Capitalism Guarantees Rising Inequality

[Chris]

Our entire system is set up to reward ownership, not work.

Tax capital gains as income and raise the minimum wage.

Reward work.

 

[georgephillip]

Free markets ensure rising inequality. Piketty notes the difference of those who own wealth and those who only own their labor. Corporations (defined by their unlimited treasury to influence the political process in their favor) in one for or another will always arise from free market system. As folks gain wealth, naturally they desire to influence the political, social, and economic for their security. All free market models operate this way. So it definitely ensures rising inequality indefinitely. Given the profit motive, no one would not use their wealth to secure their wealth and expand their wealth, using whatever means necessary. Piketty says free markets are great at producing new wealth and that's evident.

Past a certain threshold, all free market models end up collapsing or needing massive regulation--becoming incompatible with meritocratic values. Piketty argues for the latter of regulation to balance the un-meritocratic and unequal distribution.

Krugman seems to interpret Piketty in a way that implies meritocracy is giving way to family dynasties in the US:

"In America in particular the share of national income going to the top one percent has followed a great U-shaped arc.

"Before World War I the one percent received around a fifth of total income in both Britain and the United States.

"By 1950 that share had been cut by more than half.

"But since 1980 the one percent has seen its income share surge again—and in the United States it’s back to what it was a century ago.

"Still, today’s economic elite is very different from that of the nineteenth century, isn’t it?

"Back then, great wealth tended to be inherited; aren’t today’s economic elite people who earned their position?

"Well, Piketty tells us that this isn’t as true as you think, and that in any case this state of affairs may prove no more durable than the middle-class society that flourished for a generation after World War II.

"The big idea of Capital in the Twenty-First Century is that we haven’t just gone back to nineteenth-century levels of income inequality, we’re also on a path back to 'patrimonial capitalism,' in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties."

Why We?re in a New Gilded Age by Paul Krugman | The New York Review of Books

we’re also on a path back to 'patrimonial capitalism,' in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties."

Exactly! Because the 3 richest Americans, Bill Gates, Warren Buffett and Larry Ellison all inherited their wealth. No wait.

Numbers 4 & 5, Charles and David Koch inherited their billions. No, wait, when ther dad died in 1967, Koch Industries was worth millions, not tens of billions. They must have done some work.

Numbers 6-9, members of the Walton family, must have benefitted from a family dynasty. No, wait, Sam Walton didn't open the first WalMart until 1962. WalMart stock didn't get listed until 1970. No dynasty there.

Number 10 is Bloomberg.
Number 11 is Sheldon Adelson.
Number 12 is Jeff Bezos.
Number 13 & 14 are Larry Page and Sergey Brin.

Haven't seen any evidence of dynasties yet.
Perhaps you have someone in mind?

Charles and David and all the Waltons inherited their wealth.
Maybe you're wearing your rich-bitch blinders?

"Also, there is a strong correlation between inequalities in capital distribution with those in income distribution. So typically, while the top 10 per cent of the population has access to 20 per cent of total income, they actually have access to 50 per cent of capital or wealth.

The bottom 50 per cent would own no wealth. The question really posed is that when we look forward to the next 50 or 100 years, will these inequalities increase or move down?

"(Piketty's) key take is that as long as the return on capital is higher than the rate of growth of the economy, there would be a natural tendency for inequalities to increase.

Marx for the millennials | Business Line

 

[priceless]

What do these percentages of wealth even refer to? If a single king would own the entire planet, he could print money and allow the people to engage in commerce using the money and paper assets. Then, if the economy of printed money would stratify the population, the lower strata could claim that the higher strata controlled a disproportionate amount of the wealth. Still, the only real owner would be the king and that king would continue to own 100% of the wealth despite everyone else stewarding it for him.

The only reason anyone complains about wealth-stratification is to justify entitling themselves to more printed money or just to pump more printed money into the economy to grow their businesses faster. What other purpose is there?

 

[georgephillip]

Our entire system is set up to reward ownership, not work.

Tax capital gains as income and raise the minimum wage.

Reward work.

Lift the FICA tax cap on earned income and apply FICA taxes to unearned income.

 

[Toddsterpatriot]

Krugman seems to interpret Piketty in a way that implies meritocracy is giving way to family dynasties in the US:

"In America in particular the share of national income going to the top one percent has followed a great U-shaped arc.

"Before World War I the one percent received around a fifth of total income in both Britain and the United States.

"By 1950 that share had been cut by more than half.

