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Old 10th March 2018, 10:42 AM   #161
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Originally Posted by kellyb View Post
Yeah, but does (for example) modest inflation encourage capital investment?
Investment protects capital against inflation, but nobody is going to invest if they don't see their production has a market. Much probably protective financial investments (which are not technically investments) will be the response to a little inflation.

Originally Posted by kellyb View Post
Has anyone ever sussed out the size of the effect there?
Which exact new taxation is being proposed and which use for the money gathered that way? Both are needed to reply to your question.
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Old 11th March 2018, 01:09 AM   #162
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The simple fact is that when a few people hold most of the money, there's less for everybody else:
Quote:
Take it from the world's third richest man, Warren Buffett, who recently noted that between 1982 and 2017, "the wealth of the 400 [richest people in America] increased 29-fold — from $93 billion to $2.7 trillion — while many millions of hardworking citizens remained stuck on an economic treadmill. During this period, the tsunami of wealth didn’t trickle down. It surged upward.”

The reality is the United States is now home to some of the worst income inequality in the developed world, and thanks to the recent passage of the Tax Cuts and Jobs Act, this wealth gap will grow exponentially wider.
https://www.salon.com/2018/03/10/inc...lieve_partner/
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Old 11th March 2018, 06:51 AM   #163
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Originally Posted by Bob001 View Post
The simple fact is that when a few people hold most of the money, there's less for everybody else:

https://www.salon.com/2018/03/10/inc...lieve_partner/
That certainly isn't addressed in that quote.
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Old 11th March 2018, 07:53 AM   #164
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Originally Posted by Bob001 View Post
The simple fact is that when a few people hold most of the money, there's less for everybody else:

https://www.salon.com/2018/03/10/inc...lieve_partner/
I asked this before about Bill Gates, and didn't get much of an answer: Why is Warren Buffet's opinion important?
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Old 11th March 2018, 09:09 AM   #165
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Originally Posted by theprestige View Post
I asked this before about Bill Gates, and didn't get much of an answer: Why is Warren Buffet's opinion important?
Well, as one of the wealthiest people in the history of the world, he has a pretty good understanding of how money works and how the existing legal and financial framework allowed him to accumulate such incomprehensible wealth. He is also in a unique position to observe its impact on the larger society. It is also not just his "opinion" that wealth in the U.S. has been concentrated into fewer hands over the last 30 years or so; it is a matter of indisputable fact. Whether we -- in a nation that treats equality as a founding principle -- should care is what's a matter of opinion.
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Old 11th March 2018, 09:19 AM   #166
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Originally Posted by theprestige View Post
I asked this before about Bill Gates, and didn't get much of an answer: Why is Warren Buffet's opinion important?
A common meme that appears when discussions of tax policy that re-distributes wealth reach a certain point is (and here I lump some together, and paraphrase):

"Liberals always want to take 'other people's ' money and give it to the poor, but never want to give up their own money- and in fact probably are just jealous and are looking to get some of that money for themselves without earning it"

Although this sentiment is certainly shared by a number of billionaires, the fact that Buffet, Gates, and some notable others (Zuckerberg) favor policies that would impact their wealth negatively, provides a counterpoint to that meme.
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Old 11th March 2018, 09:30 AM   #167
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Originally Posted by Distracted1 View Post
A common meme that appears when discussions of tax policy that re-distributes wealth reach a certain point is (and here I lump,some together, and paraphrase):

"Liberals always want to take 'other people's ' money and give it to the poor, but never want to give up their own money- and in fact probably are just jealous and are looking to get some of that money for themselves without earning it"

Although this sentiment is certainly shared by a number of billionaires, the fact that Buffet, Gates, and some notable others (Zuckerberg) favor policies that would impact their wealth negatively, provides a counterpoint to that meme.

The issue isn't a question of "taking other people's money" after they've got it. The issue is the complex interconnections of tax policy, corporate governance, anti-monopoly enforcement etc. that allow the concentration of wealth in fewer hands in the first place. None of that is cast in stone. Income tax rates could be higher (and were, for many years), inheritance tax rates could be higher (and also were, for many years), the responsibilities of corporations as defined by their enabling laws could be broader than just short-term returns to stockholders, there could be limits to the degree to which entities like Walmart, Microsoft, Google, Amazon are allowed to dominate their markets, etc., etc. What we've got isn't what we have to have.

