Does wealth create poverty?

Wheatley

The limited resources in the world can be thought of as a giant pie cut into even slices. In an ~~fair~~ [equal] society everyone would get the same amount of slices. In reality, one percent of people get half the pie and the other half goes to the other ninety-nine percent. The remaining half of the pie likewise get's distributed unevenly. In the end, the bottom five percent fight over crumbs. There are many scarce resources that we fight over, even ones that you never thought of as resources.

Time. A disadvantaged person's time is worth much less than a privileged person. Therefore the poor have to work longer hours and get less pay (less of the pie).

Money. There is a limited supply of money in the world (the money pie). When there are more rich people getting more money, somebody has to be getting less, namely the poor.

Education. All the good professors are in elite colleges which are expensive. Unfortunate student will have to do with colleges with substandard professors and get low quality education, while fortunate students get great professors and great education.

Merchandise. When there are more wealthier people around guess what happens to the price of quality goods? It goes up. Poor people can't afford the inflated, quality merchandise so they have to settle for cheep junk.

Services. There's a limited supply of good professionals from cleaning ladies to psychiatrists The price for quality services gets jacked up because the rich end up hogging up all the good ones.

Workers. Wealthy companies have enough money to acquire all the good workers, leaving lousy workers for the rest. Not surprisingly wealthy companies in turn are more likely to be successful. And their success makes them more wealthy. And the cycle continues. The opposite true for poor companies.

I can fill this page with examples. But by now you probably get the idea.

Do you agree with my analysis. Did I leave out crucial information such as the idea that a rising tide lifts all boats, and the effects of mass market production?

Does wealth contribute to poverty? If so, what do you propose we do about it?

fishfry

In a fair society everyone would get the same amount of slices. — Purple Pond

Isn't that assumption open to question?

You are saying that in school, the kid that works hard, studies every night, forms study groups with his or her peers, attends all office hours, and works his or her ass off; deserves the same grade as the kid who slacks off and plays video games and skips class.

The business owners who works 20 hours a day to build their business, cares for their employees, provides genuine value to the community, deserves the same as the business owner who rips off his customers and cheats his employees.

Your vision seems like an extremely unfair society to me.

Wheatley

↪fishfry

You're right. I mean equal. (Forgive me, I didn't sleep last night)

Wheatley

You are saying that in school, the kid that works hard, studies every night, forms study groups with his or her peers, attends all office hours, and works his or her ass off; deserves the same grade as the kid who slacks off and plays video games and skips class.

The business owners who works 20 hours a day to build their business, cares for their employees, provides genuine value to the community, deserves the same as the business owner who rips off his customers and cheats his employees. — fishfry

I'm not saying that there should be no inequality. People who work harder and do honest work should get more than those who don't. All I am saying is that the scales are tilted towards the wealthy in that they have an unfair advantage over people who aren't wealthy who work equally hard, and that negatively effects the poor.

BC

↪Purple Pond

There is no question that material resources are limited, and that their distribution is severely uneven. The distribution is neither fair nor equal. In fact, it is counterproductive. The maldistribution of wealth puts too much wealth in too few hands to produce the benefits that wealth is capable of. A lot of the super-super-rich's wealth is the product of unproductive manipulation of markets. It's rewarding to participants, but it doesn't increase the supply of goods and services.

The distribution of wealth may be worse than you suggest. The 8 richest billionaires control as much wealth as 50% of the world's population (according to Oxfam).

With ~~8.3~~ 7.3 billion people (and rising) it is difficult to work out what an equal share of wealth would be, and it would be even more difficult to work out the means by which the world's resources could be evenly distributed. Besides which, the needs of individuals are not equal. A person living in Saskatchewan needs a more substantial shelter, more energy and warmer clothes in the winter than someone living equally well in Uganda, where the climate is very mild all year round.

Still, everybody needs a minimum number of calories, clean fresh water, shelter, clothing, access to cultural goods, and the means to obtain these goods. The first three--food, clean water, and shelter, require the most energy input, and are likely to become scarce as the climate heats up, cost effective resources are exhausted, and the population increases. (The population growth rate is slowing, but it is still increasing). Education (access to cultural resources) is already out of reach for large percentages of the world's population.

A redistribution of wealth into regions most in need of assistance to adjust to change (the poorer countries, of course) could be arranged. Will it? Don't hold your breath.

Wheatley

↪Bitter Crank

(Y)

BC

↪Purple Pond

So yes, the rich get richer because the poor get poorer.

Cavacava

Modest proposal:

Limit the amount of inheritance outside of spouse to a maximum, say $1 million dollars for entire estate.

fishfry

All I am saying is that the scales are tilted towards the wealthy in that they have an unfair advantage over people who aren't wealthy who work equally hard, and that negatively effects the poor. — Purple Pond

Now that I can agree with. One of the recent trends is "assortative mating," in which upscale professionals mate and create privileged offspring. We have rampant inequality, worse even than the gilded age of the 1920's. This is getting to be a real problem in our society.