"But since 1980 the one percent has seen its income share surge again—and in the United States it’s back to what it was a century ago.

"Still, today’s economic elite is very different from that of the nineteenth century, isn’t it?

"Back then, great wealth tended to be inherited; aren’t today’s economic elite people who earned their position?

"Well, Piketty tells us that this isn’t as true as you think, and that in any case this state of affairs may prove no more durable than the middle-class society that flourished for a generation after World War II.

"The big idea of Capital in the Twenty-First Century is that we haven’t just gone back to nineteenth-century levels of income inequality, we’re also on a path back to 'patrimonial capitalism,' in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties."

Why We?re in a New Gilded Age by Paul Krugman | The New York Review of Books

we’re also on a path back to 'patrimonial capitalism,' in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties."

Exactly! Because the 3 richest Americans, Bill Gates, Warren Buffett and Larry Ellison all inherited their wealth. No wait.

Numbers 4 & 5, Charles and David Koch inherited their billions. No, wait, when ther dad died in 1967, Koch Industries was worth millions, not tens of billions. They must have done some work.

Numbers 6-9, members of the Walton family, must have benefitted from a family dynasty. No, wait, Sam Walton didn't open the first WalMart until 1962. WalMart stock didn't get listed until 1970. No dynasty there.

Number 10 is Bloomberg.
Number 11 is Sheldon Adelson.
Number 12 is Jeff Bezos.
Number 13 & 14 are Larry Page and Sergey Brin.

Haven't seen any evidence of dynasties yet.
Perhaps you have someone in mind?

Charles and David and all the Waltons inherited their wealth.
Maybe you're wearing your rich-bitch blinders?

"Also, there is a strong correlation between inequalities in capital distribution with those in income distribution. So typically, while the top 10 per cent of the population has access to 20 per cent of total income, they actually have access to 50 per cent of capital or wealth.

The bottom 50 per cent would own no wealth. The question really posed is that when we look forward to the next 50 or 100 years, will these inequalities increase or move down?

"(Piketty's) key take is that as long as the return on capital is higher than the rate of growth of the economy, there would be a natural tendency for inequalities to increase.

Marx for the millennials | Business Line

Charles and David

How much did they inherit in 1967? Spell it out.

and all the Waltons inherited their wealth.

Wealth created starting in the 1960s.
Hardly a dynasty of ever lasting wealth.
Seems like fairly recent wealth to me.

Maybe you're wearing your dumb liberal poor-bitch blinders?

 

[georgephillip]

What do these percentages of wealth even refer to? If a single king would own the entire planet, he could print money and allow the people to engage in commerce using the money and paper assets. Then, if the economy of printed money would stratify the population, the lower strata could claim that the higher strata controlled a disproportionate amount of the wealth. Still, the only real owner would be the king and that king would continue to own 100% of the wealth despite everyone else stewarding it for him.

The only reason anyone complains about wealth-stratification is to justify entitling themselves to more printed money or just to pump more printed money into the economy to grow their businesses faster. What other purpose is there?

I'm not sure if this helps or not:

"The Wealth Distribution

"In the United States, wealth is highly concentrated in a relatively few hands.

"As of 2010, the top 1% of households (the upper class) owned 35.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 53.5%, which means that just 20% of the people owned a remarkable 89%, leaving only 11% of the wealth for the bottom 80% (wage and salary workers).

"In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.1%. Table 2 and Figure 1 present further details, drawn from the careful work of economist Edward N. Wolff at New York University (2012)."

Who Rules America: Wealth, Income, and Power

 

[dblack]

Our entire system is set up to reward ownership, not work.

Is it? Do you think people who merely "own" things make money purely from passive ownership? They really don't. If they don't do something productive with what they own, they won't make money.

 

[georgephillip]

Our entire system is set up to reward ownership, not work.

Is it? Do you think people who merely "own" things make money purely from passive ownership? They really don't. If they don't do something productive with what they own, they won't make money.

What if economic elites do something extractive with their money instead of doing something productive?

"An 'Extraction Economy is a concept from economics that refers to nation that derives most of it’s productivity from non-renewable resources, with the implication that elites are skimming a certain percentage off the top, and instead of investing that money in productive enterprises, spend it on non-productive activities instead. "

America as an Extraction Economy: Acemoglu and Robinsons's "Why Nations Fail" - * *D. Mark Key

Some elites in the US are, essentially, gambling in the global Wall Street casino with their money instead of using it to create jobs at home.

 

[dblack]

Our entire system is set up to reward ownership, not work.

