Tuesday, November 29, 2011

Consumers Are Responsible for Income Inequality

"Paul Krugman laments in his Nov. 3 New York Times column "Oligarchy, American Style," "We have a society in which money is increasingly concentrated in the hands of a few people, and in which that concentration of income and wealth threatens to make us a democracy in name only." 

I'd ask Krugman this question: Who's putting all the money in the hands of the few, and what do you think ought to be done to stop millions, perhaps billions, of people from using their money in ways that lead to high income and wealth concentration? In other words, I'd like Krugman to tell us what should be done to stop the millions of children who make Joanne Rowling rich, the millions who fork over their money to the benefit of LeBron James, and the hundreds of millions of people who shop at Wal-Mart."

~Walter Williams

155 Comments:

At 11/29/2011 5:35 PM, Blogger Ironman said...

Or, dare I say, Oprah!

 
At 11/29/2011 5:42 PM, Blogger Hydra said...

Who's putting all the money in the hands of the few,........

===========================

There being so few, what choices are there, really?

 
At 11/29/2011 5:46 PM, Blogger Hydra said...

"We have a society in which money is increasingly concentrated in the hands of a few people......

That increasig conentration cannot continue forever, therfore the wquestion is how will it stop and when.

I doubt MP has the answers any more than Krugman does.

 
At 11/29/2011 5:52 PM, Blogger Jet Beagle said...

hydra: "There being so few, what choices are there, really?"

Please name a consumer good supplied by private enterprise for which there are no choices.

 
At 11/29/2011 6:03 PM, Blogger VangelV said...

There being so few, what choices are there, really?

Really?



1

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At 11/29/2011 6:05 PM, Blogger Hydra said...

I did not say there were no choices, but increasingly that money still winds up in fewer and fewer hands.

The question was, who is putting all that money in the hands of the few. Never mind what they got in exchange, or what choices there were along the way, the end result still -seems- to be the same.

 
At 11/29/2011 6:06 PM, Blogger PeakTrader said...

Hydra says: "We have a society in which money is increasingly concentrated in the hands of a few people."

Does that mean you feel sorry for the 10,000 workers at Microsoft who became millionaires, because only a few became billionaires (a measly few million dollars is nothing compared to the $100 billion of Bill Gates, Paul Allen, and Steve Ballmer).

 
At 11/29/2011 6:09 PM, Blogger Benjamin said...

Of course, Williams is assuming perfect markets.

The USA market is heavily regulated and institutionalized.

Try practicing law without a license, for example.

Try opening up a strip bar in North Dakota, or a pot farm in Los Angeles.

Was it "free markets" that put $1.6 million of Freddie Mac money into the pocket of Newt Gingrich?

If China has slave labor making raw commodities for the plastics industry, is it really free markets that are enriching importers?

 
At 11/29/2011 6:10 PM, Blogger Hydra said...

If consumers are responsible for income inequality and they decide to do something about it, what would they do? Isn't that MPs question, although directed at Krugman??

OK, say they decide to cut back drastically on their consumption. Who would be the first people laid off? Sounds likea sure path to INCREASE income inequality, not decrease it.

And let's not even talk about wealth inequality.

 
At 11/29/2011 6:13 PM, Blogger VangelV said...

The question was, who is putting all that money in the hands of the few.

There are two answers. One is the government as it protects its friends by offering subsidies and passing legislation that makes competition harder. These people do not deserve what they get and the best way to make them poor is to take from government the power to pick winners and create losers. Both the left and right reject the solution because the parties are hoping to keep profiting from the transfer process.

The other answer is consumers. If they want to make Apple investors very rich why should we interfere? They give their money willingly and get what they want in exchange.

Never mind what they got in exchange, or what choices there were along the way, the end result still -seems- to be the same.

I have no clue what you mean. It matters how the money is earned.

 
At 11/29/2011 6:14 PM, Blogger Hydra said...

Hydra says: "We have a society in which money is increasingly concentrated in the hands of a few people."

==============================

I did not say that, Krugman did. How I feel about it has nothing to do with anything.

1) Is this trend occurring?

2) Can this trend continue?

3) If not, how will it change?


Why does that have to be about feelings, dogma, or economic theory?

 
At 11/29/2011 6:16 PM, Blogger VangelV said...

Of course, Williams is assuming perfect markets.

Not at all. No such assumption is required.

The USA market is heavily regulated and institutionalized.

Yes it is. That is a point that Williams has made before. And he has fought to reduce regulations so that even more people who deserve it can become rich while those that do not and can't compete become poor.

Nice to know that you have seen the light and are calling for fewer regulations and less government.

 
At 11/29/2011 6:20 PM, Blogger Hydra said...

If the money is increasingly conentrated inthe hands of a few people, (and if I don't like this) what choice do I have as a consumer to change what hands it winds up in?

I can buy Coke or I can buy Pepsi, but they may have the same majority shareholders. I have no say in where the money winds up.

I can buy Joe's Cola, but there is a pretty good chance that if Joe's cola gets popular, Pepsi is going to buy it.

Again I have no say in where the money winds up.

I dont think MPs thesis is proven. Anyway, all I want is a drink, after I have bought it, where the money goes is none of my business.

 
At 11/29/2011 6:22 PM, Blogger PeakTrader said...

"We have a society in which money is increasingly concentrated in the hands of a few people."

Without those "few people" everyone else would have even less money.

 
At 11/29/2011 6:23 PM, Blogger Hydra said...

One is the government as it protects its friends by offering subsidies and passing legislation that makes competition harder.

==============================

Who do you think those friends are? Aren't they the same handful of very rich people (mostly)?

Do I blame government practitioners for taking their money, or them for offering it?

 
At 11/29/2011 6:36 PM, Blogger Hydra said...

Without those "few people" everyone else would have even less money.

================================

But if the money IS increasingly concentrated in their hands, everyone else will have less money anyway.

Let's realize that what started this is that people suddenly realize that they DO have less money, and they are less well off.

Maybe they are not, and just feel that way, in which case item 1) is false and this is a non argument.








OK next comes the bigger pie argument.


Look, the GDP is X trillion. Next year it is x + a trillion and so forth. All a long a bigger percentage of that sum winds up in fewer and fewer hands. We all work (or most of us) to create that GDP.

At what point do we say, hey wait a minute, how come we are all working on this and twenty people wind up with almost all the money? Are they really that good, that creative, that they deserve almost everything? or are we just being suckers?

 
At 11/29/2011 6:40 PM, Blogger Hydra said...

Isn;t this just anotherversion of the Laffer curve argument?

Beyond a certain point we agree there are diminishing returns, but we cannot agree on what that point is.


OK forget about it, then. Lets work on how we can agree to measure what diminishing returns are.

 
At 11/29/2011 6:45 PM, Blogger PeakTrader said...

Hydra, are you saying eventually one person will have all the money and everyone else will have zero?

Would you rather have a million dollars if someone else has a billion dollars, or would you rather have $100,000 if someone else has a million dollars?

 
At 11/29/2011 6:50 PM, Blogger Che is dead said...

More disturbing is the fact that job creation is increasingly the result of the efforts of a few. When will Paul Krugman step out into the real world and create good paying jobs with great benfits? You know, just like the jobs he insists that others create.

 
At 11/29/2011 6:52 PM, Blogger Che is dead said...

"Hydra, are you saying eventually one person will have all the money and everyone else will have zero?" -- Peak Trader

Have you been reading his comments? He doesn't know what he is saying.

 
At 11/29/2011 7:01 PM, Blogger Marko said...

MP - you ask some good questions of Krugman. I assume he would answer the question of what to do with something like: we need to take money from the rich and give it to the poor, or at least force the rich to pay for "infrastructure improvements." His claim is, I assume, what he thinks would be a justification for income "redistribution."

I have some additional tough questions for Krugman:

Since the poor keep getting richer too, why does he care that the rich are getting richer? What exactly is the problem with that?

You say we are becoming a democracy in name only, in what way are the people not choosing our elected leaders? You are forgetting what is like in countries that are not democracies.

Can Krugman point to a time when we were more "democratic" and wealth was more dispersed? Was it before the 1960s when political machines controlled elections? Was it in colonial times? When was this magic time when the income was distributed more 'fairly' and there was more democracy?

I would submit that we are more democratic now than ever in history, and simultaneously the most wealthy. It sucks not to have a job, but it is best to do it in a time a place where one will not starve to death. We should be thanking our capitalist fathers for that! What is in danger now is not democracy, but the very capitalism that made us so wealthy.

 
At 11/29/2011 7:45 PM, Blogger Sean said...

Hmmm... I thought more money was made by investing than producing goods and selling them. If that's the case, it's not directly any consumer's choice who makes the most money. So it seems like a straw man argument.

 
At 11/29/2011 7:53 PM, Blogger bix1951 said...

OK this is an argument about who has power, who dominates, "the democracy does not work because the voters get fooled by ads", but as we have seen, left wing interest groups actually have plenty of money! so the whole argument is fallacious!
special interests dominate in their own domain....
but as a landlord, we are constantly trying to beat off crazy laws that are coming from tenant advocates
I guess the landlords have just not been able to rule everyone with their big money.....
and actually government has constantly gotten more powerful and the regulations keep coming fast and furious so once again the whole argument seems fallacious to me
the little guys are getting plenty of goodies from government

 
At 11/29/2011 7:57 PM, Blogger sethstorm said...

Sounds like the consumers are being used as an attempt to deflect blame, not as a true argument against Krugman.

The influence that each of those entities has (as opposed to Krugman's incorrect blame of money) are what make up such an oligarchy - not money. Consumers are led more like cattle to a limited selection, despite being stated as the ones that drive what is being offered in the first place.

 
At 11/29/2011 8:13 PM, Blogger Len said...

It seems to me that if you own any common stock, you can reasonably be considered one of "the few". By the way if you own an annuity, an insurance policy or have any type of retirement plan. All of the above own common stock.
The idea of us v. them is a waste of time.

 
At 11/29/2011 8:24 PM, Blogger rjs said...

you might want to read krugman; he isnt talking about jk rawling or lebran james..

"Can anyone seriously deny that our political system is being warped by the influence of big money, and that the warping is getting worse as the wealth of a few grows ever larger?"

http://www.nytimes.com/2011/11/04/opinion/oligarchy-american-style.html

 
At 11/29/2011 9:10 PM, Blogger Hydra said...

Pt is raising a red Herring.

I have not suggested anything, one way or another, so there is no point in jumping on me.

Take it one point at a time.
1) Is it true that a smaller percentage of people are taking home more of the money ( and retaining more of the wealth).

Do we believe that middle class incomes have stagnated and the top 0.001 have increased 400%, or not?


Never mind if it isn't the SAME people for now, just can we agree on the statistics?

 
At 11/29/2011 9:16 PM, Blogger Methinks said...

Hydra,

Money is not wealth.

