Better Distribution of the Golden Eggs

[RDKirk]

Warren Buffet, the "Oracle of Omaha" is, unsurprisingly, a great proponent of capitalism and free enterprise. But he acknowledges there is a problem with the current continuing concentration of wealth to a very small percentage of the population.

He suggests two remedies...both of which originate from classical (i.e., pre-1980) Republican thought:

1. Significantly increase the earned income credit (instead of increasing minimum wages).

2. Substantially increase effective taxes on the wealthy.

These are not new solutions on his part...he's been saying these two things for quite a few years now. He pointed out maybe ten years ago that the government effectively charges him less income tax than it charges his secretary.

Of course, by these two actions the federal government is taking more money from the rich and giving it to the working poor (redistribution...horrors!) I think the salient point is that the money is going from those who can easily afford higher taxes to the working poor, rather than going from the working nearly poor to the working poor...which is what raising minimum wage does.

MSN

 

[iluvatar5150]

1. Significantly increase the earned income credit (instead of increasing minimum wages).

I don't know why we can't do both - and why we can't bolster the assistance to folks who are unemployed/underemployed while we're at it.

From the article:

to $15 an hour “would almost certainly reduce employment in a major way, crushing many workers possessing only basic skills,” while smaller increases would still leave plenty of Americans entrenched in poverty.

It may do that, but letting low wage businesses off the hook for paying their workers ultimately does nothing but force the rest of society into subsidizing the owners and customers of that business. I'd rather force the business to pay (and charge for) decent wages and then use assistance to cover the rest rather than use assistance to supplement whatever low wages businesses can squeeze out of people.

 

[RDKirk]

I don't know why we can't do both - and why we can't bolster the assistance to folks who are unemployed/underemployed while we're at it.

From the article:



It may do that, but letting low wage businesses off the hook for paying their workers ultimately does nothing but force the rest of society into subsidizing the owners and customers of that business. I'd rather force the business to pay (and charge for) decent wages and then use assistance to cover the rest rather than use assistance to supplement whatever low wages businesses can squeeze out of people.

How do you force businesses to pay? Most businesses, numerically, the small businesses in which most people are employed, are running on narrow margins. That's the thing you're avoiding seeing: The vast majority of businesses in which the vast majority of people are working are themselves operating on thin margins.

Forcing them to pay means either forcing them out of business (which is no good to their employees) or forcing them to reduce staff (also no good to their employees) or forcing them to raise prices (no good to their customers...who are most likely also living on a narrow margin).

 

[iluvatar5150]

How do you force businesses to pay?

By increasing the minimum wage.

Most businesses, numerically, the small businesses in which most people are employed, are running on narrow margins. That's the thing you're avoiding seeing: The vast majority of businesses in which the vast majority of people are working are themselves operating on thin margins.

I'm not avoiding seeing it. I see it. It would be inaccurate to say "I just don't care," but my attitude is in that direction. I care - just not enough to accept that set of tradeoffs.

I think business owners and customers both need to have their perceptions adjusted with respect to where prices ought to be. We've all become acclimated to a marketplace where workers accept less for their labor than what it costs to provide that labor. I'd rather correct that first, then worry about filling in the gaps.

If some businesses fail, then so be it. I don't believe every business deserves to exist and I don't believe every business owner deserves to own and operate a business. If you can't figure out how to run a business that accurately accounts for all of your input costs (including the true cost of providing labor), then that's not a viable business and, unless it's providing some other social benefit that's the market is failing to incentivize (e.g. a hospital in a low income area), it doesn't deserve to exist. Let it fail and make room for somebody else who can do better.

 

[RDKirk]

By increasing the minimum wage.



I'm not avoiding seeing it. I see it. It would be inaccurate to say "I just don't care," but my attitude is in that direction. I care - just not enough to accept that set of tradeoffs.

I think business owners and customers both need to have their perceptions adjusted with respect to where prices ought to be. We've all become acclimated to a marketplace where workers accept less for their labor than what it costs to provide that labor. I'd rather correct that first, then worry about filling in the gaps.

If some businesses fail, then so be it. I don't believe every business deserves to exist and I don't believe every business owner deserves to own and operate a business. If you can't figure out how to run a business that accurately accounts for all of your input costs (including the true cost of providing labor), then that's not a viable business and, unless it's providing some other social benefit that's the market is failing to incentivize (e.g. a hospital in a low income area), it doesn't deserve to exist. Let it fail and make room for somebody else who can do better.

By the same token, then, why do you presume that every worker deserves to receive a high wage any more than every business owner deserves to be in business?

 

[iluvatar5150]

By the same token, then, why do you presume that every worker deserves to receive a high wage any more than every business owner deserves to be in business?

