Posted on 12/28/2013 9:14:07 AM PST by Baynative
A key factor.
However, stock prices go up much more for companies that grow rapidly, whether by reinvesting or acquisition, then for companies that simply distribute profits among shareholders.
This of course encourages investors to invest in companies that follow this course, and incentivizes executives, who are often compensated largely by increase in stock price.
Tax laws distort rational business practice, but so do other factors, such as investors expecting spectacular ROI. A company just doing business and distributing its profits will never produce spectacular ROI.
The fact is some will work for money and others will not.
If we split all of the money evenly of course many of the rich would return to being rich in a short time. Other who inherited their riches like Paris Hilton would merely become whores who charge instead of giving it away.
But the fact is that hard work and good moves is what makes the rich wealthy .
The poor are not poor because Warren Buffett and Bill Gates have too much money. The poor are poor because, mostly, they aren't working (or are not working much), or because they lack the skills to move up the ladder, or because they live in an area where opportunity is limited, and haven't mustered the gumption to move, or sometimes because of illness or disability. All of these things are serious problems.
That said, America today spends vast sums to provide basic income support. The poor in America, excepting the substance abuse and mental illness cohort, live relatively well by any historical or international standard. That means that we are deep into moral hazard territory. Increased income distribution simply lessens the incentive to work, or upgrade skills, or move. It makes people more comfortable in dependency, and tends to perpetuate and exacerbate the problem.
So how can we reduce the wealth differential? One of the simplest methods would be to shift Social Security to a fully funded basis to generate wealth creation among the currently non-saving demographic. Another would be to effect real school choice to allow the children of the poor an escape hatch out of too-often dysfunctional public school systems. Another would be to reduce taxes and regulation to encourage small business formation. Another would be to condition receipt of benefits on work effort. Yet another would be to encourage and support family formation, as opposed to normalizing illegitimacy and single parenthood. The list goes on.
The left, of course, generally opposes the constructive methods and prefers the counterproductive methods. If I were a cynic, I would suspect that their objectives have less to do with reducing inequalities of wealth and more to do with tearing down a resented business class while consolidating government control in an effectively one-party system.
That’s increased income REdistribution, but you already knew that.
I think there’s a correlation between the increase in government and the relative wealth of the top 1% in the video. If I recall correctly, they took in only 9% of income in 1976 but now earn 25% of all income.
We must have worked for the same guy. I think similarly.
Fairness would dictate than an individual's income is only the money left after expenses, the same as with a business.
I think the tax laws are all backwards. We should encourage wealth creation by dropping the tax rates as your income increases. That would encourage people to earn more so that their effective tax rate would drop.
I would like to see this done on a country with a more “equitable” system. North Korea, Cuba, Russia. The difference here is you can move to different positions thru your work and ideas.
That man was exactly right. I’ve been telling libs the same thing for years.
Socialism fails EVERY time it is tried.
“wealth” in a single nation-economy context is NOT as relevant or important as “what do you have and what are you able to do” COMPARED an average person in some other nation-economy;
can every afford to buy a private jet? no. is it important? should everyone be able to buy a private jet? no. then why should we be uber concerned that only a tiny fraction of the population are so humongously wealthy that they can be a private jet? we shouldn’t.
as for the “poor”; with all the safety features we have in this country most of the “poor” live better and have more than the average person in most countries in the world.
“income equality” crusades are all about promoting the sin of envy; they promote the negative feeling that everyone else has more than you do and it is all undeservedly not your fault and you and people like you “deserve” to have more and the richest “deserve to have less”, and when its not promoting envy its promoting senseless guilt, that you have too much and that’s UNFAIR
Nope. Profits are just the amount of income left after expenses. Thus it equates more closely to an individual's income after fixed expenses than to his savings.
An individuals "income" or dollars after expenses is PROFIT. !!!
“wealth” in a single nation-economy context is NOT as relevant or important as “what do you have and what are you able to do” COMPARED an average person in some other nation-economy;
can every afford to buy a private jet? no. is it important? should everyone be able to buy a private jet? no. then why should we be uber concerned that only a tiny fraction of the population are so humongously wealthy that they can be a private jet? we shouldn’t.
as for the “poor”; with all the safety features we have in this country most of the “poor” live better and have more than the average person in most countries in the world.
