The distribution of our national income has become severely skewed. It is worse than in every single country of the Middle East and approaches Latin America's discord-sowing levels. On the Gini Index, where higher numbers represent higher inequality, the U.S. comes in at 45. For comparison, the numbers in Latin America range from 41 in Venezuela to 59 in Haiti. With a score of 23, Sweden leads all nations in having the most equal distribution of income.

I saw what severe income inequality does to a society: it generates pervasive grievances that fuel a volatile and often violent politics; it fractures social cohesion; and it throttles economic development. The last point is critical. In the United States, the economic activity of a robust middle class has been an important driver of growth. Until recently, that is. In 1970, when our Gini coefficient was 39.4, the wealthiest 1 percent of Americans took in 9.7 percent of national income. That was a lot, but today the equivalent figure is 23.7 percent. The wealthiest one-tenth of 1 percent receives an astonishing 12.3 percent of national income.

According to former Secretary of Labor Robert Reich, middle-class economic activity is no longer generating new growth and jobs. As the purchasing power of the middle classes declined after 1970, families coped for a time. Women earned a second income; all workers put in longer hours and families drew on the equity in their homes. As those strategies are now exhausted, job growth is anemic. And because the wealthy can spend only a fraction of their income, they are not generating new growth either. (To spend an annual income of $10 million — not uncommon in the corporate world — one has to spend $27,397 every day.) Extreme income inequality benefits no one — not even the wealthy.

tk421;709473 wrote:I still don't understand the hatred for the rich when everyone in this wants to be rich. How do you hate what you wish you were?

queencitybuckeye;709480 wrote:Not a bad working definition of envy.

tk421;709498 wrote:Yeah, but they take it to the extreme. I also don't understand people who listen to idiots like Michael Moore and others. He's freaking rich too, and somehow convinces Americans that the rich are evil.

tk421;709498 wrote:Yeah, but they take it to the extreme. I also don't understand people who listen to idiots like Michael Moore and others. He's freaking rich too, and somehow convinces Americans that the rich are evil.

believer;709281 wrote:From each according to his abilities, to each according to his needs then Bigdogg?

The inherent vice of capitalism is the unequal sharing of blessings;
the inherent virtue of socialism is the equal sharing of misery.

Tobias Fünke;709718 wrote:The inequality in capitalism leads it to socialism, and the equal misery in socialism leads it to capitalism. My mind has just been blown.

Despite capitalism's pimples, it has created far more wealth and provided improved quality of life for far more people than socialism ever hopes to achieve.

Tobias Fünke;710011 wrote:Simply put, does there come a point where so many people have been replaced and rendered unneeded so that it is bad? Just some food for thought.

believer;710104 wrote:Absolutely it's bad. The crazy thing about capitalism is it seeks innovation and efficiencies to provide the profitability businesses need to survive.

You mention that 100 years ago people had skills and trades necessary to keep the machines humming. Enter trade unions which, while being useful in the creation of a strong American middle class through the demand for higher wages and safer work places, has ultimately priced itself out of the market without regard to economic common sense.

Meanwhile emerging economies in Asia and to a lesser extent Mexico have filled the labor niche at a much more affordable price.

But one of the beautiful things about capitalism and the free market (or at least a semi-free market) is that things tend to reach equilibrium over time. In other words the reason the Asian labor market is doing so well is because their less expensively made goods sell well in the developed markets. Yet the consumers in the developed markets are rapidly losing their jobs and/or the wealth necessary to sustain the Asian labor market in the long-term. Sooner or later the rooster comes home to roost.

Some think we need to force the issue through protectionist policies, but in doing so we only damage ourselves and the delicate global economy.

believer;710104 wrote:What needs to happen and will likely happen naturally over time is that Asian labor will become increasingly more expensive and developed labor markets like the United States will become less expensive. This will open up new jobs growth in the United States albeit at a much lower rate than what Americans have become accustomed.

