Senate Income Inequality in the U.S.: Causes, Effects, Solutions

My opinions about how people can and should be taxed aren't any more valid than Kimball's. It's a question that can only be answered by political struggle. To quote somebody, there's a class war being waged in this country, but so far, one side (the poor and lower middle class) hasn't showed up to fight.

 

No, but by funding those programs through tax dollars, you are taking away other people's ability to act independently. Every additional tax dollar spent is an additional dollar that has to be taken under penalty of law from someone else who earned it.

As I said earlier, the purpose of government is to protect the rights of its citizens. Once an individual becomes self-sufficient, the government has fulfilled that obligation. From there, it is up to the individual to set and work towards his own goals.

The way you put it doesn't make it any better. You have every right to decide what you do with your money, but you don't have any right to decide what to do with anyone else's money.

If you take $5 from 99 other people's wallets to give to a local charity, your actions don't become any more justifiable just because you then take another $5 from your own wallet. You still took the other $495 from other people against their will.

Just because government is able to do things on a larger scale doesn't mean that it is proper for it to do so.

Part of what makes government "uniquely able to provide things on a larger scale" is the fact that the government exercises a legal monopoly on force. The government can force you to pay it, under penalty of imprisonment, whereas a private entity can only request that you pay it. Through taxation, as well as other legal principles such as eminent domain, the government has the power to violate a person's property rights.

With that comes a very important responsibility to limit the exercise of that power to the minimum necessary to fulfill the government's responsibilities. Government taxation to protect individual rights (through defense, law enforcement, or even welfare assistance for basic necessities) is justified. However, taxation that goes beyond that level loses justification.

A person's earnings represent the fruits of their labors, and by natural law we each own the fruits of our labors because we own ourselves. For the government to claim the fruits of your labors beyond that which it needs to perform its duties is for the government to claim ownership of you and your labor. That becomes akin to slavery, where one person is compelled to work for the benefit of another.

It's great that you have decided to live among the poor to make a difference. That is your choice of what to do with your labor and its fruits. You have every right to direct your labor as you see fit. However, when you start to call for the government to direct the fruit of others' labors where you want, you exceed your rights and infringe the rights of others to control the fruits of their labors.

Kimball Kinnison

 

But we also live in a democracy. If the people decide that they want to help the poor more, there is nothing wrong or illegal about that. We are allowed to have opinions about what purpose the government should serve, and your opinion is no more correct than mine. You believe that the purpose of government is to "protect the rights of its citizens" and I agree. But I believe that those rights include opportunity to make oneself into what oneself wants to be. Maybe we disagree on that part. Anyway, the fact of the matter is, simply providing food and a roof is not enough to provide for that opportunity, for most people living in poverty. It takes more than that.

 

The fruit of your labor doesn't come rent free. The government shouldn't spend more than it needs, but what it needs is determined by the political process. Taxation is social policy, and there is no way to avoid that. A flat tax is a social policy that disproportionately benefits the wealthy. Socialized medicine, education and laws that promote unions are social policies that disproportionately benefit the poor and middle class. Western European countries have progressive tax systems, socialized medicine and education because the poor and middle class have high rates of participation in the democracy.

 

Where have I limited government support to only providing "food and a roof"? I have specifically talked about encouraging self-sufficiency as the goal, not "food and a roof". That makes for a very big difference.

Self-sufficiency is a lot more than merely having the necessities of life. It includes the ability to set and work towards goals without needing to rely on someone else. In case you hadn't noticed, the sort of things that I have proposed are focused on not just helping people earn enough to get by, but helping them develop the life skills needed to lift themselves higher.

I would argue that once a person has enough resources and skills to be able to fully direct their own life, they are no longer "poor", even if they make significantly less money than others in society. At that point, the government's responsibility isn't to help you gain more resources, but to protect your rights from infringement by others.

See, the problem with simply talking about the "poor" in terms of government services is how you define it. Unless everyone earns the same income, you are always going to have some people who have more money (or other resources) than others. That is because "poor" is inherently a relative term. As a relative term, you cannot eliminate "the poor" from society, because it is a constantly shifting goalpost.

