Does Income Inequality Matter?

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."

Economic pyramids....

[BWJones]

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

[mangu]

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.

Re:Inequality matters - and it's usually good

[BWJones]

I agree with you completely with respect to capitalism as a model and am in no way against capitalism. However, in the US, while there are possibilities for many to achieve great economic prosperity, there is also the possibility of losing *everything* including health care coverage and the roof over your head and this in many cases drives desperation. I would argue further that endemic violence arises more from a sense of desperation than anything else and in more and more cultures exposed to banal media that glorifies prosperity above all else, a sense of artificial desperation drives violent acts and petty crime.

What are the solutions? Social engineering arising out of more education and a focus on education at all levels from grade school to graduate school is certainly a major component to help drive priorities combined with some reform of systems to provide a fundamental level of health care coverage combined with more resources geared towards public housing and support of small to mid-size business. Other than that, I'd like to see less government in our lives with respect to politically and religiously motivated agendas.

Re:

[Kohath]

... provide a fundamental level of health care coverage combined with more resources geared towards public housing and support of small to mid-size business.

We already have a fundamental level of health care. Go to the emergency room, you get health care. What's the "coverage" for? So someone else pays for it? That's already happening when you go to the emergency room and can't pay.

What's the goal of your plan to change the "coverage"? You pay less and others pay more?

Other than that, I'd like to see l

Re:

[CokeBear]

If you consider taxes to be stealing, do you also consider the money used to pay firefighters and to pave the roads to be "stolen"?

Re:

[Viper Daimao]

Exactly. I suspect that most of the income inequality of the US comes from the fact that the richest people in the world live and make their money here. Our poor, are materially richer than many other country's middle class.

Re:Inequality matters - and it's usually good

[Viper Daimao]

Well certainly if you're talking about homeless and the poorest of the poor in any country that is true. However the Census Bureau in its annual report on poverty in the United States declared that there were nearly 35 million poor persons living in this country in 2002. Most of America's "poor" live in material conditions that would be judged as comfortable or well-off just a few generations ago. Today, the expenditures per person of the lowest-income one-fifth (or quintile) of households equal those of the median American household in the early 1970s, after adjusting for inflation.

• Forty-six percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
• Seventy-six percent of poor households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.
• Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
• The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)
• Nearly three-quarters of poor households own a car; 30 percent own two or more cars.
• Ninety-seven percent of poor households have a color television; over half own two or more color televisions.
• Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.
• Seventy-three percent own microwave ovens, more than half have a stereo, and a third have an automatic dishwasher.

Heck, the poor in America actually have a weight problem. Think about that. According to the U.S. Department of Agriculture (USDA), 13 percent of poor families and 2.6 percent of poor children experience hunger at some point during the year. In most cases, their hunger is short-term. Eighty-nine percent of the poor report their families have "enough" food to eat, while only 2 percent say they "often" do not have enough to eat.

Overall, the typical American defined as poor by the government has a car, air conditioning, a refrigerator, a stove, a clothes washer and dryer, and a microwave. He has two color televisions, cable or satellite TV reception, a VCR or DVD player, and a stereo. He is able to obtain medical care. His home is in good repair and is not overcrowded. By his own report, his family is not hungry and he had sufficient funds in the past year to meet his family's essential needs. While this individual's life is not opulent, it is equally far from the popular images of dire poverty conveyed by the press, activists, and politicians. As I said, it sounds like middle class in many developing countries.

Re:Inequality matters - and it's usually bad

[A nonymous Coward]

Seems to me that the difference is who decides where the money is spent. If one person decides where to spend $100 million, maybe he will buy a yacht, fancy cars, fine art, expensive condos ... the yacht and cars generate jobs, but the condos and fine art simply go into some other rich person's investment accounts. No one directly benefits. Plus there's not much variety there.

Whereas if 100 people spend $1 million apiece, there's more variety, more spent on manufactured goods which generate jobs, less spent on trading museum pieces around the shuffle board.

And in one million people spend $100 apiece, most of it is spent on food, booze, ciggies. Certainly generates jobs, but not good jobs, and no real opportunity to trigger investments.

The idea that a fired CEO deserves a $240 million golden parachute is just ludicrous.

Re:

[Bob9113]

I'd rather have the opportunity to work hard and become wealthy

This is one of the main points raised in the article, which is meant to inspire contemplation and discussion, not to provide a set answer. The author notes that income disparity is generally a good thing as long as there is a clear path from rags to riches. He notes, however, that if that path is unclear or nonexistent for those who have the skills and motivation to follow such a path, then there is a greater likelihood of disenfranchisement and

Re:Inequality matters - and it leads to unrest

[mpapet]

You start with: The biggest problem facing the U.S. isn't the wage gap, but the surge of regulations that prevent the poor from becoming rich (and prevents small companies from becoming large one).

You end with: Sure, there wouldn't be an income gap with such a system, but I'd rather have the opportunity to work hard and become wealthy than coast through life with a lower-middle class income after taxes.

There's a numerous logical problems built into your quickie-mart economics.

1. Working hard == become wealthy (economic-level)
There is no correlation between the two in the capitalist system. History shows again and again that most industries are non-competitive and devolve to monopolies if there are no regulations limiting their reach.

2. Working hard == become wealthy (individual-level)
There is no correlation between the degree and intensity of your work and economic success. This is the core issue in "economic distribution" discussions. Work 40 years living in an apartment with one week off a year going nowhere because you can't afford it. Or, work 40 years with two weeks off a year, one spent in Aruba the other skiing in Breckenridge. Same hard work, two different outcomes.

3. Regulations...
I believe you are relying on the politically expedient interpretation of economic thinking that makes regulations bad. Is having clean water bad? Is having 100's of thousands of houses that won't fall down in an earthquake bad? Is having clean air bad? How about a 40 hour work week. Would you prefer working 7-days a week?

I'd like Chinese workers to have the same amount of regulations so I know all Chinese citizens are deriving some benefit from their economic growth and maintain political stability so I don't have to worry about being nuked by the Chinese.

Re:Inequality matters - and it's usually good

[Guppy06]

"The biggest problem facing the U.S. isn't the wage gap, but the surge of regulations that prevent the poor from becoming rich"

Economic mobility is supposed to work both ways: stupid rich people are supposed to become poor when they are incompetent. But between outrageous executive salaries that couldn't possibly be spent in a single lifetime, along with benefits and golden parachutes, the rich are set for life, the lives of their children, and the lives of their grandchildren. This is money that is simply not up for the competition your touting.

Mod Parent Up -- One Sided Relationship

[Valdrax]

Economic mobility is supposed to work both ways: stupid rich people are supposed to become poor when they are incompetent.

This is really the problem with both the income gap and the issue of executive pay that brought it up. Our version of capitalism is sliding further and further away from the ideal goal of meritocracy.