There is no good answer and it will be painful, but I'm confident that things will work themselves out in the long haul. What goes around, comes around. It always does!

Tobias Fünke;710415 wrote:I wonder if you overestimate the equilibrium though. If jobs for the less educated are shipped from the midwest to Mexico, China, India, etc., which has undeniably happened, and their pay rates go up, which is also happening....why wouldn't companies just move to down the line to even poorer countries. Africa lacks stability, but that's not going to be that way forever. Their workforce will be more attractive than even China's/Vietnam's/etc down the road, wouldn't you think? The poorer the better, if stability is equal.

Tobias Fünke;710449 wrote:I should note:

I read an article in Foreign Affairs once that talked about similar ideas with the US and global economies. His point was pretty simple: would you rather be the country making 1,000,000 sweaters, 100,000 cars, or having 5 tremendous scientific breakthroughs (e.g. curing cancer)?

Correct me if I'm wrong, but the United States has lost its market-share in manufacturing while still maintaining a dominant lead in nanotechnology, biomedical engineering, etc., etc. Our grasp on education is the most valuable thing we possess as a country. Ironically, it is for that reason I am completely opposed to anything more than moderate budget cuts to things like NASA.

There is no doubt in my mind that we will cure cancer (with Ohio State contributing mightily) and do unthinkable things scientifically....but as far as employing your average citizen, it doesn't help much.

Thread Bomber;711427 wrote:The same old mantra.... The richest 1 percent pays 80% of the taxes. DUH!!!! The also have 80% of the money.

Bill Maher said it Best last Friday. ( yeh, I know.. he's a socialist liberal.)

"A 100 people pitch in and buy a pizza with a 100 slices, the 1st guy walks in and takes 80 of them. If you say wait a minute, you can only have 79, the cry, get your hands out of my pizza! that's socialist!"

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.” Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men — the paying customers? How could they divide the $20 windfall so that everyone would get his “fair share”? They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man, “but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I!”

“That’s true!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

tk421;709498 wrote:Yeah, but they take it to the extreme. I also don't understand people who listen to idiots like Michael Moore and others. He's freaking rich too, and somehow convinces Americans that the rich are evil.

Tobias Fünke;709718 wrote:Contrary to popular belief, Karl Marx didn't really oppose capitalism. He said it was a phase of society and would be its own undoing. The numbers here don't necessarily mean we're fucked, nor doesn't a stagnate real wage rate. But Karl Marx simply said the efficiency of capitalism will create unfathomable amounts of wealth, but mainly for the owners of the machines (in his day of the Industrial Revolution)....and that it would get to a point where if your hoi polloi were so poor they'd revolt and own the machines.

It may be hard to accept, as it was for me (I strongly supported Bush and voted for McCain), but he didn't say anything that was false. I mean it's 5am, so I can't recall the political theorist who said it, but society is only as free as its poor members. The billionaires in Mexico aren't free at all because they need armored cars and body guards 24/7. Democracies are ideal when you have a strong and well educated middle class for that very reason.

You can't really deny that capitalism sorts out who is smart/talented and who isn't. The creme rises to the top (to be cliche), but what happens if the majority of people are left on the outside looking in? To say someone can just work their way up is an embarrassing joke. Socioeconomic settings inhibit that. Does it happen? Yes. But not nearly as much as you think. Educational and financial hurdlers make it super freakin' uncommon. In fact I have read it's easier to ascend into higher pay levels in...dare I say it...EUROPE than it is here in America.

Where do I stand on the issue? I think that capitalism is the worst economic system, except for all the others that have been tried. (It's Winston Churchill-esque). I think that capitalism is best system, but not perfect. Perfection doesn't exist. There are flaws in the system and this is one of them.

EDIT: Winston Churchill actually said this:

He is correct. The inequality in capitalism leads it to socialism, and the equal misery in socialism leads it to capitalism. My mind has just been blown.