How Unequal Can America Get Before We Snap?

[Smidlee]

The problem is not inequality of income but growth. USA economy is totally based on growth, growth and more growth. Of course the bad thing about building your economy on growth is growth mathematically has to stop and level off. While it maybe true that the top 10% may have over 90% of the wealth but the top 10% doesn't use up 90% of the resources. I seriously doubt Bill Gates eats more bacon than I do. There is only so much food, gas , etc. a rich man can eat and use.

The growth problem is a lot more difficult to solve than simply changing a few numbers around in people's bank account.

 

[Ken-1122]

The problem is not inequality of income but growth. USA economy is totally based on growth, growth and more growth. Of course the bad thing about building your economy on growth is growth mathematically has to stop and level off.

Why does growth have to stop and level off?

Ken

 

[FanthatSpark]

Revolt maybe? Mass poverty = discrimination of color, correct? Not because of racism but because of class. Most poverty stricken are blacks and Latinos. Racial profiling now is in the mix of inequality of classes. When we created ghetto life that negates higher thinking (Americas manual labor force) all that is prevalent to the animal mind is fairness. These are the masses. These react violently in unjust treatment. Forgotten is the L.A. riots of the courts decision to acquit the beaters of Ricky. I posted on page 9 another ACLU case that has a nation watching... Poor Nation. If these are acquitted the white man might want to visit Germany for a while? We, middle and 1%ters understand its not racially driven but the uneducated (poor) are minds stuck in survival mode and most never have a chance for higher thinking process (not of their own choice, for getten paid is prevalent thought process) we created in the richest nation (yet morally depleted) on earth. We created this (That's how it is reality through non action) monster and when it bites back we will feel slanted, or shocked when its our complacency of status quo that created the beast. LOL.

 

[amanuensis63]

Is that how the company you work for do business? Mine doesn’t. The success of our Union negotiations are pretty much tied to how well the company does.

I'm not union. I wish it were so. Presumably our raise pool and bonus pool are tied to how well the company does, but most people don't see much in the way of raises. At one point we were told that the company was moving away from raises which were permanent to better bonuses (which don't last, so don't increase your overall costs in upcoming years). People plan vacations with bonuses, they plan lives with raises.

[qutoe]
Now don’t get me wrong; I’m not suggesting all companies are like the one I work for, I’m suggesting they aren’t all the one YOU work for.[/quote]

Actually in the tech sector they tend to do what they call "peer benchmarking". They try to set their wages and compensation in line with what the other companies do. So if enough companies decide to lower raises then everyone does. The still TALK about being "competitive" with other companies (making you think they mean they want to retain you so will pay more than the other guy), but in reality it only means they are in parity with their peers.

Let’s use Bill Gates for example; are you saying when he started Microsoft, wealth was not created?

Considering that Bill Gates may have utilized in no small way someone else's OS (at least that's been the rumor for decades) and that guy was paid a pittance of what MIcrosoft is worth, that would call that into question. BUT, let's assume the best of Bill Gates and Steve Jobs and Woz and Bill Hewlett and Dave Packard as true "inventors" (Jobs wasn't really much of a programmer or engineer from what I understood and almost none of his patents are utility patents, but I'll keep him in the mix). As I said there are indeed exceptions. HOWEVER, most of the tech CEO's today aren't necessarily capable of inventing anything. Many of them are former sales or business folks who don't have a single patent to their name. They founded nothing. They made nothing.

CEO’s aren’t the only rich people ya know! And if you have a problem with CEO pay, take that up with the Board of Directors who hired him at that pay. Evidently they know more about the CEO than you do; if the board feels he is worth the pay, who are you to say otherwise?

The BOD is usually made up of several other CEO's from other corporations. They all kind of vote each other great pay. But I've seen enough CEO's driven out the company for some sort of incompetence or wrong doing who then proceed to collect a handsome multimillion dollar golden parachute to know that the CEO doesn't EARN a great deal of the money that falls on them.