But, that is where it ends. The government has no business taking from "the rich" to give to "the poor", merely because "the poor" don't have as much as "the rich". Beyond the point of self-sufficiency, each individual is responsible for carving their own path and has no claim on the labors of another.

Tell me, you claim that you are willing to have your taxes raised to provide more to "the poor". Do you therefore support taxing everyone the same? Or would you say that "the rich" should pay more in taxes, merely because they are rich? If you argue the latter, then I would say that it's clear that you are more concerned about spending other people's money, rather than your own.

That's a large part of why I support a flat tax for everyone with limited deductions (for essentials, such as housing, medical, and education). It's always easy to say that someone else should have to pay more in taxes, but most people would think twice about insisting that the other guy pay more when they realize that it would also make their own taxes go up.

Kimball Kinnison

 

I think you may be over-romantizing those aspects there Jabba. If anything, what the prior riots in France, various smaller riots in other EU nations, and the recent riots in England have demonstrated is that large scale government support programs coupled with a lack of skills training results in huge isolated pockets of disinfranchised people. The common themes in France and England was that entire communities became both dependent on, and burdened by, government assistance. Generous personal welfare meant that entire communities became isolated pockets of citizens dependent on the state, without access to to a political voice. When more and more people in these pockets became dependent on government assistance without the need to produce or sustain anything, the remaining businesses closed down, which put more people on assistance, starting the cycle over and over. One of the findings of the London riots was that there were pockets of London and the surrounding areas that had some 50 people on assistance for every 1 "working" job. England basically came to terms with the fact that an entire generation gets just enough free money from the government to stay drunk and stupid. Figures like that are unsustainable, as even the term "free money" is a misnomer. You might be tempted to say that these are extreme examples, but they're not. They simply represent the negative underbelly to this discussion, as represented by London and Paris. I think there is a psychological aspect felt by those who aren't dependent on such payments, known as the "giver high." However, in many cases, the actual result is devistating. I'm not saying that all such welfare and public assistance is bad. What is bad is when such welfare isn't tied to a cost benefit analysis or goals based system. It's also the negative result of a system like what Prenn suggests when he basically says he doesn't mind to give more and more public aid, even if its not a need.

England even took the further step of cutting off government welfare to those who were convicted of participating in the riots, which demonstrates a new level of social warfare. One could picture such a scenario playing out in a novel like 1984, which it does in that story. Once people are dependent on the state, then the state gets to set the rules. Imagine the UK Home Sectretary cutting off public aid to those who participate in something like a protest against a war or other government program?

In other words, in these 2 high profile examples, those who received subsidies experienced just about the exact opposite of what your post indicated.

 

You may be confusing cause and effect a bit, particularly with England. A lot of England's problem was the Americanization of Great Britain in the Thatcher and post-Thatcher period. It offshored its jobs and became too heavily dependent on the financial sector for economic growth. More recently it became a huge net energy importer after North Sea oil peaked.

After a generation of not creating sustainable middle class jobs of course it was left with a social welfare problem at the bottom. This is exactly the kind of issue I'm trying to illustrate. Jobs and skills training is a great idea--we all agree with that--as long as the right kinds of jobs are available to employ those newly trained people.

But if you spend twenty years undermining job opportunities for the working class and engineering economic growth to benefit society's richest people, then as a last step you pull the rug out from under welfare programs in the name of austerity and debt reduction, of course you're going to get riots. Public unrest will only get worse in those countries as these programs continue. There's no way crappy British television is going to do the job of desensitizing the poor toward their dead end lives. American tv is just so much better at soothing and placating the masses. Maybe plenty of heroin a la Trainspotting?

As you know, I support high taxes on the wealthy coupled with social welfare programs in part because ultimately it's good for the wealthy, not because I'm a bleeding heart liberal who cares about the plight of the disenfranchised. It's ok to disenfranchise people as long as you have found a way to keep them quiet. Kimball and all those who agree with his political ideology are proposing a path toward pitchforks and torches.

