How Unequal Can America Get Before We Snap?

[Ken-1122]

Actually it is quite on topic! The point being that the game is rigged for the wealthiest and most powerful.

And why do you think the game is rigged this way? Because the wealthiest and powerful are the ones that create the wealth! If the average line worker were actually creating wealth instead of simply being a part of the plan to create wealth, they would rig the system to their advantage.

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.

Nothing is as simple and fair as one might 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.

I hate to ruin your dreams my friend, but the wealthy and investors have never been in the business of creating jobs for the good of mankind, their priorities are to make money for themselves, and the creation of jobs are just a minor requirement of their plan to make money. Trust me; if they could make more money without creating jobs? They would go that route.

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.

By George; I think he’s got it!

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.

At least the contractors are human; lots of business replace people with machines! Notice how more and more stores have you ring up your own order to pay, when they used to pay a cashier to do it? That is the unfortunate consequences of simply being a part of someone else's plan of creating wealth instead of creating wealth yourself.


Ken

 

[amanuensis63]

Because the wealthiest and powerful are the ones that create the wealth!

Do you know what Steve Jobs would have been known for if no one worked to make an actual apple computer? He'd be the smelliest nastiest loser in Palo Alto.

The workers are absolutely essential. You can have all the money in the world but if you can't get someone to MAKE your widget widgets will not get made.

If the average line worker were actually creating wealth instead of simply being a part of the plan to create wealth, they would rig the system to their advantage.

-sigh- So you think YOU could build a car just by your own willpower? You think YOU could formulate the coating just because you wanted it real bad? You think YOU could build the computer because you wanted to real bad?

Capital + workers = Productivity. Take away EITHER of those two things and productivity is NOT achieved.

I hate to ruin your dreams my friend, but the wealthy and investors have never been in the business of creating jobs for the good of mankind, their priorities are to make money for themselves, and the creation of jobs are just a minor requirement of their plan to make money. Trust me; if they could make more money without creating jobs? They would go that route.

And that is my point. There is no 'wealth creator'. So can we let go of this myth of the wealthy creating jobs? They don't. The jobs are created by the market demand. The wealthy simply have the money to put into setting up the infrastructure to meet that demand. Stacks of dollar bills cannot build a car.

By George; I think he’s got it!

I had it all along. Unlike you, apparently, I even know something about corporate boards of directors! And my point is that your original claims that wealthy people create jobs is wrong.

 

[FanthatSpark]

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.
Creating wealth requires more than lifting fingers.
Ken

Brother, you are being bombarded and still you fight . I'D take you to any fox hole with upmost confidence you got my back. Do some research though in why you are in this fox hole.

 

[Crowns&Laurels]

Back in 2005 Robert Reich, a visiting professor at the UC Berkeley's Goldman School of Public Policy and former U.S. Secretary of Labor talked about the inequality of income, wealth and opportunity in the United States and asked his audience to speculate on what will happen if these trends continue.

Well to fix it, you have to properly identify the problem first, which involves getting rid of myths like women getting paid less, immigrants not sapping revenue, or that having a degree in no matter the trade makes one better then those who do not.
Don't see that happening though, so..
~oh well~

 

[Ken-1122]

Do you know what Steve Jobs would have been known for if no one worked to make an actual apple computer? He'd be the smelliest nastiest loser in Palo Alto.

The workers are absolutely essential. You can have all the money in the world but if you can't get someone to MAKE your widget widgets will not get made.

There are some car factories where the entire assembly line has been replaced by machines; no people involved. Is it you opinion that those machines are creating wealth?

-sigh- So you think YOU could build a car just by your own willpower? You think YOU could formulate the coating just because you wanted it real bad? You think YOU could build the computer because you wanted to real bad?

Capital + workers = Productivity. Take away EITHER of those two things and productivity is NOT achieved.

I thought I made it clear that workers are a necessary part of the Business plan. (of course unless they make machines a part of the plan instead of people as in my previous example)

And that is my point. There is no 'wealth creator'. So can we let go of this myth of the wealthy creating jobs? They don't. The jobs are created by the market demand. The wealthy simply have the money to put into setting up the infrastructure to meet that demand.

