Wealth distribution

[Plu]

Lets poke the hornet's nest  

http://www.youtube.com/watch?feature=pl ... PKKQnijnsM

This video is scary. So, who here is in the mentioned 92% and who isn't?

[GurrenLagann]

I saw that video a few days ago. If it is in fact accurate (I admit I haven't checked his sources yet), then I can't deny that's rather.... I know no other fitting word than terrifying, or maybe shitty.

[stromboli]

All I know is that the people who have got it aren't me.

[Xerographica]

Max Borders posted a critique of this video over at FEE...Wealth Inequality: Predictably Irrational.  Here's the comment that I shared...

Imagine the exact same video but with the word "wealth" or "money" or "income" replaced with "skills" or "talent" or "ability". In a group of 100 people, a few people are going to be a couple standard deviations from the norm. They are going to be either really good looking or really ugly...really tall or really short...really intelligent or really stupid...really talented or really untalented.

The distribution of skills is essential to understanding the most important question: how should we use society's scarce resources?  No matter how you spin it...there's always going to be some people who are going to come up with far better answers. But unlike in the public sector, in the private sector each and every one of us has the freedom to dollar vote for the people who provide the best answers.

For example, imagine there's one kid who throws lemons at passing cars...and another kid who sets up a lemonade stand. They are both answering the question of how society's limited resources should be used.  The market works because we, the people, can use our own dollars to indicate which answer benefits us the most. The result is a distribution of resources that maximizes the amount of benefit we derive from society's limited resources.

On this blog entry...Wealth Equality vs Consumer Sovereignty...I shared over 50 relevant passages.  

If you're an advocate of free-markets and had to pick one passage to share with a liberal...which one would you choose? Here's the one passage that I would share...

The fundamental difference between decision-makers in the market and decision-makers in government is that the former are subject to continuous and consequential feedback which can force them to adjust to what others prefer and are willing to pay for, while those who make decisions in the political arena face no such inescapable feedback to force them to adjust to the reality of other people's desires and preferences. - Thomas Sowell, Intellectuals and Society

If you're a liberal and had to pick one passage that you disagreed with the most...which passage would you pick?

[Colanth]

Congress doesn't pass laws that take good looks (or skill or talent or ability) from one person and give it to another person, because the second person gives a tiny fraction of the new good looks to the congresscritters.  They do with money.

[Davka]

History tells us that whenever the vast majority of wealth/power is concentrated in the hands of a tiny minority, the majority suffer as a result. No amount of free-market bullshit can change that.

The system that appears to work best is a combination of socialism, regulated semi-free markets, and democracy. So far, this has only been implemented in a handful of nations, mostly in Northern Europe. It works.

[Xerographica]

History tells us that whenever the vast majority of wealth/power is concentrated in the hands of a tiny minority, the majority suffer as a result. No amount of free-market bullshit can change that.

Let's see...there was WWII.  Was that a result of a free-market?

As was noted in Chapter 3, expressions of malice and/or envy no less than expressions of altruism are cheaper in the voting booth than in the market.  A German voter who in 1933 cast a ballot for Hitler was able to indulge his antisemitic sentiments at much less cost than she would have borne by organizing a pogrom. - Geoffrey Brennan, Loren Lomasky - Democracy and Decision

Then there was the Great Leap Forward.  That was most definitely the result of a command economy.

The greatest man-made disasters were a direct result of people not having the freedom to shop for themselves.  Why is consumer sovereignty so important?  Because people have the freedom to give valuable feedback on how society's limited resources are used.

In the terminology of anticapitalism the words selfish and unselfish are used to classify people from the point of view of a doctrine that considers equality of wealth and income as the only natural and fair state of social conditions, that brands those who own or earn more than the average as exploiters, and that condemns entrepreneurial activities as detrimental to the common weal. To be in business, to depend directly on the approval or disapproval of one's actions by the consumers, to woo the patronage of the buyers, and to earn profit if one succeeds in satisfying them better than one's competitors do is, from the point of view of officialdom's ideology, selfish and shameful. Only those on the government's payroll are rated as unselfish and noble. - Ludwig von Mises, Human Action

The consumers are not prepared to satisfy anybody's pretensions, presumptions, and self-conceit. They want to be served in the cheapest way.  - Ludwig von Mises, Human Action

The capitalist society is a democracy in which every penny represents a ballot paper.  It is a democracy with an imperative and immediately revocable mandate to its deputies.  It is a consumers' democracy. By themselves the producers, as such, are quite unable to order the direction of production. This is as true of the entrepreneur as of the worker; both must bow ultimately to the consumers' wishes. And it could not well be otherwise. People produce, not for the sake of production, but for the goods that may be consumed. As producer in an economy based on the division of labour, a man is merely the agent of the community and as such has to obey. Only as a consumer can he command.  - Ludwig von Mises, Human Action

Free-markets are all about consumer sovereignty...so when you disagree with how a market distributes wealth...if you think the concentration of wealth causes the majority to suffer...then you have to blame the majority.  

