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United States The Almighty Buck

Does Income Inequality Matter? 1186

Posted by Cliff
from the an-issue-worth-discussing dept.
theodp is concerned about the following: "Alarmed by Goldman Sachs CEO Lloyd Blankfein's record-setting $53M bonus, Charles Wheelan (aka The Naked Economist) argues that income inequality matters. Wheelan notes that the Gini Coefficient (a measure of income inequality) for the U.S. has been moving away from countries like Japan and Sweden and closer to that of Brazil, where the murder rate is 5X that of NYC and crime is materially impacting GDP."
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Does Income Inequality Matter?

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  • by BWJones (18351) * on Friday January 12, 2007 @11:18AM (#17574658) Homepage Journal
    It certainly can be argued that there are a number of factors contributing to higher rates of violence in cultures including steeper economic pyramids, loss of access to human services and disenfranchisement. For instance, in cultures that have a relatively high average wage and flatter economic pyramid, combined with services including universal health care, countries such as New Zealand, Australia, Sweden, Switzerland, Japan, Norway, the Netherlands, and Canada among many others, there is a significantly lower rate of violence. Granted in all of those countries there are poor and those with fantastically extensive portfolios, but the statistical disparity is not as extensive as it is among countries like Brazil and the US.

    • human services (Score:5, Informative)

      by mangu (126918) on Friday January 12, 2007 @12:28PM (#17576248)
      in cultures that have a relatively high average wage and flatter economic pyramid, combined with services including universal health care, countries such as New Zealand, Australia, Sweden, Switzerland, Japan, Norway, the Netherlands, and Canada among many others, there is a significantly lower rate of violence. Granted in all of those countries there are poor and those with fantastically extensive portfolios, but the statistical disparity is not as extensive as it is among countries like Brazil and the US.


      You are mixing two entirely different things here: wage level/distribution and human services.


      I live in Brazil and the human services here are *excellent*, entirely on par or better than in Sweden, another country where I have lived in the past. On paper, that is.


      The Brazilian constitution states that "health is a right of the citizen and a duty of the state". Too bad you either pay for private health insurance or stand in line for three days to get a consultation at a public hospital. The law also guarantees thirty days per year paid vacations for workers and four months paid licence for child bearing. Too bad over 50% of the workers are either unemployed or working "informally", that is without a written contract.


      The Brazilian law is very, very generous in distributing benefits to everyone, although in practice only a small minority can get those. Public servants can retire and keep working at the same job, effectively doubling their salaries. Judges salaries start at R$24500/month (about US$11400), which is 70 times the minimum wage and about ten times the starting salary for other university graduates, such as engineers for instance. And you can become a judge right after finishing law school, although there is strong competition for the job, having another judge in the family is a strong factor in getting the employment.


      I have lived in four countries: Brazil, Colombia, Sweden, and the USA, so I know a little about the differences between them. I think it's a big mistake when the law tries to give unrealistic benefits to everyone, without regard to how it's going to be paid for. Universal health care is a big mistake, IMHO. Swedes pay dearly in taxes for all the human services they have available, even if, differently from Brazil or Colombia, those services are available to everyone who is entitled to them. In Brazil currently we have the worst possible situation, our entitlements, in theory, are on the same level as in Sweden, our taxes, in practice, are in the same level as in Sweden, and our human services, for most people, are way below those of the USA.


      There are a million or so illegal Brazilian immigrants in the USA. Those are people who break the law to get away from a country where universal health care is guaranteed by the Constitution. They do it to move away from a country where the sales tax is up to 35%. Where taxes, in average, are about 42% of total prices. Where import duties are 100% over the price for many products.


      In the end, the well-intentioned but misguided effort of legislators to grant so many benefits to everyone is one of the main reasons for the increasing crime rates in Brazil. With such absurd taxes, evasion is rampant and tolerated by officers. This causes widespread corruption and the consequent erosion of authority. When an officer accepts a bribe in exchange for a tax reduction, he is being conditioned to accept bribes for other crimes.