If you sold all of your property, right down to your underwear, you would be sitting naked and freezing in a public park somewhere. You would have a bag of money for the property you sold, but would you consider yourself rich?

No.

If you did consider yourself rich, it is only because you would know that you can use that bag of money to satisfy your wants and needs.

Wealth is constantly created and destroyed. Enterprises are created and competed out of business (if they are not politically connected cronies) all the time.

Those who are able to create the most wealth organizing the resources they are at this moment are, by definition, the minority among us. But, that wealth is not "concentrated" in the hands of a static few. The market ensures that it passes from the least able to the best able. The government ensures only that resources are passed from their highest use to their lowest use.

If you, for example, created something highly desirable, then you too would become very wealthy. You would join Jobs, Gates, Buffet, et al. This happens all the time.

It's unfortunate that former economist Paul Krugman is engaged in stupid and thoroughly debunked Marxist handwringing about "concentrations of wealth" in a capitalist system, but that doesn't mean you should swallow the BS.

Here's a much more insightful essay on wealth by an actual economist (i.e., one who didn't abandon the science to shill for socialism).

http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=97&chapter=3326&layout=html&Itemid=27

 
At 11/29/2011 9:22 PM, Blogger Hydra said...

Len: your class and lack of imagination is showing. There are lots and lots of people who have none of those things.

If the top 10% control 70% of the wealth and the bottom 40% control 1% of the wealth you cannot very well confuse the issue by pointing to the millions that have managed to accumulate $70k in their 401k and confusing them with the "few" we are talking about in this context.

 
At 11/29/2011 9:30 PM, Blogger Hydra said...

Methinks.

Money is not wealth. But the people with the top 10% of income also control 70% of the wealth, and wealth is denominated in money.

Another red Herring.

Is a smaller proportion of the population earning a greater portion of the total wealth over time, or not?

No need to get all philosophical a out it, just yes or no?

 
At 11/29/2011 9:31 PM, Blogger Methinks said...

Do we believe that middle class incomes have stagnated and the top 0.001 have increased 400%, or not?

No.

1) Is it true that a smaller percentage of people are taking home more of the money ( and retaining more of the wealth).

This is confused garbage. First of all, "the money" is not sitting in a giant pile for people to cart off. Secondly, money is not wealth.

Consider for a moment that an entrepreneur's wealth generally consists mostly of the value of his investment in his company. He is not "taking home more money" ostensibly created by the collective. His wealth is the present value of the expected cash flow generated by the resources he organizes. If his prospects dim - say, because consumer tastes change as Hydra introduces a competing product - then his wealth will drop substantially and Hydra's wealth will increase. The expected cash flows for Hydra's invention rise dramatically while the competition from Hydra depresses the expected future cash flow for our hapless entrepreneur.

Those people whose use capital (human or otherwise) most efficiently will earn a higher income. If you have a particularly marketable skill or if you can increase your market, then you will earn more than someone who doesn't and can't. If you create a highly desirable product, you will become wealthier than someone who doesn't. Of course some people will excel and others will not.

The whole point is that those who excel are by definition the few among us.

Peak Trader has repeatedly (and correctly) pointed out to you that the few make the many better off and that the many would be far worse off if the few were prevented or disincentivized from engaging in wealth creating activities that make them better off.

 
At 11/29/2011 9:35 PM, Blogger Hydra said...

Methinks:

I said never mind if it is the SAME people. We can deal with That next or later.

Is an increasingly smaller number of people taking home a larger percentage of total income, or not.


If not, then none of the rest matters.

 
At 11/29/2011 9:38 PM, Blogger Methinks said...

Money is not wealth. But the people with the top 10% of income also control 70% of the wealth, and wealth is denominated in money.

That wealth is expressed in terms of currency is not in any way meaningful.

I already addressed this concentration non-issue and Ludwig Lachman does so much better than I in his short essay to which I provided a link in my first post. I highly recommend you read it.

Is a smaller proportion of the population earning a greater portion of the total wealth over time, or not?

No.

 
At 11/29/2011 9:41 PM, Blogger arbitrage789 said...

I agree with the proposition that consumers are “largely” responsible for income inequality. But there is a bit more to the analysis. There is the issue of various interest groups getting certain government officials to pass laws that are in their interest. Exhibit “A” would be the trial lawyers. They’ve got the system set up so that they can be parasites on the large corporations. In that case, the “consumers” aren’t “voting” with their purchases.

Then, of course, we’ve got the bankers and the real estate industry setting up the rules so that they can get rich. No doubt there are plenty of other examples. So it’s not quite as simple as the consumers voting with their wallets.

This doesn’t mean that I’m arguing for an increase in the top tax marginal rate on income; I’m not. There is, however, the matter of the inheritance tax, which is relevant here.

 
At 11/29/2011 9:43 PM, Blogger Hydra said...

Methinks says no.

OK, then. End of discussion.

None of your other comments about creativity or income production make any sense, except in defense of this thing that you say is not happening.

 
At 11/29/2011 9:44 PM, Blogger kmg said...

Socialism is much more rigged in favor of the ultra-rich than capitalism is.

Socialism is merely protectionism for the super-rich.

 
At 11/29/2011 9:53 PM, Blogger Hydra said...

Peak trader has repeatedly claimed that the few make the rest better off.

There are conditions under which this is true and conditions under which it is not true.

That is simple math. But if it is true that a smaller number of people are increasingly taking home a higher percentage of the total the pt proposition cannot be true permanently.

Since you deny that fewer people are taking home more of the money, then you claim Krugman s premise is false.

That being the case krugmans argument is false, and it makes no difference if he is a socialist.

And it males no difference what the few create, since by your arguments, they don't exist.

 
At 11/29/2011 10:08 PM, Blogger Hydra said...

Hydra, are you saying eventually one person will have all the money and everyone else will have zero?

+++++++++++++++++++

Do you read anything?

That is absolutely NOT what I am saying, and I am suggesting that such a result is impossible.

Therefore, if fewer people are getting ever increasing percent of the total money, then that trend cannot continue.

In that case the interesting question would be how that trend might end.


But methinks has kindly explained that there is no such trend, and therefore no special few that are responsible for all the wealth they have created for us.

 
At 11/30/2011 12:57 AM, Blogger Methinks said...

First you demand a "yes" or "no" answer:

Is a smaller proportion of the population earning a greater portion of the total wealth over time, or not?

No need to get all philosophical a out it, just yes or no?


When I humour you by providing a simple "no" answer you throw a fit.

Methinks says no.

OK, then. End of discussion.


Nincompoopery at its best. I am reminded why I usually ignore your posts.

 
At 11/30/2011 1:00 AM, Blogger Methinks said...

There is the issue of various interest groups getting certain government officials to pass laws that are in their interest

That's an increasing problem, Arbitrage. I doubt you'll find many people who don't agree that wealth obtained through rent seeking is detrimental. In socialist countries, it's the only way to acquire wealth.

However, so far, in the United States, relatively little wealth has been accumulated through special privilege. I expect that'll change.

 
At 11/30/2011 3:49 AM, Blogger PeakTrader said...

Hydra says: "Do we believe that middle class incomes have stagnated and the top 0.001 have increased 400%, or not?"

I stated before:

Much of America's middle class is moving into upper classes, while poor immigrants are moving into America's lower classes.

Growth in the
Residential Segregation
of Families by Income,
1970-2009

"The proportion of families living in affluent neighborhoods doubled from 7 percent in 1970 to 14 percent in 2007.

Likewise, the proportion of families in poor neighborhoods doubled from 8 percent to 17 percent over the same period."

My comment: The U.S. in 1970 had a large middle class with a small upper class and a small lower class.

Today, America's six income classes (Affluent, High Income, High Middle, Low Middle, Low Income, and Poor) are more equal in size.

I guess, you can say income equality improved in America from 1970-2007, since all six income categories became more equal :)

 
At 11/30/2011 4:32 AM, Blogger Ron H. said...

And of course this:

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7

8

9

 
At 11/30/2011 4:35 AM, Blogger Ron H. said...

"The question was, who is putting all that money in the hands of the few. Never mind what they got in exchange, or what choices there were along the way, the end result still -seems- to be the same."

What exactly is your complaint, Mr. Whiney Butt?

 
At 11/30/2011 4:45 AM, Blogger Ron H. said...

"Anyway, all I want is a drink, after I have bought it, where the money goes is none of my business."

Then what are you complaining?

"I can buy Joe's Cola, but there is a pretty good chance that if Joe's cola gets popular, Pepsi is going to buy it."

Is that a problem?

If there is no difference in selection, quality, or price, what possible difference does it make whether the money is in the hands of 1 person or 1 million people?

 
At 11/30/2011 5:04 AM, Blogger Ron H. said...

"Is an increasingly smaller number of people taking home a larger percentage of total income, or not.


If not, then none of the rest matters.
"

Nor does it matter if they are. this class warfare BS is something former economist Krugman has whispered in your ear.

 
At 11/30/2011 5:08 AM, Blogger Ron H. said...

Arb: "There is, however, the matter of the inheritance tax, which is relevant here."

How is that?

 
At 11/30/2011 5:16 AM, Blogger juandos said...

Seriously dumb comment of the day?

hydra whines: "That increasig conentration cannot continue forever, therfore the wquestion is how will it stop and when"...

Did you forget the recent postings on how the wealth of individuals and companies are dynamic?

 
At 11/30/2011 5:27 AM, Blogger juandos said...

Can anyone seriously deny that our political system is being warped by the influence of big money, and that warping is getting worse as the wealth of a few grows ever larger?

Can anyone who actually believes this inane political drivel from a world class idiot can also lay claim to being a thinking human being?

 
At 11/30/2011 9:42 AM, Blogger VangelV said...

If the money is increasingly conentrated inthe hands of a few people, (and if I don't like this) what choice do I have as a consumer to change what hands it winds up in?

Easy. You can buy crappy stuff made by inefficient companies. That way you keep them alive and help the effective companies from gaining market share. Do not worry about the problem of excess waste created by keeping inefficient companies afloat because perception is more important than substance for people like you.



Yes, it might. But when Pepsi buys it, the owners of Joe's Cola get a nice fat premium, which you consider a good thing.

But don't you see the problem with your logic? Pepsi's shareholders are normal people who own the company in their pension plans and mutual funds. The owner of Joe's cola is probably worth a great deal more than the average Pepsi shareholder. By supporting Joe over the average Pepsi shareholder you are pushing the concentration of wealth in the 'wrong' direction from your perspective. Can you be such a poor thinker that you don't ever realize the implications of what you are saying.

Again I have no say in where the money winds up.

Nor should you. All you have to do is to decide which cola you prefer at the price that it is being offered. Do you want the more expensive Joe's Cola or the cheaper Pepsi or Coke? You are not a social engineer. You are just a poor schmuck who knows what he wants and has an idea how much he wants to give up to get it. The world would be a much better place if people just stuck to started to mind their own business and stuck to making decisions for themselves instead of trying to tell others what to do all the time.

