Wealth Inequality in America

[Aerion Brightflame]

 

Just a disclaimer; This is a video from 2012. Wealth Inequality has gotten worse since then, so take the examples described by the video and make it more extreme in your head. 

 

In the wake of the Panama papers revealing something like 32 trillion in untaxed off-shore money I thought it would be fun to look at this very related issue. Because you know, the super rich avoiding taxes on money they will simply never live to spend, and don't technically earn directly leads into massive financial issues for the rest of us. Because we are proper 90% of the population up with 50% of the wealth at best. 

 

Now, what I want to discuss here is the following:

1) Trickle Down economics simply does not work, and has only made wealth inequality worse

2) That arguments against social programs supporting the least well off are backwards because of this inequality directly causing it. 

3) That wealth inequality it the largest issue facing western democracies at the moment. Partially because of it's influence in politics, and partially because it goes against our best interests as a species. 

4) That the US having a wealth distribution closer to the socialist ideal isn't an inherently awful thing because of this wealth disparity. 

 

So discuss those, or discuss whatever. Just discuss this shocking unheard of issue. 

 

EDIT: http://www.theguardian.com/commentisfree/2016/apr/07/panama-papers-taxes-universal-basic-income-public-services 

 

A semi-relevent article talking about Universal basic income in relation to the papers. 

[Mutant Monster RAEG-HAPYP]

While America's wealth inequality tends to be higher than other first world countries, I'm curious how other first world countries are in terms of wealth inequality.

[Zauls]

Yeah, wealth inequality is ridiculous and so painfully unhealthy. It's bad even for the things right-wing economists obsess about: growth and business. Almost all of the wealth of the top 1% isn't going to be used for anything. It's just gonna sit in an offshore tax haven to the benefit of nobody. Imagine if, through policies like universal basic income, most of that wealth was redistributed to the general population. Business would be better, there'd be no poverty and growth would be healthier than ever.

 

I don't even get why this 1% feels the need to have such unfathomable wealth. I'm sure they'd be happy enough just being regular rich, they'd be able to have the lifestyle they desire. It's probably to do with the nature of competitive markets and just the competitive nature of people, but there's absolutely no need for it.

 

I will say though that the video does show the ignorant attitudes of so many Americans when they hear the word "socialism". They treat it as some kind of evil, despite probably knowing very little about it. It's probably because the powers that be dislike it because it would mean they were less well-off, so they churn out propaganda to make people stigmatise it.

[mido9]

In 1964, Lyndon B. Johnson declared an "unconditional war on poverty, aimed at not only eliminating poverty, but preventing it altogether". The United States has spent a total amount of money to end poverty equal to the entire GDP of Europe in 2013 on 'ending poverty' and the poverty rate IS HIGHER THAN IT WAS BEFORE WELFARE WAS INTRODUCED. It was 14.3 in 1965, 12% in 1970, and now it's 15%. There are 126 anti-poverty programs now which account for 60% of an upward of 40% tax, and it's still not enough for revenue to be equal to the deficit.
 

 

 
Before the introduction and full rollout of great society, the poverty rate had dropped from 22% to 12% in 10 years. In just ten more years, the biblical phrase "You will always have the poor among you, but you will not always have me." was about to go extinct.
 
It also led to a huge rise in welfare cliffs especially for single mothers which  increased the rate of crime, poverty, and reduced female employement rates:
 

 

(Blacks were targeted more by welfare programs and still are, so their rates are slightly higher)
 
And the rise of single motherhood also led to huge crime increases because broken homes have a lot of child abuse, drug abuse, etc:
 

 

 

 

 

 

http://www.theatlantic.com/sexes/archive/2012/12/the-real-complex-connection-between-single-parent-families-and-crime/265860/

http://thefederalist.com/2015/07/14/guess-which-mass-murderers-came-from-a-fatherless-home/

 
 
Also, it led to 20 trillion dollars of debt, and debt is just deferred poverty, it's basically giving your kids the bill for your current spending.

We've gotten increased regulation, regulation on food, regulation on power, regulation on farming, regulation on regulation, and the federal regulations are at an all time high, and so is the US tax code:

 

 

 

When it's too difficult to do business or create businesses, businesses have no competition that they have to outspend, and have no reason to spend their money on pay raises, or on creating more factories to create jobs, or on improving products, or on reducing prices or etc. No free trade or easy business starting, no capitalism.

 

Public schools are absolute s*** too(from chicago)

 

 

 

Healthcare premiums are skyrocketing like mad too: http://dailycaller.com/2015/11/01/obamacare-premiums-to-soar-3-times-faster-than-feds-claim/

 

China's doing great at reducing their poverty with their free-er markets after a lot of people died in mao's china, and it's doing great now: http://www.economist.com/news/leaders/21578665-nearly-1-billion-people-have-been-taken-out-extreme-poverty-20-years-world-should-aim

 

-----------------------------------------------------------------------------

 

So uh.

