The Upward Mobility Myth

[arnegrim]

The difference that for a union, looking out for its member pretty much is looking out for itself. Its business is to keep members pacified, and generally, the best way to do so is by sucessfully lobbying for them and defending them in conflicts with their employers and contract negotiations.

yes and no.

 

[arnegrim]

Mostly lifespan, but also competition, the economic structure, power structures, legal structures, among others.

Simple arithmetic will tell you that someone who begins life with a $20 million inheritence has a decided advantage over someone who inherits nothing.

Capital creates wealth (more capital). A college degree (can lead to) creating wages. With luck and prudent life choices, a college grad can succeed and possibly build a fortune. Few actually acheive this because of the constraints and costs of raising a family. Most people care more about family life than becoming billionaires (this is a good thing).

The person who inherits $20 million has an advantage that no amount of education or determination can equal on its own. Just think about it. Twenty million dollars represents $50,000 per year for fourty years. It's a huge sum. Of course, $20 million is an arbitrary figure. Some inherit more, and most inherit less, but the point is, inheritence is the sum total of one or several lifetimes. Someone who inherits a fortune, in effect, begins his life at an economically mature point. At birth, the privileged child's life already has accumulated the wealth of several generations.

Money doesn't grow on trees, and it doesn't grow overnight. It takes time to amass wealth, and wealth grows exponentially - the more you have, the faster it is accumulated.

The playing field is very lopsided. When you consider that 5% of the population controls over 60% of the wealth, and that wealth gets passed from generation to generation, it's easy to see why upward mobility is indeed a myth.

It's not! Someone had to do the work to earn that $20 million! It just so happens that someone else's grandfather did it and not yours... but that has nothing to do with you. You can go out and earn that $20 million if you want. Why don't you be one of those 'generations' that passes wealth on? There is nothing stopping you.

 

[CJ.23]

Sure it is... you have the opportunity to attain what your parents did... money to hand down. There are a lot of people who are not interested in that... and God bless them, but that skews the idea of a 'playing field' at least as much as inheritance does.

Interesting you say to hand down. For reasons to dull to go in to here I won't ever be able to have children (though we'll have a lot a fun in the hopeless attempt no doubt) but I can still pass on my welath to someone I suppose. On the whole, I see leaving a legacy of my writings and awful TV shows a worthy achievement, which might entertain future generations. Just being nice to others would do though.

cj x

 

[arnegrim]

Politically, yes, the unions are concerned with influence. However, unions still are the only means for labor to make demands from employers. Individual workers are powerless to enter into contractual agreements, so unions provide the only avenue to bargain for better working conditions, higher wages, etc.

No CEO would dream of accepting a position without a contract. Likewise, no supplier, distributer or client would do business without a signed agreement. Why should a worker be expected to operate any differently?

Politically, monetarily, socially... they are concerned with influence... and that influence is not always in the best interest of the worker.

 

[arnegrim]

Interesting you say to hand down. For reasons to dull to go in to here I won't ever be able to have children (though we'll have a lot a fun in the hopeless attempt no doubt) but I can still pass on my welath to someone I suppose. On the whole, I see leaving a legacy of my writings and awful TV shows a worthy achievement, which might entertain future generations. Just being nice to others would do though.

cj x

'Hand down' does not have to be familial... nor does it have to be 'financial'.

 

[whatbogsends]

The person who inherits $20 million has an advantage that no amount of education or determination can equal on its own. Just think about it. Twenty million dollars represents $50,000 per year for fourty years. It's a huge sum.

Not disagreeing with your overall point of your post, but $20 million represents $50,000 per year for 400 years, not 40 years. It is a huge sum.

 

[arnegrim]

Certainly people want to set their children up so that they do not have to struggle as much as they did. However, leaving the nation's investment capital in the hands of these children who may or may not have any talent is risky and wasteful.

Which is why there are those who become wealthy overnight... and yet squander it all away. And in the same regard, those who are not wealthy... yet are wise with their money and become wealthy after a time.

I would much prefer to 100% inheritance tax after leaving say a few million for each kid. The money would be used to provide very low interest, very long term loans to entrepreneurs who do have the brain power to create new wealth.

Interesting idea. You'd have to have some serious guidelines on what constitutes 'entrepreneur' and 'new wealth' to not be taken advantage of.