 

[Ken-1122]

Actually in the tech sector they tend to do what they call "peer benchmarking". They try to set their wages and compensation in line with what the other companies do. So if enough companies decide to lower raises then everyone does.

And if one company decides to raise its wages in order to attract better workers, everybody does; right?

Considering that Bill Gates may have utilized in no small way someone else's OS (at least that's been the rumor for decades) and that guy was paid a pittance of what MIcrosoft is worth, that would call that into question. BUT, let's assume the best of Bill Gates and Steve Jobs and Woz and Bill Hewlett and Dave Packard as true "inventors" (Jobs wasn't really much of a programmer or engineer from what I understood and almost none of his patents are utility patents, but I'll keep him in the mix). As I said there are indeed exceptions. HOWEVER, most of the tech CEO's today aren't necessarily capable of inventing anything. Many of them are former sales or business folks who don't have a single patent to their name. They founded nothing. They made nothing.

This conversation is not just about CEO’s, it’s about the super-rich. Even if the super-rich doesn’t invent anything, as long as he has his money invested in something someone else invented, his money is still helping to creating wealth.

The BOD is usually made up of several other CEO's from other corporations. They all kind of vote each other great pay.

The Board of Directors (BOD) is voted into their position by the shareholders. If you have a problem with the way the BOD does its job, put your own money where your mouth is by becoming a shareholder, and vote them out. It’s easy to complain when you have nothing invested; I say become invested, then you can complain and do something about it.

Ken

 

[nightflight]

Isn't there a government welfare program called SNAP?

 

[amanuensis63]

And if one company decides to raise its wages in order to attract better workers, everybody does; right?

Definitely let me know when that happens!

This conversation is not just about CEO’s, it’s about the super-rich. Even if the super-rich doesn’t invent anything, as long as he has his money invested in something someone else invented, his money is still helping to creating wealth.

Investing in a company is of equal importance to having people MAKE the widget. The problem in the US is that we tend to think the folks who puke up the money into the stock market are the only ones who count in the equation. And sadly it is the silliness of investors that drive companies to try to catch up to short term profits. It has effectively gutted America's ability to develop markets for the long haul.

The Board of Directors (BOD) is voted into their position by the shareholders. If you have a problem with the way the BOD does its job, put your own money where your mouth is by becoming a shareholder, and vote them out. It’s easy to complain when you have nothing invested; I say become invested, then you can complain and do something about it.

Boards of Directors are made up of other CEOs for the most part, until recently most companies did not allow shareholders to have a say on the details of the compensation committees.

I believe it is Section 951 of Dodd-Frank but this is not my area of specialization. (SEC Source)

 

[amanuensis63]

Isn't there a government welfare program called SNAP?

Yes that's the food stamp program. It has among the lowest rates of fraud of any federal program.

That's why the Republicans want to watch it like a hawk and drug test poor people lest the poor people think they are getting something for free.

The only people who get money for free are Republican Lawmakers like Marco Rubio who apparently thinks he deserves a paycheck even when he doesn't do his job.

 

[Ken-1122]

Investing in a company is of equal importance to having people MAKE the widget. The problem in the US is that we tend to think the folks who puke up the money into the stock market are the only ones who count in the equation.

And teaching children is more important than hitting a ball with a bat, but guess who makes more money? It is much easier to get someone to work for a company than it is to get someone to invest in that company. That’s why we act like the investor is the only one that counts.

Boards of Directors are made up of other CEOs for the most part, until recently most companies did not allow shareholders to have a say on the details of the compensation committees.

Why would a CEO be on the board of a competing company? Sounds like a conflict of interest to me; don’t cha think? But as I said; the shareholders vote the board into the position; CEO or not

Ken

 

[FanthatSpark]

Isn't there a government welfare program called SNAP?

