimum wage that tomorrow Wal-mart would start paying everyone $1/day...that's simply not how things would play out. Back when this country was run by industry-specific monopolies, corrupt business leaders could do that, today, there's a separation of power within the industry and the business leaders know that. Wal-mart needs employees in order to operate at the level they currently do, if they don't have enough employees, the business will suffer and Target will pounce on it. That's the reason why both of these retailers currently pay their employees (on average) $3/hour above minimum wage. They have to compete for employees.

What I've stated above is pretty much how Switzerland operates. They have no minimum wage there. In fact, the voters rejection the notion in 2014. I don't see their country running amuck with sweatshops and people making a $1/day.

 

[MachZer0]

I know this question wasn't directed at me, but I'll answer.

The following forms are stealing:
Property Tax
Income Tax (if excessive - meaning, you're being charged an amount higher than what you actually utilize in terms of public services)
Capital Gains Tax
School tax (if you don't have kids)
Unemployment tax

The following forms are not stealing:
"Found money" Tax (lottery winnings, estate tax, etc...)
Sales Tax

I would put the inheritance tax in the category of stealing, and one of the most egregious as well

 

[doubtingmerle]

You didn't answer my question. I didn't ask for a solution to the problem; first things first! Let's address what the problem is first, then we can discuss a solution.

Again; Can we agree that the problem is low wages for the bottom income earners, and that income inequality is not the problem but just a symptom of the problem? Can we at least agree on that first? If not, please explain why.



Ken

I thought I answered your question. No, I cannot agree fully with this. I explained why in my previous post to you.

 

[doubtingmerle]

I would let the market decide. Then you'd actually see a valid purpose for unions. (instead of what they do today which is just guarantee a raise simply because the person has been there another year).

People have this vision that if we got rid of the minimum wage that tomorrow Wal-mart would start paying everyone $1/day...that's simply not how things would play out. Back when this country was run by industry-specific monopolies, corrupt business leaders could do that, today, there's a separation of power within the industry and the business leaders know that. Wal-mart needs employees in order to operate at the level they currently do, if they don't have enough employees, the business will suffer and Target will pounce on it. That's the reason why both of these retailers currently pay their employees (on average) $3/hour above minimum wage. They have to compete for employees.

What I've stated above is pretty much how Switzerland operates. They have no minimum wage there. In fact, the voters rejection the notion in 2014. I don't see their country running amuck with sweatshops and people making a $1/day.

Wal-Mart may pay an average wage that is $3 over minimum wage, but there are a whole lot of people stuck at minimum wage or close to it. If companies are already paying at mimimum wage, and we remove that requirement, almost certainly those companies would choose to pay less.

It's basic supply and demand. If for instance the reservoir is overflowing, then irrigation water is cheap. If the reservoir is nearly dry, water prices go up. Likewise, when workers are plentiful, as they are now, then payments for work tend to drop.

Today's economy is limited in the supply of raw materials, which limits the total output we can get out of the economy. So companies pay top dollar for supplies. But low-wage workers are plentiful, so companies are not motivated to pay them. But America is owned by all the people, and all the people deserve to benefit from the good fortunes of America.

The founding fathers said it is self evident that the people should choose a government that best effects their happiness and safety. I think raising the minimum wage would do wonders for overall happiness and safety of the people. OK, then lets choose a government that does that.

Minimum wage payments are typically a small portion of the overall costs of a business. If 10% of a company's costs are minimum wage employees, and we raise the minimum 10%, that increases their costs 1%. Company's can absorb that, perhaps with slight pricing adjustments. And we also increase their supply of customers significantly, since minimum wage workers with a 10% increase will be more than happy to spend it, thus providing customers to businesses. The net effect can be good for business.

 

[Ken-1122]

I thought I answered your question. No, I cannot agree fully with this. I explained why in my previous post to you.

Do you agree (per my previous scenario) that if the bottom 10% receives a positive increase of 10% in their income that would be good for the economy even if it nets in a 100% increase for those at the top? Or do you disagree. (yes or no answer please)

Ken

 

[ThatRobGuy]

Minimum wage payments are typically a small portion of the overall costs of a business. If 10% of a company's costs are minimum wage employees, and we raise the minimum 10%, that increases their costs 1%. Company's can absorb that, perhaps with slight pricing adjustments. And we also increase their supply of customers significantly, since minimum wage workers with a 10% increase will be more than happy to spend it, thus providing customers to businesses. The net effect can be good for business.

This statement is false...

In business, there is no "typically" in terms of how much a mandated wage increase would impact their bottom line.

For a big box retailer? Sure, they can absorb that with no issues whatsoever.

For a local privately owned hardware store that consists of an owner and 10 employees? An increase would impact them to the degree where they'd be forced to go down one of two paths, either give themselves a pay cut (thus hurting their own family), or increase the cost of their goods in order to make up the difference (thus making them even less competitive against big box stores).

 

[MachZer0]

Wal-Mart may pay an average wage that is $3 over minimum wage, but there are a whole lot of people stuck at minimum wage or close to it. If companies are already paying at mimimum wage, and we remove that requirement, almost certainly those companies would choose to pay less.

It's basic supply and demand. If for instance the reservoir is overflowing, then irrigation water is cheap. If the reservoir is nearly dry, water prices go up. Likewise, when workers are plentiful, as they are now, then payments for work tend to drop.

Today's economy is limited in the supply of raw materials, which limits the total output we can get out of the economy. So companies pay top dollar for supplies. But low-wage workers are plentiful, so companies are not motivated to pay them. But America is owned by all the people, and all the people deserve to benefit from the good fortunes of America.

The founding fathers said it is self evident that the people should choose a government that best effects their happiness and safety. I think raising the minimum wage would do wonders for overall happiness and safety of the people. OK, then lets choose a government that does that.

Minimum wage payments are typically a small portion of the overall costs of a business. If 10% of a company's costs are minimum wage employees, and we raise the minimum 10%, that increases their costs 1%. Company's can absorb that, perhaps with slight pricing adjustments. And we also increase their supply of customers significantly, since minimum wage workers with a 10% increase will be more than happy to spend it, thus providing customers to businesses. The net effect can be good for business.

A solution to the problem of minimum wage being low is for people not to take minimum wage jobs