Is Income Inequality Leading To A Crisis For Capitalism?

[itfitzme]

...offer us some evidence that Microsoft "copied" WordPerfect?

Nobody said that they copied WordPerfect outright.

In response to the idea of Microsoft's market dominance due to it's innovation, I said,

a company like the creators of WordPerfect, would come up with a new and innovative addition to their software. The next year, Microsoft would copy their creation and add it to their software package.

Every engineering department in the world has the competitor's product sitting the corner of the room. It would be stupid to do otherwise. What do you think we do in engineering, "re-invent the wheel" every time?

Of course not. The owner does a cost benefit analysis to decide if it's cheaper to buy the company outright, buy the liscencing rights, reverse engineer the product, or just develop it from scratch.

That doesn't require "proof". It is simply how it works.

Nobody has some monopoly on inventiveness and creativity. Every competitive company has hard working, creative people working for it.

Then I went on to describe how Microsoft has a natural monopoly.

The factors that result market dominance are often the result of factors beyond anyone's control. Once a company reaches a certain threshold, their dominance becomes self reinforcing. And, that is what makes monopolies become dominant. The most well understood factors are economies of scale and barriers to entry.

Nobody in their right mind doubts that software has incredible economies of scale. Once past the development, it is just a matter of making copies and the entire cost is that of the CD. The market has even eliminated that.

And, there are no serious barriers to entry to the software development market. That is why it is smarter, for a company like Apple or Microsoft, to not try to compete in the end user software development market. It is why there are so many individual software developers hoping to score on the app, like Angry Birds.

Of course, the I-phone, has a purpose in and all by itself, it is a phone. The operating system of the PC still needs some software. A more interesting question would be why Microsoft found any value in providing it's own line of MS Office tools. I propose that it is the Microsoft name that makes it worth it. Sure, there will be people that will purchase a third party software, but most will just go with what Microsoft offers. And, that just adds to the very nature of how a natural monopoly forms.

You might have made a better argument by pointing out that "a lot of the seeming innovations by third party software developers, like floating toolbars, were the result of Microsoft putting it into the operating system and development tools in the first place."

I, of course, would have replied that "then they let the third party developers test the new tools in the market before they picked and chose what to rolled into their new revision." And, I would have pointed out that, "more likely than not, a team from the operating system group at Microsoft was meeting with a group from the WordPerfect group and other third party developers, to discuss what would be the best thing to add. All the while, the owners of the third party software companies were well aware that eventually Microsoft would completley dominate the market so they were busy socking away as much money as they could so they would retire happily."

Do I have to do both sides of a sane conversation all by myself?

Yeah, because Microsoft is evil and MACS RULE!

Why would you say that "MACS RULE!"? Macs crashed as often as the IBM PC. And the whole issue with Microsoft security is because there aren't enough Apple computers around for anyone to care. Nowhere did I even imply that the Macintosh was in any way better. You created that out of your own insanity. I was discussing "Microsoft as a natural monopoly."

"Algore", "Marc Andresseen","Netscape", "Global Crossings venture?"

Really, what you have to ask yourself is how you got from "Microsoft as a natural monopoly" to Al Gore, Marc Andresseen, and Global Crossings.

What is your purpose for bashing Microsoft?

Bashing? You consider referring to Microsoft as having a natural monopoly as "bashing"?

I've gone as far as I'm going to go with this conversation. You have spiraled off into some mania driven la la land where everything connects.

The real shame of the net is that we have this great opportunity for moderate and reasonable people to discuss issues and it gets crowded out by lunatics that can't focus on anything beyond the "conspiracy theory" that they are fixated on.

You, personally, manage to take a great technology and ruin it for everyone else, not through the more complex insanity that you weave, but by simply insisting on using vulgar words. And if you gave a carp about anyone else but yourself, you wouldn't. Does it occur to you for a second that there are people, including children, that read the forum?

(Thankfully, I do carry a "mirror in my pocket" that I use to look at myself with on occasion.)

