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income inequality debate

I have no idea how this would play out- but it would be interesting to see what impact the Church has had on this conversation. Obviously, the Church has been power/money hungry since Constantine. Imo, the issue isn't so much about governments/taxes/welfare, but rather our love of money (which is where actually following the teachings of Jesus would make a difference). The changes being seen in Africa through the promulgation of the prosperity gospel is rather astounding, but there is also a reason why that "message" has taken hold in America so strongly, especially among those lower on the economic scale. I'm getting all preachy, I know, but there are more than enough resources to go around. I'm not talking about redistributing wealth (though, I'm not against that), but just not being a selfish and hoarding ass.

I love this post. Thanks, Rev.
 
Perhaps the difference is that Mangler does not feel that income inequality is actually a problem that needs to be "helped".

At current first world levels, and given the standard of living that even the poorest generally have in the first world, that may be correct, at least right now. However if wealth is continually concentrated, and growth for everyone else is either nonexistent or almost invisible as Pinketty believes will be the case in the first world for the forseeable future, there will be a breaking point somewhere and sometime. In the past those breaking points have been pretty nasty things.

How many of those breaking points have occurred when people's lives were improving in real terms? Honest question, my historical knowledge is fairly limited prior to the 20th century.
 
How many of those breaking points have occurred when people's lives were improving in real terms? Honest question, my historical knowledge is fairly limited prior to the 20th century.

None, and it's important to understand why.

Some scholars - Pinketty being the standard bearer right now - are pointing out that the 20th century was an historical anomaly in which mature economies got destroyed by the wars, and then saw real 3-6% growth over the next 50 years while rebuilding from the wars and adopting new technology. Developing economies saw even larger growth while catching up to the western world. There was massive demographic growth due to improvements in medicine and agriculture, as well. Everyone was comparatively happy cause everyone was growing. 3-6% growth, historically speaking, is very, very robust.

Pinketty theorizes that we are at the end of that process, or close to it. He believes it is likely the next 50-100 years will see very slow, 1-2% growth on average in mature economies (which to people on the ground is imperceptible). In other words, the theory is that people's lives will no longer be improving in real terms. He also believes that this will lead to greater and greater wealth concentration. Most people will be stuck at whatever level they're at, with no prospects for improvement for themselves or their kids, and watching the 1% (or whatever) getting more and more of the benefit of the economies. That is what may give rise to societal turmoil in the coming years and decades.

The question, in short, is not whether the masses should be grateful that their lives are better now than in 1974. The question is whether the masses of 2054 will think they are better off than people were in 2014, and if not, what that means for society.
 
None, and it's important to understand why.

Some scholars - Pinketty being the standard bearer right now - are pointing out that the 20th century was an historical anomaly in which mature economies got destroyed by the wars, and then saw real 3-6% growth over the next 50 years while rebuilding from the wars and adopting new technology. Developing economies saw even larger growth while catching up to the western world. There was massive demographic growth due to improvements in medicine and agriculture, as well. Everyone was comparatively happy cause everyone was growing. 3-6% growth, historically speaking, is very, very robust.

Pinketty theorizes that we are at the end of that process, or close to it. He believes it is likely the next 50-100 years will see very slow, 1-2% growth on average in mature economies (which to people on the ground is imperceptible). In other words, the theory is that people's lives will no longer be improving in real terms. He also believes that this will lead to greater and greater wealth concentration. Most people will be stuck at whatever level they're at, with no prospects for improvement for themselves or their kids, and watching the 1% (or whatever) getting more and more of the benefit of the economies. That is what may give rise to societal turmoil in the coming years and decades.

The question, in short, is not whether the masses should be grateful that their lives are better now than in 1974. The question is whether the masses of 2054 will think they are better off than people were in 2014, and if not, what that means for society.

Thanks.

I have to admit I have a hard time giving a great deal of weight to a prediction someone is making about what the world will be like 50 years from now. I don't think many could have accurately predicted what the world would be like today even 20 years ago. What basis does he have for thinking we won't continue to develop and adopt new technologies? Why does he think our improvements in agriculture and medicine will end? Does he not see the still developing use of the internet coupled with rapid growth in two of the world's most populous nations(not even considering the growth in Latin America and the rest of Asia) as economic drivers? I also have a hard time giving much credibility someone who thinks the two most destructive wars the world has ever seen are the reason we prospered in the last century. Think of the incredible advancements we could have made if only we had a third world war. Perhaps we'll get lucky and have three this century.

I believe, although I haven't confirmed, that the biggest driver for income inequality is the growth in investment portfolios. Those portfolios will have a hard time growing if the very low growth he's predicting comes to fruition, especially as the boomers sell off their investments in retirement, so why would he expect an continual increase in wealth concentration?

One last thing.... does he not believe that the policies he is pushing will act to slow growth? If it does are we better off by adopting his policies? It seems to me like what he's suggesting will exacerbate the problems he is predicting.
 
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Why more wealth concentration? Because the rich have more. The middle and poor have less. It will intensify much more and harm the economy. The way the rich should get richer in a market economy is by expanding participation in the markets.

What the US has done is allow people create vast wealth without producing anything. Allowing so much wealth to be created by paper transactions rather than actual product development and distribution dooms real expansion.
 