Is it? Do you think people who merely "own" things make money purely from passive ownership? They really don't. If they don't do something productive with what they own, they won't make money.

What if economic elites do something extractive with their money instead of doing something productive?

"An 'Extraction Economy is a concept from economics that refers to nation that derives most of it’s productivity from non-renewable resources, with the implication that elites are skimming a certain percentage off the top, and instead of investing that money in productive enterprises, spend it on non-productive activities instead. "

America as an Extraction Economy: Acemoglu and Robinsons's "Why Nations Fail" - * *D. Mark Key

Some elites in the US are, essentially, gambling in the global Wall Street casino with their money instead of using it to create jobs at home.

I'm not not sure what you mean by "extractive". If someone manages to generate a profit by squirreling away certain resources, resources that end up being rare in the future, I'd argue that their decision was indeed "productive ".

 

[bripat9643]

What do these percentages of wealth even refer to? If a single king would own the entire planet, he could print money and allow the people to engage in commerce using the money and paper assets. Then, if the economy of printed money would stratify the population, the lower strata could claim that the higher strata controlled a disproportionate amount of the wealth. Still, the only real owner would be the king and that king would continue to own 100% of the wealth despite everyone else stewarding it for him.

The only reason anyone complains about wealth-stratification is to justify entitling themselves to more printed money or just to pump more printed money into the economy to grow their businesses faster. What other purpose is there?

What kind of commerce could people engage in if they didn't own anything?

 

[bripat9643]

Our entire system is set up to reward ownership, not work.

Is it? Do you think people who merely "own" things make money purely from passive ownership? They really don't. If they don't do something productive with what they own, they won't make money.

What if economic elites do something extractive with their money instead of doing something productive?

"An 'Extraction Economy is a concept from economics that refers to nation that derives most of it’s productivity from non-renewable resources, with the implication that elites are skimming a certain percentage off the top, and instead of investing that money in productive enterprises, spend it on non-productive activities instead. "

America as an Extraction Economy: Acemoglu and Robinsons's "Why Nations Fail" - * *D. Mark Key

Some elites in the US are, essentially, gambling in the global Wall Street casino with their money instead of using it to create jobs at home.

There is no such economic term as "extractive economy," or even "extractive," for that matter. It's purely a term of your invention. I think it's an attempt to paint certain industries as non-productive, as if copper an iron were just laying around on the ground in ingot form for someone to collect.

 

[georgephillip]

Is it? Do you think people who merely "own" things make money purely from passive ownership? They really don't. If they don't do something productive with what they own, they won't make money.

What if economic elites do something extractive with their money instead of doing something productive?

"An 'Extraction Economy is a concept from economics that refers to nation that derives most of it’s productivity from non-renewable resources, with the implication that elites are skimming a certain percentage off the top, and instead of investing that money in productive enterprises, spend it on non-productive activities instead. "

America as an Extraction Economy: Acemoglu and Robinsons's "Why Nations Fail" - * *D. Mark Key

Some elites in the US are, essentially, gambling in the global Wall Street casino with their money instead of using it to create jobs at home.

There is no such economic term as "extractive economy," or even "extractive," for that matter. It's purely a term of your invention. I think it's an attempt to paint certain industries as non-productive, as if copper an iron were just laying around on the ground in ingot form for someone to collect.

My imagination isn't good enough to be a capitalist:

Democracy and markets: More on the extractive/inclusive debate | The Economist

"Inclusive political institutions tend to support inclusive economic institutions.

"This leads to a more equal distribution of income, empowering a broad segment of society and making the political playing field even more level.

"This limits what one can achieve by usurping political power and resources the incentive to re-create extractive political institutions.

"That mechanism hasn't worked in the last 30 years.

"In contract to the 'Great Compression' from the 1940s to 1980s, economic inequality has widened sharply in the US and parts of Europe.

"So why hasn't the political playing field become more level? Acemoglu and Robinson give a hint suggesting that

"Markets can be dominated by a few firms, charging exorbitant prices and blocking the entry of mnore efficent rivals and new technologies."

 

[dblack]

What if economic elites do something extractive with their money instead of doing something productive?

"An 'Extraction Economy is a concept from economics that refers to nation that derives most of it’s productivity from non-renewable resources, with the implication that elites are skimming a certain percentage off the top, and instead of investing that money in productive enterprises, spend it on non-productive activities instead. "

America as an Extraction Economy: Acemoglu and Robinsons's "Why Nations Fail" - * *D. Mark Key

Some elites in the US are, essentially, gambling in the global Wall Street casino with their money instead of using it to create jobs at home.

