Should capitalist gain be limitless?

[orpheus last chant]

Everyone knows of filthy rich individuals, from the news, and so on. On a visceral level, my reaction is negative. It's not out of envy, but the same feeling I get when I see waste. There seems to be something wrong for people to live under the poverty line in the same world with people who simply have more money then they could use by any reasonable understanding of the expression "fulfilling every need and desire". We're talking Nero, emperor of Rome level here.

So what options could there be? Allowing people to reach a certain sum of money and then taking money above that as a tax?

What I find more disturbing is that, in most capitalist countries, once you reach a certain level of wealth, then you do not need to expend any meaningful energy to gain more. Meaning, money makes more money. The old adage: What's hard isn't to get billions of dollars, it's to get the first one. The growth vastly exceedes the cost it takes to gain more (hire a good stocks agent?). While at the same time, for people under the poverty line, no matter how much they struggle, the effort they put to keep themselves afloat rarely if ever lets them get out. Note, we're not talking about the burgeois here, but people who barely scrape enough to live.

What's even more disturbing is that with wealth, comes the power to control the rules of the game. Meaning, one can control who gets to play at the bigguns table. So effectively, by sheer existing, some players restrict the possibility of other players to reach the same potential.

It often disturbs me that the big players often get what the small players will never achieve: massive tax cuts, leniency, importance. It's easy to sack an individual, it's not so easy to sack an entire industry upon a country survives on.
There's also the monopoly effect, but enough has been said about that.

So effectively, shouldn't there be a limit to wealth? Now, there are two options in doing that. Either there's a magical amount of money no one should own more of (the usual countrargument). Or a system of taxation that's not only proportional (poor man pays 10% of salary, rich man pays 10% of money earned) but also dependant on actual value of money - poor man pays nothing, rich man pays 40%, filthy rich man pays 80%. So effectively, for a filthy rich man to become even richer (what was before incredibly easy as money breeds money) actually gets back to a sort of fairness as you have to try harder to get the same amount of money.

Now, I don't know much politics, and maybe my idea isn't original at all (most likely). So what counterarguments could there be. AFAIK, there's a similar system in Finland (very few finish people are filthy rich, in the dozens, and very few extremely poor)

[Stinger]

Yes. If I start a company, put up all the risk and work my butt off, then I should be allowed to keep gain. You betcha ya. The vast majority of businesses fail. Who do you think absorbs all those losses?

I have no problem with taxes. Taxes are a burden and they hurt business. They hurt the ability of the business to hire additional workers and innovate. However, IMO, they are necessary for society to function.

And money does not make money. I see people who make a lot of money and then lose it all the time.

How do some people "restrict the possibility of other players to reach the same potential?"

[Derrick Lang]

Stinger has pretty much said what I was going to say (although I suspect he may be far more market oriented than I am). All I can say:

1. The Nero example fails because he was a tyrant and a looter. Rich people create jobs, their investments allow companies to function, and they offer products that the public wants (think JK Rowling). They don't take billions and bury it in the backyard. The only issue at hand I can see is idle land. I'm no Georgist, but I think too much idle land can be devastating for a society.

2. In my opinion, it is immoral to tax away wealth, but not tax it. I take an Adam Smith position. I'll let him say it:
I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities...

II. The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person...

III. Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay...

IV. Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible, over and above what it brings into the treasury of the state.

First, the levying of it may require a great number of officers... Secondly, it may obstruct the industry of the people, and discourage them from...business... Thirdly, by the forfeitures and other penalties which those unfortunate individ-uals incur who attempt unsuccessfully to evade the tax, it may frequently ruin them, and thereby put an end to the benefit which the community might have received from the employment of their capitals... Fourthly, by subjecting the people to the frequent visits and the odious examination of the tax-gatherers, it may expose them to much unnecessary trouble...

The Wealth of Nations, Book V Chapter II Pt II

3. Poverty is relative. Every millionaire on the face of the planet is impoverished compared to Bill Gates. I think you mean subsistence. In America, the poor are better off than the middle class in some countries. Socialism and expropriation are not the answer. Government, make that non-corrupt government, the market, education, hard work, family values (real ones, not the right-wing nonsense), allocation of resources, are the answer. Simply taking money and re-distributing it fails, and fails badly. Even Sweden, glorious social-democratic Sweden, is privatizing a lot and want to encourage the entrepreneurial spirit. When you look at rich person, you must realize that no matter their personality, if they got rich legitimately, in the West, or certain non-Western countries, they are already making a contribution, by the taxes from their income, by using resources to contract labor and produce, by offering the public want it wants, by contributing to the cycle. At the very least, look at corrupt rich people (Sultans, dictators, violent criminals) in a different light than celebrities, businessmen, etc. Rich people pay most of the taxes (41% of Americans don't even have to pay federal income tax)

4. I don't like seeing suffering people either. I don't like living in a world where it exists, but punishing others is the Road to Serfdom (Props to Hayek). Government can't subsume our moral duty, it tries, but often fails when efficiency (a la taxation for civic services) isn't the main issue (such as welfare).

