Why Income Inequality Matters

[Malacite]

Re: Why Income Inequality Matters

Funny/Relevant

http://sphotos-f.ak.fbcdn.net/hphoto...30155883_o.jpg

[Malacite]

Re: Why Income Inequality Matters

Part 2 is up, and it's fantastic and enlightening;


Economist Richard Wolff joins Bill Moyers to explore capitalism


See also: Sheila Bair joins Bill Moyers to talk about American banks

And

Global Public Square - CNN.com Blogs

"On GPS this Sunday: Money matters
"Fareed Zakaria GPS," Sundays at 10 a.m. and 1 p.m. ET on CNN

Should the U.S. spend more to try to stimulate the economy? What should NASA be spending its money on? What does the rise of Asia’s economies mean for the United States? Fareed speaks with Nobel Prize winning economist Paul Krugman, astrophysicist and director of the Hayden Planetarium Neil DeGrasse Tyson, and former permanent secretary at the Singaporean Foreign Ministry, Kishore Mahbubani, for some answers.
I know you think the stimulus was not large enough, but it was fairly large. Certainly by historical standards, we went from debt to GDP of about 40 percent to about 70, 80 percent. And the argument is we're in the weakest recovery since the Great Depression. Is that proof that this kind of stimulus, Keynesian stimulus, just doesn't work in today's economy?

Krugman: No, because it's exactly what you would have expected to happen. I mean, this was one hell of a financial crisis – the worst since the Great Depression, exactly. We've had a huge fall in private investment, the collapse of the housing bubble, coupled with a huge rise in private savings, corporations and households trying to pay down debt. Of course you have to run large budget deficits just to stay in place. You don't expect the numbers that we've been seeing to be enough to actually produce full employment."

Krugman vs Europe: It's getting ugly - Mar. 12, 2013


Fareed was especially good today. You can get the audio version free on iTunes (they charge for the video, SOBs)

[Taskmage]

Re: Why Income Inequality Matters

More Richard Wolff plus some slamming of O'Reilly. Thought you'd appreciate.

[Malacite]

Re: Why Income Inequality Matters

Tomorrow he's having a live chat with Moyers at 1 PM (EST I think?)

And SUCK ON THAT O'Reilly (and by extension, most republicans)

[Malacite]

Re: Why Income Inequality Matters

Bill Moyers Essay: The United States of Inequality | Moyers & Company | BillMoyers.com

[Taskmage]

Re: Why Income Inequality Matters

I realize for most people this will be tl;dw, but maybe at least Malacite is invested enough to watch the whole thing. Even if IQ2 doesn't change my mind very often, I at least feel more informed about the reasons on each side.

Basically I feel the side against won because they could reference real and assured damage to low income people as a result of abolishing the minimum wage, while the side arguing for abolition could only refer to theoretical gains for the unemployed and ideological benefits. Philosophically I still support the idea of phasing out the minimum wage, but after listening to this I am of the opinion that it is not a fight worth having at this time, and for now it is simply more important to create an economic climate that provides sufficient opportunities for the unemployed and an educational system that gives people the skills they need to take advantage of those opportunities.

tl;dr In this poor economy, too many people would be hurt by removing or reducing the minimum wage. In a healthy economy, a minimum wage would be demonstrably unnecessary, so we should focus on creating that economy and then revisit the issue.

[Malacite]

Re: Why Income Inequality Matters

I'm more inclined to go with what Richard suggested; trying to figure out something to replace capitalism (at least in its current form) as it is clearly not working as intended (or perhaps it's working too well?).


The story about the co-ops was particularly fascinating - especially how no one makes more than 6x the lowest paid worker. Contrast that with the average CEO making 500x the wage of the lowest worker, not to mention stocks and severance packages and other "golden parachutes" ...


I've said it before; it doesn't take a genius to figure out that the more evenly distributed the wealth is, the more likely it is to get spur the economy. So sick of hearing this bullshit about "job creators" and "the Country is broke." from Republicans and New Classical economists;

No, the country is not broke. Your annual GDP is enough to pay off the debt in its entirety if you so chose. The U.S., out of the top 40 economies as per the OECD, ranks 38th for collecting taxes from corporations, with a full 1/3rd of them not paying a single penny - even getting tax credits. Yeah, let that sink in for a while. There aren't enough thinkers like Paul Krugman out there promoting a proper growth strategy. Granted, that can have flaws, especially when interests rates are high, but that's the thing - they're still being kept at a record low. Now is the time to be spending and investing like crazy, putting people to work and building infrastructure - things that will pay off dividends in the long run. The cheap money won't last forever, at some point interest rates will have to go up, at which point if things haven't turned around by that point, that is when shit will get serious.