There is no such economic term as "extractive economy," or even "extractive," for that matter. It's purely a term of your invention. I think it's an attempt to paint certain industries as non-productive, as if copper an iron were just laying around on the ground in ingot form for someone to collect.

My imagination isn't good enough to be a capitalist:

Democracy and markets: More on the extractive/inclusive debate | The Economist

"Inclusive political institutions tend to support inclusive economic institutions.

"This leads to a more equal distribution of income, empowering a broad segment of society and making the political playing field even more level.

"This limits what one can achieve by usurping political power and resources the incentive to re-create extractive political institutions.

"That mechanism hasn't worked in the last 30 years.

"In contract to the 'Great Compression' from the 1940s to 1980s, economic inequality has widened sharply in the US and parts of Europe.

"So why hasn't the political playing field become more level? Acemoglu and Robinson give a hint suggesting that

"Markets can be dominated by a few firms, charging exorbitant prices and blocking the entry of mnore efficent rivals and new technologies."

Quotefest.

 

[gnarlylove]

Our entire system is set up to reward ownership, not work.

Is it? Do you think people who merely "own" things make money purely from passive ownership? They really don't. If they don't do something productive with what they own, they won't make money.

"Productive" often happens to be unrelated to the "productive" or "real" economy (opposed to speculative/financial economy).

The system is designed for those with a large sum of capital with few taxes and limits on capital flows in the financial economy. Since the regulation and taxation is low and the chance for gain is high (and the risk is off-set by "too big to fail" insurance) we see your definition of productive does not correspond to the real economy of the everyman. But isn't your ideology about everyone? why then does your idea of productive need not relate to the world of productive growth, but can be "productive" so long as wealth is being generated (and either sent to tax havens or re-invested to make more wealth for themselves--not to be spent on the real economy).

 

[bripat9643]

Our entire system is set up to reward ownership, not work.

Is it? Do you think people who merely "own" things make money purely from passive ownership? They really don't. If they don't do something productive with what they own, they won't make money.

"Productive" often happens to be unrelated to the "productive" or "real" economy (opposed to speculative/financial economy).

The system is designed for those with a large sum of capital with few taxes and limits on capital flows in the financial economy. Since the regulation and taxation is low and the chance for gain is high (and the risk is off-set by "too big to fail" insurance) we see your definition of productive does not correspond to the real economy of the everyman. But isn't your ideology about everyone? why then does your idea of productive need not relate to the world of productive growth, but can be "productive" so long as wealth is being generated (and either sent to tax havens or re-invested to make more wealth for themselves--not to be spent on the real economy).

I like the way you make-up your own personal idiosyncratic definitions for the words people use and then base your arguments on those bogus definitions. You definition of "productive" is pure fantasy. If I have some woodworking machinery in my garage, and I use to make duck calls which I sell at the local sporting goods store, I have produce something. It didn't require any regulations, a large sum of capital, restrictions on capital flows or any of the other humbug you listed.

 

[dblack]

Our entire system is set up to reward ownership, not work.

Is it? Do you think people who merely "own" things make money purely from passive ownership? They really don't. If they don't do something productive with what they own, they won't make money.

"Productive" often happens to be unrelated to the "productive" or "real" economy (opposed to speculative/financial economy).

The system is designed for those with a large sum of capital with few taxes and limits on capital flows in the financial economy. Since the regulation and taxation is low and the chance for gain is high (and the risk is off-set by "too big to fail" insurance) we see your definition of productive does not correspond to the real economy of the everyman. But isn't your ideology about everyone? why then does your idea of productive need not relate to the world of productive growth, but can be "productive" so long as wealth is being generated (and either sent to tax havens or re-invested to make more wealth for themselves--not to be spent on the real economy).

The too big to fail shit isn't part of my ideology.

 

[gnarlylove]

Is it? Do you think people who merely "own" things make money purely from passive ownership? They really don't. If they don't do something productive with what they own, they won't make money.

"Productive" often happens to be unrelated to the "productive" or "real" economy (opposed to speculative/financial economy).

The system is designed for those with a large sum of capital with few taxes and limits on capital flows in the financial economy. Since the regulation and taxation is low and the chance for gain is high (and the risk is off-set by "too big to fail" insurance) we see your definition of productive does not correspond to the real economy of the everyman. But isn't your ideology about everyone? why then does your idea of productive need not relate to the world of productive growth, but can be "productive" so long as wealth is being generated (and either sent to tax havens or re-invested to make more wealth for themselves--not to be spent on the real economy).