The problem is that most people who want to remove "the surge of regulations that prevent the poor from becoming rich" are really talking about the elimination of social services (and the taxes to pay for them) that help distribute risk for the poor. Our society, in the form of bail-outs for companies that can't fund their pension plans while paying multi-million dollar CEO benefits, is only moving towards covering the risks of the wealthy and ignoring the risks of the middle class and poor.

The whole idea of the free markets being fair is that people with great ideas will generate wealth, and people with poor ideas will get driven out of the market and out of wealth. This happens very rarely, though. Once you're in the big leagues, you can drive a company into the dirt and walk away with more money that an entire small town of people may earn in their lives.

Past a certain point, wealth is one-way without deliberate and reckless dedication to spending your way out of it. There's a whole world of difference in terms of risks between people who work for money (the salaried class) and people whose money works for them (the investor class).

Re:Inequality matters - and it's usually good

[debrain]

What business is it of yours how much the CEO makes?

If a CEO gets an extra $100 and his employee gets an extra $1, is the employee worse off? No, he's better off by $1.

I agree with you, but there's a caveat that may be worth mentioning: inflation. Without getting into the details, if you inflate everyone's income, then prices will reflect (oversimplified, but not incorrect). Thus, if you have a bunch of CEO's whose incomes are growing faster than inflation, but employees whose incomes are growing at less than the inflation rate, then the income disparity between them grows, and you end up with an ever widening class disparity. Thus, there is a reason for concern over the richest getting richer, and the poorer not getting richer.

Example in point: I can't speak for anywhere else, but in the US and Canada, I understand that when adjusted for inflation, the average income has gone down $800 in the last 20 years.

Re:Inequality matters - and it's usually good

[Red Flayer]

No. I don't pay my bills with a "proportion of purchasing power". I use cash. More cash buys more in our system, regardless of what proportion it is of the total amount of "purchasing power".

Do you understand the concept of monetary supply and inflation? More cash does NOT buy more in our system; more cash merely dilutes the value of cash. The only way to get more purchasing power (which is a real term, and doesn't need quotes) is to have proportionately more cash in relation to everyone else.

In your example, everyone gets a raise. The company must be doing fairly well. Good for everyone.

No, not good for everyone. It is a zero-sum game. What happens if everyone gets a raise in the system? Goods get more expensive, and that raise is wiped out. If your raise was smaller than the average, it means that you, net, lost income.

Stop trying to trick people. Economics is simple and logical unless you're trying to warp the arguments to support a non-free economic system.

I'm not trying to trick people. I'm explaining the truth. I'm sorry that your narrow understanding of the concepts involved prevents you from truly understanding how the system works. I suggest a couple courses in economics to help you out... and until then, stop trying to mislead people by spouting uninformed nonsense in support of a potentially catastrophic inequitable system.

This has nothing to do with supporting "free" or "non-free" systems... it has to do with explaining how things work. Any judgments about what system is fair is left to each person. The simple truth is that you wrote a factually untrue statement that, while appealing to uninformed common sense, fails to account for macroeconomic truths.

This is why I used simple algebra to demonstrate my point... it's easy to understand.

A final note -- the example I used is not a company, it's a system. There's a difference.

Re:

[nursegirl]

Toronto, ON, Canada has been called the most multicultural city in the world by the UN. In general, large cities in Canada are pretty diverse, while more rural communities are still pretty homogenous.

Also, in Canada, we've favoured more of an approach that's "mixed salad" rather than "melting pot," so areas that are heterogenous are very heterogenous.

But my experience has been that the disparity between the rich and the poor in Canada is generally less sharp. The public schools in our poorest areas aren't s

I know it impacts worker performance...

[PFI_Optix]

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:

[fistfullast33l]

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.

Ob Homer Simpson quote

[RPGonAS400]

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

Re:

[Morinaga]

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

Re:I know it impacts worker performance...

[lawpoop]

"That is an average of $370,000 each. The CEO is getting a lot, but the "peons" you talk about are still getting a huge bonus."

You're telling me that the janitors making $30k a year are getting a bonus of $370,000? I can't believe you let that bullshit fly.

The bonuses aren't evenly distributed throughout the company. You cite an average, which is a figure not worth looking at. You are trying to confuse the issue, making it sound like receptionists and janitors are getting almost half-a-million at Christmastime. A more enlightening number would be the median bonus. I'll bet that there are a very few executives and managers that are getting bonuses in the millions, which make up the bulwark of the $9.5 billion. Which just contributes to the income inequality, which is what we are talking about.

Re:I know it impacts worker performance...

[mehtajr]

Try reading that again.

"His bonus reflected the performance of Goldman Sachs (Charts), which reported record net earnings of $9.5 billion, or $370,000 per employee at the world's largest investment bank."

Re:I know it impacts worker performance...

[Tablizer]

Workers are cogs and are fungible. If the workers truly had the vision and the skills that C level citizens have then they would BE C level citizens.

You make the corporate world sound like a meritocracy. The higher you go up, the less it is about raw merit and more about about power grabs and politics. Not everybody wants to play those ugly games and is one reason why heavy capitalism is rejected by much of the world. The best CEO's have had "mild" thoughtful personalities similar to those of Abraham Lincoln and Tim Duncan. The personality traits of good CEO's is already well-studied and tested. However, pushy egomaniacs end up in the position instead, and they tend to get paid even if they F up.
         

Yes, and no...

[Bullfish]

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.

Conversation goes nowhere

[lawpoop]

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

[east coast]

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

[Omnifarious]

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.

This has some merit

[MonGuSE]

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:

[avalys]

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:

[happyfrogcow]

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?

The rise of the American aristocracy

[iPaul]

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.

Re:The rise of the American aristocracy

[kansas1051]

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.

Don't be stupid with money.

[lpangelrob]

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

Re:Don't be stupid with money.

[maxume]

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:

[denis-The-menace]

"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.

Re:Don't be stupid with money.

[Lord Ender]

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.

Re:

[lpangelrob]

I know many people don't carry forward a balance, but 115 million Americans [go.com] do. So the odds of people being in consistent credit card debt are pretty high.

If someone wanted to go all-out cash, Best Buy and other retailers still take checks. Not an option for everyone, but it's true.

But yeah, no argument that spending more than you make is the root of the problem.

Yes, It Does

[p0tat03]

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.

Re:Yes, It Does

[p0tat03]

I would rate *your* post +5 pandering to stereotypes as well, to assume that "cultural differences" (which usually is just the politically correct way to say "uncivilized slant-eyed brutes" whenever I've ever heard it) even matters in this case. I admit my "evidence", though it was never meant as such, is anecdotal, but considering how prevalent and worrisome the issue was at the time, I would say the majority of the country's elite felt the same pressures.