Yes! and the person who sets up that infrastructure to meet the demand is the one who creates the wealth (assuming he is successful)

Ken

 

[Ken-1122]

Brother, you are being bombarded and still you fight . I'D take you to any fox hole with upmost confidence you got my back. Do some research though in why you are in this fox hole.

What is the "fox hole" in your scenario?

Ken

 

[whatbogsends]

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.

Just a comment on this. With the inception of high-frequency trading that you referenced, the 401K investor is performing significantly worse than they were before. The purchases by large companies into their weekly or bi-weekly 401K assignments are predictable. As a result, the markets anticipate these transactions, and the price rises before 401K purchases are made, only to fall back down to former levels after those purchases are completed. High-frequency trading is a method of extracting capital from true investment and giving it to hedge fund managers and day traders who do no wealth creation whatsoever. These machines can see a stock buy is made, and, before that buy is processed, can buy and sell the stock, drive up the price of the buy, and extract money from the market. The practice is theft, plain and simple, but because the people who are doing it are those who influence politicians, it has been left unregulated, and is a significant contributor to the current disparity of wealthy between the very rich and the rest.

 

[whatbogsends]

And why do you think the game is rigged this way? Because the wealthiest and powerful are the ones that create the wealth! If the average line worker were actually creating wealth instead of simply being a part of the plan to create wealth, they would rig the system to their advantage.

Absolutely incorrect. It is because they have the wealth that they can rig the system, not because they create it.. We have a system of legalized bribery called lobbying, and the wealthy create rules to allow them to increase their share of the wealth.

They are not the ones who "create wealth". Workers who produce things create wealth. Investors who fund businesses that hire those workers facilitate the workers creating wealth. However, as it stands, the only ones who are rewarded for the wealth creation are the facilitators, not the actual wealth creators.

 

[amanuensis63]

There are some car factories where the entire assembly line has been replaced by machines; no people involved. Is it you opinion that those machines are creating wealth?

It is almost guaranteed that if this trend continues the factories making those cars will make ZERO wealth for the investors. The cars can only be sold to people with money. Unless the investors start buying all their product sooner or later they not have any sales at all.

Yes! and the person who sets up that infrastructure to meet the demand is the one who creates the wealth (assuming he is successful)

Let the investors build as many buildings as they like. That will create nothing for return. If they "staff" the buildings only with machines they will make some money in the short term, until no one has income sufficient to purchase their widget.

Then they can shutter the building and write off the loss. Until there's no more tax revenues.

Who's more important? The investor fronting the money or the people making the widgets? My answer is NEITHER. Both are equally important.

 

[Viren]

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.


Creating wealth requires more than lifting fingers.

Ken

Yeah, the business plan, investment and the labor force are all important. I have no problem with the labor force making less money. I just disagree that the solution is always helping the investor and giving him all the credit. All the components are important and power needs to be balanced between all three.

 

[loveofourlord]

Or we need to teach people not to be envious.

yeah, people being envious of having stable jobs, homes, food, on their families plates, you just have to teach people to love being so poor that a full time job puts you on welfare.

 

[Ken-1122]

Absolutely incorrect. It is because they have the wealth that they can rig the system, not because they create it.. We have a system of legalized bribery called lobbying, and the wealthy create rules to allow them to increase their share of the wealth.

They are not the ones who "create wealth". Workers who produce things create wealth. Investors who fund businesses that hire those workers facilitate the workers creating wealth. However, as it stands, the only ones who are rewarded for the wealth creation are the facilitators, not the actual wealth creators.

How do you think wealth is created? I see wealth creation sorta like making a cake. The baker follows a recipe and gets all the ingredients, mix them together, put everything in a pan and put it all in the oven to cook. After it’s all done you have a cake.

With wealth, somebody with a business plan follows the business plan and gets the raw materials, gets the workers to assemble the raw materials into a finished product, then he arranges a location for the finished product to be sold, and you have created wealth.

Now in the cake scenario; even though I recognize without the oven to cook it all, the cake would have never been made; yet I don’t give the credit of making the cake to the oven. Even though I recognize without the store for the baker to buy the ingredients and the mixing bowls and utensils to mix everything up in, the cake would have never been made, I don’t credit the store with making the cake.