 
At 11/30/2011 9:49 AM, Blogger Regan said...

I have yet to read a logical explanation of why your "portion of the pie" has any relevance. Isn't it the absolute income rather than relative numbers that matters?

I am baffled when my friends acknowledge that the poor have seen their income rise but gripe because the income of the richest Americans grew even more. So what? Everyone is richer and that's supposed to be a bad thing?

Again I ask: Would you rather 1/2 of one pie or 1/3 of another pie that is twice as big? Why?

 
At 11/30/2011 9:49 AM, Blogger morganovich said...

implicit in all this krugman populist idiocy is one grievously flawed assumption:

that concentration of wealth is always a bad thing.

it's not.

more wealth concentration does not need to harm anyone.

imagine a 3 party economy. wealth is 10, 10, 20. thus, half the wealth is in the hands of one guy.

it grows to 15, 15, 40. that's more concentration, but who is worse off?

no one.

increased concentration of wealth is the inevitable and probably desirably outcome of bigger, more efficient markets.

you don't need to settle for local things, you can get the best and the lowest price from all over. you don;t need to use your local IT kid, you can pay someone 2000 miles away to tunnel in and do it. this concentrates wealth toward the best providers, but is also the best possible thing that can happen to consumers. they get more choice, lower prices, and better quality.

the price of that is wealth concentration as the best guys with the most attractive offerings get more business and the local incumbents whose offerings cannot compete lose out, but this makes all consumers better off.

to fight such concentration is to harm consumers by limiting their choice.

if you tax the best IT provider more, he can invest less back into his business, hire fewer people, serve fewer customers, and develop less new technology.

 
At 11/30/2011 9:53 AM, Blogger morganovich said...

regan-

"Again I ask: Would you rather 1/2 of one pie or 1/3 of another pie that is twice as big? Why?"

unfortunately, most people prefer the former. chalk it up to human nature. it's wrongheaded, stupid, and vain, but there you are.

this has been confirmed in hundreds of studies in econ. you give people a choice of 2 outcomes:

get paid $3 and the other guy gets $2, or get paid $5 and the other guy gets $7.

the vast majority pick the former, even though everyone agrees that $5 is better than $3.

they see well being in relative terms, not absolute terms. they want to beat you more than they care about absolute welfare.

couple this to democracy, and you get some really perverse outcomes.

 
At 11/30/2011 10:22 AM, Blogger Jon said...

If Williams read Krugman regularly (as he should be doing) he'd know what Krugman suggests to alleviate the problem. Read his most recent column for crying out loud. Here's his general economic philosophy. Apply it to Rowling. Yeah, she should be highly compensated. But let's not let those that similarly try and fail starve. So you tax Rowling to pay for those that weren't so lucky. It's not about preventing kids from giving her money. It's about taxing some of her money because Rowling's success is due not only to her skill but also to luck.

How much do you tax her? Instead of just moralizing or pretending that taxation is "theft" as Williams does, Krugman looks at the empirical evidence. What works well? What rate is high enough that it alleviates a lot of suffering but doesn't punish achievement to the point where it is counter productive? Do that. Williams may not like it, but he's pretending he doesn't know what it is. He should know what it is and argue against it, not pretend that there is no answer.

 
At 11/30/2011 10:40 AM, Blogger VangelV said...

Who do you think those friends are? Aren't they the same handful of very rich people (mostly)?

Some are the rich people. For example, Buffett has been very clear that his strategy includes buying companies that have a regulatory moat around them. While he did not ask for the regulatory moats he certainly took advantage of him. the way to make him poorer is to remove the protection that his companies get from the regulatory regime.

The biggest beneficiaries are the financial sector millionaires. They take full advantage of the regulations, the Fed assistance, and the bailouts that Bush and Obama pushed to 'prevent' a crisis. If you want to make them poorer get rid of the Fed's monopoly on money creation, remove the 125+ regulatory agencies, and stop bailing out bad bets.

You also have the huge assistance to big pharma, the ag companies, the automobile companies, etc., etc., etc. Of course, the unionized employees of many of these companies also benefit greatly because they are also protected from competition and get paid more than they would in a competitive market. The same is true of the 'poor', who get money that was earned by the middle class taxpayers and the 'rich'. And of the government employees. Most would be working for a lot less in a truly competitive marketplace.

Do I blame government practitioners for taking their money, or them for offering it?

The government. It is the source of all of the meddling and transfer schemes and is responsible for destroying the savings of honest workers and investors. It is the government that allowed the Fed to destroy more than 95% of the purchasing power of the USD since 1913. It is the government that passed and supported the job killing Wagner Act. It is government that used minimum wage laws to protect unionized workers from competition and prevented unskilled workers from getting jobs.

If we let the markets work things will improve as all of the barriers and waste are removed. In a hard money environment we would experience a mild deflation and the savings of workers would gain purchasing power over time. It would allow most of them to retire in dignity without worry about pension purchasing power collapsing and relying on the welfare state or charity.

 
At 11/30/2011 10:46 AM, Blogger VangelV said...

The influence that each of those entities has (as opposed to Krugman's incorrect blame of money) are what make up such an oligarchy - not money. Consumers are led more like cattle to a limited selection, despite being stated as the ones that drive what is being offered in the first place.

Krugman is a hypocrite. He does not argue for less influence on government. He just wants the people that he supports to have more influence on government. But if government incompetence and interference is the problem the solution is to cut it down to the size it was supposed to be in the first place.

 
At 11/30/2011 10:52 AM, Blogger VangelV said...

I agree with the proposition that consumers are “largely” responsible for income inequality. But there is a bit more to the analysis. There is the issue of various interest groups getting certain government officials to pass laws that are in their interest. Exhibit “A” would be the trial lawyers. They’ve got the system set up so that they can be parasites on the large corporations. In that case, the “consumers” aren’t “voting” with their purchases.

Then, of course, we’ve got the bankers and the real estate industry setting up the rules so that they can get rich. No doubt there are plenty of other examples. So it’s not quite as simple as the consumers voting with their wallets.


You are correct. Some people get money from transfer payments and protection schemes set up by government. The solution is to get rid of those schemes.

This doesn’t mean that I’m arguing for an increase in the top tax marginal rate on income; I’m not. There is, however, the matter of the inheritance tax, which is relevant here.

It isn't because those people who did manage to get very rich by convincing consumers to buy their products deserve to distribute their wealth as they wish. They are not responsible for the government protection schemes that protect other people and are often hurt by those schemes. We have to keep in mind that one plus one does not equal zero. One criminal act does not cancel out another. All you have are two criminal acts.

 
At 11/30/2011 10:53 AM, Blogger VangelV said...

Socialism is much more rigged in favor of the ultra-rich than capitalism is.

In a way you are right. For examples look to Europe where the wealthy families and powerful companies have influence for decades even as similar companies in the US fade away or get taken out.

 
At 11/30/2011 11:09 AM, Blogger morganovich said...

jon-

"Apply it to Rowling. Yeah, she should be highly compensated. But let's not let those that similarly try and fail starve. So you tax Rowling to pay for those that weren't so lucky. It's not about preventing kids from giving her money. It's about taxing some of her money because Rowling's success is due not only to her skill but also to luck."

to quote rowling, "what a load of codswallop".

apply it to any company that requires reinvestment. let's try apple.

more tax = less reinvestment = fewer jobs, higher prices, less growth etc.

what you call "luck" is rarely anything of the sort. luck can get you a product cycle, not a business of decades.

rowling was anything but lucky. she was literally starving before the first book came out. she wrote something compelling and was very, very shrewd about licensing it. that's not luck any more than an iphone was.

those who fail to achieve always attribute it and the success of others to luck, but that's a very weak argument. luck has very little do with consistent success.

your empirical argument is just fascism, pure and simple.

hey, look, it works well if we take away certain kinds of speech too and if we can house soldiers in your home.

the whole point of rights is to prevent such outrages in the name of practicality.

saying "hey, it works well if we take from you and give to me" is a pretty poor basis for a philosophy. the fascists of europe in the 30's thought that taking from minorities and giving it to the state worked pretty well too, and it was generally supported by the demos.

i really despair that there are so many in our democracy with so little understanding of where liberty comes from and worse, so much desire to take it away in the same of "pragmatism" which somehow always turns out to be code for their own benefit.

 
At 11/30/2011 11:23 AM, Blogger Methinks said...

Morganovich,

"Again I ask: Would you rather 1/2 of one pie or 1/3 of another pie that is twice as big? Why?"

An excellent interview question, don't you think? I wouldn't want to employ the idiot who prefers the former.


I've always been suspicious of the answers in those surveys, though (there's another one where people chose for starving children to make do with less food and remain somewhat hungry if all the children got the same amount of food over a scenario where all the children got plenty of food but some got more than others).

Many years ago, before telecom bundles were offered, my team did a survey of consumers. All consumers responded positively to the savings bundles would yield but, mysteriously, the overwhelming majority answered that they would not buy a bundle if one was offered.

This made no sense to me at all - that people would pass up saving on services they bought separately anyway. No rational person would prefer to pay more for services if they didn't have to give up much optionality (which you don't with telecom bundles). The report I wrote concluded that despite the answers to the survey, bundles would become popular.

And, of course, because people aren't that stupid, this is exactly what happened. Bundles are very popular. In real life, people consider opportunity cost, but ignoring it in hypotheticals is...well...costless.

I've often wondered if the respondents to this question would behave differently than they say they would when faced with such a situation in real life.

 
At 11/30/2011 11:35 AM, Blogger Jon said...

more tax = less reinvestment = fewer jobs, higher prices, less growth etc.

That's just Say's Law. It's false. Apple is sitting on about $80 billion in cash. They are hoarding cash. Cut taxes and what happens. They hoard more cash. They have all the money they need for more investment, but they don't use it because they are saving for a rainy day. The money is in the bank, but the bank isn't loaning it all out. People are not looking to expand right now. This is what's known as a liquidity trap. Under a liquidity trap Say's Law breaks down.

that's not luck any more than an iphone was.

There was zero luck involved in Rowling's success?

The race is not to the swift or the battle to the strong, nor does food come to the wise or wealth to the brilliant or favor to the learned; but time and chance happen to them all.

the whole point of rights is to prevent such outrages in the name of practicality.

Says who? The preamble to the Bill of Rights says that various restrictions on government "will best ensure the beneficent ends of its institution." In other words, granting these rights without restriction produces the best results. That is, it works. How well the system works matters. A system that produces outrageous wealth for the tiny few and starvation for the vast majority is a system that's not working well, nor would it be a system you'd want to participate in if given the choice, not knowing at the beginning where you'd end up.

