So you criticise capitalism's profit drive? The drive that lets firms hire cheaper labor from China much like PTJ bought grains on the KCBOT when cheaper than in Chicago, or you buy your tomatoes from cheaper Walmart instead of Kroger? The funny thing is that globalisation and this labor "arbitrage" might have increased inequality in the US, but in turn decreased it on a global level. Look at the huge broad based wealth generated in much of Asia these days. Apparel firms now are moving their production from China to Africa, because China has become "too expensive". And guess what? That'll develop Africa too and, over time, move the broad population from abject poverty to middle class. Besides, cheap goods from China, even if increasing relative inequality in the US, have reduced absolute levels of poverty in the US by increasing the purchasing power of the poor over levels they otherwise would have.
Capitalism, or actually the free market economy (because these days with ZIRP, "capital" is much less powerful, or look at the way FB and other tech firms are viewing shareholders as a simple form of exit to motivate their well compensated employees) is the best known system, and as PTJ said responsible for much of our progress. It is like a medication the patient absolutely needs for survival. But it has side effects. And these side effects need to be dealt with. Over time, we have invented a progressive tax system, social security and mandatory insurance to deal with this. This can be improved further no doubt, and there will be societal progress on this. It all goes back to Warren Buffett's ovarian lottery. I'd say we need relative inequality to motivate everyone to put in their best effort, but we also should eliminate absolute poverty and give everyone access to food, shelter, healthcare and education.
you are talking about a handful of entrepreneurs and higher level engineers that are well compensated vs millions of Americans that are worse off than before and in Hong Kong, to just name one example in Asia the minimum wage is still around 30hkd or around 3-4 USD, something many hundred thousands in a 7 million city are still dependent on. Or look at Japan, the middle class is hollowed out and people are spending so little because they have hardly any disposable income. This is not just a side-effect but instead a broad middle class has been sacrificed for the benefit of a few at the top. I am not postulating solutions that even remotely resemble socialist or communist ideas but I think we have to look for better solutions than currently suggested by some billionaire hedge fund managers who live the good life and hardly understand what those suffering in the current climate go through and how to properly address the question. Or aside PTJ do you not find it disingenuous how Soros postulates spending programs (fiscal and monetary) as the all-round solution, a guy with hardly more conflicts of interest between what he is doing and what he is asking for? My point is that those guys should do what they do best and shut up about issues they never had to struggle with or were even tangent by. Bravo to all your other points, made. And those are points Republicans fiercely fight against till death.
Well, i think we mostly agree on the side effects of our free market system and also the desire to reduce those. However, 2 things i am not OK with: 1) this conspiracy theory that "the rich" intentionally took from the middle class, and that's why they are rich. As i said, globalisation maybe increased internal US inequality but reduced global inequality. Second, new technology makes differences in output more noticable. In the old days, a weak worker was maybe able to produce 8 widgets in an hour while a strong worker produced 11 - for a rough wage difference of 30 percent. Today, a genius programmer or IC (integrated circuit - hardware) designer can solve a problem in a day that the 10 next best colleages together need two weeks for; so he is 100 times better than those colleages. And the next 1000 employees probably contribute negatively to the total project as they on average produce more costly bugs than what they contribute. These 1000 already basically get paid from the top employee, do you want him to reduce his performance or get hemmed in another way so the difference won't be that stark? Onto PTJ and Soros, they made their money (a) from other market participants, who are not poor and (b) the investors in their funds, who are not poor either. Now, everyone who was long the markets (especially on a leveraged basis, with OPM) over the last 30 years got a windfall from the falling of interest rates and the easy-money policies that were expressly instituted to help middle america finance their cars and houses - this accumulation of wealth being indeed an unintended side effect. But, as far as I recall, especially Soros and PTJ have been around earlier and they didn't do badly in the "golden 70s" either. 2) That the billionaires' past or wealth disqualifies them from voicing their opinion. I don't agree with PTJ either, and I was underwhelmed by his talk as I think he misinterpreted the problem, and stakeholder instead of shareholder value is not the solution - but he has just as much right to discuss than us two.