  • by PFI_Optix (936301) on Friday January 12, 2007 @11:22AM (#17574722) Journal
    When the peons who live paycheck to paycheck while being the backbone for a company see executives get yearly salaries totalling more than they'll make in a year, do you REALLY expect them to work hard? For the average corporate employee, the most they can hope for is a middle management position where they take blame for others' mistakes while their bosses take the credit for anything good that happens.

    Companies need to remember that even a genius CEO is worthless without the underlings who follow his successful plans. Imagine if that $53,000,000 had been distributed among the employees as a company-wide bonus.
    • Re: (Score:3, Interesting)

      Imagine if that $53,000,000 had been distributed among the employees as a company-wide bonus.

      Goldman handed out $16.5 billion [forbes.com] in total compensation to 22,000 employees worldwide. I'm pretty sure that while no one would turn down an extra $2400 (about $1500 after taxes), it's not going to matter much to them either way.
    • Lisa, if you don't like your job you don't strike. You just go in every day and do it really half-assed. That's the American way. -- Homer Simpson
    • by Morinaga (857587)
      Who's fault is this "pay check to pay check" situation? Most of us know and work with these people that live paycheck to paycheck. They drive $600/mo leased vehicals, have the latest cell phones and go home to watch their cable programming on their big screen TV. A lot (if not majority) of these people create their own problems.

      I don't believe these "peons" that work for corporations (ie, they have jobs) need to work pay check to pay check, they simply don't know how to help themselves. Even those ma
  • Yes, and no... (Score:3, Insightful)

    by Bullfish (858648) on Friday January 12, 2007 @11:25AM (#17574776)
    Does some CEO grabbing obscene bonuses (deserved or not) fuel social unrest? Historically, the answer is yes, but only if the bulk of the population is suffering. Then such things become flashpoints, ie "let them eat cake". However, that is not really the case for the bulk of the US population. Most people have plenty to eat, have their gadgets etc... Are there poor in the US? Yes, but there are poor everywhere, and not all necessarily the result of oppression. People with full bellies are likely to be pissed off at excesses, but not to the point of rioting in the streets. Brasil has huge problems with social inequality far beyond what is happening in the US.
  • by lawpoop (604919) on Friday January 12, 2007 @11:25AM (#17574786) Homepage Journal
    If all comes down to what you believe about human nature. Roughly speaking, some people believe that poor people are poor because they are lazy and violent, while others believe that people are poor because they don't have opportunities available to them, so they turn to violence as an effective, but not ideal, way of problem solving in their miserable lives.

    People on either side have fundamentally different views about reality and human nature, and thus there is no common ground in which to have a productive discussion.
  • My thoughts (Score:5, Insightful)

    by east coast (590680) on Friday January 12, 2007 @11:27AM (#17574820)
    I don't have as much of a problem with the pay gap as with the same people making these large sums not being serious stock holders in their company. Their paycheck is not directly related to company performance in many cases today.

    It's unbelievable to me how easy it is for someone to work their way to the top of a company without having a serious amount of their personal wealth invested into the company and that this lack of investment is a safeguard against them not having to be overly concerned in the companies well being.

    I know it's a simplistic way of looking at it but it's what makes sense to me.
  • Power law curves (Score:3, Insightful)

    by Omnifarious (11933) * <eric-slash@@@omnifarious...org> on Friday January 12, 2007 @11:27AM (#17574824) Homepage Journal

    After reading Linked [barnesandnoble.com] I've come to the conclusion that having a power law curve (the thing that gives you the 80-20 rule) is inevitable in any economy. There are only two questions to be answered.

    First, how steep is that curve? Do you have excessive centralization. I think, but do not know, that the US's curve has been getting steeper over the years. This is likely not good.

    Secondly, how easy is it to begin acquiring links because you're more attractive for whatever reason? This is where things that make it expensive for small businesses to start, compete or generally raise barriers to entry come in.

    Personally, I think we ought to revisit a lot of laws we have concerning monopolistic behavior and financial transactions and tweak them using insights from that book. That book demonstrates through numerous examples that there are a set of powerful laws governing almost all networks that grow organically. Even the network of which molecules interact with which molecules in cells has characteristics that are similar to the network of hypertext links on webpages, which has characteristics that are similar to the food web.