 
At 11/30/2011 11:36 AM, Blogger Methinks said...

rowling was anything but lucky. she was literally starving before the first book came out.

And let's face it, starving is pretty good motivation for producing something of value.

Why bother toiling if you can live comfortably off someone else?

those who fail to achieve always attribute it and the success of others to luck, but that's a very weak argument. luck has very little do with consistent success.

Exactly. Ever notice that the "lucky" usually finally get "lucky" after many years of taking risks, failing and starting again? Damndest thing that "luck".

 
At 11/30/2011 12:06 PM, Blogger Hydra said...

it grows to 15, 15, 40. that's more concentration, but who is worse off?

no one.


===============================If This example is correct, then clearly Morganovich is right. But even this example looks a lot different if you iterate it a hundred times.

According to the Krugman article:

The budget office report tells us that essentially all of the upward redistribution of income away from the bottom 80 percent has gone to the highest-income 1 percent of Americans..... And it appear that two thirds of That amount goes to the top one tenth of one percent.

Under that scenarion Morganovitchs example looks more like

1,1,1,1,1,1,1,1,1,100 and increasing to

1.1,1.1,1.1,1.1,1.1,1.1,1.1,1.1,1.1,1.1, 400 where three hundred of that four hundred is crowded even farther to the right.


Still no one is worse off, as Morgaovich points out, but most people are not really better off either.

So the issus still revolves around my question number one: is the piture of growth as Morganovich states and the statistics quoted by Krugman are false.

Or is the Krugman picture more correct and Morganovich has misrepresented the issue of everyone being better off?

 
At 11/30/2011 12:21 PM, Blogger Hydra said...

If you want to make them poorer ........, remove the 125+ regulatory agencies, .....

================================

Nice try. Removing those 125 regulatory agencies woud likely make everyone poorer. The vast majority of those regulations were put in place to correct market deficiencies. Yu get rid of those regulations tomorrow and people and businesses will be agitating to get them back the next day.



Besides, this isn't about making anyone poorer, it is about making people better off.

If Morganovich is right and the rich are making people in general better off so be it. There is still the issue of at what point do you reach diminishing returns. Morganovich thinks never, apparently. The richer a few people are the better off everybody is, no matter how few or how rich.

On the other hand, when you get to the point that you tax 90% of what the super rich get and they STILL have huge incomes compared to the next guy, it is hard to see how they are worse off in any meaningful way.

 
At 11/30/2011 12:24 PM, Blogger Hydra said...

I have yet to read a logical explanation of why your "portion of the pie" has any relevance.

================================

It has relevance as your portion of the pie approaches zero, unless the pie is approching infinity.

Some people argue that the former is happening faster than the latter.

 
At 11/30/2011 12:35 PM, Blogger Hydra said...

Did you forget the recent postings on how the wealth of individuals and companies are dynamic?

================================
No I did not forget. I specifically set the boundaries of my question to ignore that problem and the increasing pie proeblem. If we can resolve the simple version of this, then we can expand it to the more complex case.

So far the answer seems to be that this problem does not exist because of income dynamics and pie increase.


It does not make any difference if the same people or companies are involved. When a small enough sample has substantially all the wealth, everyone else has nothing, and basically no way to get it.

Just because there is some churn now, does not mean there is always churn as the concentration continues. Just as you can float fresh water on top of concentrated salt water, and they won't mix.


And I am not whining. I don't give a crap one way or another. But what I am suggesting is that if you wish to sell an idea with such arguments, you might want to consider better arguments.

 
At 11/30/2011 12:37 PM, Blogger Hydra said...

And let's face it, starving is pretty good motivation for producing something of value.

===============================

How come millions are starving, then? Starving is also a pretty good reason for doing nothing, so as to conserve energy, especially when other opportunities are near zero.

 
At 11/30/2011 12:44 PM, Blogger Hydra said...

Nor does it matter if they are. this class warfare BS is something former economist Krugman has whispered in your ear.

=================================

Wrong. If they are continually increasing the share they take, that situation cannot continue forever.

Class warfare has nothing to do with this argument.

Are you suggesting that this scenario could continue until one person owns substantially everything?

I think we both agree that could never happen.

If they are NOT continually increasing their share, none of this matters, but if they ARE increasing their share indefinitely, then eventually something will cause a change.

We might be interested in how that change will occur. Aor we can tret this like global warming and declare it not to be happening.

 
At 11/30/2011 12:47 PM, Blogger Zachriel said...

morganovich: increased concentration of wealth is the inevitable and probably desirably outcome of bigger, more efficient markets.

Then you disagree with those above who argue there is no such concentration of income.

In any case, the U.S. is approaching Mexico in terms of the concentration of income, while most other developed economies have lower concentrations of wealth. Does that help your case?

 
At 11/30/2011 12:49 PM, Blogger Zachriel said...

juandos: Did you forget the recent postings on how the wealth of individuals and companies are dynamic?

Yes. In the U.S. there is a substantial correlation between a parent's income and their children's.

 
At 11/30/2011 12:53 PM, Blogger Hydra said...

they get more choice, lower prices, and better quality.

================================
If only that were true.


What I see is companies buying each other out, leaving fewer choices, a race to mediocre in quality, and totally abandonment of the "ilities" that make things a lot less expensive.

Where is the sense in a refrigerator door gasket that costs $250 when the whole fridge costs $750?

Why do I have to buy a $250 dollar "assembly" in oder to replace a $10 part?

Some of what yu say is true, but it is not always the case: therefore something must be wrong with the argument.

 
At 11/30/2011 12:56 PM, Blogger Regan said...

It has relevance as your portion of the pie approaches zero, unless the pie is approching infinity.

So you would rather 1/2 of one pie rather than 1/3 of another that was twice as big?

 
At 11/30/2011 1:11 PM, Blogger Methinks said...

Starving is also a pretty good reason for doing nothing, so as to conserve energy, especially when other opportunities are near zero.

Holy shit. Can you really be so stupid that you would just sit motionless and allow yourself to starve to death?

Rhetorical question.

 
At 11/30/2011 1:13 PM, Blogger Methinks said...

Mr. Methinks weighs in:

"Damn it if I let starvation fool me into working! I'll expose your devious capitalist plot yet!"

 
At 11/30/2011 1:37 PM, Blogger Hydra said...

Do you really have such a lack of imagination as to realize that real starvation is debilitating?


Have you never run a model in which the do nothing option turns out to be the best one?


I merely point out that starvation is not ALWAYS a motivator.

 
At 11/30/2011 1:52 PM, Blogger Hydra said...

Regan: what has your response got to do with my statement?


If, if, if my portion of the pie is approaching zero, what difference does it make if the pie is bigger?


We are back to my question 1).

Morganovich says the answer is no. End of story.

But if the answer is yes, then eventually someone's slice of the pie goes to zero%. They starve.

Well, you say, let them get training and find a job. But we have already precluded that by allowing their slice to go to 0%.


Obviously, that is unlikely to happen so the present trend is going to have to change, somehow.

Unless morgatrench is right and there is no trend.

So why did MP bring it up?

 
At 11/30/2011 1:57 PM, Blogger Hydra said...

Regan postulates one condition in which the pie is growing faster than the portions are shrinking.

What about the other case? Does it never happen? Is it precluded, somehow?

Morganovich seems to say it is precluded.

 
At 11/30/2011 2:19 PM, Blogger PeakTrader said...

It's remarkable, in the U.S., the rich category doubled, from 7% to 14%, while the poor category also doubled, from 8% to 17%, because it's much easier to be poor.

 
At 11/30/2011 2:19 PM, Blogger morganovich said...

hydra-

"Do you really have such a lack of imagination as to realize that real starvation is debilitating?"

and do you have such a vivid imagination as to think there is any real starvation in the US?

our poor are fat. we have one of the only obese lower 10% of the income strata in all of history.

also, if there is no price to failure, why try? starvation is not the only motivator. wanting your own place to live is another. if we just give them away (but only if you refuse to earn) is that really a good set of incentives?

work, and you lose welfare and medicaid, so why bother.

it's a culture of dependence that rapidly becomes permanent.

 
At 11/30/2011 2:27 PM, Blogger morganovich said...

hydra-

"If Morganovich is right and the rich are making people in general better off so be it. There is still the issue of at what point do you reach diminishing returns. Morganovich thinks never, apparently. The richer a few people are the better off everybody is, no matter how few or how rich."

you fascist leanings are showing again.

you know how you can tell when they have stopped making others better off? people stop buying from them. if you don;t think windows 7 makes you better off, don't buy it. don't pay bill gates. don't concentrate wealth to him.

you seem to think there is some need to legislate or mandate this outcome and that somehow, people cannot tell on their own what transactions they would benefi9t from.

if you buy windows, it's because you value it more than the money. thus, such a purchase ALWAYS makes you better off.

what is there to regulate or control?

it takes care of itself.

if i invent a magic box that can produce everyhting you ever need at the press of a button, what do you care if wealth gravitates to me. you get everything you want. i can have 99.9% of all wealth in the world, and you are all still better off.

there is no point of diminishing return (which, btw, is the wrong way to look at it - so long as return is positive, whether or not it is diminishing is irrelevant. you value your first 1500 calories a day far more than the next 1500 or the 1500 after that. that does not mean you don't value calorie 2500.)

return to wealth concentration NEVER becomes negative. wealth concentration ONLY occurs when such return is positive. if it were not, you wouldn't transact.

it's an incredibly simple, self governing system that cannot EVER have the effects you describe absent coercion, which is what governments do, not consumers/sellers in a free market.

 
At 11/30/2011 2:35 PM, Blogger Hydra said...

you fascist leanings are showing again.


==============================

I have no leanings one way or another.

What part of diminishing returns do you not get, and how is that fascist?

If the pie always gets bigger faster than the portions get smaller, then I agree with you. What is the problem?

But, Krugman seems to say that recent evidence suggests this is not the case. If he is right, then the situation is going to heve to change, eventually.

Are you suggesting that - if krugmans stats are correct - that the current trend and and should continue this way forever?

 
At 11/30/2011 2:38 PM, Blogger morganovich said...

jon-

"They are hoarding cash. Cut taxes and what happens. They hoard more cash. They have all the money they need for more investment, but they don't use it because they are saving for a rainy day. The money is in the bank, but the bank isn't loaning it all out. People are not looking to expand right now. This is what's known as a liquidity trap. Under a liquidity trap Say's Law breaks down."

that is utter nonsense.

1. few companies have the luxury of apple's cash position. many struggle to expand. apple certainly used to.

2. cut the tax on dividends to zero, and apple will not hoard cash, they will pass it on to shareholders. the whole reason for the cash hoarding is taxes. it's more tax efficient to pass on gains in the form of share appreciation than the double taxed dividends.

you argument is both specious (as apple is an unrepresentative example) and flat out false, because you claim low taxes cause cash hoarding, which is preposterous. the tax arbitrage between dividends, taxed twice as regular income vs 15% for cap gains is what drives it.

