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Wednesday, January 2. 2013

Examine Inequality’s Causes Before Prescribing Solutions

Fear and loathing of income inequality is both totally understandable and ultimately misplaced.


Income inequality, if it is a problem (I do not see why it is) it is easy to fix. Just tax all income over $40,000 at 100% (except for politicians and bureaucrats).


Then confiscate all private assets over $100,000. (except for politicians and bureaucrats), because assets are really more important in life than income. Let's make it fair. Why focus on income? Some people have huge houses and apartments, and small families. The government can provide the manna. It worked great in China and the Soviet Union, so why not here?


Income and asset inequalities are fine with me. Money provides choices. Many people are highly motivated by such things, and they make good things happen. My job, for example, which pays me enough to afford ski trips to Whistler which, in turn, provides jobs for Canucks.

Posted by The News Junkie in Our Essays, Politics at 13:48 | Comments (20) | Trackbacks (0)

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Only it we confiscate 110% of politicians' assets (they have to pay us 10% more, just to be fair, since they are spending our money for us).
#1 Sam L. on 2013-01-02 14:46 (Reply)
Income inequality is good. It's what motivates people be productive so that they can improve upon what they have. If income inequality is really "unfair", why should we stop at equalizing incomes only among Americans? Why not strive for income equality among ALL inhabitants of the planet? When the moochers in America complain about the income inequality being unfair, what they really mean is that it's unfair because they have less than someone else. They conveniently neglect the fact that even the poor in America have so much more than 90% of the world's inhabitants. It is the moochers who are really selfish and evil, not the wealth producers.
#2 Mike M on 2013-01-02 16:22 (Reply)
Not to worry, because of our tremendous advances in the field of biotechnology, we can soon modify everybody to be exactly the same. Equality will be achieved and everything will be perfect. I'm gonna get me a young Goldie Hawn model. I hear they will have a slight, but meaningful advantage in cuteness.
#3 W. C. Taqiyya on 2013-01-02 19:23 (Reply)
I've discussed this with some of my Lefty friends and they're totally confused about statistics and data.
look. "Income" [i.e. earned, not govt handouts nor 'unearned income"] is not only a crappy indicator of general well-being, it suffers from some serious defects as a metric.

First, the lower bound is zero, even if you're in debt up to your eyeballs. Second, the upper bound is infinite. Third, it might as well be random [try predicting at age 15 0r 20 someone's future income at age 40], and the mobility in a relatively free market is very high.

What do we get from that? Well, for one thing as the average [median or mean] income goes up, the lower income remains zero while the upper incidence of income quite literally increases geometrically. That is, as the average [which is skewed right anyway, every single time -- remember that fixed lower bound] increases so does the standard deviation and that moves those at 3+ s.d.s [the '!%'] further away fro the lower bound geometrically. In other words, in a 'normal' situation where lots of people have an opportunity to improve their income, as incomes improve on average the 'inequality' has to increase.

Move to 300,000,000 population from 63,000,000 in 1890 and you go from Carnegie having earned income of 50K [he had about 25M in "unearned income] while the mean income was $380, to to Larry Ellison making 84.5M min earned income [2010] and a national mean income of 26+K.

IOW, from the richest man in the US making about 130 times as much as average to [one of the richest] highest paid person in the US 'earning' 3200 times the average.

Yet, who in the US today, even living in poverty would trade their current situation for that of Carnegie if they really knew what life in the 1890s was like? Were low-income individuals better off in 1890 because the income inequality was less?

IF you want more income 'equality' the only way to achieve it is to by force reduce both the upper level incidence and reduce the mean. Does anyone admit that? And even then I would bet big money that those at 4+ s.d.s would be way better off than those at the bottom.

Oh, well.
#4 JorgXMcKie on 2013-01-02 20:45 (Reply)
And, your leftie friends don't understand this simple analysis. I'm shocked. The humanities and various "studies" programs must not be as rigorous as I had been led to believe.
#4.1 BillH on 2013-01-02 22:32 (Reply)
"because assets are really more important in life than income"