  • by MonGuSE (798397) on Friday January 12, 2007 @11:31AM (#17574896)
    I'm sure that our billionaires skew the stats a little bit. However its not coincidence that successful companies have CEO's that know they have enough money and that their underlings need to feel appreciated. Google, Apple, Wegmans, etc... A good CEO in my opinion is one that recognizes that the excessive payment that he may get from the board will do more harm to his company than good and should therefore decline most if not all of it and redirect it to the employees. No one is worth 2000% more than another individual regardless of how good you are at your job.
    • Re: (Score:3, Insightful)

      by avalys (221114)
      No one is worth 2000% more than another individual regardless of how good you are at your job.

      Why not? Let's say Person A is a salesman who brings a company twenty million dollars in business in a year. Person B is a salesman who manages only one million dollars. Sounds to me that Person A is worth twenty times Person B.

      • Re: (Score:3, Insightful)

        by happyfrogcow (708359)
        Why not? Let's say Person A is a salesman who brings a company twenty million dollars in business in a year. Person B is a salesman who manages only one million dollars. Sounds to me that Person A is worth twenty times Person B.

        Person B is given Person A's sales region. Person A is given Person B's. Person B brings in 20 million now, and A brings in one million. Now is person B worth 20 times more all of the sudden?
  • by iPaul (559200) on Friday January 12, 2007 @11:33AM (#17574942) Homepage
    The reason the US founding fathers put in taxes on inheritance is that the sucess of one generation shouldn't create subsequent generations already ensconced in privalege. In a way this is unavoidable, but if the future generations aren't people of merit, they will eventually loose wealth. Now we're hitting a period in American history where ridiculous wealth is tied to a strong push to eliminate inheritance taxes. Already a number of families are bastions of old money and privilege, but watch as their wealth becomes a trivial matter of their heridity. The one thing the American founding father thought was odious about Monarchies - that mediocre men ruled the world because their great-great-great grandfather was a great man - is now becoming part of American society.
    • by kansas1051 (720008) on Friday January 12, 2007 @12:05PM (#17575736)
      Goldman Sachs' CEO received a $53 million dollar bonus because the company met some arbitrary performance standards and not because the CEO's great grandfather may have been great. The wage disparity between corporate management and the under classes is what is fueling the overall wage disparity in the U.S.A. and not inherited wealth. I can guaratenee you that most corporate management in the U.S. is not "old money." Take a look at the recent Forbes richest list and you will see that few super-rich Americans (with the exception of the Waltons) inherited their wealth. If anything, the American monarchy of "old" money has collapsed over the last few decades as new markets and technologies have emerged.
  • by lpangelrob (714473) on Friday January 12, 2007 @11:40AM (#17575102)
    Things people that want money should do:

    1.) Limit your liabilities; pay off your debts as fast as you can, especially credit card debt.
    2.) Stop using credit cards. Seriously.
    3.) Stop trying to hit it rich by playing the lottery, unless you find that particularly entertaining.
    4.) Keep an emergency fund of some sort so you can stop using credit cards.
    5.) Don't co-sign loans, ever.
    6.) Spend less than what you make.
    7.) Don't lease a car.

    This list is based on what people do to get in financial trouble:

    1.) People get in credit cards and pay more interest to Visa and MasterCard over years that they could have saved.
    2.) People, especially poor minorities (see the statistics) try to win millions when the odds of being struck by lightning are less.
    3.) People don't have money saved aside so they don't use credit cards, so they pay Visa and MasterCard interest instead of having money.
    4.) People co-sign for other peoples things, they don't pay, so they're stuck with the bill.
    5.) People pay ridiculous amounts of their income to car bills.
    6.) People use credit to look wealthier than they really are.

    The reasons for this are social ("use debt as a tool!"), cultural ("I need more stuff to impress people!"), patently unfair (the less educated are far more likely to be paid less, and so get into trouble more easily; medical problems), and selfish ("I 'need' this! I 'need' that!"), and could be a thesis, but they're hard to argue, and the concepts don't require an economics degree.