"There was zero luck involved in Rowling's success?"

that's a nonsense straw man. there is some luck associated with not being hit by an asteroid every day. but rowlings success was due to talent, diligence, and shrewd dealings. she was no luckier than you are, probably less so. i doubt you have ever been as poor as she was.

"Says who? The preamble to the Bill of Rights says that various restrictions on government "will best ensure the beneficent ends of its institution." In other words, granting these rights without restriction produces the best results. That is, it works. How well the system works matters. A system that produces outrageous wealth for the tiny few and starvation for the vast majority is a system that's not working well, nor would it be a system you'd want to participate in if given the choice, not knowing at the beginning where you'd end up."

and this is just ridiculous.

you have completely misunderstood.

the point they make is that you need individual rights to keep government from doing precisely the things you champion in the name of "the common good".

your notions of the perils of wealth concentration are just basless class war driven bugbears. our system is a failure? really? we are the richest nation in history. our poor are no poorer than those in the EU and are richer than even the top 20% of most nations.

never has there been such plenty. you are just falling precisely into the relativism trap i outlined before.

you care more about others doing better than you are than about how well everyone does.

that's pretty pathetic.

 
At 11/30/2011 2:48 PM, Blogger morganovich said...

h-

1. you do not understand returns. diminishing returns is irrelevant. you buy X for 5 and value it at 10. then you buy X again but value the second one less, call it 7. that's diminishing return, but it's still positive return. you are still better off, it's still a good idea to buy. if you value a third one at 4, that would be negative return, so you do not buy it. in that way, they system regualtes itself. is that really so difficult to understand?

2. your fascist leanings (and you have them in spades, you just don't see it. all fascists think they are working for the common good) are shown by the fact that you think government needs to do something to redistribute wealth according to some mythical formula and arbitrary ideas about what people need and should want when the system is already self regulating. that's pretty much the definition of an unnecessary and counterproductive seizure of power, hence fascism. you think YOU or someone know best, so you take freedom away to pursue your own goals. what is that if not fascism?

the current trend will and should continue so long as it's beneficial to both sides (the definition of everyone winning). if it's not in your best interest to give money to bill gates, you won't.

you are totally wrong about this:

"f This example is correct, then clearly Morganovich is right. But even this example looks a lot different if you iterate it a hundred times."

it does not matter how many times you iterate it.

if everyone's real income keeps going up, they are better off in each and every iteration from now to infinity.

15 goes to 1500 and 40 goes to 6000. so what?

it's more concentration, but the guy who had 15 is still 100 times better off.

leveling ALWAYS reduces the size of the potential pie. it's totally unavoidable. you take from the most productive and successful and give to the least.

how can that be anything but a drain on growth?

 
At 11/30/2011 2:50 PM, Blogger Hydra said...

if i invent a magic box that can produce everyhting you ever need at the press of a button, what do you care if wealth gravitates to me. you get everything you want. i can have 99.9% of all wealth in the world, and you are all still better off.

===============================

Again, this is a case in which you posit that the pie becomes infineitely big as the slices become infinitely small.

You have to invoke magic to make this example work, and I suggest that is what is wrong with your argument.

 
At 11/30/2011 2:51 PM, Blogger morganovich said...

"If, if, if my portion of the pie is approaching zero, what difference does it make if the pie is bigger?"

this is just bad math.

if your absolute income is shrinking, then you are getting worse off. this is NOT happening.

your % of the pie is irrelevant. why are you entitled to some fixed share?

 
At 11/30/2011 2:53 PM, Blogger morganovich said...

methinks-

listen to hydra and jon, and you will see just how pervasive this relative thinking is. they cannot get over %'s and don;t even seem to care about absolutes.

you see it all the time in the tax discussions.

they claim fica is "regressive" because someone making $30k pays more as a % than someone making $100k, but ignore than the second guy is paying 3X as much in actual dollars.

it's an astoundingly pervasive mindset.

 
At 11/30/2011 2:55 PM, Blogger Ron H. said...

Jon: "If Williams read Krugman regularly (as he should be doing)"

What makes you think he doesn't? I believe he doesn't, as he must realize that reading Krugman is just so many minutes gone from his life, that he'll never get back, but why do YOU believe he doesn't? Reading Krugman regularly may even lead people to hold ridiculous, uninformed views, as you do.

"Read his most recent column for crying out loud. Here's his general economic philosophy. "

Steal from the rich, give to the poor.

" But let's not let those that similarly try and fail starve."

Are there a lot of fiction writers starving? Get a grip, Jon .

Actually, as explained in another post, it's consumers who are making Rowling rich and letting others starve. Do you and Krugman know better than the majority? Why not just force consumers to buy some crummy book they won't enjoy, by a starving author, whenever they buy a Rowling book?

"Instead of just moralizing or pretending that taxation is "theft" as Williams does, Krugman looks at the empirical evidence."

He's not pretending, Jon, taxation IS theft.

OK, let's read some Krugman: "Taxing Job Creators":

Here's some nonsense that flies in the face of basic economics. Krugman HAS TO KNOW this is wrong:

"Yet textbook economics says that in a competitive economy, the contribution any individual (or for that matter any factor of production) makes to the economy at the margin is what that individual earns — period. "

If that were true, we would all still be gathering our own meals of fruit and nuts in the forest.

And this:

"What a worker contributes to GDP with an additional hour of work is that worker’s hourly wage, whether that hourly wage is $6 or $60,000 an hour. This in turn means that the effect on everyone else’s income if a worker chooses to work one hour less is precisely zero."

No, the world is poorer by the amount of production that worker would have produced, which in fact, is more than the worker is paid, or there would be no workers.

If workers produce the amount they are paid, why would they trade their labor for IOUs to spend on things they want, when they could as easily produce the things they want themselves?

If that seems confusing, ask me, and I'll explain it.

Perhaps the worst part, is that in recomending higher taxes - on ANYBODY - Krugman is saying that government can better decide how that income should be spent than the person who earned it.

Why do you believe that someone in government knows better how your money should be spent than you do?

Krugman continually ignores these two very important principles, and it just HAS to be intentional. he isn't stupid.

- Incentives matter.

- Value is subjective.

Read juandos link to Krugman in Wonderland.

 
At 11/30/2011 3:16 PM, Blogger Ron H. said...

"A system that produces outrageous wealth for the tiny few and starvation for the vast majority is a system that's not working well..."

"starvation for the vast majority?"

Give me a break. Appeals to emotion don't make good arguments. You can do better than that.

How many people starved last year in the US? Hungry doesn't count.

Is it a "vast majority"? LOL

 
At 11/30/2011 3:19 PM, Blogger Ron H. said...

"The harder I work, the luckier I get."

 
At 11/30/2011 3:25 PM, Blogger PeakTrader said...

Ron, Krugman believes growth can be stimulated by taking money away from those with a low marginal propensity to consume (MPC) and giving that money to those with a high MPC, ceteris paribus.

Similarly, Krugman believes, growth can be stimulated by taking money away from the future (borrowing) and spending that money today, ceteris paribus.

That may work under certain economic conditions. However, I stated before, a large tax cut (paid by spending cuts) and heavy deregulation are what the economy needs now.

 
At 11/30/2011 3:26 PM, Blogger Ron H. said...

"On the other hand, when you get to the point that you tax 90% of what the super rich get and they "

You will NEVER collect taxes 90% of income.

Do you have an actual example?

Incentives matter.

 
At 11/30/2011 3:28 PM, Blogger Regan said...

If, if, if my portion of the pie is approaching zero, what difference does it make if the pie is bigger?


Is it that hard to understand that your portion can be reduced while still having more pie?

1) Is it true that a smaller percentage of people are taking home more of the money ( and retaining more of the wealth).

Maybe they are. Who cares? The only thing that I care about is how much money I take home. All that matters is what I can do with what I have. What I do not have is of no consequence to me.

What's wrong with having the income of the poorest Americans rise while the richest Americans' income rises by a greater percentage? Or, to paraphrase Margaret Thatcher, would you rather the poor remain poor as long as the rich do not become richer?

My income is higher now than it was ten years ago. I'm not sure but I suspect that Warren Buffet's income has also risen in that time period at a rate which is disproportionate to mine. What's going to happen if that trend continues? How does the income inequality of two individuals from two different classes affect them?

You state that that trend cannot continue. Why not? Surely you're not arguing that it's a zero sum game and all of the money and wealth will be gobbled up, right?

 
At 11/30/2011 3:32 PM, Blogger Ron H. said...

"I have no leanings one way or another."

LOL Then why are you supporting a fascist viewpoint?

 
At 11/30/2011 3:32 PM, Blogger PeakTrader said...

And the shift of money from low MPC to high MPC and from the future to the present is temporary, until the economy rebounds.

 
At 11/30/2011 3:41 PM, Blogger PeakTrader said...

The article is wrong, e.g. Krugman is not taking water from one side of the lake and pouring it in on the other side.

 
At 11/30/2011 4:10 PM, Blogger sethstorm said...


you don't need to settle for local things, you can get the best and the lowest price from all over. you don;t need to use your local IT kid, you can pay someone 2000 miles away to tunnel in and do it.

As opposed to the local that does a good job and isn't going to try to upsell things during the repair.

Thankfully at least I have enough knowledge and tools on hand to have the warranty be the only stopping point for repairs. That, and choosing vendors that have sane warranty policies.


this concentrates wealth toward the best providers, but is also the best possible thing that can happen to consumers. they get more choice, lower prices, and better quality.

Complete and absolute bollocks. The person doing it remotely is most likely someone that will screw it up. If not (just) that, they will do as above, since they aren't motivated by competence, but by how much they can upsell.

 
At 11/30/2011 4:29 PM, Blogger VangelV said...

If Williams read Krugman regularly (as he should be doing) he'd know what Krugman suggests to alleviate the problem. Read his most recent column for crying out loud.

His latest column shows how ignorant he really is. While tax rates may have been very high in the past the actual amount paid by the rich was not as high as it is today because of the deductions that were available to them. If we keep everything as it is and increase rates to the levels that he suggests the super rich in the US will do what the European super rich do; move their capital abroad and use tax havens to protect them from confiscatory governments.

As I pointed out before, in 2009, the top 1 percent of tax returns paid 36.7 percent of all federal individual income taxes but only earned 16.9 percent of adjusted gross income. The bottom 50% paid 2.25 percent of the income tax but had 13.5 percent of the income. The average federal income tax rate was 24.01 percent for the top 1 percent but only 1.85 percent for the bottom 50 percent.

This shows just how clueless Krugman is on this issue.

Here's his general economic philosophy. Apply it to Rowling. Yeah, she should be highly compensated. But let's not let those that similarly try and fail starve. So you tax Rowling to pay for those that weren't so lucky.