For like 60 years the USA has been going more and more socialist, and so far: The poverty rate has increased despite spending and caused 20 million of national debt(deferred poverty), education is the worst in areas with the highest public school spending, the crime rate is highest where welfare cliffs are biggest, federal subsidies made obesity explode, business regulations and taxes made wages become terrible because welfare growth is outgrowing employment growth.

 

Honestly, so far the US big government experiment has done almost the opposite of everything it was intended to do.

 

Can we just try capitalism again?

[Aerion Brightflame]

Have you considered how other policies the US has introduced in that time-frame affected these things? About how there might be a correlation between growing wealth inequality and a growing welfare state? Because I'm pretty sure things like the War on Drugs, and crushing the power of unions had massive impacts in reducing the wealth and status of the affected groups. How can a kid whose had a drug charge and served time break out of poverty? They can't get into higher education as easily, they can't get especially great jobs. What opportunities do they have to get out of the welfare system? 

 

There is a quote I will look for that talks about how the war on drugs was essentially targeted at Blacks to under-cut them as a social group, since it's relevent to the things you are quoting. Because it establishing an underclass in the US that wasn't present beforehand. 

 

And I am very grateful that you produced that much visible data for your argument, however I don't think it's inclusive of enough. It's a case of correlation not being causation. That the increased social programs aren't actually the root cause of the increased poverty, and that it would have happened in spite of it. Takeyour single Mother example; Increase financial stress due to lower wages relative to the cost of living, and overall increase in divorcee rates among western nations would be huge influences in that data. Because there have been a lot of other things introduced since Lindon B Johnson that will impact in it, most notably the presidency of Ronald Regan (Thus starting trickle-down economicsand shifting you heavily to the right). I'll look for some of my own stuff to form a more concise counter argument. 

 

EDIT:

I found the quote about the War on Drugs: 

[spoiler=Spoiler]

At the time, I was writing a book about the politics of drug prohibition. I started to ask Ehrlichman a series of earnest, wonky questions that he impatiently waved away. "You want to know what this was really all about?" he asked with the bluntness of a man who, after public disgrace and a stretch in federal prison, had little left to protect. "The Nixon campaign in 1968, and the Nixon White House after that, had two enemies: the antiwar left and black people. You understand what I'm saying? We knew we couldn't make it illegal to be either against the war or black, but by getting the public to associate the hippies with marijuana and blacks with heroin, and then criminalizing both heavily, we could disrupt those communities. We could arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news. Did we know we were lying about the drugs? Of course we did."

 

 

 

Now think about the age group, and think about how many millions will have been denied opportunities as a result of this and placed in the welfare system. Think about how that impacts your stat about Black families, think about how that enviroment impacts upon children in public schools (I don't think it's a stretch to say crime affected children in places like Chicago are more likely to be in public schools). Is that enviroment because of welfare? I doubt it. Are people in that enviroment more likely to be on welfare? Probably. 

 

Think about the death of blue collar work and manufacturing in the US, and how that means there's simply less positions for the poorly educated, which again means they are more likely to be on welfare. 

 

Essentially I would argue that the welfare state and increased poverty are not a result of increased social programs, just coincidental consider other things your country has done to undercut the working and middle class. 

[Zauls]

For funk's sake, does nobody even have the slightest clue what socialism actually is? Here we go then...

 

Socialism refers to democratic public ownership of the means of production. Most of the time these days, "socialism" means market socialism, which sticks with the capitalist idea of using money as a means for trade. "Democratic socialism", which is what Bernie Sanders (incorrectly) affiliates himself with, basically means a socialist system where the decisions about political and economic are made by the population, who own the means of production. It doesn't just mean having a welfare state. You don't get "more socialist" by giving more welfare benefits. That's not what socialism is at all. Anyone who thinks America's political system is even remotely socialist is delusional. Sure, some social liberalist policies such as eliminating discrimination are compliant with both socialist and capitalist ideologies, but it doesn't mean you can call any part of mainstream American politics "socialist".

 

America's economic system is pretty much a messed up form of welfare capitalism, which fails to tackle poverty because of the increased power and political influence of global corporations and the general incompetency of government. The ridiculous debt accumulated in America isn't solely down to welfare spending and is more a problem of tax loopholes and poor planning on spending. The fact that benefits are so heavily means-tested makes administration costs far too high and leaves many still below the poverty line. You can't point and say "socialism" whenever you're trying to find the cause of a political or economic problem.