    I think I've been listening to Dave Ramsey a little too much. :-p
    • by maxume (22995) on Friday January 12, 2007 @12:02PM (#17575666)
      Using a credit card is harmless. Carrying (large amounts of) unsecured debt other than a student loan is insane(student loans are utterly fantastic investments). If someone is disciplined enough to pay off their balance every month, a credit card is a decent way to track spending. Sure, a debit card does all the same stuff, but why not use my free rewards card?
    • Re: (Score:3, Interesting)

      "some well-off people" I know get there clothes used because they think clothes are outrageously priced. They also buy used cars, and food in the reduced-price section, etc.

      Many poor people shop at the GAP, have new cars, go for take-out all the time and bitch that those "well-off people" have money to burn.
    • by Lord Ender (156273) on Friday January 12, 2007 @02:33PM (#17578778) Homepage
      Bad advice. People who don't use credit cards are just throwing money away. Cash-back cards give you 5% back on groceries and gas. If you don't make much, that 5% is a significant portion of your income!

      Good advice would be "Always use cash-back credit cards and always pay in full."

      Additionally, it is much easier to analyze your personal spending habits if you always use the same credit card because the CC companies send out these neat booklets that show breakdowns of your spending ("you spent 16% of your money on groceries in 2006").

      And another point: If you only carry a card (and no cash) you will never run the risk of losing serious money from theft/mugging.

      "Never use credit cards" is only good advice for seriously irresponsible people. And they tend to have bigger problems.

      I lived on less than $10k/year for several years in college. I also used a credit card throughout, and never paid a single fee or finance charge. So don't say I wouldn't understand--I've been there.
  • Yes, It Does (Score:5, Interesting)

    by p0tat03 (985078) on Friday January 12, 2007 @11:40AM (#17575108)

    I've lived in Canada for many years now, but before then I came from Taiwan, which as a country is really not as poor as it gets in southeast Asia. I can tell you that the wealth gap certainly does matter.

    Fellow Taiwanese feel free to disagree - but as a child over there I was constantly being protected, my father having worked for one of the larger multi-nationals with an Asian presence in the 80s. Daily you would hear news of kidnappings, children being snatched on their way to their fancy private schools; chauffeurs, butlers, maids, and servants selling out their employers and helping in kidnappings, extortions, and other crimes.

    I went to a fairly exclusive private school that taught mostly the children of foreign execs stationed in the country, and also the high-level Chinese that worked under them. All of our parents were paranoid about our security to the extreme. At many points it wasn't a matter of *if* someone makes an attempt to kidnap your child, but *when*. It wasn't the greatest of times to be a wealthy parent, though as a kid I never really felt threatened - I was probably too young to understand.

    Then I came to Canada and that turned upside down. I can't remember the last time a kidnapping happened in Canada that was driven by the ransom - usually it's some sick f--- getting his jones on molesting little girls, not an organized group out to steal from the rich.

    The difference? Canada has well-established social security. The average income is extremely high compared to most Asian countries, there is health care and welfare. In Taiwan (at the time) there was no health coverage *at all* for those who were not privately insured, almost no social assistance at all, and the wealth difference between the majority, still toiling for pennies in unsafe factories, vs. the newly-minted elite that was being quickly created by American investment, was massive.

    America isn't quite at that point, but I get the distinct impression that the gap is widening. If it continues, we will reach a point where the majority of the country is unable to afford the necessities of life. Then the violence will start.

  • by dmeranda (120061) on Friday January 12, 2007 @11:42AM (#17575144) Homepage

    Perhaps a link to Paul Graham's Mind the Gap [paulgraham.com] essay would be worth reading as well.

    There's at least four fundamental errors that are made or implied by the Inequality Matters argument:

    1. Money is not zero-sum, just because some CEO gets a lot of money doesn't mean I get less.
    2. If there were perfect equality then there would be no incentive for anybody to make any progress at all.
    3. Correlations don't prove cause-effect relations.
    4. The results are highly selective and not an indicator of good/bad on a whole. Even if more crime does result, many other good things may also result as well.
    • by 99BottlesOfBeerInMyF (813746) on Friday January 12, 2007 @12:13PM (#17575920)

      Money is not zero-sum, just because some CEO gets a lot of money doesn't mean I get less.