Last edited by Bob001; 11th March 2018 at 09:31 AM.
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Old 11th March 2018, 09:36 AM   #168
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One example of the long-term social impact of a specific legal philosophy:
https://washingtonmonthly.com/2018/0...ng-of-america/
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Old 11th March 2018, 10:03 AM   #169
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Originally Posted by Bob001 View Post
The issue isn't a question of "taking other people's money" after they've got it. The issue is the complex interconnections of tax policy, corporate governance, anti-monopoly enforcement etc. that allow the concentration of wealth in fewer hands in the first place. None of that is cast in stone. Income tax rates could be higher (and were, for many years), inheritance tax rates could be higher (and also were, for many years), the responsibilities of corporations as defined by their enabling laws could be broader than just short-term returns to stockholders, there could be limits to the degree to which entities like Walmart, Microsoft, Google, Amazon are allowed to dominate their markets, etc., etc. What we've got isn't what we have to have.
I certainly am not suggesting it is.
I was simply responding to a question by a previous poster as to why the opinion of Bill Gates WRT such changes should matter.
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Old 11th March 2018, 10:30 AM   #170
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As the rest of the world becomes more open and economically free, and their average citizen leaves dirt-floor poverty, one would expect the number of billionaires to increase, as large corporations do a lot of the heavy lifting of providing things to the burgeoning middle classes.

Inequality is a class warfare leftover. The actual measurement one cares about, if one cares for the poor and the working man, is average health and longevity and nutrition and number of Playstations and TVs per household.

Because lots of billionaires and lots of that stuff are intimately tied together. Two and a half billion people struggled for decades under controlled economies until they opened up.
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Old 11th March 2018, 01:39 PM   #171
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Originally Posted by Beerina View Post
As the rest of the world becomes more open and economically free, and their average citizen leaves dirt-floor poverty, one would expect the number of billionaires to increase, as large corporations do a lot of the heavy lifting of providing things to the burgeoning middle classes.

Inequality is a class warfare leftover. The actual measurement one cares about, if one cares for the poor and the working man, is average health and longevity and nutrition and number of Playstations and TVs per household.

Because lots of billionaires and lots of that stuff are intimately tied together. Two and a half billion people struggled for decades under controlled economies until they opened up.
Wealth is always relative. The wealthiest emperor 100 years ago couldn't buy an x-ray or a penicillin shot. The question is still how should a society's wealth be distributed, and the choice is not a centralized economy or nothing. Canada, the UK, France, Germany, Japan etc., etc. are as free as the U.S. or more so, and they provide a stronger social safety net to all their citizens paid for by charging higher taxes to their wealthiest and by regulating employers more aggressively. Do you really think Jeff Bezos would work less if he was only worth $40 billion, and was required to give his warehouse workers better pay and benefits? The Walton family holds over $100 billion, and Walmart workers routinely qualify for Medicaid and food stamps. You think maybe the Walton children could get by with a little less? Kids graduate from state colleges with five-figure debts; a generation ago, tuition was cheap or even free because state colleges got more tax money. I repeat, the way things are is not the way things have to be, or the way they should be, or they way they are in other industrial countries.
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Old 12th March 2018, 01:55 AM   #172
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The kind of personality that amasses huge wealth often does so to keep score: there is an entire industry at any level of wealth that tries very hard to make top earners feel like they don't earn as much as their peers: that is why so many highly successful stock brokers are in massive debt.
But the system would work just as well if they could keep only, say, one third of their money as long as that would also apply to everyone else in their income bracket.
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Old 12th March 2018, 09:41 AM   #173
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Originally Posted by Bob001 View Post
Well, as one of the wealthiest people in the history of the world, he has a pretty good understanding of how money works and how the existing legal and financial framework allowed him to accumulate such incomprehensible wealth.
I'll stipulate that he's probably an expert on exploiting the system he was born into. I don't agree that this necessarily makes him an expert on the social and economic effects of the system, or of any other system.