 

[itfitzme]

Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2007.
Bottom 99 percent Top 1 percent
1922 63.3% 36.7%
1929 55.8% 44.2%
1933 66.7% 33.3%
1939 63.6% 36.4%
1945 70.2% 29.8%
1949 72.9% 27.1%
1953 68.8% 31.2%
1962 68.2% 31.8%
1965 65.6% 34.4%
1969 68.9% 31.1%
1972 70.9% 29.1%
1976 80.1% 19.9%
1979 79.5% 20.5%
1981 75.2% 24.8%
1983 69.1% 30.9%
1986 68.1% 31.9%
1989 64.3% 35.7%
1992 62.8% 37.2%
1995 61.5% 38.5%
1998 61.9% 38.1%
2001 66.6% 33.4%
2004 65.7% 34.3%
2007 65.4% 34.6%


go ahead and average it out, 30 seconds in excel.......meet the 'new paradigm' same as the old paradigm....class warfare= bullshit.

Why does the table skip years with no apparent pattern to it?

This is the difference between years. 7,4,6,6,4,4,9,3,4,3,4,3,2,2,3,3,3,3,3,3,3,3

If the bottom 99% have a total of 63.3% of the wealth and the top 1 percent have 36.7%, then that means each 1% of the lesser 99% have about .63% each. That, obviously, doesn't really help much though because it's really the income compression and supposed decline of the middle class.

Most innovation has come out of the middle class, not out of the top 1%. For one thing, shear numbers would account for it. But it requires the accumulation of enough wealth to invest in a start up.

And there is a nice increase from '65 through '76 at which time it begins to decline again through 1995.

It would be great to compare that data to % change in GDP or even some historical record of innovation, but it's not very useful with randomly missing years. Is there any reason it ends in 2007?

The change in real income since 1967 has seen a greater gain in the highest 5% while the second quintile has been lower then all others.

Measure...............................Low……...2nd….....3rd………....4th…….....5th
% Chg 1967 to 2010..........16.80%....13.90%.....30.30%.......48.10%.....66.70%
% Chg Yearly Average.......0.37%......0.31%.......0.63%........0.94%.........1.22%

All in all, it says that the standard of living has increased across the board. There is, though, something missing in terms of being able to determine if if has resulted in a loss off the ability of the middle class to invest in creating new companies and product. It's just to general.

 

[itfitzme]

...and government indexes are open to questions of accuracy. Many economists regard the CPI as inherently- even intentionally- an exaggeration of inflation. http://www.econport.org/content/handbook/Inflation/Price-Index/CPI.html
.

You might want to update this one.

According to some, like ShadowStats, the CPI underestimates inflation since the BEA started doing geometric weighting and allowing for in-category substitution of goods.

The BEA has a basic response to it at Common Misconceptions about the Consumer Price Index: Questions and Answers.

Somewhere, they have a much more in depth response that directly addresses, without referencing them directly, the comments made by ShadowStats. You gotta love the internet when government agencies find themselves needing to address others concerns.

I apologize that I cannot the article.

I do see that the link you presented has a 2006 date on the bottom, though I don't find an article date. And the changes in the CPI calculations were made in 1999 and 1998.

It's pretty bad when there is one opinion that the CPI overestimates inflation and another that it underestimates it. What are we suppose to believe?

 

[itfitzme]

1. The glaring error in your precis is the underlying idea that there is a 'rich' class in this nation, i.e. the "1%."
No such class exists in an ongoing basis...merely as a snapshot in time.

"More than three-quarters of those working Americans whose incomes were in the bottom 20 percent in 1975 were also in the top 40 percent of income earners at some point by 1991, says Sowell."
Source: Thomas Sowell, "How Media Misuse Income Data To Match Their Preconceptions," Investor's Business Daily, January 12, 2010.
For text:
How Media Misuse Income Data To Match Their Preconceptions - Investors.com

I certainly hope that three-quarters of those in the bottom 20 percent managed to see their incomes increase over 17 years of working. I know that I started out, at 18, making minimum wage and by the time I was 35 had made some advancement in my career.