If I may comment on your two points: 1) If I construed it as a conspiracy theory then I need to clarify: I do not think that the rich intentionally take/took from the middle class. But I believe that the system has almost entirely been formed and shaped by leaders in the economy over the past 25-30 years in particular. Looking at past policies I can clearly see a shift away from policies that take into consideration a balanced society which includes certain "safety nets" for those who failed for whatever reason, may it be that someone got so sick that he/she could not remain in the work force anymore, may it be those who simply cannot afford education that the rich and wealthy afford themselves; among many other issues. I am totally in favor of technological advance, globalization, zero tariffs, and I have no problem that some produce 5 widgets an hour while others produce an equivalent of 100. But this is where the problem lies: A lot of those who produce 5 widgets would love to produce more and they have the basic ability and willingness to do so but they cannot afford the education that is required to get the foot into the door of places that pay well for someone that produces 100 widgets an hour. Regarding the money made by PTJ, Soros and Co, I respect them for it to certain degrees (I am probably not in agreement that one should be allowed to bust a central bank to write himself a fat paycheck, especially given that the risks are completely skewed and disproportionately distributed: What if BOE busted Sorors? Would he have worked for the rest of his life to pay off the debt his position would have incurred? Certainly not, he would have simply smirked and told his Prime Broker "sorry buddy, shit happens, laid low for a while and had knocked on another door a year later. Some call it socializing losses and privatizing gains. Regardless of his balls and how his bet paid off it was an extremely antisocial play and cost society a lot of money). And sure, anyone who had a lot of disposable income and went long the market over the past 30 years would be rich by now, problem again here is that most in the American society do not even have enough income to pay off their mortgage, not even enough to pay up for a car in cash. We can argue whether an auto loan or cash payment is more economical, but fact remains that the American consumer is either in debt or not able to heavily invest in the stock market. So using this argument is kind of misleading and leading astray from the main point. My point is that the current system has been designed by the richest and wealthiest in the American society and it pretty much leaves most of the American citizens out of the door. Summary: If the US was ever a society of equal opportunities then something has horribly gone wrong in recent times. Nothing is equal anymore, and opportunities are unfairly skewed towards those who are already born with a golden spoon. Not that things were every entirely equal, of course they were not. But if before rich and poor were on the titanic and when it sank everyone had about an equal chance to survive or die then today you can picture a small group of passengers that already wear life saving vests while they dine and have a well maintained emergency vessel on call that is constantly checked and sports all kinds of rescue features while the rest of the passengers gotta jump into the ice cold water with a tee shirt and pants on them. I think this pretty much describes the state of fairness in the current American society. 2) If I suggested anyone had no right to speak up then I apologize, of course they can speak up and they do: But I take the right to express my bewilderment at someone who (ab)used the system to the fullest to enrich himself, knowing fully well that the current system hugely disadvantages the majority in society and then turning around and wanting to change the system and claiming the system is not well designed. It simply sounds bizarre if not outright ridiculous.
.4) He blames "capitalism" with creating a surge in inequality in the US, without mentioning that globalisation and technological change are much more responsible for that. I hear this more and more. For some reason people "feel" not " think" that there is something wrong with inequality. What's wrong with it? There is certainly something wrong when any citizen goes to bed hungry, especially since we can produce more food than the whole population of the earth can or should consume. But what is wrong with me consuming more food than I really should on a Sunday afternoon? How does that hurt anybody? I suppose I could skip a meal and send the money I would have spent to Africa to buy somebody else a meal. But without capitalism, none of that food to buy, no matter who consumes it would be available.
This is completely not true in the long-term and your argument is based on short-term thinking. Purchasing power requires a job which requires a healthy economy of PRODUCERS and not just consumers. https://www.stlouisfed.org/publicat...-be-the-engine-of-economic-growth-it-once-was They sure as hell have done some things which directly contributed to it. Examine the complete slashing of progressive taxation at the higher levels since Reagan went into office. Who the hell do you think is paying all the taxes here? The rich have most definitely, along with the cooperation of politicians, gamed the system in their favor moving most of the tax burden to the middle and lower classes. Who do you think puts these people in office? Open your eyes. I sure as hell don't like paying higher taxes and while I personally think 50-70%+ tax is a bit ridiculous - on the same token I don't think shifting large amounts of the tax load to the middle earners is the right thing to be doing - particularly when upper and extremely high earners make up a large cross-section of individuals responsible for displacing lower earning jobs in the first place. Yes, let's ship off all the production-based jobs overseas, lower taxes on the rich and corporations, increase consumption, and do basically nothing about wage growth. How do you think this is going to turn out? U.S. Federal Individual Income Tax Rates History, 1862-2013 (Nominal and Inflation-Adjusted Brackets) http://www.cbpp.org/cms/?fa=view&id=3220 Combine all this with "globalization", a growth of nearly 10% in personal consumption as a percentage of GDP since the late 70s/early 80s, unignorable wage stagnation, countless other issues, and we have the situation we are in now. Things like QE/low rates are also laughable. Perpetual bandaid to an economy with much deeper problems. But hey, atleast we get cheap Chinese-made junk while the rest of the world increases their quality of living, right? Don't get me wrong, I'm all for increasing the aggregate quality of life on a global scale, but the way things are "progressing" is extremely suspect. Did you know Sergey Brin (google founder) apparently has a separate company just to manage his 30B$ of wealth? That's about 50,000 times my net worth. I'm dead certain a city of 50,000 people like myself would contribute more to society and economy than Sergey Brin. 30 fucking BILLION. http://www.bloomberg.com/news/artic...in-s-bayshore-company-manages-his-wealth-life Look, a well rounded society reasonably compensated for work, jobs available for the majority of people with healthy wages and prospects, and reasonably fair tax expectation is not going to make rich people poor.
