The 2016 Presidential Election Trainwreck

[PaloAltoCougar]

Why is income inequality a problem? I infer that you must believe that the wealthy can only get wealthy at the expense of the poor. Please explain why that is and why taxation is the way to fix that problem.

Income inequality isn't a problem by itself. The essence of liberty, whether economic or in the broader sense, is the freedom to be unequal. But it's a problem when the inequality becomes so pronounced that the masses perceive the system is unfair (even if the perception is false, btw, it's still a problem, hence Sanders' popularity). The gap between the highest earners and the labor force (not just in dollar terms but in percentages) has skyrocketed. I'm still looking for someone to rebut the oft heard claim that during the past thirty-five years, while the economy has flourished, all real income gains have been limited to the top ten percent--seriously, I'd welcome a solid dismantling of that statement. But if that claim is true, then the system seems inherently unfair. And I agree taxation isn't the way to fix it, but neither is doing nothing.

[Pelado]

Income inequality isn't a problem by itself. The essence of liberty, whether economic or in the broader sense, is the freedom to be unequal. But it's a problem when the inequality becomes so pronounced that the masses perceive the system is unfair (even if the perception is false, btw, it's still a problem, hence Sanders' popularity). The gap between the highest earners and the labor force (not just in dollar terms but in percentages) has skyrocketed. I'm still looking for someone to rebut the oft heard claim that during the past thirty-five years, while the economy has flourished, all real income gains have been limited to the top ten percent--seriously, I'd welcome a solid dismantling of that statement. But if that claim is true, then the system seems inherently unfair. And I agree taxation isn't the way to fix it, but neither is doing nothing.

One rebuttal to the argument is that the top ten percent is not static. Even if it's true that the top ten percent are hoarding the growth, the composition of the top ten percent of earners changes from year to year.

I remember seeing a study a while ago on the turnover of those in the top earning percentiles which depicted a different story than the income inequality narrative we hear so much. A top earner this year could very easily end up with losses in future years, and vice versa.

Is there enough income mobility? I don't know.

[imanihonjin]

Income inequality isn't a problem by itself. The essence of liberty, whether economic or in the broader sense, is the freedom to be unequal. But it's a problem when the inequality becomes so pronounced that the masses perceive the system is unfair (even if the perception is false, btw, it's still a problem, hence Sanders' popularity). The gap between the highest earners and the labor force (not just in dollar terms but in percentages) has skyrocketed. I'm still looking for someone to rebut the oft heard claim that during the past thirty-five years, while the economy has flourished, all real income gains have been limited to the top ten percent--seriously, I'd welcome a solid dismantling of that statement. But if that claim is true, then the system seems inherently unfair. And I agree taxation isn't the way to fix it, but neither is doing nothing.

I hear what you are saying but a couple of key assumptions would have to be true in order for the system to be unfair. Economic mobility would have to be impossible because even if the top ten percent have received all the gains this would only be meaningful if the top ten percent remained static (perhaps it has but because the measure is income and not wealth, my guess is that this number is not static as you have individuals who move in income status all the time, i.e., students who earned nothing just a few years ago may suddenly be catapulted from earning nothing to the top quintile or folks who retire with a large amount of non-income producing assets that suddenly go from high income to something far less). Economic mobility is difficult to measure as well as there are many factors that may cause a person from moving up the socioeconomic spectrum other than external forces prohibiting movement.

These are complicated issues. Far too often though people let their jealousy dictate their policy determinations. Before we take from the wealthy and give to the poor simply because a disparity exists, we had better make sure that such disparity exists because the wealthy are only wealthy because the poor are poor.

[Topper]

Income inequality isn't a problem by itself. The essence of liberty, whether economic or in the broader sense, is the freedom to be unequal. But it's a problem when the inequality becomes so pronounced that the masses perceive the system is unfair (even if the perception is false, btw, it's still a problem, hence Sanders' popularity). The gap between the highest earners and the labor force (not just in dollar terms but in percentages) has skyrocketed. I'm still looking for someone to rebut the oft heard claim that during the past thirty-five years, while the economy has flourished, all real income gains have been limited to the top ten percent--seriously, I'd welcome a solid dismantling of that statement. But if that claim is true, then the system seems inherently unfair. And I agree taxation isn't the way to fix it, but neither is doing nothing.

The devil is in the details I suppose. We hear so many claims about "the economy flourishing", and the perceptions of "unfairness". If I understand you, your point is that perception is reality and hence Sanders is popular.

As I understand it, the amount of wealth aggregated by the wealthiest is by percentages increasing whereas the wealth by those below the wealthiest is not. Whether all that is true is not something I'm capable of verifying at the source level, i.e., I don't possess the technical skills to crunch the numbers.