Honestly, unless you are also an Asian immigrant, I would contend that I have a far better sense of "cultural differences" between East and West. I was born and raised in a bilingual environment, lived in both the east and west, speak both English and Mandarin fluently, and I consider myself a pretty even mix of Chinese and American/Canadian cultural traditions.

So let me comment on your post from that perspective:

First, in the West there has been a concerted (and almost completely sucessful) effort to stamp out kidnapping for ransom. The penalties are steep...

And how does that matter? Don't be quick to assume that there have been no major effort to stamp out kidnapping for ransom in Taiwan. Massive undertakings have been taken, with some limited success. Oh, and by the way, we shoot kidnappers (not that I agree with it entirely, but that's the penalty of kidnapping). On the whole Asian penal systems have harsher penalties: prisoners are rarely afforded the kind of quality of life that you see in American jails, and we still shoot people in a public venue (such as a stadium), as opposed to pump them full of anesthetics till they die.

This isn't a commentary on supporting or opposing capital punishment, but rather my belief that when the wealth gap is sufficiently wide, no level of punishment or threat of punishment will deter the people from trying to even the playing field. If you and your neighbours cannot afford to eat, have corrugated aluminum over your heads, while behind a chain-link fence lies huge mansions of exorbitant excess, you will try and take it.

and typically the top echelons of the police get involved.

And they didn't in Taiwan? You try to sound diplomatic and neutral, but clearly you're biased against Asian culture and capability. Considering that the kidnapped children were always part of the rich elite, you can bet your ass that the top echelons of the police were always involved. There were nation-wide manhunts for alleged kidnappers, where absolutely no expense was spared to apprehend the criminals (and then shoot them).

Secondly, in the West - families don't typically cooperate with the kidnappers. They go to and cooperate with law enforcement authorities.

As they did in Taiwan. See my point above. Why are we assuming that an Asian family would be more likely to keep the kidnapping to themselves instead of going to the authorities? What reason do you have to make this assumption?

Thirdly, when the crime of kidnapping for ransom involves children - it invokes the 'protect the children' meme that appears much stronger in the West than in Asia. (For example, you hear tales of children in Asia being sold into chattel bondage, often sexual. Such tales are noticeable by their near complete absence in the West.)

Ooh, this is a huge can of worms. Having seen the media first-hand during this time of my life, I can say without a doubt that the "ZOMG protect the children from eeeeevil!" thing was as strong in Asia as I've seen in America. Are you trying to tell me that the Chinese culture is somehow less susceptible to the ancient "think of the children!" ploy?

Oh, and the tales of children being sold into chattel bondage, often sexual, are really not prevalent. They are equally absent in Asia as they are in the West. Keep in mind that much of Western media's portrayal of Asia is extremely negatively biased, probably for the enjoyment of people such as yourself. Why? I don't really know, but it reinforces the stereotype o

Inequality is actually good

[dmeranda]

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.

Re:Inequality is actually good

[99BottlesOfBeerInMyF]

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.

Re:Inequality is actually good

[bockelboy]

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

[99BottlesOfBeerInMyF]

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

[mpapet]

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?

[OhHellWithIt]

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

[pair-a-noyd]

"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.

It's about Reported Crime

[giafly]

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.

Putting the numbers in perspective

[enbody]

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."

Offshore Outsourcing = Class Warfare

[DBA_in_ohio]

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.

Not to mention the ethical issue

[Qwavel]

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).

Not to mention it's un-American

[GOD_ALMIGHTY]

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.

N.Y. murder rate is not that high ...

[angel'o'sphere]

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

[Alzheimers]

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...

[dtjohnson]

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.

Re:Correlation... causation

[spun]

Income inequality drives crime. When everyone is poor, no one steals from each other. When everyone is rich, everyone steals from each other, but there are rules. When some people are very, very rich and some are poor, the poor feel justified in evening out the unfairness through direct action. If everyone had their basic needs met, I don't think income inequality would matter as much. But as long as some people are desperare and feel they are being screwed, and they can find an easy target in a rich person, there will be crime.

Re:Correlation... causation

[Wandering Wombat]

What the hell are you doing posting on Slashdot? You're obviously WAY too smart for that.

Mod parent up, big time.

Re:Correlation... causation

[flynt]

If everyone had their basic needs met, I don't think income inequality would matter as much.

Possibly, but as the article points out, happiness and contentment is not so much our absolute wealth, but our relative wealth. Many have their basic needs met, but still feel obligated to put in long hours to increase their relative wealth. The Economist's holiday issue had a nice article on this research.

Perception of opportunity

[Harmonious Botch]

"... happiness and contentment is not so much our absolute wealth, but our relative wealth"

This is almost correct. I read a research paper a few years ago ( If I can find the link again, I'll post it ) that said that it was a combination of relative wealth and opportunity that lead to contentment.
Specifically, the authors were looking at revolutions, and noted that they tended to occur when the top quintile made 40 times as much as the bottom quintile, AND there was little or no movement of individuals between quintiles. But if people had the opportunity to move, revolutions did not occur even with greater inequality.

In other words, if people believe that they can someday earn a pile of money, they are much less likely to resent those who have. They will view the rich guy as an incentive.
But if they believe that they cannot get rich - due to caste sytems, monopolies, licencing, racial laws, or some other artificial means of locking them out - then they are far more likely to become violent.

It was reassuring to me that the author said that the US has far greater mobility between quintiles than most developed nations.

Re:Perception of opportunity

[bongomanaic]

He didn't say that the US has greater mobility than most developed nations, and he was wise not to since it's not true, e.g. http://cep.lse.ac.uk/about/news/IntergenerationalM obility.pdf [lse.ac.uk]

Thus the picture that emerges is that Northern Europe and Canada are particularly mobile and that Britain and the US have the lowest intergenerational mobility across the European and North American countries studied here. The USA is seen by some as a place with particularly high social mobility. In part this is a consequence of using measures of class to estimate mobility (these will be affected by changes in the class structure over time). However, the idea of the US as 'the land of opportunity' persists; and clearly seems misplaced.

Re:Perception of opportunity

[rwhamann]

Hmmm .. child of perpetually broke auto worker who made just enough to keep me out of eligibility for financial aid but didn't give a single penny for school ... I joined the military and worked my way up through the ranks and would now be considered upper middle class.

Can be done. Not always easy. Not always fun. But if you are physically able (a substantial if) and havn't committed any crimes (totally within your power to control), there is an almost guaranteed path of upward mobility for those who choose to work hard.

Re:Perception of opportunity

[vcalzone]

Well, I can't speak to your personal experience, but I think more people are in a situation where they're perpetually broke than are able to climb out. I'm not arguing that it's impossible to pull yourself up through hard work, just that there's a lot of really hard-working people who don't ever get to that point. I don't think most people would argue that everyone who has wealth earned it through strong character and hard work, so how can anyone argue that people who are poor were too lazy to earn any more? It needs to be plausible for anyone to be able to provide for a family if they are willing and able to work hard. That was the American Dream.