Why do you have to blame the majority?  Because the majority of consumers do not evenly distribute their money.  Why don't they do so?  Because they're not crazy.  Producers don't all provide the same exact value...some provide more value than others.  Therefore, consumers give their money to whichever producers give them the most benefit for their dollar.  

So if you want wealth to be more evenly distributed...then go after the majority.  Convince them not to shop around for the most value.  Persuade them to ignore price tags.  Tell them not to worry about getting ripped off.  Explain to them how we'll all be better off if they don't reward the producers that maximize their benefit.

Tell them what you know to be true...that just like God...government planners are omniscient.  They know what's best for us.  We should put our lives in their hands.  

Tell them that the preference revelation problem isn't a real problem.  While you're at it...tell them that unicorns, Santa Clause and the Tooth Fairy are all real.  Also, be sure to tell them that orchids won't grow outdoors in Los Angeles.

[Davka]

History tells us that whenever the vast majority of wealth/power is concentrated in the hands of a tiny minority, the majority suffer as a result. No amount of free-market bullshit can change that.

Let's see...there was WWII.  Was that a result of a free-market?

Could you be a bit more obtuse, please? And make up some strawman arguments, while you're at it?

Let's take a look at what I wrote, shall we? I wrote "History tells us that whenever the vast majority of wealth/power is concentrated in the hands of a tiny minority, the majority suffer as a result." Now, did I specifically say that the free market is always the cause of such wealth concentration? No, I did not. Did I blame the free market for the concentration of wealth, or claim that the free market is the cause of all suffering? Um - no. Didn't say that, either.

So your response appears to have absolutely fuck-all to do with what I actually wrote.

Huh.

[Davka]

As to how more even distribution of wealth is accomplished, the answer is simple: Progressive Taxation. During the 1950s and 60s, wealth in America was far more evenly distributed. Why? Because tax rates were far more progressive. Result? Economic mobility, a thriving middle class, low unemployment.

For an example of what happens when the market is only very loosely regulated, we need only look at the late 19th century and early 20th. Child labor, robber barons, company stores, crippling and even deadly working conditions, eventual economic collapse.

Command economies don't work. Communism doesn't work. An unregulated (or under-regulated) free market doesn't work. Extremists are fools. And that goes for the economic and political extremists, as well as the religious ones.

[Xerographica]

Command economies don't work. Communism doesn't work. An unregulated (or under-regulated) free market doesn't work. Extremists are fools. And that goes for the economic and political extremists, as well as the religious ones.

Command economies don't work?  Do you really not understand that we have a mixed economy?  We have a market in the private sector and a command economy in the public sector.  

So yeah, I completely agree that command economies do not work.  And I know exactly why they fail...do you?  They fail because of the preference revelation problem.  Is the preference revelation problem a real problem?  

If you don't believe that the preference revelation problem is a real problem...then there's absolutely no reason for you to say that command economies don't work.  So which is it?

[SvZurich]

Madame Guillotine is thirsty.  

[Davka]

Command economies don't work. Communism doesn't work. An unregulated (or under-regulated) free market doesn't work. Extremists are fools. And that goes for the economic and political extremists, as well as the religious ones.

Command economies don't work?  Do you really not understand that we have a mixed economy?  We have a market in the private sector and a command economy in the public sector.  

So yeah, I completely agree that command economies do not work.  And I know exactly why they fail...do you?  They fail because of the preference revelation problem.  Is the preference revelation problem a real problem?  

If you don't believe that the preference revelation problem is a real problem...then there's absolutely no reason for you to say that command economies don't work.  So which is it?

I reject your premise. Command economies don't work because the concentration of power/money in the hands of a tiny elite always ends in disaster.

And yes, I understand that we have a mixed economy. The current economic mess is the result of ~40 years of the wealthy elite fighting tooth-and-nail to decrease the socialist components of our economy, disassemble progressive taxation, and deregulate the markets. They depend on the gullibility of fools who think that by fighting for the "rights" of the top 0.01%, they are somehow protecting their own rights, and making it more likely that they, too, will one day join the elite.