 

[arnegrim]

Not disagreeing with your overall point of your post, but $20 million represents $50,000 per year for 400 years, not 40 years. It is a huge sum.

Invested getting 10% interest, interest alone is $2,000,000/year forever. Invest it at 10% and live off of 2% and watch it continue to grow for generations!

 

[nvxplorer]

Not disagreeing with your overall point of your post, but $20 million represents $50,000 per year for 400 years, not 40 years. It is a huge sum.

Wow, you're right! Thank you, and this bolsters my case ten-fold.

Fifty-thousand dollars for fourty years is only two million dollars. Many, many people inherit two million dollars.

I'd like to bring up another point.

Let's consider the average engineer working for a corporation. Let's say he earns $100,000 per year. This may seem like a sum with which someone could begin to amass wealth. Indeed, with the proper decisions and luck, this is certainly possible. However, we must view this person in the context of the economic structure. The corporation he works for is controlled by the elite (a quick Google search will reveal that stocks are overwhelmingly held by the elite class). The elite owners, already wealthy themselves, become wealthier with each $100,000 they pay to this engineer. The engineer is left with expenses from which he earns nothing. The elites, on the other hand, has so much wealth, that living expenses are miniscule in comparison to their net worth. They have so much money, that they are capable of significant investment.

In a capitalistic system, investment is what drives the economy. Within that economy, there is competition for limited resources. The wealthy class is disproportionately advantaged to compete for those resources, and they inevitably succeed. The deck is so stacked at this point (as it was circa 1900), that the wealthy class not only has a competitive advantage, but it controls all the resources (Wal-Mart is an example of this at the corporate level). The elite have basically taken competition out of the equation. And this, again, demonstrates that upward mobility is a myth.

 

[CJ.23]

As you all may have gathered, I'm a rabid lefty, but the idea of restricting people sright to dispose of their wealth how they like really worries me. Sure, tax, at least it's blatant. But taking away peoples inheritance strikes me as theft. What does it matter if the most economically productive elements do not possess the money? The idiots who inherit it will spend it, and everyone will benefit. it's their money, not ours ot choose how it is disposed of.

There is one restriction I would place on the right to dispose of your wealth as you choose, apart form a tax level which reasonably reflects the services the government provides. I do not think it unreasonable to place punitive taxes on attempts to transfer money offshore to tax havens, or to other countries to invest in their economies not our own.

Beyond that, I say that the right to inherit and to pass on wealth unhindered should remain sacrosanct, barring monopoly laws and reasonable taxation. Equally, and grwoing from this principle comes the right to dole and support if things go pear shaped, for reasons I'm too hot to explain, but will if asked.

Take away a mans riight to provide for his family, and you take way the incentive for the super rich to remain in yoru country.

cj x

 

[arnegrim]

Wow, you're right! Thank you, and this bolsters my case ten-fold.

Fifty-thousand dollars for fourty years is only two million dollars. Many, many people inherit two million dollars.

I'd like to bring up another point.

Let's consider the average engineer working for a corporation. Let's say he earns $100,000 per year. This may seem like a sum with which someone could begin to amass wealth. Indeed, with the proper decisions and luck, this is certainly possible. However, we must view this person in the context of the economic structure. The corporation he works for is controlled by the elite (a quick Google search will reveal that stocks are overwhelmingly held by the elite class). The elite owners, already wealthy themselves, become wealthier with each $100,000 they pay to this engineer. The engineer is left with expenses from which he earns nothing. The elites, on the other hand, has so much wealth, that living expenses are miniscule in comparison to their net worth. They have so much money, that they are capable of significant investment.

In a capitalistic system, investment is what drives the economy. Within that economy, there is competition for limited resources. The wealthy class is disproportionately advantaged to compete for those resources, and they inevitably succeed. The deck is so stacked at this point (as it was circa 1900), that the wealthy class not only has a competitive advantage, but it controls all the resources (Wal-Mart is an example of this at the corporate level). The elite have basically taken competition out of the equation. And this, again, demonstrates that upward mobility is a myth.

If a person (especially on earning $100,000) is unable to begin to amass wealth, why is it the fault of those who have? Perhaps he needs to learn more on the proper way to handle his money... perhaps he needs to learn to live more within his means... perhaps he needs to do something else which will pay him more...