Quote:
He is also in a unique position to observe its impact on the larger society.
Not really, no. We're all pretty equally well-positioned to observe the impact of money on society. One doesn't need to have a lot of it, to study its behavior and effects. Economics professors might have a more privileged view, but not because of their great wealth.

Quote:
It is also not just his "opinion" that wealth in the U.S. has been concentrated into fewer hands over the last 30 years or so; it is a matter of indisputable fact. Whether we -- in a nation that treats equality as a founding principle -- should care is what's a matter of opinion.
And that's the opinion I'm asking about.
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Old 12th March 2018, 02:35 PM   #174
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Originally Posted by theprestige View Post
.....
Not really, no. We're all pretty equally well-positioned to observe the impact of money on society. One doesn't need to have a lot of it, to study its behavior and effects. Economics professors might have a more privileged view, but not because of their great wealth.
....
I suspect Buffett knows plenty about how money and public policies related to it affect his businesses, competitors, employees and customers. He has spoken about these matters knowledgeably and persuasively.

But if WB doesn't win you over, how 'bout George Carlin?
https://www.youtube.com/watch?v=kXhZyAOuyhE
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Old 12th March 2018, 03:11 PM   #175
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Originally Posted by Bob001 View Post
I suspect Buffett knows plenty about how money and public policies related to it affect his businesses, competitors, employees and customers. He has spoken about these matters knowledgeably and persuasively.

But if WB doesn't win you over, how 'bout George Carlin?
https://www.youtube.com/watch?v=kXhZyAOuyhE
Appeal to authority is a fallacy, Bob.
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Old 13th March 2018, 12:42 AM   #176
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It's only a fallacy if the authority does not know what he's talking about.

Originally Posted by theprestige
And that's the opinion I'm asking about.
What opinion do you mean?

Quote:
Take it from the world's third richest man, Warren Buffett, who recently noted that between 1982 and 2017, "the wealth of the 400 [richest people in America] increased 29-fold - from $93 billion to $2.7 trillion - while many millions of hardworking citizens remained stuck on an economic treadmill. During this period, the tsunami of wealth didn’t trickle down. It surged upward.”
This opinion?
It seems to be a fact, not an opinion.

I don't get the "you want to take money away from some people and give it to others" argument either. Seems like the top earners have been taking money away from the bottom for quite a while and it's getting worse.
This is what Gates and Buffet are talking about and where they have experience. The very rich are favored by the system and are able to exploit the system in ways others cannot.

Looking at the USA, before the mid 90's the bottom 50% earned more than the top 1% measured as pre-tax national income. Since then the top 1% surpassed the bottom 50% and just kept going.

Income Inequality in the USA, 1974-2014

More here: World Wealth and Income Database.

Looking at the percentage change in income of the top 10% and the bottom 90% from 1948 to the early 80's, they kept track with each other. Then there was a sharp departure, with the bottom 90% stagnating and the top 10% climbing sharply.

The Mystery Of Income Inequality Broken Down To One Simple Chart

I believe that too much inequality is as bad as too little and somewhere between lies the ideal. You need enough money at the bottom so that poorer people can have a decent standard of living. There also seems to be a direct correlation between income inequality and crime, which should be no surprise.
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Old 13th March 2018, 03:03 AM   #177
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Originally Posted by Cheetah View Post
It's only a fallacy if the authority does not know what he's talking about.



What opinion do you mean?


This opinion?
It seems to be a fact, not an opinion.

I don't get the "you want to take money away from some people and give it to others" argument either. Seems like the top earners have been taking money away from the bottom for quite a while and it's getting worse.
This is what Gates and Buffet are talking about and where they have experience. The very rich are favored by the system and are able to exploit the system in ways others cannot.

Looking at the USA, before the mid 90's the bottom 50% earned more than the top 1% measured as pre-tax national income. Since then the top 1% surpassed the bottom 50% and just kept going.

Income Inequality in the USA, 1974-2014

More here: World Wealth and Income Database.