You need a reality check. Many UK athletes, authors, businessmen, etc., set up companies to shelter their worldwide income by using the abundant tax shelter jurisdictions that are available to them. And if they move abroad, the UK does not tax their earnings. Americans have a much harder time sheltering income because no matter where they earn their income they are still on the hook to the IRS.

It's not about preventing kids from giving her money. It's about taxing some of her money because Rowling's success is due not only to her skill but also to luck.

But neither you nor Krugman can explain why it is ethical to subsidize bad writers by her earnings. And it is not 'luck' when you get millions of kids to shell out cash for your books. She had a good idea and a nice writing style that rewarded her with great wealth that was fully deserved. Dismissing it as 'luck' without offering anything but an opinion is hardly a credible argument.

How much do you tax her?

How about nothing? Or the same as everyone else? As my 13-year-old points out, her efforts have created many jobs for people all around the world. If anything those people owe her, not the other way around.

Instead of just moralizing or pretending that taxation is "theft" as Williams does, Krugman looks at the empirical evidence.

LOL. The evidence supports Williams, not Krugman.

What works well? What rate is high enough that it alleviates a lot of suffering but doesn't punish achievement to the point where it is counter productive?

But neither you nor Krugman have no idea what that rate is. It may be 10%-15% on all income after a certain threshold. Or that may be far too high. You just don't know and playing junior pretend scientists is dangerous for empty suits.

Do that. Williams may not like it, but he's pretending he doesn't know what it is. He should know what it is and argue against it, not pretend that there is no answer.

But he doesn't know what it is. But we certainly know that spending is way too high. I would argue that the proposed $1 trillion in cuts next fiscal year is a good first step.

 
At 11/30/2011 4:45 PM, Blogger VangelV said...

That's just Say's Law. It's false. Apple is sitting on about $80 billion in cash. They are hoarding cash. Cut taxes and what happens. They hoard more cash. They have all the money they need for more investment, but they don't use it because they are saving for a rainy day. The money is in the bank, but the bank isn't loaning it all out. People are not looking to expand right now. This is what's known as a liquidity trap. Under a liquidity trap Say's Law breaks down.

First, as has been pointed out to you several times before, Hazlitt showed that Keynes never managed to refute JB Say so that pig just won't fly.

Second, what do you think happens with Apple's cash position? Is there some massive mattress in some Apple Store where the money is watched? No. The money is available for reinvestment in other assets. And if enough builds up the company will have to build more facilities, which I would not do unless there is a regime change, buy another company, which would transfer money to the owners of that company to do as they wish, or just pay the cash as dividends.

What we don't have is hording. The money is available for investment because it is not in Apple's interest to have it lose purchasing power through inflation. Other institutions have already access to that money and are using it to invest in whatever capital they wish to invest in. Or it is in the hand of the government to build a road, airport or whatever the popular scam of the day happens to be. That is something that you Keynesians seem to miss.

There was zero luck involved in Rowling's success?

The race is not to the swift or the battle to the strong, nor does food come to the wise or wealth to the brilliant or favor to the learned; but time and chance happen to them all.


Luck would have helped her if she did not have the talent. So no, luck only played a very small part no matter what narrative is spun. She got rich because the public liked her book. End of story.

 
At 11/30/2011 4:54 PM, Blogger VangelV said...

Nice try. Removing those 125 regulatory agencies woud likely make everyone poorer.

Really? Weren't those agencies watching all of the action while the housing bubble was being expanded by the Fed? How about the NASDAQ bubble?

The vast majority of those regulations were put in place to correct market deficiencies.

No. They were put into place to deal with the problems created by the money printers and political meddling. The free market is brutal on players who have bad judgment. It takes government to forgive or subsidize incompetence.

Yu get rid of those regulations tomorrow and people and businesses will be agitating to get them back the next day.

Of course they would. That is how they keep competition from springing up. Imagine if the regulatory moats were filled in and competitors could come into the marketplace. You would have incandescent bulbs made in the US again. The appliances business would boom as manufacturers could concentrate on making stuff that works better rather than meet politically motivated regulations. Toilet tanks would be larger in size. New refineries, mines, oil fields, nuclear power plants, pipelines, coal generation plants, etc., would be financed. There would be more activity to support the real economy and a lot less parasitism.

 
At 11/30/2011 5:16 PM, Blogger sethstorm said...


If we keep everything as it is and increase rates to the levels that he suggests the super rich in the US will do what the European super rich do; move their capital abroad and use tax havens to protect them from confiscatory governments.

Then what happens when these governments decide to aggressively pursue and repatriate? There is nowhere those folks can hide their assets that can't be repatriated by the US's military or detected by the US's intelligence departments.

That, and it doesn't help that the "tax havens" are usually countries with negligible military assets and easily swayed governments.

Shame that US and Europe aren't highly aggressive on tax enforcement, such that evasive technical compliance is the same as tax evasion.

 
At 11/30/2011 5:50 PM, Blogger Hydra said...

But neither you nor Krugman have no idea what that rate is. It may be 10%-15% on all income after a certain threshold. Or that may be far too high. You just don't know


===============================

This is the issue I raised far earlier. If we agree that this is th case,then we ought to be able to agree on a strategy to go find that rate.

Same for the Laffer curve.

 
At 11/30/2011 5:52 PM, Blogger Hydra said...

LOL Then why are you supporting a fascist viewpoint?

===============================

All I did was ask three simple questions, which you clowns have spent 99 posts avoiding.

I have not supported one side or the other, as far as I can tell.

 
At 11/30/2011 6:03 PM, Blogger Hydra said...

and do you have such a vivid imagination as to think there is any real starvation in the US?

=============================

When was the last time you went to a food pantry? there are thousands of people at them, in the wealthiest counties in the nation.



Look, you suggested starvation is a good incentive to work, and I said apparently not, since there are so many starving. Maybe starvation is insufficient to get people to work. Now you want to limit your argument to the US.

The fact remains there are a lot of people starving and not working, so there must be something wrong with your argument.


I don't see what any of that has to do with this string, anyway.

 
At 11/30/2011 6:07 PM, Blogger Hydra said...

What's wrong with having the income of the poorest Americans rise while the richest Americans' income rises by a greater percentage?

=================================

Nothing, except if it happens over and over again until a handful have virtually all the percentage.
At some point, I think you have a problem.

 
At 11/30/2011 6:10 PM, Blogger VangelV said...

How come millions are starving, then? Starving is also a pretty good reason for doing nothing, so as to conserve energy, especially when other opportunities are near zero.

Try looking where people are starving. You will find that the large numbers are in countries that do not protect property rights, which is where you want the US to move. In the US the poor die from obesity. That should tell you something.

 
At 11/30/2011 6:11 PM, Blogger Hydra said...

I stated before, a large tax cut (paid by spending cuts) and heavy deregulation are what the economy needs now.

============================

It must be true then.

 
At 11/30/2011 6:12 PM, Blogger VangelV said...

Then you disagree with those above who argue there is no such concentration of income.

Who wrote that? Every modern society shows a concentration of income and wealth.

 
At 11/30/2011 6:15 PM, Blogger VangelV said...

Where is the sense in a refrigerator door gasket that costs $250 when the whole fridge costs $750?

Why do I have to buy a $250 dollar "assembly" in oder to replace a $10 part?


Because without the process that makes it possible to make fridges for $575 and sell them for $750 at the retailer you would have $10 parts but $1500 fridges.

 
At 11/30/2011 6:17 PM, Blogger VangelV said...

It's remarkable, in the U.S., the rich category doubled, from 7% to 14%, while the poor category also doubled, from 8% to 17%, because it's much easier to be poor.

It is easy. All you have to do is to classify people who are obese as poor and the numbers go up. Doesn't anyone recall days when being poor meant that you were not eating well and were too thin?

 
At 11/30/2011 6:19 PM, Blogger Hydra said...

work, and you lose welfare and medicaid, so why bother.
===============================

What are you saying, that minimum jobs won't pay as much as welfare and medicaid?

Aren't welfare and medicaid payments set at pretty close to the minimum one can get by on?

Medicade and welfare aside, ignoing them completely as if they did not exist, why would anyone work at a job that pays insufficient to live on? What is the difference between working unti you starve or doing nothing until you starve? End result is that you stave either way.

Besides that, the argument was previously made that there is all this income mobility, which suggests that the culture of dependency you talk about is just as much a myth as the idea that a few people wre getting very very rich.

???

 
At 11/30/2011 6:25 PM, Blogger Hydra said...

the world is poorer by the amount of production that worker would have produced, which in fact, is more than the worker is paid, or there would be no workers.

==============================

There would be workers. They would just be self employed. Then if they elect not to work one hour, no one else is affected. The self employed workers pay is exactly equal to his output, not less.

This leads to the conclusion that companies with employees and workers, who get less than they produce, make the world a worse place and not a better one.

 
At 11/30/2011 6:25 PM, Blogger VangelV said...

You will NEVER collect taxes 90% of income.

Do you have an actual example?


I always use Bob Hope as an example of how useless the tax rates are when they are too high. During his peak earning years he was facing massive marginal tax rates that made it worthless to get paid for working. So being a smart man he didn't get paid. He did all kinds of shows in which his compensation was in the form of options to buy land for a set price. The option did not have to be exercised for years and often wasn't. But that value grew and grew and eventually good old Bob was a billionaire.

Rich people aren't usually rich because they got lucky. They got rich because they were clever at something and persistent. If the tax rate is high the incentive to avoid paying it will also be high. Eventually some smart guy will figure out how to avoid paying and the rich, who have the cash to pay for the advice, will avoid the confiscatory regime while the middle class gets screwed as usual.

 
At 11/30/2011 6:31 PM, Blogger Methinks said...

listen to hydra and jon,...

No, Morganovich, no! Please don't make me.


.. and you will see just how pervasive this relative thinking is. they cannot get over %'s and don;t even seem to care about absolutes.

Well, I agree with you that this is the case among the Jon 'n Hydras. I guess I was talking about people with basic reasoning skills.

 
At 11/30/2011 6:31 PM, Blogger Hydra said...

Can you be such a poor thinker that you don't ever realize the implications of what you are saying.

===============================


Vange: what the hell are you talking about?

 
At 11/30/2011 6:33 PM, Blogger VangelV said...

Then what happens when these governments decide to aggressively pursue and repatriate? There is nowhere those folks can hide their assets that can't be repatriated by the US's military or detected by the US's intelligence departments.

Reducing the taxes you pay is not illegal. Movie stars (who usually call for more taxes for you) use production companies to keep their foreign earnings in no tax jurisdictions. Tiger Woods uses a foreign corporation to keep some of his earnings from being taxed. So do many companies. By forcing more companies to take the same approach all you do is increse the burden on those that can't do the same thing.

That, and it doesn't help that the "tax havens" are usually countries with negligible military assets and easily swayed governments.