Re:Perception of opportunity

[UserGoogol]

Almost anything is possible if you work hard no matter where you live. Even if you're starving in North Korea, you can in principle become prosperous. You might need to wage a revolution to overthrow the government, but it's possible. Class mobility is not measured by whether it is possible to move between classes, but how hard it is. From your own description, you had to work rather hard. Not anywhere near as hard as revolting in North Korea, but certainly harder than you would have had to work if financial aid had been more generous.

Re:Perception of opportunity

[killjoe]

What you don't understand is that the military was designed to harvest people like you who had no other choice. When I was in the military the vast majority of the people I "served" with were there either to get money for education, to get out of their rinky dink town, or because they just could not cut it in the real world.

You say you "worked your way up". In the military this simply means you hung around and re-enlisted and generally didn't fuck up too bad.

Anyway the military is a special case. I am sure the US would love it right now if the only way to get from the poor classes to the middle classes was by joining the military.

Re:Correlation... causation

[iPaul]

Bingo - that's it on the nose. It's not that my stack of little green slips of paper is not as tall as you stack. It's that my child dies of leukemia because I don't have enough money to see a doctor, while you child goes to the best hospitals on the planet for a mild thyroid condition. It's about access to health care, education, nutrition, and in some sense luxuries. Imagine how it galls some people in brazil that a group of Porsche driving Yuppie kids spend more money in one night on dinner than they make in a year.

Re:Correlation... causation

[DeadChobi]

Forget Brazil. Imagine how much it galls many Americans that watch some dumb yuppie on television fritter away a couple of million dollars when that's more money than they will ever see in their lifetime. I can tell you that it makes people very angry to think about that. Not angry enough to take things into their own hands, yet, but still angry. And your salary/wage is indeed your direct access to everything you need to survive. If it's below a certain point then you can't afford to buy things like health care and food because they cost more when it's expected that the average person can pay that.

In America we're creating an underclass where the values are completely different, even from the middle class. Our middle class is shrinking in size, with more people dropping below the line between the two classes and winding up poor. When our middle class is gone we lose the perception of class mobility, and then people start fighting.

I can tell you that I get pretty pissed off when I hear about million-dollar bonuses when if I had 1% of that money I wouldn't have to worry about college tuition for the rest of my career. It makes me angry, so I try to ignore it. Watching commercials also gets me a little mad because of the huge disparity between the way the "average american" is depicted on television, and the way we actually live. If you're willing to buy into the commercial vision, then you start to think that everyone but you is living like that, and then you start to wonder how you can get to that point. When you start to think that you can't, you get angry.

Re:Correlation... causation

[ArcherB]

I can tell you that I get pretty pissed off when I hear about million-dollar bonuses when if I had 1% of that money I wouldn't have to worry about college tuition for the rest of my career. It makes me angry, so I try to ignore it. Watching commercials also gets me a little mad because of the huge disparity between the way the "average american" is depicted on television, and the way we actually live. If you're willing to buy into the commercial vision, then you start to think that everyone but you is living like that, and then you start to wonder how you can get to that point. When you start to think that you can't, you get angry.

You get angry or jealous? There is a difference.

1% of one million is $10,000. I spent more than that on college but I'm sure you could get an education for less than that. But let's say that a million-dollar-bonus earner was forced to give it away in 1% increments. He would be able to give $10,000 to exactly 100 people (all before taxes of course). After taxes, he could give approximately $6000 to 100 people, who in turn would only receive $4000 each (after taxes again). Could you go to college on $4k?

Finally, in your perfect world where the rich have to give all their money to pay for your college, why would you want a college education anyway? You bust your ass through college, work hard, long hours in your job, and when you are successful, you'd have to give away your money to some angry kid who despises you for your hard earned success and is too lazy to pay for his own education!

Re:Correlation... causation

[billcopc]

By allocating capital to where it is best used Goldman Sachs produces huge wealth for everyone.

What kind of brainwashed bullcrap is that ? There is no way to "produce wealth for everyone", at least not in material form. Being wealthy essentially means having a lot more money than the average joe. If everyone were equally "wealthy" then the word would lose its meaning. You cannot truly create wealth out of thin air, you simply transfer value from one entity to another. There is no net gain. By giving some guy a 53M bonus, you're just shifting that money (aka POWER) away from an immediate group of people. The recipient, in turn, will probably spend a small portion of it on luxuries (high markup low value), and lock the rest away in the bank (or investments). The money that is spent will recirculate to some extent, trickling back down to the common people but still resulting in a pyramid of profit for the middlemen. The rest of the cash just sits idle and creates a void, which is then filled by inflation.

When you have more money than you can spend, you're actually creating a cascade of economic problems. Way back when money was invented, it represented effort and value. You trade the fruits of your labor for money, which could then by traded for other people's goods and services. Today's money has little to do with its ancestral purpose. What has Lloyd Blankfein done to tangibly benefit the people around him, that is worth 53 million ? 53 million bucks can build a shitload of houses, educate a ton of kids, or feed tens of thousands of people to satiety. Or it can buy one man some short-term entertainment, maybe get his kids through college and pay off a few gold-diggers.

To me, the only currency that matters, the only one whose value is fixed and whose purpose is clear, is energy. We are living on a planet with finite resources, yet population is growing out of control. All the money in the world won't help when there's no more oil to power factories, no more heat to cook our food, no more electricity to run our hospitals. The fact that such a disaster is centuries, perhaps millenia away doesn't make it less of a problem, that's where we're headed and unless something radical comes around to change our course, humankind will be doomed. It's hard to be rich and famous when you're extinct.

Re:Correlation... causation

[Tyberius]

Gotta call bullshit.

The rest of the cash just sits idle and creates a void, which is then filled by inflation.

Unless your millionare sticks the money in the mattress, then it is not idle. Even if it is in the bank, the bank will lend the money to job creators or homeowners, and if it is invested, then it goes to job creators.

Re:Correlation... causation

[inverselimit]

Gold has no tangible value. It is shiny, thus people want it, but it has no 'inherent' value. Sure, it can be used in a few manufacturing processes, but if that was all it was good for (i.e, not shiny), it wouldn't be worth much.

Re:Correlation... causation

[gobbo]

This is still what money is. I goto work and use my time, effort, and skills in exchange for a money. I then use that money to buy goods and services. Now Mr.MoneyBags might make more then I do, but that is because someone values his time, effort, or skills more then mine, and thus he gets paid more. What he does with his money, be it giving food to starving kids, saving it for his family, or blowing it all away on fast cars and fast women is his perogative and his choice. He earned the right to spend that money however he chooses (withing the confines of legally, of course)

This, more or less, is how I explain money to my children: it's a stored barter, delayed value given for goods or services, that can later be redeemed at convenience, so it gives more choice and helps you meet your needs better.