5. I just saw your location, Romania. No doubt, if you are a native, your view of wealth is subject to the fact that the Romanian economy is less stable and there is a more corrupt and less stable state than in US/Canada/Western Europe/Japan etc. No doubt, my view is subject to me being an American. I will say this: without effective government capitalism, legitimate capitalism, can't survive, Ayn Rand knew it, I believe it, and the Eastern black evinces the fact. I hope things become better.

So effectively, shouldn't there be a limit to wealth?

No. Although, Adam Smith lackey that I am, I wouldn't disagree with this:
The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion

http://www.adamsmith.org/smith/won-b5-c2-article-1-ss3.htm

[orpheus last chant]

How do some people "restrict the possibility of other players to reach the same potential?"

Monopoly. I remember reading how Microsoft managed to monopolise the entire computer world during the late 80s and early 90s: buying off the competition, effectively driving small buisnesses out of the field by blocking their access to the market, seeping into every possible niche (like for example, getting a goverment grant for Windows to be on every school computer/state library) etc.

I also remember reading they got some pesky fines for these practices, but the fines were paid, yet the result remained - microsoft has become ubiquitous, and the game has ended. Nobody can break through this market.

[Stinger]

How do some people "restrict the possibility of other players to reach the same potential?"

Monopoly. I remember reading how Microsoft managed to monopolise the entire computer world during the late 80s and early 90s: buying off the competition, effectively driving small buisnesses out of the field by blocking their access to the market, seeping into every possible niche (like for example, getting a goverment grant for Windows to be on every school computer/state library) etc.

I also remember reading they got some pesky fines for these practices, but the fines were paid, yet the result remained - microsoft has become ubiquitous, and the game has ended. Nobody can break through this market. It is the nature of business to grow, seek monopoly, and limit competition. However, it is the job of government to regulate and open up competition. Maybe the US government has been too lax on Microsoft. However, their product is well liked here. I need a new computer. And I'm looking at a Mac. Microsoft won't be in the dominant position forever. No company ever is.

[Derrick Lang]

It is the nature of business to grow, seek monopoly, and limit competition. However, it is the job of government to regulate and open up competition. Maybe the US government has been too lax on Microsoft. However, their product is well liked here. I need a new computer. And I'm looking at a Mac. Microsoft won't be in the dominant position forever. No company ever is.

I'd say the DOJ took them to the woodshed. They have been pretty rough on them, at least as of the 90's. Microsoft did engage in unsavory practices, but nothing can change the fact that they are just preferred by the average citizen. There is talk of Linux, but many don't have the time nor patience to work with it. Firefox* is an example of innovative competition and it is slowly eating away at IE's market share, the same way Google made MSN look like silly (although not as fast).


*I'm a hardcore Mozilla supporter, so I'm biased from the outset.

[Loren Pechtel]

Consider how that rich person makes his money grow:

He invests it. That means the creation of new means of production which benefits everybody, not just the rich person.

When you invest money the objective is to gain *PART* of the increase in productivity that the money permits.


I'm sure there will be some who point out that most investing is of already-existing stock shares and thus doesn't produce new means of production. True but that's simply a step along the way--the secondary market in stock is necessary to support a good primary market in stock and this primary market in stock is a big driving force in the creation of new means of production.

[Stinger]

[QUOTE=Stinger;4507425]
Monopoly. I remember reading how Microsoft managed to monopolise the entire computer world during the late 80s and early 90s: buying off the competition, effectively driving small buisnesses out of the field by blocking their access to the market...
{snipped} Another thing: what is wrong with buying off your competition? It is the business's decision to sell. Actually, a great many entrepreneurs start new businesses with the express hope that their competition will buy them out. In a free market, all businesses are for sale for a certain price. And this is a good thing for the businesses. I know that I was ecstatic when I sold my small business to a large competitor. And I'm sure that they are making more money for the business than I did. But that's okay with me. I got the price that I wanted and I'm now I'm a happy wage slave.

[toth8]

So effectively, shouldn't there be a limit to wealth?

No.

Now, there are two options in doing that. Either there's a magical amount of money no one should own more of (the usual countrargument). Or a system of taxation that's not only proportional (poor man pays 10% of salary, rich man pays 10% of money earned) but also dependant on actual value of money - poor man pays nothing, rich man pays 40%, filthy rich man pays 80%. So effectively, for a filthy rich man to become even richer (what was before incredibly easy as money breeds money) actually gets back to a sort of fairness as you have to try harder to get the same amount of money.