 

I'll say a little about China while we're at it, too...

 

Yeah, poverty may be decreasing there for now. That's because they're still a low-wage, low-price economy and corporations are willing to meet their wage demands. It may look like they're getting on fine, but the sheer quantity of raw materials and non-renewables they're getting through is absolutely insane and if it carries on as it is, they'll drain the world of all it's resources before long (I know they're not the only culprits of this, but they are certainly one of the worst). Also, the economic problems of increased consumerism will get to them eventually and wage/price inflation will make them less attractive to business without a big welfare state to top up wages. Essentially they're headed right in the direction of the worst of the Western developed economies and it doesn't bode well long-term.

[mido9]

Have you considered how other policies the US has introduced in that time-frame affected these things? About how there might be a correlation between growing wealth inequality and a growing welfare state? Because I'm pretty sure things like the War on Drugs, and crushing the power of unions had massive impacts in reducing the wealth and status of the affected groups. How can a kid whose had a drug charge and served time break out of poverty? They can't get into higher education as easily, they can't get especially great jobs. What opportunities do they have to get out of the welfare system?  

 

And I am very grateful that you produced that much visible data for your argument, however I don't think it's inclusive of enough. It's a case of correlation not being causation. That the increased social programs aren't actually the root cause of the increased poverty, and that it would have happened in spite of it. Takeyour single Mother example; Increase financial stress due to lower wages relative to the cost of living, and overall increase in divorcee rates among western nations would be huge influences in that data. Because there have been a lot of other things introduced since Lindon B Johnson that will impact in it, most notably the presidency of Ronald Regan (Thus starting trickle-down economicsand shifting you heavily to the right). I'll look for some of my own stuff to form a more concise counter argument. 

 

Now think about the age group, and think about how many millions will have been denied opportunities as a result of this and placed in the welfare system. Think about how that impacts your stat about Black families, think about how that enviroment impacts upon children in public schools (I don't think it's a stretch to say crime affected children in places like Chicago are more likely to be in public schools). Is that enviroment because of welfare? I doubt it. Are people in that enviroment more likely to be on welfare? Probably. 

 

Think about the death of blue collar work and manufacturing in the US, and how that means there's simply less positions for the poorly educated, which again means they are more likely to be on welfare. 

 

Essentially I would argue that the welfare state and increased poverty are not a result of increased social programs, just coincidental consider other things your country has done to undercut the working and middle class. 

 

The biggest thing that makes it causation is the huge welfare cliffs. A single mother on welfare recieves 60k dollars worth of benefits per year(it's also untaxed income) which is higher than a blue collar job itself so OF COURSE women will go into single motherhood more. If the welfare benefits in the graph I posted were all redistributed to wages, the average wage would go up 75%. We could pretty much all get raises and tax breaks with no negative outcomes. Welfare cannibalizes wages, employers cant pay their workers as much when it gets taxed so hard, which leads to either less wages or more layoffs, so you cant blame wage stagnation for welfare and regulation, but you can blame welfare an regulation for wage stagnation.

 

Single motherhood was between 5 to 15% before 1965 too, and sure as hell nobody can say that there was less poverty during WW2 than there is now. There's even birth control pills now!

 

And single motherhood welfare and welfare as a whole IS an underclass. An underclass that thanks to welfare cliffs is impossible to escape.

 

 

 

 

Child abuse also heavily leads to depression, anxiety, and so on which leads to drug abuse( I already posted the child abuse statistics). It's exponentially harder to get off drugs when you start as a child, and getting beaten up as a child causes mental illnesses which lead to using anti-depressants or heroin and then you get addictions and other issues. I mean, who's gonna go on drugs as a child: The average child who had loving parents or the child that got beaten up so badly by his parents he got mental illnesses?

 

 

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3075408/

 

That, and the war on drugs was a government program, and an illegal no-accountability one at that. Dont ask the shitty government to fix its own problems, it has been shown not to work.

 

And also, trickle down economics dont work because there are no holes in the cup being filled at the top, they're all covered by business regulations(posted above), tax liabilities and exemptions(also see up), and even then the impact of trickle down is minimal compared to the single motherhood and welfare boom by LBJ which is extremely visible. If you want to make trickle down start working, get rid of the huge regulations(90k business regulations are completely unjustified, more businesses in the US are failing than are being made) BEFORE reducing tax and reduce specifically welfare taxes so there arent welfare cliffs.

 

No competition or too much difficulty to do business = Trickle down always turns into trickle up.

[mido9]

 It may look like they're getting on fine, but the sheer quantity of raw materials and non-renewables they're getting through is absolutely insane and if it carries on as it is, they'll drain the world of all it's resources before long. Also, the economic problems of increased consumerism will get to them eventually and wage/price inflation will make them less attractive to business without a big welfare state to top up wages. Essentially they're headed right in the direction of the worst of the Western developed economies and it doesn't bode well long-term.