Looking at the percentage change in income of the top 10% and the bottom 90% from 1948 to the early 80's, they kept track with each other. Then there was a sharp departure, with the bottom 90% stagnating and the top 10% climbing sharply.

The Mystery Of Income Inequality Broken Down To One Simple Chart

I believe that too much inequality is as bad as too little and somewhere between lies the ideal. You need enough money at the bottom so that poorer people can have a decent standard of living. There also seems to be a direct correlation between income inequality and crime, which should be no surprise.
I think there is a dubious assumption in here about "trickling upward" and that there is "missing" income growth that the working class should have gotten but the wealthy gobbled it up instead.

If you look at total employee compensation as a share of revenue, you will find that total employee compensation has remained the same.

Charts like those are produced via fudging with numbers. Piketty and Saez like to use novel notions about income sharing units, EPI likes to mix and match price indexes, and they both like to exclude certain forms of income.

http://www.asymptosis.com/wp-content...ncome-dist.pdf
http://davidsplinter.com/AutenSplint...Inequality.pdf
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Old 13th March 2018, 07:18 AM   #178
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Originally Posted by Tsukasa Buddha View Post
I think there is a dubious assumption in here about "trickling upward" and that there is "missing" income growth that the working class should have gotten but the wealthy gobbled it up instead.

If you look at total employee compensation as a share of revenue, you will find that total employee compensation has remained the same.
....
But how is that compensation distributed? If 100 employees get $100 each, or the boss gets $1,000 and the rest get $91, it's still $10 grand, but the social impact isn't the same. The gap between executive pay and worker pay has accelerated enormously in recent years.
http://fortune.com/2017/04/19/execut...ation-ceo-pay/
https://www.huffingtonpost.com/entry...b0a40aa3acd1c9

It's also dubious to treat "wealth" and "income" interchangeably. Somebody working at a good job with overtime might have more income than a comfortable retiree who clips bond coupons. But one might have no savings, and the other has obvious wealth. Warren Buffett -- proponent of the "buy and hold" investment strategy -- could arrange his affairs so he wouldn't have any income in a given year. But you wouldn't compare him to a penniless homeless guy. The real problem is not just income, but the concentration and accumulation of wealth, which is the result of tax policies as much as anything else.
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Old 13th March 2018, 09:41 AM   #179
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Old 13th March 2018, 11:31 AM   #180
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Originally Posted by Bob001 View Post
But how is that compensation distributed? If 100 employees get $100 each, or the boss gets $1,000 and the rest get $91, it's still $10 grand, but the social impact isn't the same. The gap between executive pay and worker pay has accelerated enormously in recent years.
http://fortune.com/2017/04/19/execut...ation-ceo-pay/
https://www.huffingtonpost.com/entry...b0a40aa3acd1c9
Again, narrow, misleading statistics made by the EPI.

Quote:
In contrast, the BLS data for all CEOs says CEOs made on average $138,380 in 2003 and $178,400 in 2013. Thus, the pay of all CEOs rose by 29 percent, which is less than the increase in pay of production and non-supervisory workers In other words, the pay gap between “regular” workers and CEOs is nowhere near as big as it is commonly depicted as being and, most shockingly, has actually shrunk slightly over the past decade, not widened.

...

The common comparison is distorted by comparing the average pay of 75 percent of all workers to the average pay of 0.03 percent of CEOs. When we compare average worker pay to average pay for all CEO, the much hyped story reverses—workers have actually seen their pay rise slightly faster than the CEOs have. Once you learn that data and facts are two different things, you are well on your way to being an educated consumer of economic information.
Linky.

Quote:
It's also dubious to treat "wealth" and "income" interchangeably. Somebody working at a good job with overtime might have more income than a comfortable retiree who clips bond coupons. But one might have no savings, and the other has obvious wealth. Warren Buffett -- proponent of the "buy and hold" investment strategy -- could arrange his affairs so he wouldn't have any income in a given year. But you wouldn't compare him to a penniless homeless guy. The real problem is not just income, but the concentration and accumulation of wealth, which is the result of tax policies as much as anything else.
Again, you'll run into the same characters (Piketty, Saez, Zucman) when you try to look up wealth inequality as well. It's actually very debatable depending on your definitions.