Taxation is robbery. It's a cancer on the world.

[Preno]

No, capitalist gain should not be limitless. In fact, there should be no such thing as 'capitalist gain'.

Capitalists get their reward primarily from owning something, not from doing something (by 'primarily' I mean that even if they do nothing and hire someone to manage their wealth, their wealth will likely grow, or at the very least they will be able to live off it). In essence, they have been rewarded for a one-time act - however arduous - by being given the right to perpetual ownership, so whatever the fair compensation for that one-time act has been, they are bound to exceed it (in some cases very soon) and continue earning money for nothing (cue Dire Straits). Thus, if you criterion for judging economic systems is fairness, capitalism fails quite miserably. And the important thing to realize is that this does not happen only in monopolized markets - in every market, people who own the means of production are partly rewarded simply for that (well, in proportion to how available the means of production are to the population - people who sell home-made cookies obviously aren't particularly rewarded for owning a stove).

And by a reward being fair, I mean that it is in some sense proportionate to either the effort or the work done. Now, critics of course say that it is difficult, if not impossible, to precisely say what is proportionate and what isn't, but a) it may be possible to determine approximately which jobs are relatively proportionately rewarded (i.e., assuming that the reward R1 for job A is proportionate, is the reward R2 for job B proportionate?), b) it certainly is easy to observe that certain rewards are prima facie disproportionate. In fact, all that matters is being relatively proportional, because it is the relative, not the absolute values that determine which distribution of rewards in a society is to be considered fair.

(Let me pre-empt one argument straightaway - it does not matter "who says what is fair and what isn't", that's up to discussion. This is a criterion for comparing economic systems that we use to discuss their relative merits, not necessarily a criterion that the economic systems themselves must use.)

So, it is possible to limit the reward capitalists get, but this does not solve the fundamental problem of them being rewarded for ownership, not for work (although ownership is typically a result of work). It can at best attempt to emulate a fair system.

[Stinger]

So effectively, shouldn't there be a limit to wealth?

No.

Now, there are two options in doing that. Either there's a magical amount of money no one should own more of (the usual countrargument). Or a system of taxation that's not only proportional (poor man pays 10% of salary, rich man pays 10% of money earned) but also dependant on actual value of money - poor man pays nothing, rich man pays 40%, filthy rich man pays 80%. So effectively, for a filthy rich man to become even richer (what was before incredibly easy as money breeds money) actually gets back to a sort of fairness as you have to try harder to get the same amount of money.

Taxation is robbery. It's a cancer on the world. I agree with you all the way. I think that a much better system is the one in England, the one documented by the great historian JK Rowland. Over there, the only people who pay taxes are the muggles. Even the common wizards don't have to pay any taxes. The Minstery of Magic, Public Works, and all other public services are provided by the magicians, and they don't require any tax dollars. The magicians get the public services that they need, but they don't have to pay for it. I guess that even Hogwarts is provided free of charge for the wizards.

[epepke]

I get irritated when I see this objection.

Do you work in an office building? Well, then, who exactly did you think paid to build it? Someone with a lot of money, that's who. Have you built an office building? Did you get together with a bunch of middle-class people and all chip in a buck or two? Or do you think that the Gubmint should just poot them out because they are so nice and sweet?

[Axulus]

Consider how that rich person makes his money grow:

He invests it. That means the creation of new means of production which benefits everybody, not just the rich person.

When you invest money the objective is to gain *PART* of the increase in productivity that the money permits.


I'm sure there will be some who point out that most investing is of already-existing stock shares and thus doesn't produce new means of production. True but that's simply a step along the way--the secondary market in stock is necessary to support a good primary market in stock and this primary market in stock is a big driving force in the creation of new means of production.

Not to mention that a high value to stock in the secondary market (meaning a lower rate of return) will allow any new offerings to attract more money than they otherwise would. This is because investors will bid up the price of any new offering to offer a comparative return with other, similar investments.

To make it clearer what I am saying, look at the debt market. If I buy bonds that are available in the secondary market, my purchase ever so slightly decreases the interest rate (by slightly increasing the demand for debt). With a lower interest rate, an unrelated business will be able to borrow slightly more money and still make its interest payments, thus increasing the amount of capital available to it ever so slightly that can be used to expand production, hire more workers etc.

[Bonniedundee]

Certainly there returns and freedom on capital and labour should be limitless and have no restrictions or regulations on it whatsoever. But this far from enirching the capitalist will destroy him as capital has to compete for labour rather than vice versa and the returns of capital will drop to almost nothing.