I credit the Baker as the one who made the cake because he came up with the recipe, and put everything in place for the cake to be made.

If Joe comes up with a business plan that requires money, labor, raw materials, and a store to sell the finished product, if wealth is created as a result I’m not going to credit the bank who provided the money as the one who created the wealth; I’m not going to credit the supplier of raw materials, the laborers, or the landlord who rented him the store as the one who created the wealth, I am going to credit Joe because even though I realize none of this would have happened without the raw materials, the bank, the laborers, and the property owners, it is Joe who put it all together so he gets the credit of creating the wealth because he is the one who put it all together.

I am certain you will disagree with either my scenario or something; so let me have it! Where do you see me going wrong here?


Ken

 

[Ken-1122]

It is almost guaranteed that if this trend continues the factories making those cars will make ZERO wealth for the investors. The cars can only be sold to people with money. Unless the investors start buying all their product sooner or later they not have any sales at all.



Let the investors build as many buildings as they like. That will create nothing for return. If they "staff" the buildings only with machines they will make some money in the short term, until no one has income sufficient to purchase their widget.

Then they can shutter the building and write off the loss. Until there's no more tax revenues.

Who's more important? The investor fronting the money or the people making the widgets? My answer is NEITHER. Both are equally important.

How do you think wealth is created? I see wealth creation sorta like making a cake. The baker follows a recipe and gets all the ingredients, mix them together, put everything in a pan and put it all in the oven to cook. After it’s all done you have a cake.

With wealth, somebody with a business plan follows the business plan and gets the raw materials, gets the workers to assemble the raw materials into a finished product, then he arranges a location for the finished product to be sold, and you have created wealth.

Now in the cake scenario; even though I recognize without the oven to cook it all, the cake would have never been made; yet I don’t give the credit of making the cake to the oven. Even though I recognize without the store for the baker to buy the ingredients and the mixing bowls and utensils to mix everything up in, the cake would have never been made, I don’t credit the store with making the cake.
I credit the Baker as the one who made the cake because he came up with the recipe, and put everything in place for the cake to be made.


If Joe comes up with a business plan that requires money, labor, raw materials, and a store to sell the finished product, if wealth is created as a result I’m not going to credit the bank who provided the money as the one who created the wealth; I’m not going to credit the supplier of raw materials, the laborers, or the landlord who rented him the store as the one who created the wealth, I am going to credit Joe because even though I realize none of this would have happened without the raw materials, the bank, the laborers, and the property owners, it is Joe who put it all together so he gets the credit of creating the wealth because he is the one who put it all together.

I am certain you will disagree with either my scenario or something; so let me have it! Where do you see me going wrong here?


Ken

 

[Ken-1122]

Yeah, the business plan, investment and the labor force are all important. I have no problem with the labor force making less money. I just disagree that the solution is always helping the investor and giving him all the credit. All the components are important and power needs to be balanced between all three.

I wasn't trying to give the impression the labor force was not important, I was just making the original point that the rich are not getting rich by taking from the poor; that if the rich had less everyone else would have more; that is the claim I was refuting.

Ken

 

[whatbogsends]

How do you think wealth is created? I see wealth creation sorta like making a cake. The baker follows a recipe and gets all the ingredients, mix them together, put everything in a pan and put it all in the oven to cook. After it’s all done you have a cake.

With wealth, somebody with a business plan follows the business plan and gets the raw materials, gets the workers to assemble the raw materials into a finished product, then he arranges a location for the finished product to be sold, and you have created wealth.

Now in the cake scenario; even though I recognize without the oven to cook it all, the cake would have never been made; yet I don’t give the credit of making the cake to the oven. Even though I recognize without the store for the baker to buy the ingredients and the mixing bowls and utensils to mix everything up in, the cake would have never been made, I don’t credit the store with making the cake.

I credit the Baker as the one who made the cake because he came up with the recipe, and put everything in place for the cake to be made.

If Joe comes up with a business plan that requires money, labor, raw materials, and a store to sell the finished product, if wealth is created as a result I’m not going to credit the bank who provided the money as the one who created the wealth; I’m not going to credit the supplier of raw materials, the laborers, or the landlord who rented him the store as the one who created the wealth, I am going to credit Joe because even though I realize none of this would have happened without the raw materials, the bank, the laborers, and the property owners, it is Joe who put it all together so he gets the credit of creating the wealth because he is the one who put it all together.