Actually, if they had big militaries they wouldn't be tax havens. Nobody would trust the government not to confiscate their assets.

Shame that US and Europe aren't highly aggressive on tax enforcement, such that evasive technical compliance is the same as tax evasion.

The European politicians and their masters would not like that because they are hiding their money too. And there is nothing wrong with the Rolling Stones moving to no-tax Monaco to avoid paying UK taxes. Any other Brit has exactly the same option. There is nothing wrong with a top notch Holywood actor in setting up a production company in the Bahamas or Barbados. You can do exactly the same thing and keep your foreign earnings from being taxed until you repatriate them.

 
At 11/30/2011 6:33 PM, Blogger VangelV said...

Then what happens when these governments decide to aggressively pursue and repatriate? There is nowhere those folks can hide their assets that can't be repatriated by the US's military or detected by the US's intelligence departments.

Reducing the taxes you pay is not illegal. Movie stars (who usually call for more taxes for you) use production companies to keep their foreign earnings in no tax jurisdictions. Tiger Woods uses a foreign corporation to keep some of his earnings from being taxed. So do many companies. By forcing more companies to take the same approach all you do is increse the burden on those that can't do the same thing.

That, and it doesn't help that the "tax havens" are usually countries with negligible military assets and easily swayed governments.

Actually, if they had big militaries they wouldn't be tax havens. Nobody would trust the government not to confiscate their assets.

Shame that US and Europe aren't highly aggressive on tax enforcement, such that evasive technical compliance is the same as tax evasion.

The European politicians and their masters would not like that because they are hiding their money too. And there is nothing wrong with the Rolling Stones moving to no-tax Monaco to avoid paying UK taxes. Any other Brit has exactly the same option. There is nothing wrong with a top notch Holywood actor in setting up a production company in the Bahamas or Barbados. You can do exactly the same thing and keep your foreign earnings from being taxed until you repatriate them.

 
At 11/30/2011 6:35 PM, Blogger Ron H. said...

Peak: "Ron, Krugman believes growth can be stimulated by taking money away from those with a low marginal propensity to consume (MPC) and giving that money to those with a high MPC, ceteris paribus."

Krugman goes off the rails at: "Taking money away", and only goes further wrong from there.

"Similarly, Krugman believes, growth can be stimulated by taking money away from the future (borrowing) and spending that money today, ceteris paribus."

It's hard to imagine that he really believes that. he's a bright guy.

"That may work under certain economic conditions. However, I stated before, a large tax cut (paid by spending cuts) and heavy deregulation are what the economy needs now."

I agree.

 
At 11/30/2011 6:37 PM, Blogger VangelV said...

This is the issue I raised far earlier. If we agree that this is th case,then we ought to be able to agree on a strategy to go find that rate.

Great. Start at no income or corporate tax and no capital gains taxes. Cut all spending other than a bit for defense and a few of the things authorized by the Constitution. You can finance that bit of spending by selling off mineral rights, leasing federal buildings, airport control systems, and other 'assets' held by the government.

Once we see how the economy responds over a decade or so we can increase the rates by 2% and wait another decade to see if there is an improvement. We can keep doing that until we find a rate that produces a worse outcome than the previous one.

When do you want to start?

 
At 11/30/2011 6:37 PM, Blogger Methinks said...

Ron, Krugman believes growth can be stimulated by taking money away from those with a low marginal propensity to consume (MPC) and giving that money to those with a high MPC, ceteris paribus.

Unfortunately, Krugman doesn't understand ceteris paribus is not a real life condition.

He's right about the growth. Stealing from some to (theoretically) spend on others grows government tremendously and astonishingly fast.

 
At 11/30/2011 6:41 PM, Blogger Hydra said...

I asked three simple questions, and you clowns cannot even get past the first one without getting all wrapped up in dogma and unrelated issues like starvation.


1) Is this trend occurring? (A smaller asnd smaller proportion of people taking home a larger and larger perentage of the total pie over time, as described by Krugman, and reported in government documents.)

2) If it exists, can this trend continue?

3) If not, how will it change?




Cmon, guys, it isn't that hard.

So far, what I think I hear is that no, Krugman is wrong, the government documents are wrong, and that is not what is happening.

Instead, the rich are getting richer, the poor are getting richer, and it will always be thus.

is that a fair assessment of what has been said so far?

 
At 11/30/2011 6:45 PM, Blogger Hydra said...

When do you want to start?

If conservatives would sign up for that, we can start next year.

I predict your experiment is very short, because you would have a worse result in the very first month.

Once we dispense with that balderdash we can try an experiment that might work.

 
At 11/30/2011 6:48 PM, Blogger Hydra said...

the large numbers are in countries that do not protect property rights, which is where you want the US to move.

============================

WHAT????

WTF did you ever get that out of me, or anything I said?

If you are going to simply make stuff up, then your comments have no merit.

 
At 11/30/2011 6:52 PM, Blogger Hydra said...

Weren't those agencies watching all of the action while the housing bubble

===============================

Watching being the operative word.

They were watching Madoff, too.

Lets take the cruisers away from the state police and let them watch, too.


We got most of those stupid regulations because stupid business people made them necessary. Repeal them tomorrow and most of them will be back next week.

Are there stupid regs? Of course there are, but that does not justify your conclusions.

 
At 11/30/2011 6:56 PM, Blogger Hydra said...

You will NEVER collect taxes 90% of income.

============================

I think Regan paid taxes at the 90% rate, for a while.

 
At 11/30/2011 6:59 PM, Blogger Hydra said...

if you don;t think windows 7 makes you better off, don't buy it.

I think I 'm still working on windows 2000.

 
At 11/30/2011 7:05 PM, Blogger Ron H. said...

"Why do I have to buy a $250 dollar "assembly" in oder to replace a $10 part?"

Because that's the only way the company can afford to continue to provide parts for your old worn out piece of crap refrigerator. There is no longer enough demand for just a gasket to keep making them.

Instead of whining, you should thank them for saving you 2/3 of the price of a replacement refrigerator.

Yes, I know, you think every manufacturer should make all replacement parts for every model for at least 50 years, and they could do that, but you wouldn't like the original price of the refrigerator. You would probably buy one from their competitor who had that same replacement parts strategy you cry about now.

 
At 11/30/2011 7:08 PM, Blogger Ron H. said...

"Do you really have such a lack of imagination as to realize that real starvation is debilitating?"

I've heard that it can sometimes be deadly.

 
At 11/30/2011 7:20 PM, Blogger Ron H. said...

"Are you suggesting that this scenario could continue until one person owns substantially everything?"

No. The disparity between rich and poor cannot reach 100%. Keep in mind that to enable the rich to get richer, the poor must get richer also, to allow them to buy more of the products the rich produce.

At some point the rate of increase of disparity must approach 0.

 
At 11/30/2011 7:37 PM, Blogger Ron H. said...

"All I did was ask three simple questions, which you clowns have spent 99 posts avoiding."

Gee, I didn't think you actually expected answers to such dumb questions.

"1) Is this trend occurring?"

yes

"2) Can this trend continue?"

Yes, to a limit I described in another comment.

"3) If not, how will it change?"

It is self limiting, as I explained.

Most importantly:

4) Who cares?


"I have not supported one side or the other, as far as I can tell."

You have suggested that increasing income disparity is a problem.

 
At 11/30/2011 7:52 PM, Blogger Ron H. said...

"What I see is companies buying each other out, leaving fewer choices, a race to mediocre in quality, and totally abandonment of the "ilities" that make things a lot less expensive."

Are there more companies in the US today than 20 years ago, or fewer? How about in the world?

Are there more items available for you to buy now, or 20 years ago? How about at your local grocery store?

Are there more restaurant choices in your area than 20 years ago or fewer? If you are rural, this may not apply.

 
At 11/30/2011 7:58 PM, Blogger Ron H. said...

"Nothing, except if it happens over and over again until a handful have virtually all the percentage.
At some point, I think you have a problem.
"

And, ...What is it?

 
At 11/30/2011 9:00 PM, Blogger Methinks said...

I think Regan paid taxes at the 90% rate, for a while.

I think it's a surprise to no one that you think wrong.

When Reagan's income reached a high enough level that the next dollar he earned that year would be subject to a 90% tax rate, he quit making movies and hung out at his ranch until the end of the year. That's the story the man told.

So, a man who could have been productive chose not to be because it wasn't worth it. Instead of getting 90% of Reagan's next dollar, the IRS got 0% of a dollar that was never earned. There's a lesson in that story for you to miss.

I asked three simple questions, and you clowns cannot even get past the first one without getting all wrapped up in dogma and unrelated issues like starvation.

Your increasingly stupid questions have been thoughtfully and thoroughly answered by several people now. That you don't understand any of the answers is a personal problem for you to grapple with.

 
At 11/30/2011 9:05 PM, Blogger juandos said...

jon says: "If Williams read Krugman regularly (as he should be doing) he'd know what Krugman suggests to alleviate the problem. Read his most recent column for crying out loud"...

Why should Williams in his golden years waste what he has left of life reading the rantings of a fool?

Note how Krugman spouts the typical loser-leftie crapola: "Let me suggest two areas in which it would make a lot of sense to raise taxes in earnest, not just return them to pre-Bush levels: taxes on very high incomes and taxes on financial transactions"...

Then further on Krugman blathers on: "And it’s instructive, too, to note that some economies already have financial transactions taxes — and that among those who do are Hong Kong and Singapore"...

Only one problem here, it has no basis in reality...

Singapore has NO taxes on capital gains (and Krugman demands that Congress raise capital gains taxes);
Sinapore's corporate income rate is a flat 17 percent;
Singapore's income tax rates are substantially lower than U.S. rates.

 
At 11/30/2011 9:28 PM, Blogger Hydra said...

it does not matter how many times you iterate it. if everyone's real income keeps going up, they are better off in each and every iteration from now to in finity

++++++/+??+/+??+/???

Now you are simply wrong. Anyone can put together a simple excel model and see bow this fails. It works for your specific example, but your example is not representative of recent conditions.

 
At 11/30/2011 9:34 PM, Blogger VangelV said...

Note how Krugman spouts the typical loser-leftie crapola: "Let me suggest two areas in which it would make a lot of sense to raise taxes in earnest, not just return them to pre-Bush levels: taxes on very high incomes and taxes on financial transactions"...

Then further on Krugman blathers on: "And it’s instructive, too, to note that some economies already have financial transactions taxes — and that among those who do are Hong Kong and Singapore"...

Only one problem here, it has no basis in reality...

Singapore has NO taxes on capital gains (and Krugman demands that Congress raise capital gains taxes);
Sinapore's corporate income rate is a flat 17 percent;
Singapore's income tax rates are substantially lower than U.S. rates.


You expect Krugman to know the facts? That is just so 'unfair'.