On land I'm not sure, it is not a product of your labour and should not be considered property like capital or labour, but I don't know which solution to this I quite favour.

If I had to choose I'd probably go for the Ingalls-Tucker occupancy and use ie mutualist idea, but the Georgism(or as it should be called Lockeanism properly applied.)with a land value tax on site and ground rent is almost as good in my opinion.

[premjan]

Gain should never be limited, but where appropriate, can be taxed. Eliminating poverty can't be done by redistributing wealth, as that effectively feeds a man for a day but does not teach him how to eat tomorrow. It has to be done by creating a better or different kind of economy.

[His Noodly Appendage]

Inflation ensures that accrued wealth must be invested rather than hoarded.

If you're making a billion dollars a year, you need to be spending a billion dollars a year, or your money just shrivels up and becomes worthless.

And if you're on the top of the heap, the money you spend must, by definition, be headed downwards, where it is most needed. Money in motion is a good thing.

If you want to rig the system for social justice, encourage people to spend their money near the bottom of the economy rather than near the top.

How's this for a silly idea: tax investment in very large companies, and use the money to subsidise investment in very small ones (on some kind of sliding scale). Presumably with rules exempting investment in subsidiaries from any subsidy, and possibly factoring in the investor's own income...

[EricK]

Money in motion is a good thing.


If money in motion is a good thing can any meaning be applied to phrases like "government waste" or "a waste of taxpayers' money". The sort of schemes these get applied to do move money around and the money doesn't end up being hoarded either.

[His Noodly Appendage]

Good question.

[Metaphor]

Money in motion is a good thing.


If money in motion is a good thing can any meaning be applied to phrases like "government waste" or "a waste of taxpayers' money". The sort of schemes these get applied to do move money around and the money doesn't end up being hoarded either.

Actually that is a good question. In the money-go-round of the economy, money is useful when it is traded, no matter where it ends up.

For example, if I start a software company that eventually fails, I've still provided employment to x people for x years.

[Derrick Lang]

If money in motion is a good thing can any meaning be applied to phrases like "government waste" or "a waste of taxpayers' money". The sort of schemes these get applied to do move money around and the money doesn't end up being hoarded either.

Government does not create wealth (no labor for remuneration, no production). It simply gains revenue from taxation, monopolization, and other means. The government can run a deficit because, unlike a wasteful corporation or individual, they rarely are held into account for their waste. A corporation or individual doesn't simply spend money to spend it. An example of government waste, and this does happen, "$1200 for a toilet. $2,000 for a tarp." Neither of these things retail for that price and neither can produce a return on its investment, and can lead to inflation. Whereas actually saving and getting rid of the deficit would actually bring the government back in black (think of a person who lives off credit cards, but has no perpetual income, being offered many new cards). Now if someone is a believer in supply-side economics that is a whole other ballgame. I suppose they could argue that putting billions in the hands of corporations, who increase executive salaries, means that executives have more to contribute to the economy. Because, for example, while Exxon made more profits last year than any corporation in the history of the world, they needed government subsidies for (insert).

If you want to see government waste: http://www.cagw.org/site/PageServer?pagename=reports_pigbook2006
The Congressional Pig Book is CAGW's annual compilation of the pork-barrel projects in the federal budget. The 2006 Pig Book identified 9,963 projects in the 11 appropriations bills that constitute the discretionary portion of the federal budget for fiscal 2006, costing taxpayers $29 billion. A "pork" project is a line-item in an appropriations bill that designates tax dollars for a specific purpose in circumvention of established budgetary procedures. To qualify as pork, a project must meet one of seven criteria that were developed in 1991 by CAGW and the Congressional Porkbusters Coalition.


For example, if I start a software company that eventually fails, I've still provided employment to x people for x years.

What about investors that own worthless shares? What about the bank that can't recoup its loan? The economy also depends on consumption (savings can actually be pernicious). If those employees can't get other jobs, even if for a single pay cycle, then that means less consumption. Also the employees might make less at a new job.

[Metaphor]

What about investors that own worthless shares? What about the bank that can't recoup its loan? The economy also depends on consumption (savings can actually be pernicious). If those employees can't get other jobs, even if for a single pay cycle, then that means less consumption. Also the employees might make less at a new job.

I'm comparing it to a situation where the money is really and truly wasted - like, for an extreme case, being burned.

[Derrick Lang]

I'm comparing it to a situation where the money is really and truly wasted - like, for an extreme case, being burned.

In that case, I see your point.

[Gooch's dad]

I'm all for a 90% tax on any annual income over $10 million USD, including capital gains. This would help to reduce the marginal tax rate on the middle class, which has gone up drastically over the last 30 years.