That's a great thing, resources of the world are there to be used and it's a shame that there are still metals and ores that could house millions of people still underground with nobody using them. They're also paying a lot of money for those resources which makes both sides happier and everyone happier. Using resources of the earth is pretty much increasing the standard of living of someone in the world at no cost of someone else's standard of living, it's why everyone has computers and phones, right?

 

If they dont have increasing regulations and tax codes, they wont get inflation and unemployment.

[vla1ne]

That's a great thing, resources of the world are there to be used and it's a shame that there are still metals and ores that could house millions of people still underground with nobody using them. They're also paying a lot of money for those resources which makes both sides happier and everyone happier. Using resources of the earth is pretty much increasing the standard of living of someone in the world at no cost of someone else's standard of living, it's why everyone has computers and phones, right?

 

If they dont have increasing regulations and tax codes, they wont get inflation and unemployment.

I don't have the time to properly address half the things on this page, but this one can be done rather quickly. zauls didn't mean that underground resources couldn't be used, he was saying that they are being burned through at a rate that's not only to fast to sustain, but too fast to last for any reasonable length of time. the standard of living may be raising, and people might get happier as a result, but at what cost? the speed that china's burning through resources is going to cripple them before long.

 

but above all that, unrestrained altruism can be far worse than greed, digging just because the resources are there is an irresponsible practice.

 

 

also, in this entire thread, UBI solves the tax tangle of welfare state issues, and proper tax reform fixes tax evasion. neither of those things are likely to occur in the near future though.

[epicmemesbro]

 

 

 

 

So uh.

For like 60 years the USA has been going more and more socialist, and so far: The poverty rate has increased despite spending and caused 20 million of national debt(deferred poverty), education is the worst in areas with the highest public school spending, the crime rate is highest where welfare cliffs are biggest, federal subsidies made obesity explode, business regulations and taxes made wages become terrible because welfare growth is outgrowing employment growth.

 

 

Can we just try capitalism again?

 

Sadly, today's generation are developing a hostile attitude towards capitalism, which explains why Sanders is so popular. I've even seen some claim that capitalism is the bane of our existence just because there is a chance that a couple of people could get rich. Some event want to leech a huge portion of the wealthy's income for their expenses such as education. Although I am for a slight increase in taxation for those who make more than 200,000 per year the percentages that they demand are ridiculous.  Attitudes like these are why the rich make offshore accounts.

This is coming from someone who is more broke than the average second class American....

 

One is not directly at an economic disadvantage due to a wealthy few. Most progressives call for an economic model similar to that of the Scandinavian countries claiming it would make for a more fair distribution of equality but that would lead to too much government intervention, a decrease in gross domestic product, and high overall taxes.

[Ryusei the Morning Star]

 

1) Trickle Down economics simply does not work, and has only made wealth inequality worse

 

This is really the only point I would like to address here. "American Trickle Down" or Supply Side Economics isn't working cause we're NOT doing it properly.

 

The idea is to lower the marginal cost of production, so that firms can make more profit and thus pay their worker more.

 

You have to understand that people are selfish.

 

Lowering Taxes gives the bigs at the firms a more liquid form of revenue that they can just not move over to their workers.

 

How to fix this?

 

Lower Taxes -> Higher Subsidies - Cash Flow should be less liquid to restrain the money flow to the worker

Higher Minimum Wages - Company can make more profit, but they should not be able to swindle it away

Stop the Exportation of Jobs - Wealth is tricking down, but it's going from America->China/India

Border Problem-  Increasing the minimum wage is stupid if you have illiterate desperates willing to work for a dollar to do 10%'s work

 

SSE is a beautiful concept IF you apply it properly. But the Republican are too greedy to do so, and the Democrats are too narrow minded to point out how to fix a system and instead would rather couple it at the hip with the Republicans and attempt to trash them both.

[♪ ♪Aria ♪ ♪]

Regardless of what we do, there will always be a gap in wealth, since economy is a hard thing to counterbalance....

[Zauls]

Regardless of what we do, there will always be a gap in wealth, since economy is a hard thing to counterbalance....

 

Having gaps in wealth isn't a bad thing at all, in fact it is healthy. For example, someone who puts in years of hard work getting a degree to go into a high-skilled job should be paid more than a cleaner. However, when the gap is so large that financial gains are no longer anything like proportional to the time, effort or skill, then there's a problem. There are also barriers to enter these jobs. Mostly the rich are rich because their families are rich and they know the right people. Things like this mean there aren't equal opportunities for people, which isn't healthy.