“income equality” crusades are all about promoting the sin of envy; they promote the negative feeling that everyone else has more than you do and it is all undeservedly not your fault and you and people like you “deserve” to have more and the richest “deserve to have less”, and when its not promoting envy its promoting senseless guilt, that you have too much and that’s UNFAIR
notice that the entire conversation refflects economic ignorance; ignorance that imagines that wealth simply exists and wham bam it can be “distributed more equitably”; which we know is not so because wealth does not simply exist it is created and the various means of “redistributing” it on “humanitarian” grounds, by government fiat or any form of coercion ALTER the mechanisms of wealth creation and wind up shrinking the economic pie, while NOT STRENGTHENING it for most. Those at the bottom wind up still being at the bottom of a smaller economic pie.
I know a lot of people that never came into big money but did have decent jobs that did (does) the same thing; never save a dime, spend every penny they make every pay check, and borrow money to buy everything they want.
The very richest have hundreds or thousands of times more wealth than the poorest. But what are they doing with it? Is it sitting as piles of cash, doing nothing and earning nothing? No.
Many even in the middle class, let alone the poorest, do not understand this.
most of them are congress critters. bet all are in the 1%, /but they call the hard working man that aquires wealth via hard work and saving the greedy rich....the only ones greedy are those that make laws to steal from the citizens. Those greedy sons of bitches spend day in and day out how to tax everyone into a hole and steal their wealth...arrogant SOB, think they can tax rain water on your property and excuse themselfs from all the laws they make. Now those are the greedy rich.
The solution is, I think, not even related (except tangentially) to economics; the real issue is Justice.
No, I don't mean "social justice" — because the theft of property from some and redistribution to others is not Justice at all, but merely social.
What I mean is that the very rich and the very poor should be, in the eyes of the law,bearers of the same inherent rights: if the poor steals from the rich, the poor is a thief, likewise if the rich steals from the poor he is a thief. Expanding on this: the agents of government should be bound by the law by at least as much as the average citizen — in fact, there can be argument that they should be more bound by the law because they are more familiar and more tied to the law.
Much of that inequitable distribution is due to corruption between government and industries, if the government [collectively/corporately and individually] were bound by the law (in particular federal, but also state, county, and municipal) then it would be prevented from engaging in much of this corruption.
As an example: look at the War on Drugs. Nowhere in the Constitution does it authorize the federal government the power to prohibit the trade of various substance. (Indeed, even by precedent *spit*, it took a Constitutional Amendment to do so with respect to alcohol.) Yet, even so, the powers being used have been further corrupted so that the government may seize your money and property and force you to prove your innocence.
This video is interesting in that it requires an evaluative philosophy, that is, a belief that the economic situation of people is either right or wrong. The author has a belief that the economic situation as it exists is wrong and toward the end of his argument discusses the relationship between income and “hard work” in the form of time put in to receive income.
However, an economic system doesn’t pay individuals based on hard work—the system pays individuals in terms of “value delivered”. You can work yourself ragged all day long but if it isn’t valued by someone, it won’t produce you income.
Neither does an economic system care about the fairness of the distribution of incomes. The economic system, because it is a complex dynamic system, tends to produce outcomes that don’t seem fair. But, such systems aren’t subject to the fairness opinions of anyone. Such systems produce outcomes you can’t change in a simple, predictable manner by gov’t policy, although you can certainly mess up a lot of lives trying.
Another error in assumptions by the author is the ommission of choice and preparation. Some people make choices and prepare at no pay for a long time to then receive higher income. It is a rational choice. Other people choose to pursue low income work (e.g., art) while others choose to pursue higher income work (e.g., orthopedic surgery). If they both are working very very hard on a given day far in the future, it is not a “wrong” that one earns more money on that day.
Another suspect issue in the author’s work is his mention of the concept of government. Government is routinely and unconsciously thought to be a corrective mechanism for a perceived wrong in society. As conservatives know, government often worsens the wrong. Government employees are just as greedy as anyone else and if you put power in their hands, watch the money flow their way. Did the author of this piece not note that we have had a quasi-socialist society for many decades, worsening in recent years, yet income “inequality” has gotten even more extreme? I wonder why that is (rhetorical question)? I am going out on a limb a bit here when I write that socialism is a SOURCE, not only of poverty, but of INEQUALITY.
Yes, free market capitalism is a source of inequality and so is socialism and every other system of government. However, free market capitalism leaves a bit of choice of inequality distributed among the peasants. Socialism puts the choice in the hands of a few.
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