However, I use this explanation because they are children. I don't need to confuse them with the details of what, for instance, their grandfather sees going on, as he manages the financing of new ventures and schemes.

My dad doesn't like to admit it very often but the larger the sum, the more opportunity to game the system (I wish that he would game it himself some, then he wouldn't be broke but rich). Huge amounts of capital mean everyone with decision making power who's in on it will make out large, and if some look the other way, everyone makes out larger. Think of high finance as The House, and in the casino, the House always wins in the end.

A big part of the gravity-like agglomeration of capital is how much gaming of the system is going on, under considerable secrecy. Finance is very compartmentalized under some valid privacy rules, and the nod-and-wink regulation that accompanies it. When incredible breaches like the Enron debacle make us think about rooting out corruption, we've just fallen into an ideological trap: 'the players are mostly fair, and the rules keep them that way.' How about this: many of the players are working for the House, and the House doesn't even legally exist, it's a loose syndicate that caan't be centralized or identified.

Hollywood and the utilities industries have had some of the more embarrassing schemes that I've heard of. The amount that people were getting paid just for retainer, and then rubberstamping things or scheming over coffee, would give you chills, and the amount of 'surplus' capital in these schemes that were budgeted into various hidden payouts was astounding--and this is the stuff I was allowed to see. I'm talking more money in minutes than you make in years. It's not that "someone values Mr. Moneybags time" more, and that it's fair value--it's just that the only people looking are in on it.

The most disturbing part of what you wrote (and how most of my country thinks) is in the way that you conflate exchange value with use value, as though there were some natural market force determining that $8,000,000 for 2 hours of handwritten expertise is equivalent in productivity to 150 years in the factory assembling automobiles. If you've seen the way nudge-nudge that it works, and the willful blindness and denial put to use by people in the position of directly supporting this global embezzlement, you'd know that something else is at work: avarice and deception, and an ideological outlook that blurs 'what you can get for it' with 'how useful it is.'

Re:Correlation... causation

[Brickwall]

Yuppie kids or their parents also produce more in a day than people in Brazil produce in a year. Hence, they get paid more. Brazil's economic woes are due to a) their economic policy and b) the fact that their people produce less than the western setup

You don't get out of Mommy's basement much, do you? My wife is from the Philippines - about as poor as Brazil - and I have visited there frequently. Yes, there are people, like my wife's brothers, who run a successful chain of department stores, and who make relatively lots of money. There are also many people, like virtually every politician and government officer, who live on graft, corruption, and crime. For example, we were introduced to the governor of her province, who also runs the meth trade. Police and armed forces officers supplement their incomes by kidnapping and ransoming rich kids. Ever practical, the Chinese, who run much of the trade, form associations that routinely pay local police and army officers protection money so that their children will not be touched.

Although the Philippines has lots of laws to provide services, they don't have the money. One reason is rich businessmen routinely "negotiate" their tax payments with the local official. Such negotiations always include a thick envelope for the official. So when you live in a country where the rich avoid their taxes, where the people who are supposed to uphold the law break it, and the government that is supposed to work for you steals from you, there is going to be a lot of crime because the social contract is routinely betrayed.

Re:Correlation... causation

[iocat]

Bullshit. In most third world countries(or countries with extreme income disparities anyway) -- the people at the top do far less work and produce far less goods than the people at the bottom. With very little social mobility, it's easy for a rent type situation where the assholes on top keep the 'common people' down -- it's not some perfect Objectivist paradise where hard work or being smart alone can make you successful. It's also not like the US where factory work is an awesome job with solid pay and great benefits. People who may produce a lot (like all your cheap consumer goods) get paid fuck all, as do people in the service industries. (A typical, college-educated, tri-lingual, hotel clerk in Bangkok earns about $125 a month, for instance.)

But even if I concede your point, I disagree with your valuation. Unless the chairman of goldman sachs cures cancer, productizes cold fusion, and gets ROME a third season, there's no way on earth he is worth 200,000% more to society than the dude who drives the truck that brings milk to my grocery store, my kid's teacher, or the dude who just sold me a coffee.

Re:Correlation... causation

[corbettw]

You can't eat stock options you know.

No, but when someone invests their money in a public corporation, either by buying stock in the company or by buying shares of a mutual fund that holds stock in the company, then either one of two things happen: one, someone else sells their corresponding shares for money (which can buy food, which you can eat), or two, the company sells shares in itself directly, which raises capital to expand the business, which means it can hire more employees, whom the company pays with money, with which the new employees can buy food (and then eat).

So while investing in the markets doesn't directly enable you to eat, it does set off a chain of events on which our entire economic system is based and which eventually lead to people buying food and eating it.

Re:Correlation... causation

[ChibiOne]

If everyone had their basic needs met, I don't think income inequality would matter as much...

I understand your argument. But an armed robbery or a burglar sneaking into someone's house are totally different things from an organized kiddnapping, a serious problem in some Latin American countries. Those bastards don't feel desperate and they don't feel they are being screwed. They have their basic needs more than met to begin with. And yet, there you have them: terrorizing families, demanding monstruous ransoms and mutilating, even killing their victims even after getting their "pay".

Re:Correlation... causation

[spun]

It is important to remember that no matter how horrific the crime, it happens for a reason. Those reasons are only rarely completely internal to the criminal. Calling somone a bastard, while a reasonable response to such horrors, isn't helpful. It amounts to throwing up one's hands and saying, 'the devil made him do it.' It's not an explanation, but an expression of emotion. In order to come to grips with crime, we must put aside emotion and analyze the root causes dispationately. I say this as a victim of violent crime who was permaently handicapped in an attack.

Re:Correlation... causation

[maxume]

This brings to mind the stuff in freakonomics about drug dealers. A guy in Chicago went into a gang and got to know them, and analyzed their economics. The guys on the street dealing the drugs, taking most of the risk, earn about $10 an hour all told. They work really hard at it, and regularly risk their lives. They are willing to do this for the chance it gives them of getting to the top, where they make a pretty decent living(~$100,000).

Basically, they are born into a crisis and never realize it, and they see the horrible 'career' of dealing drugs as one of the better ways out. Putting them in prison is an excellent waste of money, the next generation is always ready to replace them.

Re:

[Archangel Michael]

"But as long as some people are desperare and feel they are being screwed, and they can find an easy target in a rich person, there will be crime."

PS3, XBox360, Wii, Nike Shoes .....

People have been Killed, robbed, beatened, and otherwise harmed by people's greed to acquire these products. Yet, none of these are items that are within the definition of "basic needs". Nobody "needs" these.