I've been fussing all weekend because assets and income are interchangable. The Obamacare taxes, which kicked in on the 1st, are applied differently on earned income and investment income; a much lower rate on the first than the second. So if you take home a paycheck of $100,000 you'll pay an additional $800 this year for Obamacare. If however you are one of those rich guys that make their money,say $100,000, off of investments, you will pay $3800. (You deserve to pay more because you didn't have to work very hard, and you're rich.) It turns out that in my little real estate business I'm one of the rich guys because I get rent from my apartments (an investment) and not a paycheck, even though it's not anything like the $450,000 rich guy pay. It is also true that the value of my apartments went down over night because a buyer won't pay as much for apartments that now earn $3800 less every year. A quick calculation shows my apartments lost $54,000 in value. Asset value and income are interchangable. Now a rich guy can maybe shrug off a bit extra in taxes but $54,000 starts to get noticable, especially if you multiply by a few. Multiply this by the thousands of times it happens in the country and you might expect the economy to show a hit. How would you react if you were worth thousands of dollars less than you were worth a few days ago? I spent some time today sending out rent increase letters. (I know, evil Republican landlord.) So now who will my tenants pass the cost on down to? Do you own a store or restaurant that they might shop at less frequently? And so it goes.
#5 Colorado on 2013-01-03 00:05 (Reply)
The starting point for any discussion of income inequality should really be Thomas Sowell - e.g., http://www.redding.com/news/2011/nov/09/thomas-sowell-income-inequality-is-numbers-game/
#6 GW (Link) on 2013-01-03 03:00 (Reply)
As a Canuk, I'm thankful that you value our ski resort enough to spend your money there.

I've returned the favour by golfing in Florida and Myrtle Beach in the past, and hope to try Arizona and maybe Texas in the near future.

We live in grand times, too bad so many can't see that.
#7 mitchel44 on 2013-01-03 04:49 (Reply)
--everything was nice and equal, and then along came the Higgs-Bosun
#8 buddy larsen on 2013-01-03 07:09 (Reply)
A very long time ago when I was 6 or 7 or 8 I made some money going door to door to pick up newspapers and would sell them to a "junk dealer" who would come by every week in his horse drawn wagon. I would also pick up rags and scrap metal (suprisingly a lot of the latter from trash barrels put out on trash day). In the winter I would shovel sidewalks and driveways; a good price for 2-3 hours shoveling was $5. I would pick up coke bottles and mow lawns. Later at age 13 I worked Saturdays and Sundays in a car wash ( they made me get my SS #). Minimum wage was $1.35/hr and it felt good!!! I worked part time all through school (no fast food, there wasn't any yet) and after High school I worked two jobs until I joined the Air Force. I worked part time while in the Air Force too since the pay wasn't even equal to the minimum wage back then. I read everything I could on investing and self-improvement. I got my bachelors and masters while working full time. I have been retired for 15 years and I was unemployed for exactly 1 week in my entire life.

If the government had simply given me what I needed I probably would never have worked for it.

The reason I worked for it was BECAUSE there was an income inequality which really means it was possible for me to do better. If there was not that possibility, that is if I made the same regardless of how hard I worked I doubt I would have busted my butt shoveling snow or working pumping gas in sub-zero weather.

The income equality exists exactly because some people will work harder and they CAN earn more. It does NOT exist because the elite hate the poor or want to punish them. I want more rich people, more middle class and I know from experience the only way to have that is to give people incentive and not a handout. I measure my success by having gotten myself on the plus side of the income inequality scale through hard work. If there isn't an income inequality and everyone is handed "free stuff" then how can we measure success?
#9 GoneWithTheWind on 2013-01-03 10:44 (Reply)
Enterprise is when you make money delivering papers, then turn around and collect them for the junk man. Not a bad way for a 6 - 7-year-old to make a few dollars. The problem today is most youngsters don't have such jobs and, therefore, don't learn to scramble for such opportunities.

The problem with taxing capital gains, dividends and interest is those monies already have been taxed and are crucial to learning how to save up for needs/wants, emergency funds and retirement instead of relying on credit cards and whims of politicians who fuss around with social security. Savings and investing should be encouraged. Political engineering is the biggest problem facing our country.
#9.1 jma on 2013-01-03 12:01 (Reply)
The News Junkie: Income inequality, if it is a problem (I do not see why it is) it is easy to fix. Just tax all income over $40,000 at 100% (except for politicians and bureaucrats).

Someone can be concerned about increasing concentrations of wealth without necessarily advocating total economic and social equality. Either extreme can be detrimental.
#10 Zachriel on 2013-01-03 11:13 (Reply)
I am concerned with the increased concentrations of wealth in the federal government. In general wealthy individuals do not harm me and their investments benefit society with jobs and available capital. The governments efforts cause me great direct and indirect harm and the more wealth they have the more harm they do. I am in favor of starving the beast; elect only congressmen and a president who will cut/slash the federal bureaucracy and budget. I would favor about a 50% real cut in budget over a one year period with follow on 10% cuts in real budget for a couple of years. More serious cuts in the bureaucracy along the lines of 50% of all non-military federal employees this year and another 50% cut next year. I would like to see all laws sunsetted every five years requiring congress to rewrite or repass them. I would like to see congress limited to 6 months a year; perhaps with their increased duties dealing with the sunsetted laws and their reduced session times they would have less time to mettle in our business. I would like to see a small increase in the bureaucracy; an office of inspector general who reviews the presidents and congresses actions for constitutionality and has the authority to pass his opinions directly to the supreme court for immediate action. It is ludicrious that our politicians can pass unconstitutional laws which negatively impact our citizens while the Supreme Court languishes and somehow has time to find constitutional privacy guarantees that don't appear in the constitution. Lets put the Supremes to work actually deciding what is constitutional.
#10.1 GoneWithTheWind on 2013-01-04 10:29 (Reply)
GoneWithTheWind: I would favor about a 50% real cut in budget over a one year period with follow on 10% cuts in real budget for a couple of years.