      So what? We're talking about the psychology/sociology of crime. It is the perceived disparity and unfairness that matters, regardless of underlying economics.

      If there were perfect equality then there would be no incentive for anybody to make any progress at all.

      True, and if there is no socialism all wealth consolidates via the wealth condensation principal until we're living in a totalitarian system. No sociologist or economist in their right mind thinks extreme socialism is going to work. The question is what level of wealth disparity/condensation is ideal to maximize living conditions. I might note, Too much wealth disparity also leads to no incentive for progress. If I'm born wealthy and just leave my money in the stock market certs daddy left me, why should I ever contribute anything to society instead of being a lazy rich bastard?

      Correlations don't prove cause-effect relations.

      I distrust anyone making this argument as they usually have an agenda.. The correct quote is "correlation does not imply a specific causation." Correlation frequently implies some causation and a lot of science today is finding correlations and testing possible causations. Whether crime causes wealth disparity, wealth disparity causes crime, or both are caused by some other factor is the point of research into the subject. There is some evidence for wealth disparity motivating crime, and very little evidence for any other specific causation therefor scientists in general tend to think that disparity motivating crime is the most probably correct sequence. Most science, especially in very complex systems, is not a matter of proving anything, merely finding likely answers.

      The results are highly selective and not an indicator of good/bad on a whole. Even if more crime does result, many other good things may also result as well.

      This is true enough, which is why you need to define your goals before taking action. If decreasing crime is your only goal, erasing all laws will do it, although it may not be a good overall result. That said, this argument does not speak to what "good things" might be scientifically caused by wealth disparity, whereas crime is a pretty obvious negative. Until someone can draw such a correlation, this is just spouting unsupported maybes.

    • by bockelboy (824282) on Friday January 12, 2007 @12:42PM (#17576562)
      I think you didn't get the gist of the article (or simply didn't read it). The author is not arguing for income equality, but the necessity of social mobility.

      When social mobility - or even the appearance of social mobility - disappears from a society, people will go outside the boundaries to make it happen. And, by social mobility, I mean something people feel that they can control, not luck (i.e., it's important to feel that if they are a genius who works hard, they can make money).

      In Brazil, if you are born in a slum, you die in a slum. There's no equivalent of the "American Dream", telling folks that hard work will get you far in life (debate for yourselves whether or not this is true in America). If you work hard in a favela, you won't die as quickly in the favela. You will never get out.

      That sort of thinking/belief is what drives people to consider options outside the boundaries of law.
  • Clarification (Score:4, Insightful)

    by 99BottlesOfBeerInMyF (813746) on Friday January 12, 2007 @11:42AM (#17575148)

    The summary mentions income disparity, but that statistic is only used because it is easy to measure. Sociologists modeling this issue actually find that wealth disparity, not income disparity has the closest correlation to violent crime of any observed factor. Another thing to be kept in mind is that "correlation does not necessarily imply a specific causation." This quote is often mangled by people with agendas. Correlation frequently does imply some causation, whether that causation is direct in either direction or both items are caused by another factor. Probably half of all science is finding correlations and testing for causations.

    Finally, I'd like to address where the research on this subject has gone in the last few decades. The correlation between wealth disparity and violent crime fits neatly with research into motivation and de-motivation for criminal behavior. In the 80's and 90's corporations funded a lot of research into how to stop employee theft. At the same time a few other studies also tackled the same issue from a less mercenary perspective. The results of all this research led to some surprising changes in the way most sociologists think about crime. While threat of punishment is a deterrent to crime, it is nowhere near as important a deterrent in most cases as was previously assumed. In fact, the strongest motivation for not commit crime was moral, but in a rather unfocused way. In some instances a sign that says please don't steal (maybe Apple wasn't nuts) proved more effective at deterring crime than a security camera. Treating employees well and building up loyalty to the company is one of the most cost effective ways to reduce theft. Business schools in the US are just in the last 5 years starting to teach this, so it may take a while for it to worm its way into corporate culture.