The "poor" Americans are some of the richest people in the world, just look at the obesity levels. Truly "poor" people are

Re:Correlation... causation

[LordPhantom]

Americans are a bunch of whiney wimps who would rather get rich quick, while being poor, than work hard

Ok, I'll bite. You had me up until that statement. You, sir, apparently like to make sweeping generalizations about a group of people you obviously understand little about.

I'll put this in a bite-sized mental morsel for you: There are -some- poor folks who live off the charity of others, and there are -some- rich people who live off their connections. Just like every other country in the world. But that doesen't apply to everyone, there is an extremely large group of hard working middle class folks propping up the economy here, if you really worked hard and came from the background you say you did, you would know that.

Re:Correlation... causation

[Rob the Bold]

PS3, XBox360, Wii, Nike Shoes .....

People have been Killed, robbed, beatened, and otherwise harmed by people's greed to acquire these products. Yet, none of these are items that are within the definition of "basic needs". Nobody "needs" these.

The "poor" Americans are some of the richest people in the world, just look at the obesity levels. Truly "poor" people are literally dying of starvation, worry about their next meal, wonder where they will sleep tonight.

That does seem to suggest that "Income Inequality" does matter. That it's not just a matter of how poor you are in absolute terms, but how poor you are compared to your fellow citizens.

Re:Correlation... causation

[99BottlesOfBeerInMyF]

People have been Killed, robbed, beatened, and otherwise harmed by people's greed to acquire these products. Yet, none of these are items that are within the definition of "basic needs". Nobody "needs" these.

You're mistaking the psychology here. People aren't stealing because their basic needs aren't met. They're stealing because they have been able to justify that action to themselves, usually with an internal dialogue along the lines of, "life is unfair. Nothing is fair. Thus stealing, is just another way to get what I want. Why should I be a chump and stay poor just because I was born that way? I'm going to make something of myself the same way a lot of the rich families did, by being unscrupulous and doing whatever it takes."

The "poor" Americans are some of the richest people in the world, just look at the obesity levels. Truly "poor" people are literally dying of starvation, worry about their next meal, wonder where they will sleep tonight.

Crime does not correlate to poverty nearly as well as disparity. People don't rob others because they are poor, they do so because they feel justified since others were born with so much more than they were. Take a look at internet crime, suddenly people in the third world with nothing can rob people in the US. Predictably, there has been an explosion of internet crime from the third world. "An American makes 500 times what I do, despite being a moron. I can live for years off of one case of fraud against them." Of course there are going to be more crimes do to this disparity. Within the US, it is the difference between the rich and poor, not the overall level compared to the world (which most don't see) that drives crime.

I know, I've been "poor". I've also know what its like to have to get up off my ass and get a job, and do crappy work for a living. If one works hard, is honest and never stops learning, one can end up in IT, with a decent wage.

Yeah for a lifetime of hard work and smart decisions you can make 1/100,000th what one of the people born to extreme wealth and who is a lazy idiot makes from investing all that inheritance in lending firms that lend you the money you need to get started and then collect interest. In fact, over the course of my life I'll make about as much money paying interest on my mortgage and other loans as I will make for myself. Someone else is making just as much off my hard work as I am and they've done nothing but start out with money. That sort of unfairness is what drives people to crime, although usually the crime is committed based upon opportunity, not targeting the wealth specifically.

Americans are a bunch of whiney wimps who would rather get rich quick, while being poor, than work hard.

Who wouldn't rather get rich quick? This phenomenon, by the way, is in no way limited to the US. Wealth disparity correlates to violent crime and robbery levels the world around.

Re:Correlation... causation

[bonoboboy]

"People have been Killed, robbed, beatened, and otherwise harmed by people's greed to acquire these [Wii, PS3] products. Yet, none of these are items that are within the definition of "basic needs". Nobody "needs" these." You're quite right by saying that nobody *needs* these items, but it certainly wasn't the rich out there fighting the crowds for these products. Often, they were poor bastards who were paid by someone to stand in line for them, or people who didn't actually want the machines, but wanted to cash in on the reselling of these machines on ebay or whatnot. The point here is that America's poor are getting poorer, and the richer are getting richer. The concern is that America is losing the middle class. You like bitching about America now ... are you hoping for more material down the road? Even if America's poor have a higher standard of living than the poor elsewhere in the world, does that mean America shouldn't continue to consider the situation of their own poor and continue trying to make America a better place? "The "poor" Americans are some of the richest people in the world, just look at the obesity levels." Actually, I'd say the obesity levels in America's poor aren't due to some great amount of nutrition they're getting, but more to the LACK of nutrition they're getting. Take a trip to a grocery store in a poor neighbourhood, and you'll see cart fulls of ramen, boxed meals, and red fruit drink - all full of questionable chemicals, MSG, and high-fructose corn syrup. These people are fat because they can't afford nutritious food like fresh fruits & vegetables. I'd highly recommend a visit to the Southeast section of Washington, DC at some point. Seeing such neighbourhoods in person might change your mind about the poor in America, especially in areas like this where it's quite obvious that the poor neighbourhoods are defined by things like skin colour. Yes, such things do still matter.

Re:Correlation... causation

[opkool]

Exactly.

This is why Ophra opened a leadership school in Aouth Africa and not in the US.

She said in an interview (writting from memory): "whenever I went to South Central-like places, I'd ask to poor kids 'what is what you want?' and they would answer things like 'a pair of Nikes', 'an Xbox','a flat-screen TV'. On South Africa, when you ask poor kids what they want, they say 'a uniform so I can go to school', 'books for school','a pair os sandals to go to school'. This is why I built the school in Sout Africa".

Sad.

Re:Correlation... causation

[Lumpy]

Bingo!!!

Fun facts....

The rich can afford to have a new house built AWAY from crime and get the benefits of modern insulation and technology so heating and cooling thier home costs less than 1/3rd that of a older home from the 70's or 80's.

The poor (making $20.00 an hour or less) cant afford to build a home or buy a old home in lower crime areas... you just cant afford a $350,000.00+ mortgage when you make a paltry $20.00 a hour. So you are stuck buying a crapshack in the $200,000 range in a questionable neighborhood that you hope is not too bad. Here is the problem. your little 1200 Sq foot crapshack was built in 1955 and has no insulation. so heating it costs you over $200.00 a month during winter months. While the rich guy in his 4800 sq foot home get's away with $180.00 a month keeping it at 72 degrees because he has low E glass, south facing windows, thermal mass, decent insulation etc....

The gap is widening... I realize that I will never EVER be able to afford to build a house, the income gap has widened enough that I will never be able to catch up to the fact that housing is spiraling out of control in price. The depressing fact is that I see my 15 year old and know that she probably will never be a homeowner unless she does somethign stupid and get's one of those unrealistic mortgages, marries a rich guy, or becomes a doctor.

And this is in non-popular metro areas, Only the truely insane tries to buy a home in California near San Diago, LA or Frisco. (Where you have the $500,000.00 Crapshacks)

The rich are not only getting richer but they are dragging lots of things with them.