Quote:
The factual argument that US wealth inequality is rising sharply in recent decades--rather than rising only modestly as shown in Piketty's data above--ends up relying on a particular method of calculating wealth inequality. Wojciech Kopczuk goes through this issue in some detail in his contribution to the JEP symposium.

Broadly speaking, there are three ways to measure US wealth inequality in recent decades. One way is using data from the Survey of Consumer Finances which is done every three years (most recently in 2013) by the Federal Reserve. A second way is using data from estate taxes over time, which involves figuring out ways to project changes in wealth of the top 1% for the total population based on those who die and file estate tax returns in a given year. Both of these methods show a modest or minimal rise in US wealth inequality in receent decades.

The third method is to look at the capital income people receive as shown in their tax returns, and use that data to estimate their wealth. For example, if someone reports a certain amount of income from bank interest, then by looking at interest rates in the past year, you can make a solid estimate of how much money (on average) was in their bank account. Emmanuel Saez and Gabriel Zucman have published a working paper using this approach that is getting a lot of attention. It is "Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data,” published last October as NBER Working Paper 20625.

This method requires some extrapolation. In some cases, wealth doesn't throw off income in a given year: for example, an IRA or 401(k) account doesn't show up as income on your taxes; gain in the value of your home doesn't show up as income in a given year; a higher value of a business you are running doesn't necessarily show up as income in a given year; and if you owns stock but don't get paid dividends, it doesn't show up as income. Indeed, as Kopczuk reports, Saez and Zucman estimate that "capital income on tax returns represents only about one-third of the overall return to capital." Even when a capital asset does throw off some income, it can be tricky to know what interest rate to apply so that you can infer the amount of wealth. It's easy enough to look at interest paid by a bank and infer the size of a bank account. But if you have capital gains from selling stock, or from more complex financial assets, inferring the underlying size of the wealth is trickier. Thus, a variety of extrapolation methods are used, like approximating the value of real estate by the amount of property taxes paid, which shows up as a deduction on a number of income tax forms.

During some periods, this "capitalization method" of estimating wealth tracks the results of the survey and estate-tax methods pretty well. In the last few years, the capitalization method shows more of a rise in wealth concentration at the top 1% in the US economy: in the figure above, the top 1% of the US wealth concentration would have about 40% of total wealth, rather than 30% of total wealth. Piketty says in his JEP essay that he tends to favor the Saez-Zucman estimates over those presented in his book. Kopczuk says that he tends to favor the survey-based and estate-tax methods. Both agree that measuring wealth and matching up the estimates across these three methods is a lively and unsettled area of research.

4) The form in which wealth is held and generated matters: for example, consider wealth from inheritance. If a rising share of wealth is inherited, then this might be more troubling. However, Kopczuk cites various pieces of evidence for the U.S. that "[t]he importance of inheritances as the source of wealth at top of the wealth distribution peaked in the 1970s and has declined since then."

Or consider wealth from housing. An often-mentioned paper by Odran Bonnet, Pierre-Henri Bono, Guillaume Camille Chapelle, Étienne Wasmer argues that esssentially all of the recent variation in household wealth in recent decades is due to a rise in housing prices--and in particular, to the fact that housing has become more expensive relative to renting. Here's their comment from a short summary they wrote about their research paper:
"The impressive success of Thomas Piketty’s book (Piketty 2014) shows that inequality is a great concern in most countries. His claim that “capital is back”, because the ratio of capital over income is returning to the levels of the end of the 19th century, is probably one of the most striking conclusions of his 700 pages. Acknowledging the considerable interest of this book and the effort it represents, we nevertheless think this conclusion is wrong, due to the particular way capital is measured in national accounts.The author’s claim is actually based on the rise of only one of the components of capital, namely housing capital. Removing housing capital, all other forms of capital exhibit no trend in the recent period. At the beginning of the 21st century, other forms of capital are, relative to income, at much lower levels than at the beginning of the previous century."
Linky.
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