However, rather than redistribute the wealth through taxation, it would seem better to use the markets to correct themselves would be a better approach. We might use tax incentives and perhaps punishments if the wealth is not recirculated for new jobs and for the small businesses. The ideas percolating in my head include, tax credits or higher lending margins for lenders who lend to businesses of smaller sizes in numbers of employees and in volume of sales, and better deductions for employers who fund retirement accounts and benefits.

Although it is an anathema to me, the aggregation of enormous wealth for the accumulation of mansions and yachts does not appear to benefit the economy at large. The redistribution through wealth confiscation would only take from one aggregator to another. There is no guarantee that confiscation of wealth or an industry ends up enriching those who have been impoverished. Ideas?

[imanihonjin]

The devil is in the details I suppose. We hear so many claims about "the economy flourishing", and the perceptions of "unfairness". If I understand you, your point is that perception is reality and hence Sanders is popular.

As I understand it, the amount of wealth aggregated by the wealthiest is by percentages increasing whereas the wealth by those below the wealthiest is not. Whether all that is true is not something I'm capable of verifying at the source level, i.e., I don't possess the technical skills to crunch the numbers.

However, rather than redistribute the wealth through taxation, it would seem better to use the markets to correct themselves would be a better approach. We might use tax incentives and perhaps punishments if the wealth is not recirculated for new jobs and for the small businesses. The ideas percolating in my head include, tax credits or higher lending margins for lenders who lend to businesses of smaller sizes in numbers of employees and in volume of sales, and better deductions for employers who fund retirement accounts and benefits.

Although it is an anathema to me, the aggregation of enormous wealth for the accumulation of mansions and yachts does not appear to benefit the economy at large. The redistribution through wealth confiscation would only take from one aggregator to another. There is no guarantee that confiscation of wealth or an industry ends up enriching those who have been impoverished. Ideas?

Why not? Someone has to build them and someone has produce the materials to build them and someone has to provide sustenance to those who produce these things and on and on it goes. The best thing for the economy that wealthy people can do with their money is spend it.

[Northwestcoug]

Why is income inequality a problem? I infer that you must believe that the wealthy can only get wealthy at the expense of the poor. Please explain why that is and why taxation is the way to fix that problem.

I keep referring to what others post, but again, what PAC said. Whether real or perceived, there is an economic ceiling that quite a few citizens cannot break through. That sentiment is becoming more widespread. That alone is not healthy for a political system.

I'm not sure why people keep asking how more taxation is going to fix the problem. I've never said that once. But again, it can certainly be a part of a broader solution.

[imanihonjin]

I keep referring to what others post, but again, what PAC said. Whether real or perceived, there is an economic ceiling that quite a few citizens cannot break through. That sentiment is becoming more widespread. That alone is not healthy for a political system.

I'm not sure why people keep asking how more taxation is going to fix the problem. I've never said that once. But again, it can certainly be a part of a broader solution.

I believe this is the case too and I think that you won't find much a disagreement on either side of the political isle. However, the cause of this is a major form of disagreement. Those on the left seem to think the sentiment is a result of an unfair system, those on the right think that it is a result of jealousy and laziness.

[Topper]

Why not? Someone has to build them and someone has produce the materials to build them and someone has to provide sustenance to those who produce these things and on and on it goes. The best thing for the economy that wealthy people can do with their money is spend it.

I may not articulate this clearly or with precise economic terminology, but it appears the money is merely circulating for the most part within the same segment as that which possesses it. Thus, if those that control the investment banking institutions pay out the money to themselves and it merely circulates within those circles, it will show why the masses are not benefiting from the successful investments made by those with massive capital reserves. The money is being retained by those with capital reserves. The reserves are so large they can't spend it in the economy but merely invest among themselves after capitalizing on the excess value of labor which is not paid.

There is a problem that wage earners' purchasing power has been flat or decreasing. http://www.pewresearch.org/fact-tank...d-for-decades/

This frustration is what populists tap into. Sanders has not convinced me that his solutions will succeed but unless those who believe in market forces can find incentives to turn this trend around, eventually statists will start trying some of their "solutions", which in my mind are likely to be disastrous and unsuccessful over the long run. As PAC more artfully expressed, none of those whom I usually trust have come up with methods of encouraging the market to respond or methods of explaining that these observations about wage earners losing purchasing power to be incorrect.

[Topper]

I keep referring to what others post, but again, what PAC said. Whether real or perceived, there is an economic ceiling that quite a few citizens cannot break through. That sentiment is becoming more widespread. That alone is not healthy for a political system.

I'm not sure why people keep asking how more taxation is going to fix the problem. I've never said that once. But again, it can certainly be a part of a broader solution.

I agree the perception is not healthy. I also agree the causation is not understood or adequately explained.

As to your bolded portion, I don't know what you mean by that. Taxation increases revenue to the government, deprives taxpayers of excess funds but doesn't inherently "fix" anything.

Are you believer in the multiplier of government spending?