I am all for a guy that earns his money, but they also need to realize what they are doing to the rest of the world and how they are starting to create animosity.

Rich can not get surprised when they park their BMW 7 series sideways taking up 4 spaces at the local mall and come back finding it keyed.

Being rich is not a problem, it's being rich and an asshole that pushes most of the poor over the edge. It's easy to rob an asshole.

Re:Correlation... causation

[MalleusEBHC]

The poor (making $20.00 an hour or less) cant afford to build a home or buy a old home in lower crime areas... you just cant afford a $350,000.00+ mortgage when you make a paltry $20.00 a hour. So you are stuck buying a crapshack in the $200,000 range in a questionable neighborhood that you hope is not too bad. Here is the problem. your little 1200 Sq foot crapshack was built in 1955 and has no insulation. so heating it costs you over $200.00 a month during winter months. While the rich guy in his 4800 sq foot home get's away with $180.00 a month keeping it at 72 degrees because he has low E glass, south facing windows, thermal mass, decent insulation etc....

The gap is widening... I realize that I will never EVER be able to afford to build a house, the income gap has widened enough that I will never be able to catch up to the fact that housing is spiraling out of control in price. The depressing fact is that I see my 15 year old and know that she probably will never be a homeowner unless she does somethign stupid and get's one of those unrealistic mortgages, marries a rich guy, or becomes a doctor.

And this is in non-popular metro areas, Only the truely insane tries to buy a home in California near San Diago, LA or Frisco. (Where you have the $500,000.00 Crapshacks)

It's this kind of pessimistic attitude, combined with excessive spending, that is keeping people from home ownership. I just got out of college and got a job as a software engineer, but my goal is to get a house in 5 years. I make about average money for a fresh out of school software engineer, which isn't great considering that I'm living in Silicon Valley and intend to buy a place here. I could take the "woe is me" attitude and resign myself to never buying a house, but instead I'm focusing on saving my money and setting myself up to get a house. Sure I don't have a lot of money to throw around on excessive consumption like I see out of many of my fellow grads, but it means that I'll be able to buy a house with an honest-to-God down payment and a real mortage, not some crazy ARM.

Being the son of an accountant, fiscal responsibility has been drilled into me since before I can remember. It still amazes me that some people fail to realize that if they curb their spending and plan for the future, it can do wonders to their financial and living situation.

Re:

[Darby]

According the the Gini numbers mentioned in TFA, this would mean that the US has one of the highest crime rates in the world! I don't think that is the case.

The US has more people per capita in prison than any other nation on the planet.

The US also has more people *in raw numbers* in prison than any other nation on the planet.

That's incarceration rate rather than crime rate, but they are related, so clearly it's reasonable to guess that we might well have one of the highest crime rates as well.

Did you actua

Re:Correlation... causation

[eln]

Obviously that very narrow event does not cause greater violence, but it can certainly be argued that larger income disparity results in greater civil unrest, which will often manifest as violence and other criminal activity (looting, etc).
   

Re:

[DoofusOfDeath]

... results in greater civil unrest, which will often manifest as violence and other criminal activity (looting, etc).

That's totally correct according to my experience. The other night, the Russians had a war that lasted too long, and like even the people in Minsk rioted, and they totally trashed the temple. Man, Civ III is awesome...

Re:Correlation... causation

[246o1]

There is a limited amount of wealth in our society. It is not an entirely zero-sum game, but it is true that the more wealth the richest have, the less the rest of us have. If you were to take half the money of the richest 10% of Americans and spread it out among the poorest 40%, you'd probably take one of the biggest steps in history towards eliminating poverty.

Not only does America have greater income inequality, but it matters more in America. There's no universal health care, social security is dependent upon you paying into it (something many people forget), single parents are expected to work full-time from the time their child is about 2 months old, etc. Basic benefits that everyone shares equally reduce effective income inequality, and there is a well-known link between desparate poverty and crime.

Furthermore, think of the social problems associated with income inequality. The rich can basically buy and sell poor people, you can see this with many of the semi-rich sex tourists in SE Asia, but the same kind of things are possible in America. The poor have no reason to trust people who run a society that is blatantly rigged against them. Et cetera et cetera

Re:

[pipatron]

Not only does America have greater income inequality, but it matters more in America. There's no universal health care, social security is dependent upon you paying into it (something many people forget), single parents are expected to work full-time from the time their child is about 2 months old, etc.

The reason it matters more in America is because of the greater income inequality. In Sweden (good example since I live here.. :P), the higher taxation and minimum wages, and also a non-linear taxation where people who earn more will not only pay a higher tax but even a bigger share of their income, results in a smaller income inequality. This money goes into public healthcare and social security, in order to basically make sure that even if you're the lowest drug-addict scum on earth, you don't have to s

Re:

[ArcherB]

In Sweden (good example since I live here.. :P), the higher taxation and minimum wages, and also a non-linear taxation where people who earn more will not only pay a higher tax but even a bigger share of their income, results in a smaller income inequality. This money goes into public healthcare and social security, in order to basically make sure that even if you're the lowest drug-addict scum on earth, you don't have to steal anything, but can just show up at the social security office and get more than e

Re:

[Grym]

I couldn't disagree more. The rich don't drive the economy any more than any other consumer does. How is a single mother buying baby formula any less connected to the economy than Paris Hilton buying a new purse? You might be tempted into an argument of scale (that the purse costs thousands more), but this point is moot because there are far more single mothers than Paris Hiltons. In fact, I'd go so far as to say that the rich, as a result of their savings accounts, contribute less to the economy, per c

What BS

[XanC]

Wealth couldn't be less of a zero-sum game. And I guarantee that if we tried your crazy plan of taking half the rich people's money and giving it away, within a year we'd be right back where we started. Why? Because the rich keep on making the decisions that made them rich, and the poor keep on making the decisions that made them poor*.

*Note: I don't believe anyone in America is truly "poor", except by choice.

Re:

[RightSaidFred99]

My wife works in the social work field. Poverty begets poverty for the simple reason that semi-retarded, poor, illiterate scumbags pop out child after child, and those children do the same damn thing. I literally _hate_ those kinds of poor people. Hate them with a passion. This may sound "overly-republican", but you won't be able to point out any flaw in the logic. One way we could improve this country in about 2 generations is by, I don't know, _enforcing_ all that bullshit we spout about "think of th

Whose choice?

[Valdrax]

Note: I don't believe anyone in America is truly "poor", except by choice.

But whose choice was it?

For example, we know that the quality of primary education ties very strongly to your chances of getting into a good college (or even going to college at all) which ties very strongly to your future career prospects. What about nutrition and healthcare, which have a noted impact on adult IQ? What about how the presence of a strong and united family or the lack thereof affects people? What about the presence of discrimination against people with "ghetto-sounding" names?