LOL, that program has been defunded majorly. Single person was receiving around 113$ monthly. Today, ROFLOL 15 bucks monthly, LOL imagine surviving on 15 bucks, no healthy eating there eh?. Wonder where that 100$ x 1,000,000 recipients has been reshuffled too? Still pay same tax if not higher, correct?

 

[amanuensis63]

Why would a CEO be on the board of a competing company? Sounds like a conflict of interest to me; don’t cha think?

Are you serious? I mean really serious? Do you have zero idea of how corporate boards work or are structured???

But as I said; the shareholders vote the board into the position; CEO or not

Ken

In the US the slate of board members to be voted on are provided by a nominating committee, but only recently (2002) have rules been put in place to ensure that the nominating committee have independent members as a requisite for listing. Historically the nominating committee received guidance from the corporate management. Shareholder nominations are only allowed in special circumstances. Boards are not like some group that are randomly selected by general shareholders from among their favoritest people.

 

[Ken-1122]

Are you serious? I mean really serious? Do you have zero idea of how corporate boards work or are structured???



In the US the slate of board members to be voted on are provided by a nominating committee, but only recently (2002) have rules been put in place to ensure that the nominating committee have independent members as a requisite for listing. Historically the nominating committee received guidance from the corporate management. Shareholder nominations are only allowed in special circumstances. Boards are not like some group that are randomly selected by general shareholders from among their favoritest people.

I think we are getting a little off subject here, my point is when the super-rich invests his money; whether it be someone else’s idea/company or something he started, he is creating wealth IOW making the pie larger. This money he is making is not taking away from the poor, of anything he is helping the poor by paying taxes on the profit he makes.

Ken

 

[Viren]

I think we are getting a little off subject here, my point is when the super-rich invests his money; whether it be someone else’s idea/company or something he started, he is creating wealth IOW making the pie larger. This money he is making is not taking away from the poor, of anything he is helping the poor by paying taxes on the profit he makes.
Ken

He's actually taking from the fruits of productive labor. Productive labor is what actually creates wealth. I'm not saying investors aren't necessary in many instances to help companies accelerate growth, but that's all they do. Investors don't lift a finger in the actual creation of wealth.

 

[amanuensis63]

I think we are getting a little off subject here, my point is when the super-rich invests his money; whether it be someone else’s idea/company or something he started, he is creating wealth IOW making the pie larger. This money he is making is not taking away from the poor, of anything he is helping the poor by paying taxes on the profit he makes.

Ken

Actually it is quite on topic! The point being that the game is rigged for the wealthiest and most powerful. The example I gave of the complexities of the Corporate Board of Directors and Compensation decisions shows you that economics is not as simple and "fair" as one would hope.

This dream that the "investor class" and the "wealthy" make jobs as if they are creating a miracle out of thin air for the good of all mankind is pure bunk. People invest in companies and support the development of a company in order to MAKE money. They provide the bare minimum of jobs that they can possibly get away with in order to maximize profits.

For example: a friend of mine worked for a big company recently. He was laid off during a work force reduction. Within a week his position was backfilled by a contractor who was making far less money, had not benefits (other than what the contract company offered, and I don't believe that was anything). This company he worked for which laid him off is intent of ultimately getting rid of all the people in the position he held and replace them with contractors. They cost less, have no benefits and require almost no real treatment as actual members of the team.

This is the way capital works in the US. YES, capitalism works wonders to make a thriving economy...until those who are actually in control of the companies decide that they aren't making ENOUGH PROFIT so they start to devalue the workers.

This is the obvious outcome of 30 years of "Trickle Down" economics. IT doesn't improve the lot of those on the bottom and it helps elevate the wealthy to god-like status (they "give" us jobs) and devalues the worker.

The workers are equal to the owners. The owners want a widget made and so they NEED workers. Just as the worker needs a job.

Let's stop treating wealth as if it is somehow "special" has no needs itself.