I believe a worker deserves to be paid at least enough to live to provide their labor: lodging, food, health care, transportation, clothing, etc. Nothing fancy, just the basics needed to keep the 180 lb sack of meat healthy enough to walk in the door every morning. When rent routinely runs $10-12k/yr or more, $8/hr doesn't cut it.

I would say the same thing for any of their other input costs - they should pay what it costs to provide the electricity to keep the lights on, or the service contract that keeps their business-critical machinery operating, or to produce the raw materials for their products, or to keep the trash emptied. We shouldn't be subsidizing those costs unless the business has some other positive externality that the market isn't accounting for.

 

[RDKirk]

I believe a worker deserves to be paid at least enough to live to provide their labor: lodging, food, health care, transportation, clothing, etc. Nothing fancy, just the basics needed to keep the 180 lb sack of meat healthy enough to walk in the door every morning. When rent routinely runs $10-12k/yr or more, $8/hr doesn't cut it.

So, then, we increase the cost of products and services to pay for the labor.

But here is the thing: The average person doesn't make enough to pay for goods and services at that rate. They will get priced out...or those businesses will fail. You've already said that you don't care if those businesses fail, but I don't think you've lived in an economic condition in which very few businesses can operate, and those that do are very high-priced. If all you do is raise minimum wage, you're only making the low-to-average wage earner bear the burden.

It's better to raise taxes on the wealthy and provide low-paid workers with an earned income credit...that puts the burden more directly on the wealthy.

 

[iluvatar5150]

So, then, we increase the cost of products and services to pay for the labor.

Yep.

But here is the thing: The average person doesn't make enough to pay for goods and services at that rate. They will get priced out...or those businesses will fail. You've already said that you don't care if those businesses fail, but I don't think you've lived in an economic condition in which very few businesses can operate, and those that do are very high-priced. If all you do is raise minimum wage, you're only making the low-to-average wage earner bear the burden.

Actually, it's the low-to-average wage earners who would benefit most from a minimum wage hike, since their wages would be the most directly impacted. The ones who would be affected most would be those whose current wages are far enough above the new floor that they wouldn't get any residual wage boost.

This is all assuming that companies don't increases their prices more than is needed to cover the new labor expenses. That's not a safe assumption.

 

[FireDragon76]

The most unspoken effect of income inequality is how wealth concentrated in fewer hands corrupts the country's democratic principles.

Personally, I am in favor of UBI or negative income tax.

 

[Matt5]

Warren Buffet, the "Oracle of Omaha" is, unsurprisingly, a great proponent of capitalism and free enterprise. But he acknowledges there is a problem with the current continuing concentration of wealth to a very small percentage of the population.

He suggests two remedies...both of which originate from classical (i.e., pre-1980) Republican thought:

1. Significantly increase the earned income credit (instead of increasing minimum wages).

2. Substantially increase effective taxes on the wealthy.

These are not new solutions on his part...he's been saying these two things for quite a few years now. He pointed out maybe ten years ago that the government effectively charges him less income tax than it charges his secretary.

Of course, by these two actions the federal government is taking more money from the rich and giving it to the working poor (redistribution...horrors!) I think the salient point is that the money is going from those who can easily afford higher taxes to the working poor, rather than going from the working nearly poor to the working poor...which is what raising minimum wage does.

MSN

Progress depends on the top 1%. Just make them pay for their own mistakes. Currently, that's not happening adequately.

The "natural" distribution of wealth follows the power law which gives us the 80-20 rule: 20% of the people should own about 80% of the wealth.

The mathematical law that shows why wealth flows to the 1% | Alok Jha | The Guardian

The mathematical law that shows why wealth flows to the 1% | Alok Jha

Alok Jha: No one who is interested in an equitable society can fail to be irked by unfairness in wealth distribution – but it is not unexpected

www.theguardian.com

One problem is that the same 1% wants to remain in that 1%. They do it by gaming the system.

Rule #1: When there is a recession or depression, then the government should do nothing.

Let the people who screwed things up pay the price.

Rule #2: Automatic debt release once a decade on a fixed date.

Let the lenders beware. If they screw up then they get to pay.

If you don't like those rules then we will get a decade long depression instead.

 

[JimR-OCDS]

The communist's system punished those who had the talent to earn more than those without
such talent. The government took away the income and property of the talented,
and tried to redistribute resources to those who lacked such talent. They did this by
convincing people that the only reason why they were struggling is because the wealthy
were exploiting them. The same argument is being used today.

Successful farmers were replaced with idiots who had little knowledge about farming never mind about
managing the finances of a farm or business.

The system we had in the West was the best that could be achieved by humans, Today, people
are calling on government to hand out justice to some, by being unjust to others, especially
the successful. It won't work and Stalin and Mao both showed how such ideologies fail.