Limit the amount of inheritance outside of spouse to a maximum, say $1 million dollars for entire estate. — Cavacava

This only makes sense if you think the government should be allowed to confiscate the work of someone's lifetime. Only a committed Statist would think this is a good idea. For one thing, it would not solve the problem. The offspring aren't only getting money from their parents. They're getting the best education, the best work ethic and values, and so forth. Your solution is nothing more than a government grab of the assets of productive citizens that does nothing to solve the underlying problem of growing inequality.

BC

the gilded age of the 1920's — fishfry

There was a depression around 1893, and a few years later the beginning of the Progressive Era which was about as welcome by the rich as an infestation of their august persons by lice and bed bugs.

The gilded age ended around 1900, give or take a few minutes, thanks to the Progressive Era and Theadore Roosevelt, which instituted controls on industrial giants, banks, brokerages, and the activities of the very, very rich. The 1920s saw waste fraud and abuse under the Harding administration (Teapot Dome scandal--oil and government lands), and there was rampant stock speculation in the late 1920s, ending in the Great Depression. The rampant stock speculation didn't produce a lot of millionaires and it wiped out most of them on October 24, 1929, Black Tuesday. A lot of people were speculating with borrowed money, and when the slide began in the morning, all the speculators suddenly discovered that their stock were worth less than they owed, then it just got worse, and worse and worse.

The economy really didn't recover until 1942, when industrial production was mobilized for WWII.

BC

This only makes sense if you think the government should be allowed to confiscate the work of someone's lifetime. — fishfry

In fact, it is the rich that are confiscating the work of someone else's lifetime -- their employees. Labor creates all wealth. Capitalists get rich by expropriating for themselves a significant portion of the wealth the workers create. They do this by paying the workers significantly less than the value of the goods they produce.

The offspring aren't only getting money from their parents. They're getting the best education, the best work ethic and values, and so forth. — fishfry

I think you will find that a lot of children of the super rich are not all that productive--and after all, with their predecessor's wealth, there isn't any need for them to be very productive. Most super rich families are happy if their scions don't piss it all down the drain. There are exceptions, of course.

John D. Rockefeller Junior inherited a huge fortune from his father, JDR, Senior. Junior wasn't interested in the oil business which wasn't the free for all that it had been when his father made his many millions, by hook and crook (quite a bit of crook, actually). Junior did feel obligated to increase the family fortune, and decided real estate was the best bet. He bought up, or signed long-term leases on a batch of land (and run of the mill buildings, mostly) and built Rockefeller Center, in New York. It didn't earn much money right away (the depression, WWII) but after the war it started to yield a profit and still does. (I don't know what it's ownership status is today -- it was a very large multi-block development.)

Nelson Rockefeller, son of JD Junior, went into politics. None of the other Rockefeller children or grandchildren became tycoons of any sort.

BC

[this] solution is nothing more than a government grab of the assets of productive citizens that does nothing to solve the underlying problem of growing inequality. — fishfry

Well, actually it is the quintessential step to solving growing inequality. The biggest underlying problem is the regressive tax system which allows great fortunes to be built on the backs of workers and by using publicly owned or subsidized infrastructure--railroads, highways, the internet, locks and dams, nationally defended international trade, etc.

The last step is to distribute the tax revenue among the workers in the form of inexpensive college costs, excellent trade school programs, guaranteed government loans for tuition where needed, supplementation of local school budgets, infrastructure, solid public health programs, research programs into major diseases, social security, and so forth

This won't kill off the rich, and it won't kill off industry. I am not proposing socialism here, just a progressive tax system that enables the government to carry out tasks which guarantee a brighter future for everyone, not just the spoiled brats of rich folk. (Seizure of the assets of the rich, socialism, and the dictatorship by the proletariat has been proposed elsewhere.

PS. Since you are protesting so loudly, we can only assume you are sitting on a significant stash of ill-gotten gains. We'll be coming for your wealth later. If you don't mind, stack it up neatly in boxes. It will make the seizure go faster, and be less inconvenient for you.)

fishfry

The last step is to distribute the tax revenue among the workers in the form of inexpensive college costs, excellent trade school programs, guaranteed government loans for tuition where needed, supplementation of local school budgets, infrastructure, solid public health programs, research programs into major diseases, social security, and so forth — Bitter Crank

If it worked out that way in practice I might not be so opposed to the idea. But those tax revenues will end up in the hands of government bureaucrats and rent-seeking corporations whose CEOs pay the right bribes to the right politicians. You know this is true.

And as far as guaranteed loans for tuition, we've had those for years. They've resulted in a huge student debt bubble and a huge spike in tuition. If you subsidize tuition, colleges raise tuition to pay for bloated administrations, the banks make a government-guaranteed profit lending the money, and the kids get stuck with the bill. You know this is true as well. The numbers already provide the proof.

Infrastructure? I'm all for it. You think the government doesn't have enough money for infrastructure? They blew trillions on obscene wars. Wars which the left no longer even bothers to oppose. And why is that, by the way? Does it perhaps go back to the day Hillary stood on the floor of the US Senate and spoke passionately for 30 minutes in favor of invading Iraq? That was the end of the anti-war left.