We had very high marginal tax rates on the very rich, throughout the 50's and 60's. These were hardly periods of slow growth. For the fundamentalist marketeers to claim that high taxes=stagnation is simply unsupportable.

[untermensche]

Taxation is a crude fix for serious societal malfunctions.

It will never be more than a crude fix.

[coloradoatheist]

I'm all for a 90% tax on any annual income over $10 million USD, including capital gains. This would help to reduce the marginal tax rate on the middle class, which has gone up drastically over the last 30 years.

We had very high marginal tax rates on the very rich, throughout the 50's and 60's. These were hardly periods of slow growth. For the fundamentalist marketeers to claim that high taxes=stagnation is simply unsupportable.


You do that and suddenly the people you want to tax now live in Dubai or the Caribbean or some other country. France is having the problem with that where they are losing rich people every day. Plus tax rates themselves don't mean as much as effective tax rate.


Mike

[premjan]

There's no point on penalizing the wealthy especially if they are business creators. You could reasonably tax certain types of consumption on their part, especially for very successful businesses as they are in a position to give something back to society.

[Metaphor]

I'm all for a 90% tax on any annual income over $10 million USD, including capital gains. This would help to reduce the marginal tax rate on the middle class, which has gone up drastically over the last 30 years.

We had very high marginal tax rates on the very rich, throughout the 50's and 60's. These were hardly periods of slow growth. For the fundamentalist marketeers to claim that high taxes=stagnation is simply unsupportable.


You do that and suddenly the people you want to tax now live in Dubai or the Caribbean or some other country. France is having the problem with that where they are losing rich people every day. Plus tax rates themselves don't mean as much as effective tax rate.


Mike

It might drive SOME people away, but let me put it this way: if you like your social freedoms at least as much as your eoonomic ones, you're not going to be moving to Dubai.

And if it drove Bill O'Reilly to move to Dubai and ended his relentless garbage clogging airwaves....talk about an unexpected benefit.

[Metaphor]

There's no point on penalizing the wealthy especially if they are business creators. You could reasonably tax certain types of consumption on their part, especially for very successful businesses as they are in a position to give something back to society.

Warren Buffet didn't create any businesses or come up with some brilliant idea. He made money by having money (ie every Republican's wet dream).

[coloradoatheist]

You do that and suddenly the people you want to tax now live in Dubai or the Caribbean or some other country. France is having the problem with that where they are losing rich people every day. Plus tax rates themselves don't mean as much as effective tax rate.


Mike

It might drive SOME people away, but let me put it this way: if you like your social freedoms at least as much as your eoonomic ones, you're not going to be moving to Dubai.

And if it drove Bill O'Reilly to move to Dubai and ended his relentless garbage clogging airwaves....talk about an unexpected benefit.

With the virtualness of office today people can have an address in one location and spend their time at another.

Mike

[Metaphor]

It might drive SOME people away, but let me put it this way: if you like your social freedoms at least as much as your eoonomic ones, you're not going to be moving to Dubai.

And if it drove Bill O'Reilly to move to Dubai and ended his relentless garbage clogging airwaves....talk about an unexpected benefit.

With the virtualness of office today people can have an address in one location and spend their time at another.

Mike

It is one thing to incorporate a company in another country and trade in the US. It is quite another to actually be a permanent resident of another country but still somehow live in the US.

[premjan]

Buffett is a creator of investment firms, though I suppose investment is a soft way of making money.

[Loren Pechtel]

I'm all for a 90% tax on any annual income over $10 million USD, including capital gains. This would help to reduce the marginal tax rate on the middle class, which has gone up drastically over the last 30 years.

Nope. It would destroy the middle class when the economy crashed.

Eat the rich and when they're gone there won't be the capital to keep society running.

We had very high marginal tax rates on the very rich, throughout the 50's and 60's. These were hardly periods of slow growth. For the fundamentalist marketeers to claim that high taxes=stagnation is simply unsupportable.

Except we didn't have very high tax rates back then. That's what was on the books but there were so many loopholes that people didn't actually pay them.

Consider the effect of Reagan's tax reorganization. It was *NOT* a tax cut as the tax take remained about the same. Rather, he lowered tax rates and closed loopholes. Yet the official top rate went *WAY* down.

[Loren Pechtel]

There's no point on penalizing the wealthy especially if they are business creators. You could reasonably tax certain types of consumption on their part, especially for very successful businesses as they are in a position to give something back to society.

Yes. I've been advocating something along these lines for a long time.

Abolish IRA's and 401k's. Instead, give everyone a tax-free account. Any income is deposited directly into the account, you don't get it directly. You can freely invest from this account, the proceeds go back into it.