    By now you're probably wondering, how this fits in with wealth disparity. Wealth disparity allows people to justify their crimes, removing the moral motivation to not commit crimes. If one man is born with nothing and has to go into debt simply to get started and remains in debt for years while working hard and making good decisions, and another person is born wealthy, never has to work a day in their life and is an idiot, and makes 1000 times what the first person does simply by investing in firms that loan money to the first person and people like him and collect interest, it is easy to see that life has not treated the two people fairly. The smart and hard worker makes little and struggles while the lazy idiot gets a free ride. The more common and drastic this seems to our first person, the more likely they are to commit violent crimes and robberies. They can justify those crimes to themselves by looking at the inherent unfairness they have been subjected to. Now here's where it gets interesting. Remember where I mentioned earlier that the motivation was unfocused? While the potential criminal may have justified their actions via the unfairness, they commit their violence and crime based upon opportunity. That means they are no more likely to rob the rich than to rob other poor people.

    So where does that leave us? It leaves us with a hypothetical causation between wealth disparity and crime, that is somewhat supported by statistical evidence. It also gives us clues to potential ways to reduce violent crime by addressing the motivations for crime. If we implement more progressive inheritance or wealth taxes and apply that money to socialist programs aimed at the very poor, will crime be reduced? I think it will, and that seems to be the case in other countries, but no one knows for certain. I also think rather than a dole for the poor we'd do better to address the culture of drug prohibition via decriminalization, set up addiction treatment and management programs, and address the healthcare crisis that exemplifies the percieved wealth disparity issue, if not the actual differentiation.

  • A Qualified Yes (Score:3, Insightful)

    by mpapet (761907) on Friday January 12, 2007 @11:42AM (#17575156) Homepage
    History shows again and again, a politically and socially stable country tends to have either
    a) large and stable "middle class." Another way to describe it is good income distribution and consumption by a large number of people in the country/empire in question. More recently, that also includes political participation by all citizens.
    b) Despots running the show.

    In more recent times, Detroit as described in the part-documentary Roger & Me has excellent examples of the phenomena at a city-scale.

    Is there a direct causal relationship that can be expressed in an equation that would satisfy a ./er? No. In that way, reality definitely has a liberal bias. (to borrow a quote)
  • Picking on New York? (Score:3, Interesting)

    by OhHellWithIt (756826) on Friday January 12, 2007 @11:43AM (#17575170) Journal
    From TFA:
    Overall, the murder rate in Brazil is five times that of New York City. As in the United States, much of that violence is poor-on-poor, although the toll redounds everywhere. The New York Times reported recently on a World Bank study concluding that if Brazil had the much lower homicide rate of Costa Rica, Brazil's GDP would have been three to eight percent higher in the 1990s.

    I'm no fan of New York City, but he's definitely using a bogeyman here. In 2002, the murder rate in Washington, DC, was six times [infoplease.com] that of the Big Apple. New Orleans was nearly eight times more deadly, and that was before Katrina. The state of my birth, South Carolina, which is relatively rural, has a murder rate of around the same magnitude of New York City.

    FWIW, I agree with the general thrust of the article, that such large wealth and income inequities are not a good thing.

  • The real question (Score:5, Insightful)

    by pair-a-noyd (594371) on Friday January 12, 2007 @11:49AM (#17575346)
    "Does Income Inequality Matter?"

    To the people at the bottom of the food chain, yes, it does.
    To the carnivorous top feeders, no, it doesn't matter at all.
  • by giafly (926567) on Friday January 12, 2007 @11:50AM (#17575378)
    1. Crime requires poor people. This is because rich people make the laws (or buy the politicians who do) and they're not stupid, so crime is what poor people do [commondreams.org].
    2. But crime reporting requires rich people. This is because their taxes fund the police.
    3. So to get a lot of reported crime, you need both poor people (to do it) and rich people (so it's reported). Hence this apparant effect.
    Does Income Inequality Matter? No, but it appears to matter.
  • by enbody (472304) on Friday January 12, 2007 @12:02PM (#17575658) Homepage
    To put Wall Street bonuses in perspective:
    "Just these bonuses -- for one year -- overwhelmingly exceed all the pay increases received by [other] workers over the entire six-year period," said Mr. Sum.