Why more wealth concentration? Because the rich have more. The middle and poor have less. It will intensify much more and harm the economy. The way the rich should get richer in a market economy is by expanding participation in the markets.

What the US has done is allow people create vast wealth without producing anything. Allowing so much wealth to be created by paper transactions rather than actual product development and distribution dooms real expansion.

Total agreement RJ. Think about how much stronger our economy could be today if we had never developed capital markets.
 
Are you separating "capital markets" from "equity markets"?

No derivatives or any such product should ever be allowed to be sold unless and until they have been completely tested and fully regulated. Could you imagine brakes on a car not being tested? Or toothpaste? Or pajamas?

But Wall Street scream about doing the same thing for financial products.

As I've said many times, Obama's biggest failure is not having hundreds of senior Wall Street/bankers in jail for what their greed did to the world economy.
 
Are you separating "capital markets" from "equity markets"?

No derivatives or any such product should ever be allowed to be sold unless and until they have been completely tested and fully regulated. Could you imagine brakes on a car not being tested? Or toothpaste? Or pajamas?

But Wall Street scream about doing the same thing for financial products.

As I've said many times, Obama's biggest failure is not having hundreds of senior Wall Street/bankers in jail for what their greed did to the world economy.

Can you explain how one would go about testing a derivative without a derivative being sold?
 
We have a responsibility to ensure that our entire population is able to live a decent (an ambiguous term I don't know how to define) life. So we should just give them the means to do so, rather than trying to delude ourselves that terrible (imo) economic policies like the minimum wage are actually helping our society.
 
How were things better before minimum wage?
 
If they can't be tested, they shouldn't be sold.

So no banks right. No way to test them before creating them. When they fail they can create widespread destruction right? Never should have been created.
 
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How were things better before minimum wage?

They weren't better overall. However employment rates for young people (particularly poor ones) were much, much higher, which I think is a pretty good thing for a number of reasons.

If someone needs help, we should give them help, rather than trying to hack the economic system, trying to trick it into getting to the ends we want to achieve.
 
I also have a hard time giving much credibility someone who thinks the two most destructive wars the world has ever seen are the reason we prospered in the last century.

I'm far from an economist or economic historian, but my understanding is this is actually pretty well accepted.
 
So no banks right. No way to test them before creating them. When they fail they can create widespread destruction right? Never should have been created.

If I sell you a product and it's not what I said it was, then I am liable. Why shouldn't banks be held responsible?
 
You may have faster growth rates after wars but there is no way they create value to an economy. You don't hear a lot of economist clambering for the destruction of a few cities when we go into a recession do you?
 
If I sell you a product and it's not what I said it was, then I am liable. Why shouldn't banks be held responsible?

I think they should be. Now I'm concerned I'll have to reevaluate my opinion.
 
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faster growth rates may be what we're both agreeing on. No destroying cities doesn't create wealth abroad but it--at least during and after WWII--stimulated production domestically. not sure if production = wealth but it did happen. As much as the new deal, WWII is credited for bringing the U.S. out of the recession in the 30s.

But like everyone has been saying, whether the 20th century is a model or applicable to the 21st is up for debate.

I like this thread i hope it's not sullied with personal rivalries because there is much to learn.
 
The key here is growth. Data seem to show that throughout human history, with very few exceptions, structural growth has been very slow, around 1-2% per year. Obviously this is a vast generalization, and it's just an average. But it seems to hold true for vast periods of history. People living in those times perceive the world around them as relatively unchanging/stable/stagnant, whatever word fits the times. Critically, throughout most of history, wealth was heavily concentrated among elites, and it was hard to break into those elites (you had to be born into them, generally). Data indicates this even held true during the industrial revolution and colonial period. Inherited wealth had a higher rate of return than people could make from their labor.

The wars destroyed massive amounts of capital assets especially in Europe and Japan. All that stuff had to be rebuilt, and it was, and then improved upon with new technology. This led to growth of 3-6% or higher. People felt like things were "getting better". They felt their children would have better lives than they did. They saw opportunity. Because the growth rate was high, it was easier for common people to amass some wealth. Social mobility improved. Inherited wealth was less important, because inflation ate away at it and it wasn't growing at a much faster rate than earned income wealth.

Some scholars believe that this period of growth has now run its course, and a return to the pre-war norm is inevitable. Inherited wealth will once again earn higher rates of return than one can make by working. Growth will be too slow for most people to have any hope of moving up, or of their children having a better life. Some would say this world has already arrived - how many people, outside the 1%, have seen their real incomes increase more than 1-2% in the past 10 years?

Now of course it could be that new technologies spur growth. Hard to tell. At this point it looks like new technologies are primarily putting more and more humans out of low- and middle-wage work, while all the benefits of the technologies are reaped by ownership. The growth, in other words, is in capital and profits on capital, not in labor income.
 
faster growth rates may be what we're both agreeing on. No destroying cities doesn't create wealth abroad but it--at least during and after WWII--stimulated production domestically. not sure if production = wealth but it did happen. As much as the new deal, WWII is credited for bringing the U.S. out of the recession in the 30s.

But like everyone has been saying, whether the 20th century is a model or applicable to the 21st is up for debate.

I like this thread i hope it's not sullied with personal rivalries because there is much to learn.

Message received, I'll play nice.
 
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