 

No, I'm just going off the after action examination reports of the recent riots. I do think your "blame" is misguided here. What you mention is the result of the natural progression of changing technology and the UK's international situation. The UK's switch to a financial and technological focused ecomomy started long before Thatcher. It was the result of a switch from being a colonial Empire which began after WWII. The UK had to switch from its closed-loop colonial economy because as the time of "the sun never setting on the British Empire" ended, the UK had to find new ways to keep itself integrated in the world economy while also retreating inward. If you want to label this as being "Americanized," so be it, but I think it's inaccurate. Or maye the label only works because it mirrors the US's rise during the same period after WWII. But anyway, by Thatcher's time starting in 1979 (but reaching her zenith in the 80's) this was being finished, not started. So really, if you need to blame anyone, blame Labour Party's Harold Wilson, who served as PM during 1964-1976 during the heyday of the UK's transformation. (Wilson had a break for a couple of years in there, but for the most part his second term mirrored his first)....

I do accept some of what you say, but it's also another example of both sides sharing the blame. Instead of addressing the above issues, the government masked the symptoms with social welfare. If the situation in England is a warning about unrestrained financial dependence, it's also a warning against unrestrained social welfare.

 

I think we agree. Social welfare programs helped paper over larger social issues regarding employment and opportunity and wealth distribution in the post-war, post-colonial empire economy.

In the U.S. we exhausted all our low hanging fruit of territorial expansion, fossil energy exploitation, urbanization and education of rural Americans by the mid second half of the 20th century.

At that point the economy begins looking more like a zero sum game, so those in a position to win played even harder to protect their slice of the pie. Generosity to the working middle class through tolerance of organized labor subsided as it become more expensive and the business elite became more incentivized to undercut it. As income levels for the middle class stagnated, we expanded credit drastically to keep the middle class spending and offshored manufacturing to lower the cost of consumer goods. As the threat of angry black people subsided and the zero summing of the American economy became clearer, white people lost their fear and began pushing back against the advances of the civil rights era.

You can see the point when the American social contract of the 20th century started to break down - right in the middle of 70s oil shocks and stagflation. The civil rights movement unglued it and stagflation tore it apart. Then we threw easy credit at the problem for a generation. Now comes the big, final devaluation of the dollar as we monetize government debt.

Eventually America gets a new social contract, but I don't see a very positive future for income equality in the U.S. If Kimball can sell enough people on the idea that the government shouldn't be in the business of promoting broad sharing of wealth, then I think we'll eventually hit on some kind of neo-feudalism that makes a few people very happy and effectively disenfranchises everyone else.

 

Eventually America gets a new social contract, but I don't see a very positive future for income equality in the U.S. If Kimball can sell enough people on the idea that the government shouldn't be in the business of promoting broad sharing of wealth, then I think we'll eventually hit on some kind of neo-feudalism that makes a few people very happy and effectively disenfranchises everyone else.

Ok, so when did you become such a big fan of Pol Pot, Jabba? Ok, I kid, I kid...

I'd let Kimball characterize his own arguments, but just by going off of your post, I would agree with him that the government shouldn't be in the business of "broad sharing" of anything.

But if you're only going to focus on the extremes, why does everything have to be equal or promote some ultimate sense of fairness? If you're so sold on the idea of the government distributing wealth, why not take your argument a step further and have the government promote fairness through genetic manipulation and/or eugenics? If your neighbor has more money than you, why should he also be able to run faster, or sing better, or understand complex equations more easily? Why does it matter so much that the government distribute wealth in the first place? Because this is where the distribution argument feeds on itself. You, or Prenn, or others could say on paper that they don't mind if the government takes their money and their neighbors money to more evenly distribute it, even if it doesn't come with a definable goal, but that's just it. Who cares if Prenn's friend drives a BMW while he only drives a Toyota? Who cares if my neighbor has 500 channels of 3-D HDTV goodness because he's a regional VP with Apple, while I only have an over the air antenna and my measly 18 channels? Who cares if Derek Jeter gets paid a crazy amount of money to play the same game that millions of schoolkids play for free during recess? If you're worried about disenfranchisement through unfairness, the alternative result of your desire to eliminate achievement is to turn everything into an Orwellian Animal Farm where everyone is fair, including those who are more fair.