But, that 3/4 move from the bottom 20 percent to the top 40 percent doesn't mean the top 1% moved anywhere.

 

[Uncensored2008]

Nobody said that they copied WordPerfect outright.

The teen years are rough, but don't be so hard on yourself and deem yourself a nobody....

Every year, a company like the creators of WordPerfect, would come up with a new and innovative addition to their software. The next year, Microsoft would copy their creation and add it to their software package.

In response to the idea of Microsoft's market dominance due to it's innovation, I said,

In response to the straw man you erected?

Every engineering department in the world has the competitor's product sitting the corner of the room. It would be stupid to do otherwise. What do you think we do in engineering, "re-invent the wheel" every time?

What specific feature or idea did Microsoft "copy" from WordPerfect?

Of course not. The owner does a cost benefit analysis to decide if it's cheaper to buy the company outright, buy the liscencing rights, reverse engineer the product, or just develop it from scratch.

That doesn't require "proof". It is simply how it works.

So Microsoft is evil because they had the wits to buy better products?

Nobody has some monopoly on inventiveness and creativity. Every competitive company has hard working, creative people working for it.

Yet you claim M$ is only dominant because they have a natural monopoly.

Do you even grasp what a natural monopoly is?

{Definition of 'Natural Monopoly'
A type of monopoly that exists as a result of the high fixed or start-up costs of operating a business in a particular industry. Because it is economically sensible to have certain natural monopolies, governments often regulate those in operation, ensuring that consumers get a fair deal.

Read more: http://www.investopedia.com/terms/n/natural_monopoly.asp#ixzz1oM1pQ4G7}

In fact, the software business is the opposite of a natural monopoly, ANYONE with the brains and skills can enter the market. Hell, a guy could clone Unix, name it after himself and put it out as open source letting a massive community of user support it and offer a massive challenge to M$ in the server market...

Then I went on to describe how Microsoft has a natural monopoly.

Well, you sort of ignorantly stumbled all over yourself due to the fact that you don't grasp the terms you bandy about.

The factors that result market dominance are often the result of factors beyond anyone's control.

Which factors allowed the two man operation of Gates and Allen close off the market to other entrants?

Once a company reaches a certain threshold, their dominance becomes self reinforcing. And, that is what makes monopolies become dominant. The most well understood factors are economies of scale and barriers to entry.

Explain then, how Google was able to dominate the web and now phones, when M$ identified these as key markets long before Google existed?

Nobody in their right mind doubts that software has incredible economies of scale. Once past the development, it is just a matter of making copies and the entire cost is that of the CD. The market has even eliminated that.

Well, there you go.

No support costs and users never seek new features. So all M$ needs to do is pump out copies of Windows 3.12 and rake in the cash...

And, there are no serious barriers to entry to the software development market. That is why it is smarter, for a company like Apple or Microsoft, to not try to compete in the end user software development market. It is why there are so many individual software developers hoping to score on the app, like Angry Birds.

Microsoft and Apple have never competed. Apple is a hardware company, now more than ever.

Windows 7 is the most used operating system in the world - ON THE MACINTOSH. The preceding is true, the Intel based Macs can and do run Windows. Apple finally figured out that this doesn't hurt them, they sell the hardware.

Of course, the I-phone, has a purpose in and all by itself, it is a phone. The operating system of the PC still needs some software. A more interesting question would be why Microsoft found any value in providing it's own line of MS Office tools.

You could always read what they said on the subject.

Or you could ignorantly speculate....

I propose that it is the Microsoft name that makes it worth it. Sure, there will be people that will purchase a third party software, but most will just go with what Microsoft offers. And, that just adds to the very nature of how a natural monopoly forms.

Izzatrite?