You're not being specific, but does that mean you would eliminate Social Security and Medicare? Would you still collect the taxes meant for those programs?
#10.1.1 Zachriel on 2013-01-04 12:08 (Reply)
Zach you have a SS medicare fetish. I answered this before, you need to take notes. SS should be taken away from the politicians and removed from the general fund and be run as a seperate entity from the federal government.

I would eliminate the EPA, Dept of Education, Dept of Energy, Dept of Labor, HUD, Homeland Security, Transportation, Most of HUD, most of HHS, about half of; Dept of Interior; Agriculture; and Commerce.

And most importantly I would reverse Obamacare.
#10.1.1.1 GoneWithTheWind on 2013-01-04 16:59 (Reply)
GoneWithTheWind: SS should be taken away from the politicians and removed from the general fund and be run as a seperate entity from the federal government.

Okay, but that doesn't help the budget problem because Social Security brings at least as much as it spends.

What about Medicare?

GoneWithTheWind: I would eliminate the EPA, Dept of Education, Dept of Energy, Dept of Labor, HUD, Homeland Security, Transportation, Most of HUD, most of HHS, about half of; Dept of Interior; Agriculture; and Commerce.

How much does that add up to?
#10.1.1.1.1 Zachriel on 2013-01-04 18:01 (Reply)
The federal government has 2400 "welfare" programs hidden in the budgets of 5 different cabinet level departments. The total federal budget for welfare is about $1.2 trillion. The states in a mish-mash of matching and competing programs together spend about the same amount on welfare.

It is hard to come up with firm numbers but I would estimate that my suggestions would cut the federal budget about $2 trillion a year but that is very conservative and it could be considerably more then that.
#10.1.1.1.1.1 GoneWithTheWind on 2013-01-05 10:34 (Reply)
GoneWithTheWind: The total federal budget for welfare is about $1.2 trillion.

Means-tested federal spending was $717 billion in 2011. That includes Medicaid for the elderly in nursing homes, for instance. What did you intend to do with them?
#10.1.1.1.1.1.1 Zachriel on 2013-01-05 11:24 (Reply)
Actually you have no clue what the federal government spends on welfare because there are 2400 programs hidden in five cabinet level departments. Then you must decide if the "cost" includes the pay and benefits of a million or so federal employees who administer and work within these programs or are these costs simply allocated to that departments budget and never accounted for as "welfare".

What to do for those on medicaid in nursing homes??? A good question. The left's answer is to take my money at the point of a gun if I am unwilling and give it to enormous bureaucracies who waste 90% of it so they can claim to be doing good things. Then you must ask yourself what would be the average cost of nursing homes if the government was not paying the bill? would there be more religious and non-religious charities performing these tasks? The question really boils down to this: Must I be forced to support whomever the government decides needs support? I don't want to. Call it selfish, call it my Libertarian streak, but the bottom line is I am tired of having my earnings and assets taken from me to support bureaucracies and the indolent because some politicians have discovered they can buy votes with my money. So my vote on this is END IT. No more transfer of wealth by the federal government. It is unconstitutional, and I realize for the left that is simple an inconvenient technicality, and it is immoral, another concept unknown in the leftist world. Free us from the tyranny of the federal government.
#10.1.1.1.1.1.1.1 GoneWithTheWind on 2013-01-06 10:15 (Reply)
GoneWithTheWind: Actually you have no clue what the federal government spends on welfare because there are 2400 programs hidden in five cabinet level departments.

Didn't seem to stop you from providing numbers above. Means-tested federal spending was $717 billion in 2011, including administrative costs.
http://www.heritage.org/research/testimony/2012/05/examining-the-means-tested-welfare-state

GoneWithTheWind: Must I be forced to support whomever the government decides needs support? I don't want to.

Well, there is the rule of law, and democratic processes to determine what those laws should be.

GoneWithTheWind: So my vote on this is END IT.

So your answer is to let destitute elderly fend for themselves.
#10.1.1.1.1.1.1.1.1 Zachriel on 2013-01-06 10:43 (Reply)

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