    That comes from Bob Herbert of the NY Times (Jan 8, 2007) who provided these numbers: "There are 93 million production and nonsupervisory workers (exclusive of farmworkers) in the U.S. Their combined real annual earnings from 2000 to 2006 rose by $15.4 billion, which is less than half of the combined bonuses awarded by the five Wall Street firms for just one year."

  • by DBA_in_ohio (1050320) on Friday January 12, 2007 @12:02PM (#17575660)
    The present situation in which the middle class is losing ground is not as some would have it, the mysterious workings of a competitive, dynamic free market economy. It's the direct result of decades of corporate controlled multi-national trade agreements and labor arbitrage provisions facilitating the offshore outsourcing of work and the importation of "cheap labor" into the U.S.

    I've fought this fight in the IT sector for more than 5 years now. Middle and upper middle class American IT workers have been methodically targeted for replacement with lower wage foreign replacement workers. Carly "the Outsourceress" Fiorina was notorious for this activity but she is hardly alone. Her successor at HP, Mark Hurd was part of the same dynamic during his tenure at NCR in Dayton, Ohio. Larry Ellison and Bill Gates have been whacking their American workforce for years while whining to Washington politicians that they can't find qualified American IT workers. The result: politicians keep expanding the number of foreign "guest workers" permitted into the U.S. under non-immigrant visa programs such as H-1b. (There's a push underway even now for an increase.)

    I think that the many Americans seeking a middle class life, well-qualified to perform even advanced work who may have lost jobs, are under threat of job loss and seeing their wages/salaries pushed DOWN by offshore outsourcing and NIV work programs SHOULD be outraged at both the politicians and the so-called business leaders and the Wall Street investors who demand that American workers get kicked to the curb.

    The wealth now accruing to the already wealthiest segments of our society represents an illegitimate TRANSFER of wealth from the American middle class.

    The increasing share of wealth controlled by the richest Americans is NOT the result of any Darwinian "survival of the fittest". Offshore outsourcing, "free trade" and NIV worker replacement programs are POLITICAL creations driven by lobbies funded by the wealthiest segments of our society.

    This is a recipe for CLASS WARFARE. You'll find that Sen. Jim Webb of Virginia has spoken out re. this situation since before he entered the Virginia primary in which he defeated longtime ITAA pro-outsourcing and pro-NIV President Harris Miller.
  • by Qwavel (733416) on Friday January 12, 2007 @12:03PM (#17575686)

    Is this what it has come to? The only way to convince people that massive inequality is wrong is to suggest that it might lower the GDP?

    Whether your background is Christian, Jewish, etc. Humanist, or even liberal (like mine), you probably believe in some sort of equality. Not because it helps the economy but as a matter of right vs. wrong. People used to talk about equality of opportunity as one of the basic values of democracies and now even that has been thrown away.

    Now it seems that 'equality of opportunity' has been replaced by 'the American dream', which seems to mean that regardless of your socio-economic background, any level of success is still theoretically possible. Success might be extremely unlikely compared to a kid with richer parents, but it does still happen (and when it does we celebrate it on TV).
  • by GOD_ALMIGHTY (17678) <curt.johnson@nospAM.gmail.com> on Friday January 12, 2007 @12:04PM (#17575732) Homepage
    Noah Webster, Miscellaneous Remarks on Divizions of Property . . . in the United States [uchicago.edu]

    Noah Webster, An Examination into the Leading Principles of the Federal Constitution [uchicago.edu]

    Noah Webster, of Webster's Dictionary fame (the reason we don't spell color, colour), was the Federalist who gave the most detailed account of the nature of property and wealth to a free society. Essentially, he stated that the point of the Constitution was to break up power so that it would be too difficult to gain enough for one group of citizens to deny the rights of another group. The creation of 2nd class citizens (slaves were not citizens and indentured servants had rights) undermines the Constitution. The idea that Webster brought to the forefront was that wealth is power, therefore one the Constitution cannot survive an economic system that concentrates wealth and therefore power.