I am certain you will disagree with either my scenario or something; so let me have it! Where do you see me going wrong here?


Ken

You're right, i'm going to disagree with your scenario. Because, for the most part, it's not people like Joe that are the very wealthy. People like Joe are small business owners who do reasonably well, generally make it to the top 1-10% of earners and do alright for themselves. However, most of the wealth that is being generated is going to people who provide the capital, but are not the people devising/executing the business plans. Those who do the devising/executing of business plans do well, but not nearly as well as those with the capital that make their wealth from ownership of capital.

Don't get me wrong, those that provide the capital certainly deserve a slice of the pie, and a significant one at that. However, in large business, the slice of the pie going to capital owners has been increasing steadily over the last 30+ years, and the amount going to workers, and some extent managers has been decreasing.

 

[Ken-1122]

You're right, i'm going to disagree with your scenario. Because, for the most part, it's not people like Joe that are the very wealthy. People like Joe are small business owners who do reasonably well, generally make it to the top 1-10% of earners and do alright for themselves. However, most of the wealth that is being generated is going to people who provide the capital, but are not the people devising/executing the business plans.

Bill Gates, Sam Walton, Mark Zuckerberg, John D Rockefeller,, Henry Ford, Paul Allen, Larry Ellison…..and the list goes on; these are some of the richest men the world has ever known! How are any of them different than the “Joe” in the scenario I presented?


Ken

 

[amanuensis63]

How do you think wealth is created?

It is created when an unmet need is found in the marketplace and then fulfilled.

That requires
1. The capital investment to start up the factories and provide the infrastructure
2. The workers to actually MAKE the item.

One can easily make use of technology to make the making more efficient, but ultimately if more and more jobs are replaced by machines there is less and less money in the market to pay for the goods. So the unmet need remains unattainable.

Now in the cake scenario; even though I recognize without the oven to cook it all, the cake would have never been made; yet I don’t give the credit of making the cake to the oven.

Why not? If it is as necessary to the process as the baker then it seems irrational to assume the baker is the only important factor.

If Joe comes up with a business plan that requires money, labor, raw materials, and a store to sell the finished product, if wealth is created as a result I’m not going to credit the bank who provided the money as the one who created the wealth

Why not? The bank in this case is the INVESTOR. Do you feel the investors who front the capital are unworthy of any credit?

it is Joe who put it all together so he gets the credit of creating the wealth because he is the one who put it all together.

I just had an idea for a widget that will sell for $1 million a piece and it will be amazingly successful. There, I have an idea. Have I created wealth?

I am certain you will disagree with either my scenario or something; so let me have it! Where do you see me going wrong here?

You seem intent on finding ONE particular cog in the wheel and giving all credit to that cog.

My point is this is how our country has gone astray. We have assumed that the wealthy "create jobs" as if it is some gift to the lower classes. We give them tax breaks and incent them to make more jobs. As if they have a choice in the matter. We must toady to their every whim, lest they withhold their jobs.

Which is utter silliness.

This is why Trickle Down Economics has FAILED consistently since it was foisted off on us in the US 30+ years ago. It doesn't work that way.

The market creates demand and capital+workers meet the demand. Cut out any of those players and you get a failed system.

DENIGRATE the worker as if he or she is perfectly expendable and interchangable (which is what most industry is busy doing today, aided and abetted by Right Wing Political trash talk) and you wind up with a situation in which productivity increases while middle class incomes stagnate which they have done for 30+ years now.

It also results in anemic rebounds from the last economic crisis. SOMEONE's making money. Only problem is, it's the folks who already have most of the money (and the power). And the reason that is the case is because we as Americans have accepted this myth of the almighty wealthy "job creator".

 

[amanuensis63]

Bill Gates

May have made use of someone else's work.

, Sam Walton

family fortune propped up by years of relying on the PUBLIC WELFARE SYSTEMS to pay their worker's healthcare. Now they are doing somewhat better but still have to had donations to help their workers get food for the holidays.