[imanihonjin]

I may not articulate this clearly or with precise economic terminology, but it appears the money is merely circulating for the most part within the same segment as that which possesses it. Thus, if those that control the investment banking institutions pay out the money to themselves and it merely circulates within those circles, it will show why the masses are not benefiting from the successful investments made by those with massive capital reserves. The money is being retained by those with capital reserves. The reserves are so large they can't spend it in the economy but merely invest among themselves after capitalizing on the excess value of labor which is not paid.

There is a problem that wage earners' earning power has been flat or decreasing. http://www.pewresearch.org/fact-tank...d-for-decades/

This frustration is what populists tap into. Sanders has not convinced me that his solutions will succeed but unless those who believe in market forces can find incentives to turn this trend around, eventually statists will start trying some of their "solutions", which in my mind are likely to be disastrous and unsuccessful over the long run. As PAC more artfully expressed, none of those whom I usually trust have come up with methods of encouraging the market to respond or methods of explaining that these observations about wage earners losing earning power to be incorrect.

Sorry, this doesn't make any sense. Those with the money can't simply invest it with each other with a full stop. What do those investments represent? Factories, grocery stores, real estate properties? All of these investments are good for the economy because they create jobs.

[Topper]

Sorry, this doesn't make any sense. Those with the money can't simply invest it with each other with a full stop. What do those investments represent? Factories, grocery stores, real estate properties? All of these investments are good for the economy because they create jobs.

Institutional investors continue to invest in institutional investments which are churning money through the management of capital and labor. That doesn't mean jobs or good paying jobs are being created. If they are able to make more money by using cheaper, devalued labor, then they will do so.

What is the top industry? The financial industry. I can't rank the other industries, but the next would likely be the healthcare industry. Again there is so much data to sift through and how to make sense of it is another matter. Is it true that institutional investments necessarily create jobs? And if it is true, what is the quality of those jobs?

[Jeff Lebowski]

I hear what you are saying but a couple of key assumptions would have to be true in order for the system to be unfair. Economic mobility would have to be impossible because even if the top ten percent have received all the gains this would only be meaningful if the top ten percent remained static (perhaps it has but because the measure is income and not wealth, my guess is that this number is not static as you have individuals who move in income status all the time, i.e., students who earned nothing just a few years ago may suddenly be catapulted from earning nothing to the top quintile or folks who retire with a large amount of non-income producing assets that suddenly go from high income to something far less). Economic mobility is difficult to measure as well as there are many factors that may cause a person from moving up the socioeconomic spectrum other than external forces prohibiting movement.

These are complicated issues. Far too often though people let their jealousy dictate their policy determinations. Before we take from the wealthy and give to the poor simply because a disparity exists, we had better make sure that such disparity exists because the wealthy are only wealthy because the poor are poor.

Why do you assume it is motivated by jealousy? The majority of people, both wealthy and poor, support the concept of a progressive tax system.

Nobody earns money in a vacuum or in a completely independent fashion. Our entire economy is undergirded by roads, military protection, police, enforcement of banking laws, copyright laws, etc. Every dollar you earn is brought to you with via this infrastructure and system. It is perfectly reasonable to try to find a taxation balance that fosters wealth and economic growth while balancing the public needs, including assisting the less fortunate.

[imanihonjin]

Institutional investors continue to invest in institutional investments which are churning money through the management of capital and labor. That doesn't mean jobs or good paying jobs are being created. If they are able to make more money by using cheaper, devalued labor, then they will do so.

What is the top industry? The financial industry. I can't rank the other industries, but the next would likely be the healthcare industry. Again there is so much data to sift through and how to make sense of it is another matter. Is it true that institutional investments necessarily create jobs? And if it is true, what is the quality of those jobs?

Explain what this means. How does one earn money on capital?

[Topper]

Explain what this means. How does one earn money on capital?

Breaking up assets when the parts are more valuable than the whole. Liquidation.

Investment in the achievement of other efficiencies.

Shifting labor to cheaper markets.

Investment in government securities. Investment in currencies and in commodities.

Those are just a few. However, my comments involved labor and capital.

[imanihonjin]

Why do you assume it is motivated by jealousy? The majority of people, both wealthy and poor, support the concept of a progressive tax system.

Nobody earns money in a vacuum or in a completely independent fashion. Our entire economy is undergirded by roads, military protection, police, enforcement of banking laws, copyright laws, etc. Every dollar you earn is brought to you with via this infrastructure and system. It is perfectly reasonable to try to find a taxation balance that fosters wealth and economic growth while balancing the public needs, including assisting the less fortunate.

I said that far to many people want to make policy determinations based on jealousy. When I hear people wanting to make tax policy based only on the notion that somebody has far more than other people without further analysis, I fear that people stop there.

The problem with a progressive tax system is that it is completely arbitrary. How much is enough, what is someone's "fair share"? It is always easy to think someone else should pay more as long as I don't have to, but it is immoral to take from someone to redistribute to others simply because you think they have too much and another too little. Stealing is stealing, even if a society does it via the government.