 

[arnegrim]

As you all may have gathered, I'm a rabid lefty, but the idea of restricting people sright to dispose of their wealth how they like really worries me. Sure, tax, at least it's blatant. But taking away peoples inheritance strikes me as theft. What does it matter if the most economically productive elements do not possess the money? The idiots who inherit it will spend it, and everyone will benefit. it's their money, not ours ot choose how it is disposed of.

There is one restriction I would place on the right to dispose of your wealth as you choose, apart form a tax level which reasonably reflects the services the government provides. I do not think it unreasonable to place punitive taxes on attempts to transfer money offshore to tax havens, or to other countries to invest in their economies not our own.

uhoh... you might have a problem with the Hiltons... or the Heinzs (Kerrys)

Beyond that, I say that the right to inherit and to pass on wealth unhindered should remain sacrosanct, barring monopoly laws and reasonable taxation. Equally, and grwoing from this principle comes the right to dole and support if things go pear shaped, for reasons I'm too hot to explain, but will if asked.

Take away a mans riight to provide for his family, and you take way the incentive for the super rich to remain in yoru country.

cj x

Take away the right for a man to acquire vast amounts of wealth without fear of 'redistribution', and you take away the incentive to acquire vast amounts of wealth

 

[nvxplorer]

It's not! Someone had to do the work to earn that $20 million! It just so happens that someone else's grandfather did it and not yours... but that has nothing to do with you. You can go out and earn that $20 million if you want. Why don't you be one of those 'generations' that passes wealth on? There is nothing stopping you.

You missed the point of my post. As someone graciously pointed out, $20 million is $50,000 for 400 years. I don't think you're grasping the enormity of that sum.

Making $20 million in a lifetime is seriously much more difficult than you make it seem. Also, have you heard the phrase "old money?" Some fortunes have been in families for hundreds of years (Du Pont?).

But this ignores the point of my post, anyway. What I was arguing was that a person born into wealth has an advantage over someone who isn't. Yes, an inheritance was earned by someone in the past, but what that means is that those who inherit have an economic lifespan of several generations, while those who inherit nothing have a lifespan of only one generation. This is indeed an unbalanced playing field - for those in the game, not those who have passed away.

 

[CJ.23]

Completely unrelated, well almost - do American Women work? I'm guessing 95% of British women hold paid employment, which has a peculiar effect on the economy. Asall British prices are based on a dual income household, its almost impossible for asingle person to buy a house anywhere iin the UK at the moment. Average starter home in really dody ex-social housing project in my home town about $240,000. Yes, nearly a quarter of a million for a two bedroon house in a dodgy area. However on paper Britons are all incredibly wealthy, owing to these ludicrously inflated house prices.

cj x

 

[CJ.23]

Take away the right for a man to acquire vast amounts of wealth without fear of 'redistribution', and you take away the incentive to acquire vast amounts of wealth

Yes, that was my point. And they spend money. Now if they spent money domestically, not abroad, well everyone might benefit.

cj x

 

[HouseApe]

As you all may have gathered, I'm a rabid lefty, but the idea of restricting people sright to dispose of their wealth how they like really worries me. Sure, tax, at least it's blatant. But taking away peoples inheritance strikes me as theft.

It is not theft. You are not taking away anything that somebody has earned. And I think children should be left quite wealthy. Just not exorbitantly so.

What does it matter if the most economically productive elements do not possess the money? The idiots who inherit it will spend it, and everyone will benefit. it's their money, not ours ot choose how it is disposed of.

But there is a difference between the value of spending money and the value of creating wealth. A rich kid might go and buy a yacht and the yacht manufacturer gains some profit and keeps staff employed. You are just moving wealth from one place to another. But taking the money and investing it in some new, valuable product creates new jobs and new wealth to be shared by new employers and employees alike.

There is one restriction I would place on the right to dispose of your wealth as you choose, apart form a tax level which reasonably reflects the services the government provides. I do not think it unreasonable to place punitive taxes on attempts to transfer money offshore to tax havens, or to other countries to invest in their economies not our own.