So all those users of WordPerfect saw the M$ logo and were powerless to resist? Say, why then did M$ Word for DOS and Excel fail to gain any significant market share? Why was it that only the move to a graphical platform like Windows brought Word and Excel into consideration? You say it's just the M$ brand. What if a more sober look revealed that years of experience making Office for Mac provided M$ with an understanding of a graphical paradigm that Lotus and WordPerfect simply lacked?

You might have made a better argument by pointing out that "a lot of the seeming innovations by third party software developers, like floating toolbars, were the result of Microsoft putting it into the operating system and development tools in the first place."

More important are those things that allow collaboration and productivity.

I, of course, would have replied that "then they let the third party developers test the new tools in the market before they picked and chose what to rolled into their new revision." And, I would have pointed out that, "more likely than not, a team from the operating system group at Microsoft was meeting with a group from the WordPerfect group and other third party developers, to discuss what would be the best thing to add.

It's your straw man..

All the while, the owners of the third party software companies were well aware that eventually Microsoft would completley dominate the market so they were busy socking away as much money as they could so they would retire happily."

So they developed tools knowing that M$ had the marketing clout they lacked to succeed?

Damn, that sounds sinister...

Do I have to do both sides of a sane conversation all by myself?

It's your straw man.

Why would you say that "MACS RULE!"? Macs crashed as often as the IBM PC. And the whole issue with Microsoft security is because there aren't enough Apple computers around for anyone to care. Nowhere did I even imply that the Macintosh was in any way better. You created that out of your own insanity. I was discussing "Microsoft as a natural monopoly."

It could be that I was mocking you,

"Algore", "Marc Andresseen","Netscape", "Global Crossings venture?"

Really, what you have to ask yourself is how you got from "Microsoft as a natural monopoly" to Al Gore, Marc Andresseen, and Global Crossings.

Uh sparky, YOU brought up the congressional democrats having a hearing on M$ being a monopoly.

Have you considered Ginko Biloba?

Bashing? You consider referring to Microsoft as having a natural monopoly as "bashing"?

No, that is mere ignorance.

I've gone as far as I'm going to go with this conversation. You have spiraled off into some mania driven la la land where everything connects.

I accept your surrender,

The real shame of the net is that we have this great opportunity for moderate and reasonable people to discuss issues and it gets crowded out by lunatics that can't focus on anything beyond the "conspiracy theory" that they are fixated on.

Your issue is a steaming pile of shit.

You ignorantly misidentified the situation and draw conclusions based on your false premise.

You, personally, manage to take a great technology and ruin it for everyone else,

Sniff, now I'm going to cry...

not through the more complex insanity that you weave, but by simply insisting on using vulgar words.

Too fucking bad.

You march in here an pontificate on subjects you have zero grasp of. Then you whine when you get called on it.

You're in my back yard buddy, start spouting ignorant shit and you WILL be called to account.

And if you gave a carp about anyone else but yourself, you wouldn't. Does it occur to you for a second that there are people, including children, that read the forum?

If there are children in this forum, they have far bigger issues than me.

(Thankfully, I do carry a "mirror in my pocket" that I use to look at myself with on occasion.)

Narcissistic personalty disorder?

 

[EdwardBaiamonte]

1. The glaring error in your precis is the underlying idea that there is a 'rich' class in this nation, i.e. the "1%."
No such class exists in an ongoing basis...merely as a snapshot in time.

"More than three-quarters of those working Americans whose incomes were in the bottom 20 percent in 1975 were also in the top 40 percent of income earners at some point by 1991, says Sowell."
Source: Thomas Sowell, "How Media Misuse Income Data To Match Their Preconceptions," Investor's Business Daily, January 12, 2010.
For text:
How Media Misuse Income Data To Match Their Preconceptions - Investors.com

I certainly hope that three-quarters of those in the bottom 20 percent managed to see their incomes increase over 17 years of working. I know that I started out, at 18, making minimum wage and by the time I was 35 had made some advancement in my career.

But, that 3/4 move from the bottom 20 percent to the top 40 percent doesn't mean the top 1% moved anywhere.