If the government's job isn't just to provide for the basic needs of its citizens, and as you suggest, has a duty to promote undefined comfort in an equitable sense, where would you draw the line? Who defines what is fair and equitable? After all, all joking aside, that was the goal of Pol Pot, and why he eliminated everyone who stood out beyond the norm...

 

Let's say one of the reasons someone ends up poor is becasue they gambled. You can do a few things here.

A) You can just give them more money at which point they will go gamble it away becasue they have a problem.
B) Get them help for there problem and teach them to use money in a wise way.

Why on earth would I pick option A? What sense would it make to keep give someone one reason to just keep throwing there money away which was really my money?

 

No one's asking for absolute equality I hope. I've written many times that I believe there will always be plenty of poor. We can count on them. We need them. Despite its astonishing growth, China remains incredibly rich in poor people, while we still have to import them to keep their numbers up.

My only point is that social cohesion disintegrates when the disparity between rich and poor becomes too great, unless it is held together by something else, like good cable television made widely available to the poor.

As an advocate for the top 5% I also understand that providing a generous safety net to the bottom 20% is a direct means of promoting social stability and preserving my wealth.

Since the start of the recession, armed robberies have increased in my neighborhood, since of course we're close to the border of Chicago's west side and it's easy for marauding gangs of the poor to cross over into the territory of wealthy people and terrorize us. I like to think of this as a breakdown in the social contract although a poor armed person from the west side of Chicago may simply think of it as easy pickings among us liberal unarmed types.

I could arm myself of course, but since I'm not some kind of half wit, I'd much rather just pay taxes to support food stamps and cable tv for people as a kind of disincentive to come and rob me. And then robberies in my neighborhood subside and my property values don't plummet quite as fast as they otherwise would, and the tourists feel more comfortable taking the Green Line out to see us and look at all our nice Frank Lloyd Wright architecture and drink our Starbucks coffee and eat our pan Asian restaurant food.

 

Again, though, at what point do you decide that opportunity is equal enough?

Personally, if a person has had help to bootstrap himself through a trade school or Associate's degree, then he should have developed the skills and resources to go the rest of the way on his own from there. Either of those options should provide enough to move someone into a middle-class lifestyle with the application of a little financial management and some necessary hard work.

Do other people perhaps get more opportunities? Sure, but not everyone can go to Harvard or MIT, nor is everyone cut out for such things. The goal isn't to completely equalize opportunity for everyone, but to make sure that everyone get the opportunity to improve and adnave their lives.

However, I disagree with making post-secondary education free for everyone. I think it's important to make people provide some of the investment in their own education, because it will make them value it more. I know that I worked harder in college the years that I was personally paying they bills, compared to the year that I cut a deal with my parents to pay the bill. (I remodeled their bathroom that summer rather than getting a summer job, because we had limited transportation resources. It saved them several thousand dollars in labor which they then used to cover my tuition instead, a win for everyone.) Some financial assistance is one thing, but in general a full ride should be earned in one form or another.

Kimball Kinnison

 

I'm not 100 percent in favor of redistribution of wealth by any means. I am, however, in favor of equalizing opportunity. One of my issues with Reagan is that as Governor of California, he eliminated the free tuition programs at University of California schools, and as President, he eliminated guaranteed Stafford Loans. Not to mention his defunding of school lunch programs ("ketchup and relish are vegetables") when it has been proven that better nourished children are more capable of success in school, and the cuts in the national school lunch program invariably strike poor children the most.