You pay tax on the money you draw out of the account to actually spend.

[Derrick Lang]

Warren Buffet didn't create any businesses or come up with some brilliant idea. He made money by having money (ie every Republican's wet dream).

1. Warren is an example of The American Dream. The guy made his first investments at the age of 11 (I didn't even know what the word meant until I was 16). He grew up in a stable middle-class home.

2. He did create a business: Berkshire Hathaway. He did not create it from scratch, he saved it, and created a behemoth (like Ray Kroc did for McDonald's) .

3. I can't think of a worse example to use for classist purposes than Warren Buffet: He is a man who lives in a modest home that he bought in the 1960s, he is magnanimous and gave away most of his wealth, he is an investor, which is one of the points of having a wealthy class: investment. A business first and foremost needs capital and enterprise skill if it wants to establish itself and Buffet mastered those. I can't believe you are using an uber-investor to show the problems with wealth. I must be missing something.

If you are going to cherry pick rich people you may want to use low millionaires who are wasting their money [Paris Hilton, but not the Hilton Family). Billionaires are pretty much out of the question.

"I want to give my kids enough so that they could feel that they could do anything, but not so much that they could do nothing"
-Warren Buffet [ http://video.google.com/videoplay?docid=515260011274566220 ]


I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It's like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GNP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when my wife and I die. (Lowe 1997:165-166)
- Warren Buffet

[unrealist42]

At a certain point the concentration of capital can become detrimental to the economic well being of a society. When a few people have all the money and concentrate it in the capital markets, the amount invested in actual productivity growth slows to nothing as other markets contract due to a lack of money circulating.

It happened all the time in the 1900s.

[Loren Pechtel]

At a certain point the concentration of capital can become detrimental to the economic well being of a society. When a few people have all the money and concentrate it in the capital markets, the amount invested in actual productivity growth slows to nothing as other markets contract due to a lack of money circulating.

It happened all the time in the 1900s.

It happened back then because there was so much less capital that such concentrations were possible.

[Metaphor]

I can't believe you are using an uber-investor to show the problems with wealth. I must be missing something.


Um, you are clearly missing something, as I didn't say that I was using Warren Buffet to illustrate classism. I was using him to illustrate he made money by having money - as all rich people do. But Buffet didn't even get his initial money from doing something like Bill Gates, he was just extraordinarily gifted at playing the stock market.

[Derrick Lang]

I can't believe you are using an uber-investor to show the problems with wealth. I must be missing something.


Um, you are clearly missing something, as I didn't say that I was using Warren Buffet to illustrate classism. I was using him to illustrate he made money by having money - as all rich people do. But Buffet didn't even get his initial money from doing something like Bill Gates, he was just extraordinarily gifted at playing the stock market.

(The whole Republican wet dream thing strikes me as classism. If not, I apologize)

As for making money by having money, the same goes for Bill Gates. For everyone. Even a poor person playing the lottery has to put money into an actual ticket. The whole point of investment is to gain, or else people wouldn't take the risk (the safest bet of all: CDs). He didn't come into this world rich, he worked and was astute. He made money by being a genius, just like Bill Gates. Bill Gates income is derived from his investments, buttressed by his supreme leadership ability. As for the actual product, there are thousands of others who do the legwork.

The best example of a old fashioned, product to the public, billionaire is J.K Rowling. It's funny because she illustrates the bankruptcy of many a leftist (not saying you are a leftist). When it comes to expropriating property of the rich, some will go so far as to say if one million people want to give a certain amount of money (x) to a another person that this should not be allowed. Their "labor" arguments fall apart when it comes to the labor of celebs. Most of the argument is simply hatred of the rich, and nothing more (once again, this is not aimed at You, but is a generalization).

[exile]

The thing I object to is inherited wealth. If someone works hard to build up a business (though he may have had a truckload of luck - I know people who worked round the clock only to have their business collapse through no fault of their own) then there is a justification for him to accumulate wealth and be allowed to enjoy it (subject IMO to a joint responsibility for the welfare and defence of society which is discharged through taxation).

But - what is the justification for someone to sit on their behind and enjoy inherited wealth? Saw a magazine article called something like "The New Slackers" about rich kids swanning around Europe for 6 months of the year on an allowance or inheritance from their daddies. Bear in mind that this is paid for out of business profits which could be used instead to increase wages of the employees or the dividends paid to stockholders.

[Derrick Lang]

But - what is the justification for someone to sit on their behind and enjoy inherited wealth? Saw a magazine article called something like "The New Slackers" about rich kids swanning around Europe for 6 months of the year on an allowance or inheritance from their daddies. Bear in mind that this is paid for out of business profits which could be used instead to increase wages of the employees or the dividends paid to stockholders.