...Now let me ask you to explain this. Imagine that a pig is a duck and that it makes a deal with a starving child who needs an egg....

Can't you see this voluntary transaction is not moral or ethical? Would you be proud if your duckpig made such a deal?

Therefore we must end the free market capitalism and deregulation of the past few decades and start letting government regulate market failures.

If you don't understand this then you are not thinking as clearly as the ethical national socialists that we should all support. So read more Krugman and pray to Saint Obama for salvation.

 
At 11/30/2011 9:40 PM, Blogger VangelV said...

Nothing, except if it happens over and over again until a handful have virtually all the percentage.
At some point, I think you have a problem.


There is no way for that to happen in a free market. Such concentrations are only possible if you have a government system that transfers wealth from the taxpayers and consumers to protected interests.

 
At 11/30/2011 9:41 PM, Blogger Hydra said...

LOL Then why are you supporting a fascist viewpoint? At 11/30/2011 3:32 PM,

+++++++++++++++

What have I supported? I asked three questions, none of which have been given a straight answer.


Nowhere have I suggested any tax or policy.


Your attacks on me are as insupportable as the rest of your argument.

 
At 11/30/2011 9:44 PM, Blogger VangelV said...

What are you saying, that minimum jobs won't pay as much as welfare and medicaid?

Aren't welfare and medicaid payments set at pretty close to the minimum one can get by on?


You are right. But you forget the obvious. You don't stay on a minimum wage job unless you are incapable of learning. Most people progress quite rapidly from minimum wage jobs to much higher paying jobs once the learn skills and establish that they are reliable.

The problem is that the high minimum wage rate prevents employers from creating unskilled labour minimum wage jobs. And that the claw-backs and high welfare payouts discourage those who might want such low paying jobs to get a start from taking them in the first place.

 
At 11/30/2011 9:46 PM, Blogger VangelV said...

Can you be such a poor thinker that you don't ever realize the implications of what you are saying.

===============================


Vange: what the hell are you talking about?


That answers that question.

 
At 11/30/2011 9:55 PM, Blogger Hydra said...

There is no way for that to happen in a free market. Such concentrations are only possible if you have a government system

++++++++++++/+++

You just can't stay on topic, can you? Who said anything about a free market? The question is whether a smaller and smalle number of persons are or are not taking home a larger and larger percentage of total income.

The clear implication is here and now, in the market we have, not in some hypothetical world of wishful thinking.


Are the figures and reports Krugman mentioned correct or not?

 
At 11/30/2011 10:14 PM, Blogger Hydra said...

Most people progress quite rapidly from minimum wage jobs to much higher paying jobs once the learn skills and establish that they are reliable.

++++++++++++++++++++

Again, this is simply not true. You are describing successful people. But, MP presented data in a previous post on income mobility that showed that some people escape the bottom two quintiles. However, the data showed even more clearly that most people who start out in the bottom quintiles stay there, and most people in the top quintiles started there.

There arrested huge numbers of people who will never hold more than a minimum skills job. There are still more that have such jobs and shouldn't, and still more that can't even aspire to that much.

Regardless the whole issue of income mobility is moot - if and only if - it turns out that the stats and reports Krugman reports are correct. In an economy where fewer and fewer people control more and more of the economy, the potential for income mobility necessarily becomes less and less.

 
At 11/30/2011 10:20 PM, Blogger Hydra said...

nd that the claw-backs and high welfare payouts discourage those who might want such low paying jobs to get a start from taking them in the first place.

+++++++++++++++++

But you just said there is substantial income mobility. Then you say we have a society of dependency.

Which is it?

 
At 11/30/2011 10:30 PM, Blogger Hydra said...

me the little guys are getting plenty of goodies from government

++++++++/++++++++++++

Good thing. They sure aren't getting them from business. Some seem to think that starvation is the right motivation.

 
At 11/30/2011 10:40 PM, Blogger Hydra said...

ur increasingly stupid questions have been thoughtfully and thoroughly answered by several people now.

/+++++++++?+++++++++

No one has answered the questions. Instead they have brought in all manner of other topics in order to evade answering. Including my supposed stupidity and political leanings.

But nothing that represents anything like a straightened answer.

I conclude that such evasiveness points to fundamental dishonesty, and ideas that cannot be trusted.

 
At 11/30/2011 10:46 PM, Blogger Hydra said...

Ron:

Fewer aircraft manufacturors, autos, tractors, appliances,

I stand by my observation: more consolidation, fewer choices, lots more crappy junk.

 
At 12/01/2011 3:08 AM, Blogger Ron H. said...

"There would be workers. They would just be self employed. Then if they elect not to work one hour, no one else is affected. The self employed workers pay is exactly equal to his output, not less."

Those workers would be self employed catching fish with their hands, looking under logs for grubs, and picking wild berries to eat.

You really need to learn some very basic economics.

"This leads to the conclusion that companies with employees and workers, who get less than they produce, make the world a worse place and not a better one."

You really need to learn some very basic economics.

If you produce $10/hr and I pay you $10/hr, why would I bother to run a business?

 
At 12/01/2011 3:13 AM, OpenID Sprewell said...

Hydra, I and others have repeatedly pointed out to you that concentration of wealth can be a very good thing, as long as it's earned in a market and not stolen by a politburo and especially when it's accompanied by rising income across all groups, as it has in the US. I have even pointed you at stats that show that income inequality has fallen in the current recession and gave you reasons why it is likely to fall even further in the coming decades, just like it did in the decades after the '20s boom. The fact that you persist in spouting this class warfare propaganda doesn't speak well for your ability to reason about these issues.

 
At 12/01/2011 3:27 AM, Blogger Ron H. said...

"Fewer aircraft manufacturors, autos, tractors, appliances,"

You didn't answer the question I asked. try again.

 
At 12/01/2011 7:28 AM, Blogger Methinks said...

....that concentration of wealth can be a very good thing, as long as it's earned in a market...

And here we should maybe explicitly mention that it's good precisely because income inequality is merely a by-product.

It results from the incentives implicit in a market economy to serve our own interests by serving the interests of others. The degree to which we do so determines our relative wealth and, by definition, increases the wealth of everyone else as well.

Not so in the USSR, the country of my birth. The only way to obtain what was considered extreme wealth there (a lifestyle materially similar to a blue-collar worker's in America in the same time period) was through graft.

The conditions of the Soviet life demanded humour to cope:

The definition of a good Soviet citizen is one who steals but feels bad about it.

and

Not stealing from the government is stealing from your family.

Thus, income inequality in the uber equal Socialist Utopia of the USSR was far greater than in America and the ability for the average Russian to change his lot in life was practically nil.

 
At 12/01/2011 8:54 AM, Blogger VangelV said...

You just can't stay on topic, can you? Who said anything about a free market? The question is whether a smaller and smalle number of persons are or are not taking home a larger and larger percentage of total income.

The clear implication is here and now, in the market we have, not in some hypothetical world of wishful thinking.


Your inability to think is very evident. If concentration due to government transfer programs is a problem you need to argue for a more restricted government that cannot stop competition as it does now, not call for more government meddling. That is the problem with you lefty idiots. Even when you identify a problem correctly your ideology gets in the way and sabotages your arguments. So instead of doing the right thing you propose doing something else that is wrong.

In this case the left agrees that it is wrong for government bailouts, transfer programs, mandates, and subsidies to make rich people richer by protecting them from competition that would benefit the consumer. Instead of arguing that the solution is less power for corrupt government bureaucrats and politicians you imagine a hypothetical world in which if the right people were put in place they could wield their power and govern for good.

But as Ron and I keep pointing out, men are not angels. The problem is not caused by the character of the men in power but by the nature of power itself. An intelligent and morally superior man would avoid government because he would be smart enough to know the limits of his knowledge and the possibility of making errors in judgment. He would also be aware that to be in power one must figure out a way to hold on to that power. In the case of the US, we see perpetual campaigning and money raising. Officials are continually trying to use their campaign skills that led them to power even as they ignore skills that are needed for effective governance. The very promises that were made during campaigns are broken immediately because they would make holding on to power much more difficult.

This is why both the socialists and the national socialists on this board are so wrong in their advocacy. Their systems depend on competent, practical, and moral rulers. But such rulers could never obtain and hold power in a social democratic system. So what you have instead is a system where most of the actors are corrupt and power hungry players who seek to enrich themselves by selling their influence and power to the highest bidders.

 
At 12/01/2011 8:59 AM, Blogger VangelV said...

Are the figures and reports Krugman mentioned correct or not?

No. Krugman is very good at twisting numbers and creating narratives that support his views. And he lies. For example, when he brought up his Singapore reference he failed to mention that Singapore does not tax capital gains, has a flat tax rate that is 17%, and that Singapore's income tax rates are much lower than rates in the US. If Singapore is the standard why is he arguing for higher capital gains rates, higher income tax rates, and higher corporate rates?

 
At 12/01/2011 9:03 AM, Blogger VangelV said...

Again, this is simply not true. You are describing successful people. But, MP presented data in a previous post on income mobility that showed that some people escape the bottom two quintiles. However, the data showed even more clearly that most people who start out in the bottom quintiles stay there, and most people in the top quintiles started there.

The data did not show that. It showed the opposite.

 
At 12/01/2011 9:05 AM, Blogger VangelV said...

But you just said there is substantial income mobility. Then you say we have a society of dependency.

Which is it?


There is substantial mobility. But many of the people who are on welfare and dependent on government handouts tend to stay exactly where they are. If you want them to be mobile you have to stop bribing them to stay dependent.

 
At 12/01/2011 9:07 AM, Blogger VangelV said...

Ron:

Fewer aircraft manufacturors, autos, tractors, appliances,

Hydra:

I stand by my observation: more consolidation, fewer choices, lots more crappy junk.


Look up what the word 'observation' really means. Making stuff up cannot be classified as 'observation.' Ron is right. We have more companies, more stuff, and much more choice than we used to.

 
At 12/01/2011 1:35 PM, Blogger Ron H. said...

"Again, this is simply not true. You are describing successful people. But, MP presented data in a previous post on income mobility that showed that some people escape the bottom two quintiles. However, the data showed even more clearly that most people who start out in the bottom quintiles stay there, and most people in the top quintiles started there."

You like that income mobility data now? At the time, you disagreed with it for some reason.

So, your reading of the data tells you that most people that started out making less than $50k/yr continue to do so, and others have always made more than $179k/yr?

What's your point?

"There arrested huge numbers of people who will never hold more than a minimum skills job. There are still more that have such jobs and shouldn't, and still more that can't even aspire to that much."

Numbers please. What's your source for that?

 
At 12/01/2011 1:45 PM, Blogger Ron H. said...

"Watching being the operative word.

They were watching Madoff, too.

Lets take the cruisers away from the state police and let them watch, too.
"

If you're suggesting that some agencies serve no useful purpose, then they should be abolished, don't you think?

 

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