Not that any of this matters, but it's just funny to see how the blame game tends to keep rumors alive. Reagan didn't eliminate guaranteed Stafford Loans, he capped the income level for the federally guaranteed loans at 32,500. (which represents 1980 income levels. Today, the income cap level would be around $43,375). But remember, the non-partisan Office of Management and Budget recommended that the cap be applied at the $30,000 level, so the Reagan administration actually added an addition $2,500 above what was recommended to it. And in fact, Congress at the time made it law that families above that limit had to demonstrate need in order to qualify for the loans. What you don't mention is that when Reagan was elected, both houses of Congress were controlled by the democratic party.... (Robert Byrd was Senate Majority Leader, and Tip O'Neil was Speaker of the House) The cap didn't affect private student loan programs and scholarships at all. Government guaranteed Pell Grants were also capped at $1,900 per school year for students who earned less than $25,000. None of that seems particularly unrealistic or harsh, especially if you look at the fact that the average costs for a 4 year degree in 1980 was $10,000 for private universities, and $5,000 for public universities. But at any rate, it was both the Reagan administration and Congress who instituted the caps.

As for the "Ketchup and relish are vegetables," this is something that comes up from time to time as well. Again, Congress cut almost 1 billion dollars from the U.S. Department of Agriculture's school lunch voucher program in the last days of the Carter Administration. Congress gave the Agriculture Department 90 days to come up with cost cutting measures that would also allow school districts to meet nutritional guidelines. One of the big controversies at the time was that lima beans were being provided by the federal government, but almost all pupils were throwing them away, which accounted for a lot of waste. So choices which would actually be eaten by students while still meeting the new budget cuts were debated. When the 90 days was over, Reagan had assumed office. So yes, technically, Reagan was President when "ketchup was declared a vegetable," but he really didn't have anything to do with the decision, which was made by a panel of educators and USDA personnel. But this only applied to those schools which accepted federal meal vouchers, and yet again, was the the result of both decisions made by Congress and the administration.

 

Not to distract from the topic, but I live some 30 miles away from downtown LA and the only way to have tv where I am is via cable or satellite. There's really not much of an over-the-air option here. And I'm in a valley of about a quarter million people, so it's not just me.

http://www.treasury.gov/services/Pages/Treasury-Payments.aspx
One of the services the Treasury lists is being able to send them more money if you want to. Just go to the above page, then click on "Gifts to Reduce the Public Debt" for an instant tax increase.

I'd put a bit of a selection process on it in terms of majors, but making post-secondary educations free would be an immense boon. I couldn't go to a UC because of the high cost of tuition (I was accepted to, I think, 4 of them) since i didn't have the income that could cover tuition plus living expenses. I had to pass on one of the opportunities I had for my Master's because they couldn't offer any financial assistance, including work. At least in California, right now California public schools are taking fewer and fewer Californians because they'd rather have foreign and out of state students that have to pay higher tuition.

 

Look back at what I put in red. I never said that they shouldn't offer financial assistance. However, I don't think that there should be a blanket full ride, but that it should be earned in one form or another.

I also have an issue with a state school specifically seeking out-of-state students. The purpose of a state university is to help educate the people of your state. If you are rejecting in-state students in favor of out-of-state students (as a general rule), something is severely messed up.

Kimball Kinnison

 

While I don't disagree with the above, I was the very first in my family to ever go beyond high school. I didn't have a career plan because I didn't know what to do with my life - all I knew was I didn't want to be a secretary (and back then, though things were definitely changing, many working women were secretaries, nurses or teachers). Both parents were, I suppose, "blue collar" workers.

So I majored in Communications (and work in insurance, go figure). I'd still like to work in something creative, but I'm not creative enough/driven enough/good enough to succeed in a creative field, be it writing or music.

Job counseling is a great idea; a career plan should follow that.

(Perhaps that is what you posters mean, but I read it as having a career plan going into college - my apologies if I misunderstood.)

 

Loath as I am to link something from Rachel Maddow (I don't dislike her, but I just know that people are going to pitch a fit), I happened to catch a bit of her show last night (Mythbusters was a repeat...).