 

[amanuensis63]

He's actually taking from the fruits of productive labor. Productive labor is what actually creates wealth. I'm not saying investors aren't necessary in many instances to help companies accelerate growth, but that's all they do. Investors don't lift a finger in the actual creation of wealth.

In some cases the investors make things much harder in the workplace. US corporations are legally obligated to serve ONLY the shareholders. Which means if the shareholder wants IMMEDIATE profit the corporation will do whatever it takes to achieve that (or they might lose capitalization). What that means is US corporations are focused on SHORT TERM INVESTMENTS IN DEVELOPMENTS and will cut bait on programs that don't turn sufficient profit within 6 months. It also demands that the corporations treat the human capital as cheaply as possible. MOAR PROFIT!

I'm not denigrating the entire system. It can and has worked in the past. But it isn't like it's handed down from God and can do no wrong.

 

[Aldebaran]

In some cases the investors make things much harder in the workplace. US corporations are legally obligated to serve ONLY the shareholders. Which means if the shareholder wants IMMEDIATE profit the corporation will do whatever it takes to achieve that (or they might lose capitalization). What that means is US corporations are focused on SHORT TERM INVESTMENTS IN DEVELOPMENTS and will cut bait on programs that don't turn sufficient profit within 6 months. It also demands that the corporations treat the human capital as cheaply as possible. MOAR PROFIT!

I'm not denigrating the entire system. It can and has worked in the past. But it isn't like it's handed down from God and can do no wrong.

If the labor force decides that they can do better elsewhere, then they'll go elsewhere. Then the profits won't be there for the investor. So in order to keep the investor, they have to treat the "human capital" well enough to make it worth their while.

 

[amanuensis63]

If the labor force decides that they can do better elsewhere, then they'll go elsewhere. Then the profits won't be there for the investor. So in order to keep the investor, they have to treat the "human capital" well enough to make it worth their while.

Not really. None of that comports with reality. It certainly should, but it doesn't.

That's the problem.

About a decade ago I started working for a large company. We were told that they had done extensive analysis of the rate of pay and found it was in line with their "peer companies". Then a year or so later they told us "we are moving away from 'raises' in preference for better bonuses" (again, not uncommon among the peer organizations). And bonuses don't last like pay raises do.

So if I wanted to leave I'd have to find a new job in the same part of the industry, sell my house (in a down market I would have lost my shirt), move (because we are the only one of our industry in this part of the country). And when I found my new "dream job"? Yeah, it would look a lot like what I see in my current employer.

All these hypotheticals about how people can do this and that and drive the market themselves simply don't quite pan out as the idealists would have us hope.

But you missed my larger point: investors who don't have any real skin in the game (other than some cash) don't want to wait around for a pay off. They want quick turns on their investment. The only people who are told to invest for the long term are the average joes who have been FORCED into 401k's as a means of ensuring retirement. Now we all have to navigate an investing space dominated by microsecond machine trades, daytraders, and professional investors. We who didn't study business in university don't stand a chance. Oh and lest you think I should have studied business I need to remind you your companies NEED chemists as well. Business people can't run everything.

 

[Smidlee]

Why does growth have to stop and level off?

Ken

What Al calls The First Law of Sustainability: Population growth and/or growth in the rates of consumption of resources cannot be sustained.

 

[Ken-1122]

He's actually taking from the fruits of productive labor. Productive labor is what actually creates wealth. I'm not saying investors aren't necessary in many instances to help companies accelerate growth, but that's all they do.

Productive labor is only a part of creating wealth. Somebody has to have a business plan which usually includes productive labor, and somebody has to invest money.

The reason the person who comes up with the business plan and invests money or gets money to invest is given the credit, is because people willing to work for a wage are a dime a dozen; those able to come up with a successful idea or willing to put their money for investments are not as plentiful.

Investors don't lift a finger in the actual creation of wealth.

Creating wealth requires more than lifting fingers.

Ken

 

[Ken-1122]

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