Beyond that, I say that the right to inherit and to pass on wealth unhindered should remain sacrosanct, barring monopoly laws and reasonable taxation. Equally, and grwoing from this principle comes the right to dole and support if things go pear shaped, for reasons I'm too hot to explain, but will if asked.

Take away a mans riight to provide for his family, and you take way the incentive for the super rich to remain in yoru country.

cj x

The super rich have so much capital that it is not that easy to divest themselves. You would need strict laws to monitor this however, and probably punitive actions against foreign countries that allow this would be necessary.

 

[nvxplorer]

Yes, that was my point. And they spend money. Now if they spent money domestically, not abroad, well everyone might benefit.

cj x

(I'm addressing your previous post as well)

Economic activity involves far more than simply spending money. What it is spent on, who benefits from the purchase, etc.

Unwise business/consumer decisions are not beneficial. Quite to the contrary. Monetary transactions can be detrimental. Passing money back and forth is just that - passing money. What is done in exchange for that money is what counts.

Two unrealistic, extreme examples can illustrate this point:

If the wealthy spent every last penny they owned on diamonds, the economy would collapse. We would end up with a world of starving people, and a bunch of rich people with diamonds (who would also starve).

If everyone hired their neighbor to sing to them each morning, and spent all their money on this, we would have economic activity which consisted solely of people singing and passing dollars back and forth among each other.

Yes, these are crazy examples, but it illustrates that what is done with the money is important; far more important than just spending it.

 

[nvxplorer]

If a person (especially on earning $100,000) is unable to begin to amass wealth, why is it the fault of those who have? Perhaps he needs to learn more on the proper way to handle his money... perhaps he needs to learn to live more within his means... perhaps he needs to do something else which will pay him more...

I'm not assigning fault, as you seem to be implying. If I'm not strong enough to lift a certain weight, is it my fault, or is it just a fact of life?

There are certain economic facts that aren't anyone's "fault." It is just a result of the implemented system.

As I stated previously, resources are limited. There is only so much to go around. The wealthy are not only better positioned to compete, but they have control of the very resources that we all compete for.

A simple example:
We have a business owner and several employees. The owner owns the capital. He controls the resources, outside of labor (which he has a huge upper hand over). These employees may wish to own the company themselves, or become part owners, but it is beyond their capability to do so without the owner's participation. The owner has complete control of the situation, and unless he decides to sell, the workers are forced to either accept their position or become unemployed.

This is a simple closed system example to make a point. I realize the reality is much different, but for this example, the workers cannot find other employment. The workers could band together and start their own company, but considering the owner's capital investment represents the equivalent of several lifetimes earnings of all the workers, this is an impossibility.

Resources are limited. We all compete for those resources. Those that control the resources are in a position to not only retain them, but to acquire more.

 

[arnegrim]

You missed the point of my post. As someone graciously pointed out, $20 million is $50,000 for 400 years. I don't think you're grasping the enormity of that sum.

Making $20 million in a lifetime is seriously much more difficult than you make it seem. Also, have you heard the phrase "old money?" Some fortunes have been in families for hundreds of years (Du Pont?).

But this ignores the point of my post, anyway. What I was arguing was that a person born into wealth has an advantage over someone who isn't. Yes, an inheritance was earned by someone in the past, but what that means is that those who inherit have an economic lifespan of several generations, while those who inherit nothing have a lifespan of only one generation. This is indeed an unbalanced playing field - for those in the game, not those who have passed away.

No it's not! Your grandfather had as much opportunity to make that $20 million as theirs did... but he didn't. You have as much opportunity to make that $20 million as their grandfather did... will you?

Its like a 20 year old being upset at a Vietnam vet for having so many medals and they don't... if you want the medals, go out and earn them, don't hold it against those who did it in the past and benefit from it!!!

 

[arnegrim]

It is not theft. You are not taking away anything that somebody has earned. And I think children should be left quite wealthy. Just not exorbitantly so.



But there is a difference between the value of spending money and the value of creating wealth. A rich kid might go and buy a yacht and the yacht manufacturer gains some profit and keeps staff employed. You are just moving wealth from one place to another. But taking the money and investing it in some new, valuable product creates new jobs and new wealth to be shared by new employers and employees alike.

And they hire captains... yard workers... maids... nannys... construction workers... etc etc etc