gut;978138 wrote:If you're a smart, industrious person I don't see how you can't earn a good living. You probably won't make the 1%, but there's no lack of mobility for those types to be confined to the bottom 20%. It's a simple fact that not everyone can be in the top1%, and if you aren't particularly smart of hard-working I doubt there's anyway to improve mobility to take someone out of the bottom 20% who probably, based on talent and effort, IS a bottom 20%er.
To be in the top 1-2% you generally have to be running your own business. I don't see great barriers to doing that, but it does involve much more risk than most people are willing to take on. You can certainly do very well without founding a business, but again most are unwilling to make the sacrifices with regard to investing in education and chasing opportunities to do that. People always ignore the sacrifices many of the 1-2% have made to get there - often when you look at their personal lives it's not all it's cracked-up to be unless you value money over everything else.
There's not going to be massive mobility between the 95% and 5% or however you want to slice it. Basic math says this isn't possible. Some people are lucky, but that's generally the difference between a 10% and 2% or whatever. There's really nothing the govt can do that enables a person with mediocre talent to rise well above the average. The top-5% is always going to command much more salary because, quite simply, they are capable of creating much more value for my business than the guy who puts screws in a car door and is easily replaceable. I guess I should hire the mediocre plant manager and spread the $50k I save to the 200 factory workers, until ultimately everyone is out of a job because the plant is poorly run.
This debate is not and should not be about the wealth gap. The issue is the standard of living and wealth of the median person, and also the bottom 15% or so. And I think redistributive tax policies are just a very ineffective way to do that. Always seek to cut-out the middle man (govt). Increasing the minimum wage is more effective, but the problem is most people employing such are not the 1% but small business owners who make a good living but generally aren't "wealthy".
If my company makes a boatload of money and I pay my employees well, why should I (and my employees) have to subsidize less talented people working at bad businesses? Which exactly do you want more of - good businesses paying employees well or bad business paying employees poorly? Socialism favors the latter and it's why those economies usually suck on the tailpipe.
1. You've mentioned the general maxim that higher taxation rates are a drag on productivity. (I thought it was the post I'm quoting but I don't see it in there). This is a generally accepted principle but in reality GDP per hour worked is nearly as high in France and Belgium as it is in the United States and they have way higher marginal tax rates.
Luxembourg, norway and the netherlands all have higher marginal rates and yet were more productive per hour than U.S. workers. The
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_hour_worked
2. Perhaps you'll say "well it's because of the high rates that they work less hours overall and therefore produce less." How awful does that sound? Americans work more hours on average than most OECD countries and yet according to the census bureau's report that came out a couple of days ago 1 out 3 Americans is barely scraping by...either in poverty or a little bad luck away from being there.
http://www.nytimes.com/2011/11/19/us/census-measures-those-not-quite-in-poverty-but-struggling.html
How is that good for would-be entrepreneurs?
In the post WWII era, when we had higher marginal rates and fewer tax expenditures we had less income inequality, more economic mobility and faster GDP...with incomes growing for all income groups. Over the last 30 years income mobility has been downward for most Americans...Even though the pie has grown most Americans, despite being more productive, have gotten less of the pie. How do you reconcile that? I can accept the idea of broad base, low rates = larger pie and more prosperity...but most americans got less prosperous despite the pie growing.
I've said before that I'm not a big fan of raising taxes in our currently depressed economy. We definitely should cut the corporate rate. But, this idea that raising taxes as part of our long term budget problem will choke off growth is not supported by the evidence.
According to the IMF, the U.S. economy grew by 2.8% in 2010 whereas say, Sweden's economy grew by 5.5%. And, even if it were true, the the point of growth is so that the people and nation as a whole gets better off. But the fact is the standard of living for most americans (including most Republicans) has been dropping steadily for 30 years.
And ultimately, the only thing that is seriously on the table is 4.6 percentage points. Truly remarkable that people act like that would be the end of the world.
3. Finally, a strong social safety net can foster entrepreneurship and risk taking. People always want to know why Silicon Valley is so successful. It's because they embrace failure and taking risks. How can most industrial americans logically take a risk when they're one bad step away from bankruptcy and their benefits are tied to their employer? If a person was covered by medicare by virtue of being a citizen, the cost of taking a risk and attempting to open his own firm and leaving behind his employer sponsored health insurance is not as high.