Now, who gets to make the choices that shape your life as a child? Is it you, or is it your parents?

Anyone can say that a person made all the choices that led them to where they are today, but it takes a certain short-sightedness to think choices all happen in a vacuum or that all people have equal access to opportunity. Intergenerational income mobility has been on the decline in America because of the prevalence of people who have that philosophy: you sink or swim on your own; there are no hands to hold you up or to keep you down. The fact is that if you're born to poor parents, you're more likely in America than in any other industrialized nation to end up just as poor as them, and if you're born to rich parents, your more likely here to end up rich as well.

I think a lot of people just don't understand how expensive it is to be poor. Try buying things with bad credit, working jobs with no healthcare until you end up in the emergency room, working such long hours at pitiful wages to make ends meet that you can't raise your kids, renting in overpriced slums because you can't afford to pre-pay 1-2 month's rent, etc.

Public works to help cover medical, food, and education expenses does go a long way to giving children the opportunities that their parents don't currently have. A higher minium wage would let parents make ends meet without having to abandon their children, and less financial stress makes for happier relationships and better health. Educating people in school about debt management and about the impact of their choices would also help out a lot.

There are things we can do to improve the opportunity of people to make those good choices that keep one out of poverty. You're right that wealth is no zero-sum game, but there's something fundamentally wrong with our society that makes us think that the biggest pile is a greater sign of efficiency than the highest tide.

Re:

[ArcherB]

There is a limited amount of wealth in our society. It is not an entirely zero-sum game, but it is true that the more wealth the richest have, the less the rest of us have. If you were to take half the money of the richest 10% of Americans and spread it out among the poorest 40%, you'd probably take one of the biggest steps in history towards eliminating poverty.

What would that amount to? Without researching the numbers, you might end up giving each of the poorest 40% about $20-$200 each. What about those

Sorry, you're completely wrong.

[paladinwannabe2]

There is a limited amount of wealth in our society. It is not an entirely zero-sum game, but it is true that the more wealth the richest have, the less the rest of us have.

For proof that you're incorrect, I ask you to compare America today to America 50 years ago. I posit that we are immensly richer now than we were then as a society- the improvements in medicine, technology, and manufacturing allow us to have much better goods for a smaller percentage of our income now than ever before in human history. What is that but the creation of wealth? How, then, can you say that wealth in our society is limited? The amount of wealth in our society is constantly rising, and i

Redistribution as the cure-all! Except, not.

[FooAtWFU]

If you were to take half the money of the richest 10% of Americans and spread it out among the poorest 40%, you'd probably take one of the biggest steps in history towards eliminating poverty.

There once was a country called Zimbabwe. It was a decent country, physically, with plenty of natural resources (mineral and agricultural). It had a cool pair of rivers named the Limpopo and Zambezi. They had some very rich white people with lots of land (<1% of people owned 70% of the land) who had moved in during the colonial era, and some very very poor black Africans. One day, when the black African majority had gained power, they decided, "This is unfair. We will redistribute the wealth in this country." And so they distributed the wealth (mostly the land), taking from the rich and giving to the poor. And when they started, the rich white people saw what was happening, and they left, and the land was redistributed.

Zimbabwe is now infamous for having what is possibly the world's most messed-up economy. Their inflation rate was 1204.6% a year as of last August. Poverty is everywhere and only getting worse. And, of course, no one in their right mind is going to invest anything in the country. As Wikipedia puts it:

The scale of the drop in farm output has produced widespread claims by aid agencies of starvation and famine. However Mugabe's expulsion of the international media has prevented full analysis of the scale of the famine and the resultant deaths. What is not in dispute is that a country once so rich in agricultural produce that it was dubbed the "bread basket" of Southern Africa, is now struggling to feed its own population. A staggering 45 percent of the population is considered malnourished. Foreign tourism has also plummeted, costing tens of millions of dollars a year in lost revenue.

For reference, the CIA World Factbook places their Gini index at 56.8, as of 2003.

Typical straw man

[Flying pig]

Nobody said that - you are just creating a straw man to knock down. Correlation is correlation, it cannot be direct or indirect. Either variable a has a positive or negative correlation with respect to variable b, with an given level of significance, or it does not. There is no "direct or indirect" about it.

Causality is different, of course, though "indirect cause" is a very medieval concept.

I don't think anybody would suggest that paying a banker a lot of money will suddenly cause someone to become a street robber. But if there is a correlation become income inequality and crime, and given the high cost of crime, there is a case for investigating the nature of any relationship.

As an example, it is known that high incomes in the City of London are associated with cocaine use. This inevitably brings rich people into contact with drug dealers. Given the profits to be made, it might be that the existence of a rich and rather well protected class of drug users made them a very attractive target for drug dealers, causing increased competition for access to this market. Since drug dealing is an illegal, unregulated market, this might cause more turf wars and therefore more visible drug-related crime. That is a possible chain of causation which, if correct, could have implications for policy on drugs (e.g. toleration and a legalised market.)

The US has, I believe, nearly 2 000 000 people in prison. This is a big enougfh cost item that it needs proper study.

Re:Typical straw man

[Rob the Bold]

The US has, I believe, nearly 2 000 000 people in prison. This is a big enougfh cost item that it needs proper study.

A little over a decade ago, I was asked to do a little research. I worked at a company that put phones in jails for prisoners to call their moms, wives and girlfriends (collect). Boss wanted to find proof that this was a growth industry. I was the only engineer there, so math-related problem came to me. A little digging at the library showed that the population of at federal, state, county and local detention facilities was roughly doubling every 10 years.

Good news for the company: customer base was growing faster than US population at large. Bad news for everyone else: if trend continued everyone would be in jail sometime around 2070. I assumed (to myself) that this trend couldn't coninue for that long . . .

I hadn't checked the numbers lately, but in the mid 90s the population was about 1 million. So if your 2 million figure is right, we're still on track.

Re:Correlation... causation

[WhiplashII]

The other crazy thing he says is that based on the data element:

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.

he concludes:

that a nation may be collectively better off (using some abstract measure of well-being) with a smaller, more evenly divided pie than with a larger pie that's sliced less equitably

Didn't we just establish that people are unhappy unless they make more than their neighbor? Equivalence is not enough - just ask your neighbor! So the real result of this is that we should never publish who received the salary, so that you can assume that you are still the highest paid among your peers.

And that, I think are the key words: your peers. None of us aspire to being Trump - not with that hair. But we want to make more than our peers do - that's a common enough aspiration.

Re:Correlation... causation

[BeBoxer]

I would attribute it more to ineffective police and court systems and massive corruption as opposed to an income disparity.

Because clearly, there is no relationship between these three. How could there possibly be a relationship between having lots of desparately poor people and an overworked/ineffective court system? Or between having obscenely rich folks and corruption?