But those data are less useful because income group members change every year.

1) In summary, half of all of U.S. households move from one income quintile to a different income quintile every decade.

2) The average number of people with jobs in a top income quintile household is two, while a majority of bottom income quintile households have no one employed.

3) If there are two adult income earners in a household who are married, their incomes are combined on tax forms. This is very common among top quintile income households.

4) The lowest quintile households, however, include a lot more single-person households, or two unmarried working adults living together, and sharing expenses, but reporting their incomes to the IRS as if they were two separate households.


5) 75% to 80% of the actual income for bottom quintile households is transfer payments (aka “welfare”) that are not included in IRS income data.


(6) The IRS warns against comparisons of pre-1987 and post-1987 income data due to significant changes in the definition of adjusted gross income (AGI) that made top quintile households appear to have large reported income gains, when in fact there was no change to their income at all.

7) In addition to the AGI changes, large marginal tax rate reductions during the Reagan Administration caused another large change in tax reporting. This reporting change appeared to boost top quintile income, when in fact their incomes had not changed.

8) Lastly, income for the bottom quintile does not include welfare entitlement tranfer payments making them seem far poorer than they actually are.

 

[georgephillip]

Forty years ago the richest 1% of Americans earned 7%-8% of total US income while the richest 1% of Germans earned about 11% of their country's total income.

Today the richest 1% of Americans earn around 23% of total US income while the richest 1% of Germans still take home about 11% of their aggregate income.

That's because German labor unions had voting members sitting on the boards of directors of German corporations; German workers prevented their capitalists from outsourcing millions of German jobs to Communist China while US unions did not.

Fewer welfare transfer payments would be necessary today if the US 1% and their propagandists hadn't succeeded in bribing elected Republican AND Democrats to write favorable trade and tax legislation over the last five decades.

The solution starts by FLUSHING hundreds of Republican AND Democrats from the US Congress next November.

 

[EdwardBaiamonte]

That's because German labor unions had voting members sitting on the boards of directors of German corporations; German workers prevented their capitalists from outsourcing millions of German jobs to Communist China while US unions did not.

too stupid but perfectly, exactly, 100% liberal and brain dead. You say if Detroit had kept the old union wages and benefits Detroit would have been more competitive and provided more jobs?

It is too stupid for words, and really really really liberal. I'm sorry.

 

[georgephillip]

I'll type slower.

If the UAW had had voting members sitting on the boards of directors of Ford, GM and Chrysler in the 70s and 80s, then millions of middle class jobs would not have been gifted to communists.

The US would not have lost more jobs in a single decade(2000-2010) than any other single state in history except the USSR.

Would we have fewer billionaires and millionaires today?

I certainly hope so.

You are right about one thing...you are sorry.

 

[EdwardBaiamonte]

I'll type slower.

If the UAW had had voting members sitting on the boards of directors of Ford, GM and Chrysler in the 70s and 80s, then millions of middle class jobs would not have been gifted to communists.

actually even uber liberal Obama went along with the settlement that dramatically weakened the unions so the companies would have lower costs and thus a chance to survive in a globalized economy. This is really elementary stuff. It was in all the papers. How you don't know that is a mystery. Are you a liberal? That explains it. See why we are positive a liberal will be slow? What other conclusion is possible. But, you don't have to be a liberal all your life.

 

[georgephillip]

seems interesting post, as it is very informative post I think it will be helpful in day to day life.

Imho, the rich never have enough money.
They will come back for more; just as they did in 2008.
Probably not this year or the next, but it's guaranteed to happen within the next decade if US voters continue "choosing" between Republican OR Democrat in the voting booth.
If your ballot contains third party options, consider one of their candidates before you cast another vote for Wall Street.

 

[georgephillip]

I'll type slower.