    The second link was a paper written "at the request of the federalist leadership shortly after the ratification debate had begun" (Bailyn, Ideological Origins... p373). These ideas were in response to alleged errors made by Montesquieu first noted by the Willian Vans Murrary, an American law-student studying in London after the revolution.

    Webster talks primarily of real property, ie land. In an agrarian economy real land is the primary infrastructure for the creation of wealth. Now that we have moved to a different economy, the fact that wealth equals power and the vulnerabilities of the Constitution have not changed, so we must adapt our regulations of the market in accordence. The historic record shows that the vast majority of the Founding generation would be shocked and deeply disturbed by the inequality of wealth in this country today and the trends regarding those statistics. They would see it as endangering the Constitution itself. I'm not for radical reorganization of wealth, I believe redistributing growth is much more efficient and fair than redistributing existing wealth. That's why income inequality is such an important factor and why it matters. It may not be the only problem and it may be a symptom of larger issues, but it's an effective measure given the current economic structure of the nation.
  • by angel'o'sphere (80593) on Friday January 12, 2007 @12:12PM (#17575886) Homepage Journal
    Wouldn't it be more precise to compare Brazils rate of murder with, lets say Washington D.C., instead of N.Y.? As WDC has also a 5 times higher murder rate than NY ....

    angel'o'sphere
  • The Value of Money (Score:5, Insightful)

    by Alzheimers (467217) on Friday January 12, 2007 @12:16PM (#17575992)
    In other words, we care less about how much money we have than we do about how much money we have relative to everyone else. In a fascinating survey, Cornell economist Robert Frank found that a majority of Americans would prefer to earn $100,000 while everyone else earns $85,000, rather than earning $110,000 while everyone else earns $200,000.

    Because, in an economy where there is less money available, that money is *worth* more and can buy things at a lower price than an economy where everyone has twice as much money. Consider the hypothetical "numbers pulled out of my butt" scenario:

    If everyone has $85,000, an average car could sell for $20,000. If we double the amount of money to $200,000, that same car would now cost as much as $47,000. Having a few dollars more than the average in the first example is *always* going to be better than having half as much in the second. That hundred grand isn't worth as much! Consider that the "cost of living:" health care, transportation, even groceries are all going to increase by more than double.

    It's not about how much money you have, but how much you can get with it. We can't assume that market prices stay the same when the amount of money available is doubled. It's why having a million dollars today isn't enough to be considered rich anymore -- too many people have a million dollars, and the luxuries attributed to "millionaires" in the past are now reserved for "billionaires". Meanwhile the price of necessities climbs faster than the average income, leaving our money worth less and less, until those on the bottom rungs are forced to choose, not between comforts, but between the basics. When the only food Grandma can buy with her Social Security after paying for her prescriptions necessary to stay alive has a picture of a cat on it, that's intolerable.
  • Why it matters... (Score:5, Insightful)

    by dtjohnson (102237) on Friday January 12, 2007 @12:44PM (#17576620)
    1) Extremely high executive compensation attracts people for management who are extraordinarily greedy and selfish. These traits lead them to make business decisions that are both self-serving and short term in outlook; exactly the opposite of what any business needs to grow and prosper.

    2) A top management receiving pay that is so much higher than most of the people working in the business allows them to live in ways far beyond the means of most other employees. As a result, they lose touch with the day-to-day problems and issues of their workforce and consequently make poor decisions.

    3) People who are paid far above others soon begin to think that they are somehow wiser, more intelligent, more creative, harder working, etc than others and begin to devalue their contributions and opinions. This can have disastrous consequences for any organization.

    4) Extremely high compensation usually carries a built-in obligation for a 100 percent time and life commitment, something that is unimportant to selfish people but critically important to many talented people who might otherwise seek higher positions.

    The most talented top managers often seem to stumble into their positions by chance after the organization has been nearly destroyed by the self-seeking opportunistic managers to the point that those types no longer find the position attractive.

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