Video, pertinent part starts around the 5:30 mark

Basically what she brings up is an important point. The GOP keeps harping on the "class warfare" bullcrap, constantly referring to the mega-rich as "job creators" rather than the mega-rich. Their argument basically says that taxing the mega-rich decreases the amount of money that the mega-rich can spend on hiring new people. Reality, however, says something completely different. Enter the Koch Brothers.

In 2007, their combined wealth was $34 billion dollars. Today it is $50 billion. Their wealth has increased.

According to Republican logic, more money for the "job creators" should mean that the number of people they employ increases. Let's see if that holds up.

In 2007, Koch Industries employed 80,000 people. Today they employ 67,000. The people they employ has decreased.

Hmmm, that can't be right. The Koch Brothers, two "job creators", have been making more money than ever before, yet they're consistantly laying people off.

What the hell? I'd love to hear someone worm their way out of this one.

 

Loaded post aside, I'd suggest that if you think one party plays class warfare over the other, well, I have a 50 billion dollar investment I'd like to sell you. I accept Paypal. But that's neither here nor there.

But the obvious way "to worm out of" your post is to point out that one example does not prove the rule. I don't know anything about the "Koch Brothers," other than what's on sources like Wikipedia. But even basic sources indicate that there are 4 brothers, and they own/run/sit on the board of all sorts of different companies. Taking your figures at face value- even though you didn't provide any support- what if "Koch Industries" shed 13,000 positions? Would it make you feel better if those 13,000 people were transferred to "Koch Incorporated," which is a different subsidiary? Or if Koch oil and gas exploration grew by a similar amount, even as Koch Industry contracted? You don't know. I don't know, but it doesn't prove anything either way.

If just never ceases to amaze me how someone can look at a single source "Look! I watched Maddow, and she says the Koch Brothers suck, so that must prove er, something... and not only that, even if it doesn't, I'm going to say that the Kochs represent all republicans to make a er, different point..." without actually examining anything.

Because hey, look! George Soro's investment company acquired interest in the Lehman Brothers just before it failed....OMG! That must mean that all democrats wanted the US financial market to collapse, because obviously, the billionaire democrat Soros shares everything in common with every other democratic voter in the US...It's true! Obviously, that's silly, and loaded, and it makes no sense to even try and make that connection, but hey, I'd love to see someone worm their way out of that one....

 

It's not just Maddow. Look at the recently released Forbes 400 list, and look at how many billionaires in America have been making ridiculous profits, and how they are not hiring. All you have to do is use google a bit, Mr. There's tons of examples, not just one. Exxon Mobile is another one.

Also, did you even watch the clip?

Here's another example of how big business are doing GREAT in this current economy, yet are not hiring people.

Sorry about my absence from this thread...I'll respond to the other posts in a bit.

 

It's not just Maddow. Look at the recently released Forbes 400 list, and look at how many billionaires in America have been making ridiculous profits, and how they are not hiring. All you have to do is use google a bit, Mr. There's tons of examples, not just one. Exxon Mobile is another one.

Prenn, you seem to be confusing my reply to a specific post to a comment on the entire topic. Ok, so there's a kernel of discussion there in your reply, but that's nothing like what was contained in JFTy's post. Here's a different source which examines "Top 10 companies hiring this week," which seems to be a regular feature:

HERE

There are some large corporations listed in there. If U-Haul is adding a thousand new field positions, and dozens of corporate executive positions, how does the salary for the CEO factor in? (I don't know what it is, BTW..) How many "billionaires in America have been making ridiculous profits," and how does that tie to policy? Is investment or personal wealth being examined, or business profits vs expansion? What is their political affiliation, if that even matters? How would alternatives effect profits and/or hiring? But none of that was mentioned or examined, and instead we basically got a "I hate the GOP suckers!" post. The Koch Brothers mentioned could be creating jobs even as their personal wealth increases. It's realistic that one subsidiary would contract even as a different subsidiary expanded. Those brothers don't represent all of one policy any more than the crazy Soros example I provided represents a different one, especially if nothing specific was examined. If that's the case, then JFT should just randomly intersperse exclamations like that every couple of hours throughout the forum, and the result would be the same from a debate standpoint.