I like the way you make-up your own personal idiosyncratic definitions for the words people use and then base your arguments on those bogus definitions. You definition of "productive" is pure fantasy. If I have some woodworking machinery in my garage, and I use to make duck calls which I sell at the local sporting goods store, I have produce something. It didn't require any regulations, a large sum of capital, restrictions on capital flows or any of the other humbug you listed.

You're hopeless. I posted a link demonstrating the validity of the distinction meaning that I did not invent it but there is genuine economics behind distinguishing between the real economy and the speculative economy. The distinction "...lay in the fact, emphasized by both Marx and Keynes, that the capital accumulation process was twofold: involving the ownership of real assets and also the holding of paper claims to those real assets. Under these circumstances the possibility of a contradiction between real accumulation and financial speculation was intrinsic to the system from the start." The Financialization of Capitalism

But you're right otherwise. It would be dubious to invent idiosyncratic terms. But given your alleged understanding of economics and my stupidity (read: Marxism) you ought to know this but I'm beginning to doubt you have any substantive knowledge about some of your more forthright assertions and allegations.

 

[gnarlylove]

Is it? Do you think people who merely "own" things make money purely from passive ownership? They really don't. If they don't do something productive with what they own, they won't make money.

"Productive" often happens to be unrelated to the "productive" or "real" economy (opposed to speculative/financial economy).

The system is designed for those with a large sum of capital with few taxes and limits on capital flows in the financial economy. Since the regulation and taxation is low and the chance for gain is high (and the risk is off-set by "too big to fail" insurance) we see your definition of productive does not correspond to the real economy of the everyman. But isn't your ideology about everyone? why then does your idea of productive need not relate to the world of productive growth, but can be "productive" so long as wealth is being generated (and either sent to tax havens or re-invested to make more wealth for themselves--not to be spent on the real economy).

The too big to fail shit isn't part of my ideology.

The free market necessitates it. Capitalists always seek to secure against risk (i.e. profit motive). The best way to do that is to have a strong government that can extract from the taxpayer, the working citizen to secure against their risks.

You may start with a free market, but as soon as certain companies begin to accumulate capital, they inevitably use their capital to secure against capital loss. It's only natural. So inevitably free markets become heavily regulated or insured--favoring those with the capital to afford such influence.

If a government didn't exist before free markets, they would be formed to protect and insure capitalists and land holders from risk.

 

[dblack]

"Productive" often happens to be unrelated to the "productive" or "real" economy (opposed to speculative/financial economy).

The system is designed for those with a large sum of capital with few taxes and limits on capital flows in the financial economy. Since the regulation and taxation is low and the chance for gain is high (and the risk is off-set by "too big to fail" insurance) we see your definition of productive does not correspond to the real economy of the everyman. But isn't your ideology about everyone? why then does your idea of productive need not relate to the world of productive growth, but can be "productive" so long as wealth is being generated (and either sent to tax havens or re-invested to make more wealth for themselves--not to be spent on the real economy).

The too big to fail shit isn't part of my ideology.

The free market necessitates it.

A free market prohibits it.

 

[Toddsterpatriot]

"Productive" often happens to be unrelated to the "productive" or "real" economy (opposed to speculative/financial economy).

The system is designed for those with a large sum of capital with few taxes and limits on capital flows in the financial economy. Since the regulation and taxation is low and the chance for gain is high (and the risk is off-set by "too big to fail" insurance) we see your definition of productive does not correspond to the real economy of the everyman. But isn't your ideology about everyone? why then does your idea of productive need not relate to the world of productive growth, but can be "productive" so long as wealth is being generated (and either sent to tax havens or re-invested to make more wealth for themselves--not to be spent on the real economy).

The too big to fail shit isn't part of my ideology.

The free market necessitates it. Capitalists always seek to secure against risk (i.e. profit motive). The best way to do that is to have a strong government that can extract from the taxpayer, the working citizen to secure against their risks.

You may start with a free market, but as soon as certain companies begin to accumulate capital, they inevitably use their capital to secure against capital loss. It's only natural. So inevitably free markets become heavily regulated or insured--favoring those with the capital to afford such influence.

If a government didn't exist before free markets, they would be formed to protect and insure capitalists and land holders from risk.

You may start with a free market, but as soon as certain companies begin to accumulate capital, they inevitably use their capital to secure against capital loss.

Which is why no bank lost a single dollar during the financial crisis.

If you ever listened to what you post, you'd realize how stupid it sounds.