No different than the middle-class parents who pay for their child to go to school when the poorer ones can't. Typically parents want their children to have experiences and will pay for it. If I had a kid there would be no end to the things I would buy for them, if I had money (I do not as I am poor). I pity the parent who puts the business before their kids.

I haven't heard of the article, but I have serious doubts that this is being paid out of business profits, if so that would be illegal. I suspect that it is from the parent's income, and not corporate funds, but I haven't heard of the article.

Rich kids are not the only slackers. Generation X and beyond consists of slackers spanning the class spectrum. Even lower middle-class young people can get away with slacking these days. In Japan and Italy it is not unusual for children in their 30s to live with their parents, pay no rent, and enjoy life. I actually support that. This notion of "I'm cutting you off at 18, welcome to the real world!" is a bunch of crap in my opinion. Life is short and a good parent would want to give their kid(s) everything possible, of course not to the point of incapacitating them though.

Bear this in mind, compared to the days before child labor laws, 11 year olds going to school, playing games, and bringing no income is considered "slacking off".

[exile]

In the UK at least, a business owner can draw income from
his business profits as long as he pays income tax on it. Isn't it the same in the US?

Anyway the gist of the article was about rich kids living into their 20s or 30s without ever having to do a hand's turn of work. This is a bit different to a "gap year".

I had assumed that most people were uncomfortable with the idea of people idling at the expense of others, whether they are living on welfare or "on their daddy's yacht". Maybe the Protestant Work Ethic isn't as strong as I thought.

The main danger of inherited wealth is that power tends to go with wealth - and a wealthy family can become a kind of aristocracy and therefore acquire political power. Think of the Roosevelts, the Kennedys and the Bushes. The US constitution has checks and balances to limit this - but can it stop the exercise of power by the wealthy through financial donations and the ownership of media?

[Derrick Lang]

In the UK at least, a business owner can draw income from
his business profits as long as he pays income tax on it. Isn't it the same in the US?


To be honest, I'm not sure. Of course the only way a business owner gets paid is through profits. I read your post as saying that an owner was using capital or profits for personal use without authorization. This may have been me reading too much into it from my American point-of-view.


Anyway the gist of the article was about rich kids living into their 20s or 30s without ever having to do a hand's turn of work. This is a bit different to a "gap year".


I don't see a true problem with this. As an American, I think the Puritan/Protestant work ethic is really leading to some serious social issues, whereas in some non-English speaking countries (ex: France, Denmark), people know how to relax and take life for what it is. I suppose these kids are going to take over the business. Are they in school or educated? Rarely do people, rich or middle-class, do nothing. They might not do income earning work, but they usually engage in some sort of activity, sitting on boards, something. But in the end, I can't see an issue with people just enjoying life versus working. For most people, work is nothing more than doing what one has to do to eat and live in a comfortable manner. For others, it is doing what they love and getting paid for it (artists oft fall into this category). We have one life to live, it makes sense to do what one wants and has the ability to do. I can't find fault with them.


I had assumed that most people were uncomfortable with the idea of people idling at the expense of others, whether they are living on welfare or "on their daddy's yacht". Maybe the Protestant Work Ethic isn't as strong as I thought.

As social animals, everyone lives off someone else, even government employees live off taxpayers. Some people just have it easier. In America, firefighters typically only work 96-120 days in a year, rarely half the year (in my city they work 24 hour shifts and are off for 48 hours and then they have every 5th day off, and while at work they sit around, all at taxpayer expense). Often what seems to be idling is actually providing something for someone else. Even someone who does nothing but sit around eating all day must buy food. As for inheritance, someone had to earn the wealth. Now, life insurance is another issue.


The main danger of inherited wealth is that power tends to go with wealth - and a wealthy family can become a kind of aristocracy and therefore acquire political power. Think of the Roosevelts, the Kennedys and the Bushes. The US constitution has checks and balances to limit this - but can it stop the exercise of power by the wealthy through financial donations and the ownership of media?

The problem with those examples is that the people put them there. Look at celebs who came from nothing. In America, we like celebrity, we are a culture built on the idea of the family business. These two things make us pine and glorify the rich and famous (not all Americans of course). The US constitution is not a check and balance on private citizens, checks and balances apply to the government only. To be fair, if you are going to use those examples, you should also mention the Clintons (who came from little, especially Bill), the Fords, etc, all who came from nothing or average backgrounds.