, Mark Zuckerberg

Spite-based software invention which became popular and now harvests all your data (they should thank YOU) in order to turn a profit off of selling stuff back to you based on the data YOU GIVE THEM.

, John D Rockefeller

They called folks like him Robber Barons for a reason. And it wasn't a nice reason. Folks like him created monopolies which took every advantage imaginable against the regular people. Ultimately Standard Oil had to be broken up because of the ruthlessness and exploitation of their business practices.

,, Henry Ford

Interestingly realized that you have to pay your workers enough that they can and will buy the cars they make! Although kind of a nasty bigot.

, Larry Ellison

Actually made a relational database. Now a generally nasty piece of work as far as being a human. Works really hard to avoid paying his fair share of taxes. Niiiice.

…..and the list goes on; these are some of the richest men the world has ever known! How are any of them different than the “Joe” in the scenario I presented?

Most of them (or their heirs) were willing to do whatever was necessary to stick it to the regular folks in order to enrich themselves.

Note: I don't think that captains of industry are ipso facto bad people, just that these are not necessarily folks who have achieved greatness through purely good actions. They may be golden gods but they have feet of clay in many cases. And their businesses succeed because we in the USA value success at any cost.

 

[Viren]

I wasn't trying to give the impression the labor force was not important, I was just making the original point that the rich are not getting rich by taking from the poor; that if the rich had less everyone else would have more; that is the claim I was refuting.
Ken

That true to a certain extent though. If the labor force has lower wages the rich get more and the workers get less.

 

[whatbogsends]

Bill Gates, Sam Walton, Mark Zuckerberg, John D Rockefeller,, Henry Ford, Paul Allen, Larry Ellison…..and the list goes on; these are some of the richest men the world has ever known! How are any of them different than the “Joe” in the scenario I presented?

Ken

Firstly, your listing the exceptions. Secondly, if you take a look at the list of the wealthiest, these are not the type of people that dominate that list.

http://www.forbes.com/billionaires/list/

1. Bill Gates - arguably in the category you listed, but that is debateable.
2. Carlos Slim Helu - Capitalist, investor, not inventor/businessman.
3. Warren Buffet - Capitalist, investor, not inventor/businessman.
4. Amancio Ortega - arguably in the category you described.
5. Larry Ellison - Critical in the development expansion of Oracle, check for earned his money.
6. Charles Koch - Capitalist, investor, not inventor/businessman.
7. David Koch - Capitalist, investor, not inventor/businessman.
8. Christy Walton - While she has ties to Walmart, her wealth was due to married into inherited wealth.
9. Jim Walton - inherited wealth.
10. Lilliane Bettencourt - inherited wealth.
11. Alice Walton - inhertited wealth.
12. S. Robton Walton - inherited wealth.
13. Bernard Arnault - Capitalist, investor, not inventor/businessman.
14. Michael Bloomberg - Investor/businessman. Questionably in the category you described.
15. Jeff Bezos - in the category you described.
16. Mark Zuckerburg - in the category you described.
17. Li Ka-shing - questionably in the category you described.
18. Sheldon Adelson - in the category you described.
19. Larry Page - in the category you described.
20. Sergey Brin - in the category you described.
21. Georg Schaeffler - questionably in the category you described
22. Forest Mars - inherited wealth
23. Jacqueline Mars - inherited wealth.
24. John Mars - inherited wealth.
25. David Thomson - inherited wealth.
26. Paulo Lemann - questionably in the category you described.
27. Lee Shau Kee - Capitalist/investor
28. Stefan Persson - inherited wealth.
29. George Soros - Capitalist/investor
30. Wang Jianlin - Capitalist/investor

11 of the top 30 are people who really made an invention or business plan that set them apart and brought them wealth through their innovation. The rest may have used business acumen to leverage existing wealth into more wealth, but i would argue are not people like Joe.

You can keep going down the list, but you'll find that the majority of the super wealthy are not like Joe, but are those who have leveraged wealth or managed wealth to gain wealth, rather than innovating or executing a business plan that they devised.

I'll re-iterate: i'm not arguing that those who contribute and manage capital don't deserve a share of the wealth that is created. They absolutely do. I'm arguing that the share of the created wealth they receive is disproportionate to their contribution.