InvisibleBlack
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quote:
ORIGINAL: tazzygirl
Income inequality, as it has been used for the past year, refers to the disparity among groups... but not based upon what each individual makes. The common thread in almost every reply... with a few notable exceptions... has been about making incomes "equal".
quote:
Its about income level disparity, if we really wish to break it down that way. Its about those at the bottom of the rung who are perpetually made to feel bad about being at that level. Those jobs used to be for the kids in high school and college.. a way to start up that ladder. Recent events have shown that the ladder is missing a few rungs and others above those missing rungs are laughing at those below it.
Personally, I don't believe that as a yardstick of an economy's success (or "fairness") that income inequality (or disparity between groups or however one would describe it) is the premier factor. I believe the greater concern should be social mobility. I think that more rankling than the fact that there are some "very rich" people is the growing realization that for many people their future (and that of their children) lacks a realistic possibility of improvement beyond their current means.
Coupled with that is the fact that some of the very visible of these extremely wealthy are viewed as not having earned their wealth. I'm not aware of anyone who resents Oprah for her vast income, nor Steve Jobs for his. (Now someone will surface to say they do resent them  .) I think the single biggest component to this concern with "income inequality" are the highly visible financiers and bankers who have driven the global economy to ruin and somehow seem to have prospered even as their companies, employees and customers were destroyed.
I would argue that the solution to this problem is not taking money from the next Steve Jobs or Oprah, but instead changing the rules which currently allow a Jon Corzine or a Ken Lay to benefit from activities which are clearly non-productive and actually damaging.
I believe there are fundamental disconnects between the financial system and the rest of the economy, and until these are corrected no amount of changes to income tax or government spending patterns are going to help the situation.
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Its about the top 1% being able to buy an election, being able to buy Congress.
I don't necessarily believe that this is due to "income inequality". As power centralizes and more and more aspects of the economy are controlled from a single point - the utility of gaining access to and influencing decision makers becomes more and more important, until at some point it becomes more important than being productive. I think in 2010 GE spent something like $40 million in lobbying. As an investment for the company, that $40 million was probably better spent influencing law makers than it was spent in developing a new product, improving a production process or performing research & development. As long as this situation persists, any sensible company, corporation or entrepeneur with the means and the access would be perfectly rational in making the decision to spend their money lobbying. The minute that was no longer the case, the lobbying cashflow would dry up.
Lastly, (to reframe something Real0ne said) a fair amount of blame for income inequality can be laid at the foot of inflation:
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"Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth.
Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers," who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
-The Economic Consequences of the Peace by John Maynard Keynes, 1919
There was actually a superb video explaining the operation of this principle but I can't seem to locate it just now. If I find it, I'll post a link.
[Edited: Typos]
< Message edited by InvisibleBlack -- 12/28/2011 5:26:13 PM >
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