U.S. Distribution of Wealth Now Worse Than Banana Republics

mentalfloss

Prickly Curmudgeon Smiter
Jun 28, 2010
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You no longer need to travel to distant and dangerous countries to observe such rapacious inequality. We now have it right here at home — and in the aftermath of Tuesday’s election, it may get worse.

The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976. As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.

C.E.O.’s of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent.

That’s the backdrop for one of the first big postelection fights in Washington — how far to extend the Bush tax cuts to the most affluent 2 percent of Americans. Both parties agree on extending tax cuts on the first $250,000 of incomes, even for billionaires. Republicans would also cut taxes above that.

The richest 0.1 percent of taxpayers would get a tax cut of $61,000 from President Obama. They would get $370,000 from Republicans, according to the nonpartisan Tax Policy Center. And that provides only a modest economic stimulus, because the rich are less likely to spend their tax savings.

So we face a choice. Is our economic priority the jobless, or is it zillionaires?

And if Republicans are worried about long-term budget deficits, a reasonable concern, why are they insistent on two steps that nonpartisan economists say would worsen the deficits by more than $800 billion over a decade — cutting taxes for the most opulent, and repealing health care reform? What other programs would they cut to make up the lost $800 billion in revenue?

In the past, many of us acquiesced in discomfiting levels of inequality because we perceived a tradeoff between equity and economic growth. But there’s evidence that the levels of inequality we’ve now reached may actually suppress growth. A drop of inequality lubricates economic growth, but too much may gum it up.

Robert H. Frank of Cornell University, Adam Seth Levine of Vanderbilt University, and Oege Dijk of the European University Institute recently wrote a fascinating paper suggesting that inequality leads to more financial distress. They looked at census data for the 50 states and the 100 most populous counties in America, and found that places where inequality increased the most also endured the greatest surges in bankruptcies.

Here’s their explanation: When inequality rises, the richest rake in their winnings and buy even bigger mansions and fancier cars. Those a notch below then try to catch up, and end up depleting their savings or taking on more debt, making a financial crisis more likely.



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Trotz

Electoral Member
May 20, 2010
893
1
18
Alberta
I have a suspicion that corruption and patronage is far worse in North America than in the 'Global South', but in the latter it is more obvious because of limited resources and decrepit infastructure.


I know in British Columbia there are numerous construction scandals in Vancouver and the most recent being the Olympic Village Stadium. Multi-billion dollar contracts were issued to "friends of provincial parliament" (see corruption and patronage) and the Government assured the public this was perfectly ok as the condos were going to be "affordable"...

Hah.

Though it's any different from a Third World Country. If you organized a protest in Vancouver about corruption you'll get the pigs (cops) sent after you.
 

damngrumpy

Executive Branch Member
Mar 16, 2005
9,949
21
38
kelowna bc
Oh don't get me started on BC, this Province is loaded with corruption and games.
but so are the rest. The wealthy can actually get people to go out and vote against
their own interests. People are continually railing against the evils of corruption and
ill gotten gain. Given the chance however those complaining would roll up their sleeves
and join right in For all intent and purpose, we are a banana republic. It is just that the
poor are for the most part more high class than our neighbours in the equatorial south.
If we keep with the free trade agreements around the world we will soon be joining them
however. Distribution of wealth is slowly leading us back to the twelfth century where
the power will be stripped from the middle classes and firmly entrenched in the upper
crust of society. I am not talking about the wealth here, I am talking about power and
there is a difference. People are being motivated by fear, more than greed. The upper
class of society is using the governments and military to guarantee protection of the
masses and the old saying, When we give up freedom for security we end up with
neither is true. It just means the class struggles of history are on going.
 

Trotz

Electoral Member
May 20, 2010
893
1
18
Alberta
It's like that historic expression, not sure who coined it though, but the ones with swords made the ones without collect the grain

I don't think anyone advocates giving the welfare poor a billion dollars a year to spend themselves straight to hell... but nevertheless, most people in the country - including our middle class professionals - don't come anywhere close to reaping the gains of their productivity. Might sound like a Marxist (more inclined to syndicalism myself) but Bill Gates isn't a billionaire because he is smarter than us but rather he lives off the labour of others.
 