If the UAW had had voting members sitting on the boards of directors of Ford, GM and Chrysler in the 70s and 80s, then millions of middle class jobs would not have been gifted to communists.

actually even uber liberal Obama went along with the settlement that dramatically weakened the unions so the companies would have lower costs and thus a chance to survive in a globalized economy. This is really elementary stuff. It was in all the papers. How you don't know that is a mystery. Are you a liberal? That explains it. See why we are positive a liberal will be slow? What other conclusion is possible. But, you don't have to be a liberal all your life.

German companies continue to survive in the "globalized economy" even without massive infusions of tax dollars because the richest 1% of Germans take home the same percentage of German income today (11%) that they took home forty years ago.

Unlike elementary US parasites who've increased their share of US income from 8% to 23% over the last forty years by sending millions of productive jobs to Red China.

Maybe you should stop bowing and scraping to the rich?

You don't have to be a slave all your life.

 

[TakeAStepBack]

The rich people aren't the problem. Corporatism is the problem and until people get in the know, we'll keep running in that circle of blaming capitalism for the symptoms of rampant corporatism and keep screaming for socialism as an answer.

 

[georgephillip]

The money rich people inject into politics seems like the problem.
For thousands of years the rich have used the powers of government to consolidate and increase their wealth, primarily through other people's blood (war) and other people's money (debt).
Since it's hard to imagine capitalism without corporations, maybe we should consider a wall between government and private wealth?

 

[TakeAStepBack]

The money rich people inject into politics seems like the problem.
For thousands of years the rich have used the powers of government to consolidate and increase their wealth, primarily through other people's blood (war) and other people's money (debt).
Since it's hard to imagine capitalism without corporations, maybe we should consider a wall between government and private wealth?

That wall is already in the constitution in several ways. But the power brokers just jam shit under interstate commerce and continue giving interests to corporations for money. The answer is to take govt. out of business altogether and put it back in its rightful role of upholding the constitutional laws.

It wont ever happen though. We'll break it first.

Corporatism does not mean no corporations. It means govt./corporate collusions that pass subsidya nd regualtory measures that favor, and foster, the monolpies we see today by destroying competition. Then there are the bail outs....that's all socialist corpoartism at its finest.

The problem is not capitalism, it is the answer.

 

[EdwardBaiamonte]

German companies continue to survive in the "globalized economy"

did someone say they were not surviving??

even without massive infusions of tax dollars because the richest 1% of Germans take home the same percentage of German income today (11%) that they took home forty years ago.

Maybe if the Germans paid top guys more they would get better guys, not have only 70% of our per capita GDP, and not have average unemployment of 9%?

Unlike elementary US parasites

how can they be parasites when they pay all the taxes tha the rest live off of?????????????

who've increased their share of US income from 8% to 23% over the last forty years by sending millions of productive jobs to Red China

.

Would you rather they keep the jobs here and watch their industries destroyed like the auto industry for example????

Maybe you should stop bowing and scraping to the rich?

You don't have to be a slave all your life.

the rich like Jobs and Gates invent the products that got us from the stone age to here. If they are not mankinds greatest heros who is?????????

 

[georgephillip]

Nice to meet you, Ana
Welcome to the asylum.

 

[EdwardBaiamonte]

The money rich people inject into politics seems like the problem.
For thousands of years the rich have used the powers of government to consolidate and increase their wealth,

That is why Republicans since Jefferson have wanted to limit government power. Of course, if liberals create government power a war will break out to buy and control that power.


Now perhaps even the liberal can understand what libertarian or Republican means?

 

[georgephillip]

Libertarians and Republicans mean to drown government in the closest bathtub while giving corporations even more control over society. Only devout slaves and conservatives would call that freedom.

 

[Uncensored2008]

Libertarians and Republicans mean to drown government in the closest bathtub while giving corporations even more control over society. Only devout slaves and conservatives would call that freedom.

Good god but you're stupid.

Say stupid, who is it that mandates BY LAW, that individuals must buy the products that well connected corporations like Kaiser and Blue Cross?

A.) Republicans
B.) That fucking moron Obama with his Fascistcare bullshit