So yeah, spend now, get to fixing shit (and there's a lot of shit that needs fixing, like oh say the 70k structurally deficient bridges...) and putting people to work, so they can buy things and pay their share of taxes which will grow the economy and offset the spending. Austerity just doesn't work, look at what it's done to the U.K. and Europe.

[cidbahamut]

Re: Why Income Inequality Matters

I wonder if it might be better to approach the problem from the other end. What happens if we place a hard cap on salaries? If you can't earn enough to buy a small island nation every year, then you have less incentive to siphon off your employees' wages and benefits for your own personal gain. I know the canned response is "but then no one will be motivated to succeed and be awesome", a notion which I thoroughly reject.

[Taskmage]

Re: Why Income Inequality Matters

The minute you start setting hard limits, you remove the ability of workers and companies to compete and discriminate about how they spend their resources, but I wouldn't be opposed to steeply diminishing returns on compensation after a certain point.

[cidbahamut]

Re: Why Income Inequality Matters

Well the way I see it, without hard caps on salaries, the people at the top are just going to continue to see improvements to the company's bottom line as being directly beneficial to them. And I do mean directly. So as long as they can improve their personal income by taking it out of the underlings' wages and benefits, they will continue to do so.
Without a hard cap on how much they can make, how do we remove the incentive to cut costs by screwing over the workers? The current system does nothing but embrace that behavior.

[Taskmage]

Re: Why Income Inequality Matters

Well, hang on. Corporate execs do make retarded amounts of money, and there's a social justice issue in that disparity, but it's unclear to me that those salaries result in poorer conditions for workers. For example, PepsiCo CEO Indra Nooyi makes $20M/year.[1] PepsiCo employs 294,000 people.[2] So even if she drew a $0 salary and that money was distributed to the employees, that would only result in about an 3¢/hour raise for each person. (20M / 294k / 2880 hrs) Similar numbers for AT&T. Or I suppose you could look at it as 1000 new employees at 30k/year. That's about a third of a percent of expansion in their work force. If that happened for every company in the country, it wouldn't make a dent in unemployment numbers. So, it doesn't seem to me that greedy CEOs are bleeding their companies dry.

[cidbahamut]

Re: Why Income Inequality Matters

I'll be the first to admit I haven't looked at the numbers, so my proposition is probably pretty flimsy.

Still, the fact remains that there are companies doing very well while their workers aren't.

[Malacite]

Re: Why Income Inequality Matters

It's not just the CEO's but investors too.

You have to take into account the bullshit that is the roughly 14% capital gains tax rate on investments. Now, it's true that messing with this too much could seriously hurt incentives to invest, but even so it does strike me as horribly unjust that someone can make millions of dollars a year off investments (like Romney) and pay such a small percentage in taxes for what's essentially passive income. I don't care how much work you put in to get that going, the fact is you're not physically doing anything anymore at that point - that's as close to free money as you can get so why should someone who's busting their ass all day get taxed upwards of 30%+ ?

Even more horrifying are the statistics on servers. Because of a shit deal that Herman Cain lobbied for when he was head of the American Restaurant Association, the minimum wage for server sis something like $2.73/hour I believe (don't know if this is nation wide or not) and worse yet, pretty much all of that money gets taxed away. Which means these people are essentially living purely on tips.

That is fucked up.



EDIT: Side note, I believe Bill Clinton (might have been Carter but I'm sure it was Clinton) tried to impose a maximum salary cap for corporate execs like Cid's talking about and it didn't go down well at all.

[Taskmage]

Re: Why Income Inequality Matters

I've only glanced over the numbers just now, but I didn't see any data that was significantly different. I wouldn't assume it's not a problem or at least part of the problem, but I don't want to take it as a given, either.

When a company is "doing well" that's generally defined by its stick rising in value, right? That'd be another good place to look for corrupting incentives.

- - - Updated - - -

Guess Mal beat me to it.

[Yellow Mage]

Re: Why Income Inequality Matters

I like TM's idea of diminishing returns to scale better. Theoretically we could even set this up through the tax system so that employers are encouraged to up employee wages to avoid giving even more to Uncle Sam instead. Furthermore, that could encourage more employment in general. Which sounds better to a CEO: paying a person's modest wage, or paying for their welfare?

ADD: of course, that doesn't solve the problem of simply employing offshore . . .