 

[FireDragon76]

The communist's system punished those who had the talent to earn more than those without
such talent. The government took away the income and property of the talented,
and tried to redistribute resources to those who lacked such talent. They did this by
convincing people that the only reason why they were struggling is because the wealthy
were exploiting them. The same argument is being used today.

Successful farmers were replaced with idiots who had little knowledge about farming never mind about
managing the finances of a farm or business.

That is closer to what happened under the personality cult of Stalin. Later eras in Soviet history had alot less ineptitude in terms of the economy.

The system we had in the West was the best that could be achieved by humans,

"The West" is a broad category. Some countries in the West do better than others. The US, in terms of metrics of human flourishing, isn't anywhere close to the top countries. The US has serious structural and ideological problems that limit the ability to provide for the general welfare of its citizens.

 

[JimR-OCDS]

That is closer to what happened under the personality cult of Stalin. Later eras in Soviet history had alot less ineptitude in terms of the economy.



"The West" is a broad category. Some countries in the West do better than others. The US, in terms of metrics of human flourishing, isn't anywhere close to the top countries. The US has serious structural and ideological problems that limit the ability to provide for the general welfare of its citizens.

Broad, but the truth.

Despite the mistakes that were made, the West moved forward while the rest of the world's nations either went
backwards or stood still.

The US led the way towards liberty as no other country had the idea that the government should be by the people
and for the people. The Declaration of Independence put the rights of people as those given by the Creator, not
by government.

The Israelite form of government was closer to what our founding fathers created. The writings of various
founders along with Franklin and Jefferson, often quote the Book of Exodus and the representative form
of government the Israeli's established according to God's design when they left Egypt.

I agree that we in the USA are seeing our liberty being eroded as freedom of speech is the first right to be taken
away. Will we return to a free society? I doubt it. I think we've gone too far on the slippery slope and there is no
turning back.

 

[RDKirk]

The communist's system punished those who had the talent to earn more than those without
such talent. The government took away the income and property of the talented,
and tried to redistribute resources to those who lacked such talent. They did this by
convincing people that the only reason why they were struggling is because the wealthy
were exploiting them. The same argument is being used today.

Do you think that was Eisenhower's argument? Do you really think that's Buffet's argument?

 

[JimR-OCDS]

Do you think that was Eisenhower's argument? Do you really think that's Buffet's argument?

I'm not sure what you're referring to when it comes to Eisenhower?

Eisenhower warned that the US economy must not be tied to the defense industry. Something
our government did back during the Vietnam War. Now, every war we get involved with is
the result of pressure from the defense industrial complex, which owns Congress and the
of the Presidency.

 

[RDKirk]

I'm not sure what you're referring to when it comes to Eisenhower?

Eisenhower warned that the US economy must not be tied to the defense industry. Something
our government did back during the Vietnam War. Now, every war we get involved with is
the result of pressure from the defense industrial complex, which owns Congress and the
of the Presidency.

Eisenhower's economic policies included quite high income taxes on the wealthy (90 percent...I believe the current level is 30 percent) and quite "liberal" social policies.

 

[Laodicean60]

Rule #1: When there is a recession or depression, then the government should do nothing.

Let the people who screwed things up pay the price.

Rule #2: Automatic debt release once a decade on a fixed date.

Let the lenders beware. If they screw up then they get to pay.

I agree, I never liked the too big to fail because that encourages risky behavior. This Golden egg thing is a hard one. Earned income credit would help and maybe have a minimum wage starting with micro-cap companies and above but leave the ma and pop shops alone especially my lawn guy. I think leave the tax system alone but do away with all the deductions that the rich take advantage of. I think reshoring manufacturing will help because it might create some wage competition like after covid, wages increase because companies needed employees.

 

[JimR-OCDS]

Eisenhower's economic policies included quite high income taxes on the wealthy (90 percent...I believe the current level is 30 percent) and quite "liberal" social policies.

To pay for the Korean war?

 

[RDKirk]

To pay for the Korean war?

The war was over by his second term. The point is that Eisenhower's tax policy was far more strongly and intentionally progressive (that is, the wealthy paying much more) than the tax policies of any succeeding administration.

 

[Trogdor the Burninator]

I believe a worker deserves to be paid at least enough to live to provide their labor: lodging, food, health care, transportation, clothing, etc. Nothing fancy, just the basics needed to keep the 180 lb sack of meat healthy enough to walk in the door every morning. When rent routinely runs $10-12k/yr or more, $8/hr doesn't cut it.

Please excuse me while I take a moment to reminisce about a time long ago when you could rent anything for $10k/year in my city. I think I was still in university...

We have higher minimum wages here for sure, but median rent is now over $30k/year. For a lot of people, surviving on low incomes, even with the various govt assistance available, is hard.