Avro

Time Out
Feb 12, 2007
7,815
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54
Oshawa
That's a good question.

Why would we strive for mediocrity, for sameness? Makes no sense at all.

Sure, there are people with lots, and people with little. What's wrong with that?

You think CEO's aren't mediocre?
 

YukonJack

Time Out
Dec 26, 2008
7,026
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Winnipeg
It's like that historic expression, not sure who coined it though, but the ones with swords made the ones without collect the grain

I don't think anyone advocates giving the welfare poor a billion dollars a year to spend themselves straight to hell... but nevertheless, most people in the country - including our middle class professionals - don't come anywhere close to reaping the gains of their productivity. Might sound like a Marxist (more inclined to syndicalism myself) but Bill Gates isn't a billionaire because he is smarter than us but rather he lives off the labour of others.

Response by a person(?) who probably needs his momma to tie his shoe-laces.
 

Bar Sinister

Executive Branch Member
Jan 17, 2010
8,252
19
38
Edmonton
Why should wealth be distributed equally without equal effort to earn it?


Good point. However, I believe the thread is concerned not with the lack of complete equality, but the incredible gap that has occurred between the wealthiest Americans and the poorest. In the 1950s for example, the ratio of earnings for a shop floor worker in the US to a company executive was about 12 to 1. This meant the average US worker could actually support a wife and family on a single salary. Today the ration is closer to 90 to 1 with both husband and wife having to work in order to make ends meet. This is a serious problem in a country that depends upon consumers to drive the economy. For all of their wealth, the top 10% of Americans don't actually consume very many goods. One would expect that with more than half the wealth the top 10% would contribute half the spending, however, that is far from the case with much of the excess wealth pushed into overseas investments or stock market investments that make more money for the wealthy but don't really help the US economy much. This is one of the reasons why tax breaks for the wealthy don't really help the economy very much.

BTW the situation in Canada is very similar to the US.
 

El Barto

les fesses a l'aire
Feb 11, 2007
5,959
66
48
Quebec
This is where Capitalism starts to crumble.
What is the end game ?
To own all the weath in the world? The country?
Wouldn't that devalue money to a point of worthlessness?

The way I see it , if the you made loads of money in a country that gave you that chance than it's only fair you pay your share.
This corporate gouging is killing the country...... we the people are that country!
I'd be all for capital gain cap. Oil companies on top of that list. They act united like a monopoly.
 

Walter

Hall of Fame Member
Jan 28, 2007
34,843
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48
It never fails that there will always be people who want to bite the hand that feeds them.
 

mentalfloss

Prickly Curmudgeon Smiter
Jun 28, 2010
39,778
454
83
Unfortunately, it's these sorts of false insults that have thrived throughout the years and used for oppressive gain by the wealthiest class to convince the middle class that they are somehow not capable human beings. Of course, the middle class falls for it because they've already drank the kool-aid - the 'american dream' - about getting to the highest rung on the ladder.

Instead of mimicking successful social democracies in certain parts of Europe - like Sweden, Norway, Netherlands or Switzerland - America is further polarizing itself by continuing this ludicrous proposition of unmitigated wealth.

Regardless, the point of this is not to measure some form of objective worth or work ethic. It is about the destabilization of the entire economic structure that will inevitably occur if we continue this crash course into 1% control.
 

DaSleeper

Trolling Hypocrites
May 27, 2007
33,676
1,665
113
Northern Ontario,
I start making a gadget in my garage and people like it....so I make more and they sell like crazy, so to be able to keep up I hire some of my neighbours to help me and I still can't keep up with the demand.
So I go to the bank, borrow money, put myself in hock and buy a big building hire hundreds of people and still can't keep up with the demand....
Next thing you know...I haven't made a single gadget by hand in years because I don't have time...The people I have hired pay millions in taxes to the government, but people bitch because I don't pay enough taxes.....