There are certain things only the wealthy and powerful can do. They own the media because that is what the population wants, they exist to serve the public and that increases their revenue and pleases their shareholders. There are many attempts at communal ownership (Public Access Television) and leftist "for the people" programming, it fails. This country is so diverse that public ownership often leads to stagnation (PBS is a prime example of this). I see nothing wrong with the rich being engaged in the political process. At least no more than Religious conservatives, homosexuals, drug users, and every other interest group. Think an atheist can get elected to the Senate or Presidency? Nope, the country is fairly unanimous on that, but the rich are divided, like the country. I don't expect the wealthy to vote themselves into poverty anymore than I expect Christians to vote themselves into bondage.

[Metaphor]

Um, you are clearly missing something, as I didn't say that I was using Warren Buffet to illustrate classism. I was using him to illustrate he made money by having money - as all rich people do. But Buffet didn't even get his initial money from doing something like Bill Gates, he was just extraordinarily gifted at playing the stock market.

(The whole Republican wet dream thing strikes me as classism. If not, I apologize)

As for making money by having money, the same goes for Bill Gates. For everyone. Even a poor person playing the lottery has to put money into an actual ticket. The whole point of investment is to gain, or else people wouldn't take the risk (the safest bet of all: CDs). He didn't come into this world rich, he worked and was astute. He made money by being a genius, just like Bill Gates. Bill Gates income is derived from his investments, buttressed by his supreme leadership ability. As for the actual product, there are thousands of others who do the legwork.

The best example of a old fashioned, product to the public, billionaire is J.K Rowling. It's funny because she illustrates the bankruptcy of many a leftist (not saying you are a leftist). When it comes to expropriating property of the rich, some will go so far as to say if one million people want to give a certain amount of money (x) to a another person that this should not be allowed. Their "labor" arguments fall apart when it comes to the labor of celebs. Most of the argument is simply hatred of the rich, and nothing more (once again, this is not aimed at You, but is a generalization).

The Republican quote is not about classism, it's about the mindset of Republicans.

I am, in fact, a leftist, but I think you're critique of left-wing celebrity worship is off. I don't think leftists particularly love celebrity, I think it is conservatives who dislike celebrity, in the sense that celebrities tend to be liberal AND they get a substantial portion of their income in wages, that is, their labour.

Now, whether anyone 'deserves' 70 billion dollars in wealth, no matter how hard they've worked is a matter for debate. But if it is the case that money makes money, then the poor will never be able to move up substantially. The working poor typically spend all their income just to stay alive - there isn't the odd million or so to sink into stocks and bonds.

[Derrick Lang]

The Republican quote is not about classism, it's about the mindset of Republicans.

I am, in fact, a leftist, but I think you're critique of left-wing celebrity worship is off. I don't think leftists particularly love celebrity, I think it is conservatives who dislike celebrity, in the sense that celebrities tend to be liberal AND they get a substantial portion of their income in wages, that is, their labour.

Now, whether anyone 'deserves' 70 billion dollars in wealth, no matter how hard they've worked is a matter for debate. But if it is the case that money makes money, then the poor will never be able to move up substantially. The working poor typically spend all their income just to stay alive - there isn't the odd million or so to sink into stocks and bonds.

1. That is not the mindset of the majority. I doubt even a significant minority. The average Republican is no more or less pro-capitalist than the average Democrat. What separates them are cultural issues. Both parties at the State and National levels are beholden to corporate interests. It's just a matter of which ones.

2. I wasn't referring to leftists loving celebrity, but Americans. I think leftists, due to their tendency to be academic or intellectual, are highly critical of it. I don't think conservatives dislike celebrity, as they are the ones supporting Hollywood along with the rest of middle America. Activists, no matter the wing, are against Hollywood for what it represents: godlessness, extreme wealth, hedonism, etc. They just come at it from different angles.

3. Deserving 70 billion is not a matter of debate. If they deserve it they deserve it. What is up for debate is how to tax the wealth. A person can still have 70 billion but get taxed out of it. There is no way other than taxation/expropriation to stop someone from legally obtaining 70 billion.

4. For one thing, the working poor would be less poor if they stopped having children. It is mind boggling how people will have children when they can barely support themselves. Other than that, re-distribution isn't going to solve the problem. Money is not actually the most important factor in reducing poverty. Marriage is one step (a shame religious conservatives have tainted the issue). Education is another. But if the wealthy are taxed out of income to re-invest then there aren't going to be many jobs for the educated outside of Academia or the Government. We are going to see increases in poverty for the simple fact that low skilled labor is being provided by illegal immigrants and foreign workers. If there are 12 million illegals working then that is 12 million jobs not going to 12 million low-skilled Americans. Of course, no illegals would mean that we would have to pay more for goods, but that doesn't bother me as much as having a permanent underclass.

Not that I have grand answers. I just know the old solution of "let government tax and spend" has failed more than enough ( New Deal, Great Society) to not be tried again. Government has to be involved of course.