In reality, of course, you have a far better chance of winning the lottery than you do of significantly changing your economic caste. But that carrot looks so very enticing that many people will fight like hell for the chance to chase it, never stopping to wonder who is holding the stick.

[Xerographica]

I reject your premise. Command economies don't work because the concentration of power/money in the hands of a tiny elite always ends in disaster.

You reject the preference revelation problem?  Why?

And yes, I understand that we have a mixed economy. The current economic mess is the result of ~40 years of the wealthy elite fighting tooth-and-nail to decrease the socialist components of our economy, disassemble progressive taxation, and deregulate the markets. They depend on the gullibility of fools who think that by fighting for the "rights" of the top 0.01%, they are somehow protecting their own rights, and making it more likely that they, too, will one day join the elite.

First you said that command economies concentrate power in the hands of a tiny elite...but now you're saying that the current economic mess is a direct result of the wealthy elite fighting socialist components.  Why would the elite fight against something that benefits them?  

In reality, of course, you have a far better chance of winning the lottery than you do of significantly changing your economic caste. But that carrot looks so very enticing that many people will fight like hell for the chance to chase it, never stopping to wonder who is holding the stick.

In a market economy...consumers hold the stick...which is exactly why it's the demand that determines the supply.  

You think that government planners, like God, know what's in our best interests...  

"Trust in government planners with all your heart,
And lean not on your own understanding"

That's a recipe for disaster.  Why?  Because government planners are not omniscient.  They don't know what the actual demand is for public goods.  As a result there will be a significant discrepancy between supply and demand.  This means that society's limited resources will be wasted on things that we really don't need at the expense of things that we really do need.    

Again, to be clear, my premise is the preference revelation problem.  If you reject my premise then explain why you believe that government planners are omniscient.

[Davka]

I reject your premise. Command economies don't work because the concentration of power/money in the hands of a tiny elite always ends in disaster.

You reject the preference revelation problem?  Why?

No, I reject your premise that the only two choices are to state that command economies do not work because of the preference revelation problem or to state that command economies do work. That's an absurd position to take. Things are never black-and-white in the real world, only in theory.

And yes, I understand that we have a mixed economy. The current economic mess is the result of ~40 years of the wealthy elite fighting tooth-and-nail to decrease the socialist components of our economy, disassemble progressive taxation, and deregulate the markets. They depend on the gullibility of fools who think that by fighting for the "rights" of the top 0.01%, they are somehow protecting their own rights, and making it more likely that they, too, will one day join the elite.

First you said that command economies concentrate power in the hands of a tiny elite...but now you're saying that the current economic mess is a direct result of the wealthy elite fighting socialist components.  Why would the elite fight against something that benefits them?

Different elite.

Take a look at Tsarist Russia. Their economy sucked, but not because it was a command economy. It was a very free market, with the money/power concentrated in the hands of an elite few. The Communist Revolutions in Russia did not change the degree of concentration of wealth/power,  it merely changed in whose hands the wealth and power was concentrated. The Tsarist aristocracy fought the communists for the same reason that today's Western aristocracy fights socialism. Those in power want to stay in power. They don't want to hand over the reins to a new elite, nor do they want to be forced to share.

And your automatic coupling of socialism with a command economy, and conflating of the elite in a capitalist society with the elite in a communist society, honestly makes me wonder if you actually want to understand a word I'm saying.

Socialism as practiced in the West does not concentrate power or wealth in the hands of the few. Socialist Democracy is a completely different animal from communist totalitarianism.

The concentration of power in the hands of 0.01% of Americans is unsustainable. When very few people are taking half the pie, and those at the bottom are living on crumbs, something is very, very wrong.

You think that government planners, like God, know what's in our best interests...  

How the FUCK do you know what I think?

Instead of playing mind-reader, try asking. You're making a buttload of assumptions, most of which are way off.

Seriously, nothing I'm saying is really all that difficult. Most 4-year-olds can grasp the concept. Only extensive brainwashing in the voodoo that is economic theory could possibly make something so very simple seem opaque.

[GurrenLagann]

To say that command economies work, or simply laxing basically all regulations on businesses will better the economy is to ignore much of the last century or so. Well, that made me chuckle as much as when I heard of the "trickle-down" economic proposition. In the satiric words of Bill Maher: "When you increase my taxes government, you make me feel less likely to 'invest'. *sad face*"