Wait....didn't Bill Gates do something like that??

And if I figure that the government taxes me to such a level that that it would pay to move the production to Mexico, the government just has to sey the tarrifs on my goods made in mexico high enough to prevent it.

But wait...there is a free trade aggreement...and with all the trade agreements popping up all over the place, I have a choice as to where I can move.

That is what sharing the whealth through taxation does.

Incremental tax works....if not pushed so far that it pays for business to move elsewhere.
 

captain morgan

Hall of Fame Member
Mar 28, 2009
28,429
146
63
A Mouse Once Bit My Sister
The way I see it , if the you made loads of money in a country that gave you that chance than it's only fair you pay your share.
This corporate gouging is killing the country...... we the people are that country!
I'd be all for capital gain cap. Oil companies on top of that list. They act united like a monopoly.


I always find it interesting that the phrase "fair share" is used in these discussions... It insinuates that everyone pays (or is expected to) an equal amount of money for the common gvt services and resources that are paid for out of the collective tax pot.... You know, the actual "fair share". The loads of money that people make are subject to a progressive tax rate that translates into loads of tax dollars for the tax base.
 

captain morgan

Hall of Fame Member
Mar 28, 2009
28,429
146
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A Mouse Once Bit My Sister
I start making a gadget in my garage and people like it....so I make more and they sell like crazy, so to be able to keep up I hire some of my neighbours to help me and I still can't keep up with the demand.


Stop making the gadgets... Or developing vaccines, medical equipment or green technology.


So I go to the bank, borrow money, put myself in hock and buy a big building hire hundreds of people and still can't keep up with the demand....


... But, but.. Won't "The People (as in We The People) step up and co-sign the loan?


Next thing you know...I haven't made a single gadget by hand in years because I don't have time...The people I have hired pay millions in taxes to the government, but people bitch because I don't pay enough taxes.....


Capitalist oppressor!


How dare you create jobs, distribute wealth and pay progressive taxes towards the common good!



But wait...there is a free trade aggreement...and with all the trade agreements popping up all over the place, I have a choice as to where I can move.


I suppose that "The People" haven't considered that possibility.... Mind you, the folks in the jurisdiction where you move to will be benefiting from the jobs, income, etc..
 

Avro

Time Out
Feb 12, 2007
7,815
65
48
54
Oshawa
I start making a gadget in my garage and people like it....so I make more and they sell like crazy, so to be able to keep up I hire some of my neighbours to help me and I still can't keep up with the demand.
So I go to the bank, borrow money, put myself in hock and buy a big building hire hundreds of people and still can't keep up with the demand....
Next thing you know...I haven't made a single gadget by hand in years because I don't have time...The people I have hired pay millions in taxes to the government, but people bitch because I don't pay enough taxes.....

Wait....didn't Bill Gates do something like that??

And if I figure that the government taxes me to such a level that that it would pay to move the production to Mexico, the government just has to sey the tarrifs on my goods made in mexico high enough to prevent it.

But wait...there is a free trade aggreement...and with all the trade agreements popping up all over the place, I have a choice as to where I can move.

That is what sharing the whealth through taxation does.

Incremental tax works....if not pushed so far that it pays for business to move elsewhere.

Bill Gates also supported a tax hike for the rich in his state so teachers and police don't get laid off.

Capitalism is a b*tch.....No wonder people want to change it to a socialist society....;-)

It already is in some ways.

....and of course when ever you approach this subject the right takes it to the extreme.

How predictably boring.:roll:
 

ironsides

Executive Branch Member
Feb 13, 2009
8,583
60
48
United States
It is not the super rich who are holding up tax increases for more teachers, police firemen etc. it is the middle class who are done supporting the bulk of society. You could increase the taxes of the rich by 75% and still would not have enough to support the growing masses of poor. They are not the problem, just in the minds of the frustrated few who have to blame some class for their problems. Sound familiar.