Well, the top tax rate changed from 50pc in 84 to roughly 40pc today, so that basically explains 20 percentage points of the 250+ percentage points diversion in the your chart following the tables. And, if you use simple arithmetics, you'll find out that the top 1pc today pay a higher share of taxes than ever - simply because their income has gone up 250pc while taxes have only gone down by 20pc. I maintain that the chief reasons for the divergence are globalisation and technology. Globalisation led to the stagnant wages in the bottom half, as they had to compete with cheaper foreign labor. And technology (together with CEO pay for any large corporation + expansion in the well paid finance sector) led to the skyrocketing in the top part. Wages and stock based compensation is really off the charts even at money losing tech companies like Twitter, just look at their P&L. Wall Street guys and girls now jumping ship to the valley, that tells you something. Apple, Google, FB, Amazon, Oracle, salesforce, Uber, younameit. When you ask these firms why they pay so much (for money losing corporations, this money is coming directly out of the shareholder a.k.a. capitalist pockets), they'll tell you that they just hire the best who are 100 times more valuable than the average. So, in technology like in finance, it's extremistan instead of mediocristan (Taleb invented those words and the comparison).
Many points well made. Agree with you full heartedly. It is not about bashing the rich and wealthy. But matter of fact is that tax loop holes exist, and expensive lawyers know full well how to pretty much get around paying a large portion of taxes. The system was designed and skewed to serve the ultra wealthy. And that is the problem in today's America. If * tax loop holes were removed * elections cannot be financed via contributions anymore, and party membership dues are fixed and identical regardless of person/entity * a health care system was created with mandatory health care coverage for everyone and normal medical services and surgeries are priced equally regardless of doctor or hospital * a large portion of wealth was discouraged to be passed through generations via high inheritance taxes * higher property taxes for higher valued properties * above all, education was free until and including university and tuition at every kindergarten is identical; same applies to primary, secondary school and university. Then, several things will happen * the above need to be financed via raising certain taxes, but that is outlined above already. Removing tax loop holes, higher inheritance taxes, higher property taxes for highly valued property will easily finance educational reform. Health care reform may have to be financed via the above plus a few additional percentage points from income taxes * The ultra rich will moan but ultimately stay because they know full well that earning income abroad will be taxed at least at US rates and that innovation and high productivity is still taking place in the US * The middle class will benefit the most and that is exactly the target, creating a healthy and functional middle class Most importantly a society presenting equal opportunities to everyone will be created. Not doable? Yes, not doable with stupid and uneducated sheep who can be told fairy tales by their republican and democrat constituents. A society would have to wake up and speak up for the above to happen. Currently that is not the case, heck, most Americans would have a hard time to even walk more than a few yards from their parking lot into the super market. But at some point something will need to happen. The system as of now is designed to benefit the top 1-2% and it unfairly taxes the middle class. Some say the above is not possible? Well, look at most Scandinavian countries. They enjoy ultra high living standards, they have a free vote, choices, and the same rights than most Americans enjoy. Accusing Scandinavian countries of following a socialist model is completely unfounded. Or look at Germany, maybe the luckiest country at the moment, pretty much everything goes well for Germany. I content that only a small portion of luck is involved, everything else was created and directed by design. Taxes that very much compete with American income tax rates, low unemployment, huge export surplus, balanced sovereign budget, high savings rate, productive labor force, high output at high quality, virtually free education. I would argue Germany is the country in the world which presents the fairest and most equal opportunities to its citizens.