No I am not willing to give the government more money for more crony capitalism and warmongering. I say no.

BC

You know this is true. — fishfry

No, I do not know that that is true. There was a time within my memory (maybe yours too) when college tuition at major universities was quite affordable. In 1980 a mid-level course in the College of Liberal Arts at the University of Minnesota was $80. Fees were a little extra--not much. Now they are several hundred dollars. Why? Because state and federal support of University education was cut by legislators and congress. Government support of higher education dropped from around 75% in the early 70s to 25%. Why? To redirect more revenue to the rich. remember, the 1980s was the reign of Ronald Reagan and dubious supply-side economics.

fishfry

Labor creates all wealth. — Bitter Crank

Marx? Perhaps we'd have to agree to disagree. Marxism has been a disaster everywhere it's been tried. Seen Venezuela lately?

I think you will find that a lot of children of the super rich are not all that productive — Bitter Crank

I'm not thinking of the super rich here. Just the regular rich. The silicon valley CEO married to the Palo Alto physician. Their kids go to good schools and learn to start businesses in their teens. Those are the people I'm talking about. The super rich will take care of themselves. You can't take their money. They buy the politicians.

fishfry

(double post)

Wheatley

I like the idea of a universal basic income. It would benefit a lot of people.The problem is paying for it. We're already trillions of dollars in debt. So we need to increase taxes. You don't want to tax income too much because that would disincentive productivity. I think we should raise the capital gains tax and start a wealth tax like they have in Europe. And they also should start charging households for extra garbage. Protect the environment and discourage waste. Kill two birds with one stone.

Cavacava

↪fishfry

This only makes sense if you think the government should be allowed to confiscate the work of someone's lifetime. Only a committed Statist would think this is a good idea. For one thing, it would not solve the problem. The offspring aren't only getting money from their parents. They're getting the best education, the best work ethic and values, and so forth. Your solution is nothing more than a government grab of the assets of productive citizens that does nothing to solve the underlying problem of growing inequality.

I think unlimited inheritance tends to create aristocracies of wealth and builds inequities which can ultimately bring down governments or lead to autocratic rule. I think that if inheritance monies were shifted back into the economy there would be plenty of money to give all citizens an excellent education, plus much more.

Of course this ain't going to happen, we already have a virtual/actual plutocracy, and I doubt the rich will allow politicians to limit their family money, it's their legacy.

WISDOMfromPO-MO

A redistribution of wealth into regions most in need of assistance to adjust to change (the poorer countries, of course) could be arranged. Will it? Don't hold your breath. — Bitter Crank

Or those people are ahead in adjusting.

At least that is what I gathered from reading Grassroots Post-Modernism: Remaking the Soil of Cultures, by Gustavo Esteva and Madhu Suri-Prakash (1998 edition).

Just using contemporary America as an example: the republic is only a little more than 200 years old; the enjoyment of the contemporary American lifestyle en masse can probably only be traced to the 1950's. Americans have not had to adjust much. Other than two exact days--December 7, 1941 and September 11, 2001--has U.S. soil ever been touched by an organized assault from foreigners, let alone extensive occupation and oppression?

"Grassroots Post-Modernism" is a riveting book that touches on many themes, and I can't do justice to it here. But I think that one theme is unmistakable: while the West struggles with the consequences of its way of life, the world's oppressed majority are already moving on. The world's oppressed majority has only suffered from the West's, the Global North's, or whatever you want to call its relatively recent way of life. That oppressed majority has resisted the encroachment of that aforementioned way of life and is regenerating their local cultural and natural spaces. The authors illustrate all of this with one people in Mexico who in spite of 500 years of being dominated by outsiders--first the Aztecs, then the Spanish, and since then, the Mexican government, multinational corporations, etc.--have managed to maintain their land, culture and identity.

The thesis of the book may be false. I don't know. But if at least one pair of scholars is asserting--and supporting with plenty of evidence, other sources, and footnotes--that the world's oppressed majority is already moving beyond all of the problems/issues being brought up in this thread, their view should be considered.

BC

Marx? Perhaps we'd have to agree to disagree. Marxism has been a disaster everywhere it's been tried. Seen Venezuela lately? — fishfry

Venezuela is a basket case because of grossly bad management. Bad management doesn't work well in any economic system.

Just the regular rich. The silicon valley CEO married to the Palo Alto physician. Their kids go to good schools and learn to start businesses in their teens. Those are the people I'm talking about. — fishfry

"Entrepreneurs don’t have a special gene for risk—they come from families with money" -- Quartz

I don't know any of these people. I have some information (various reading over the years) on what makes the children of Silicon Valley productive entrepreneurs. The matter has been studied: Parents with lots of money have the means to facilitate their children's success.

Inc. and Fortune cited a study in Quartz to the effect...

What really sets entrepreneurs apart from everyone else? It's not their resourcefulness, imagination, ability to foresee trends, or their belief in their own ideas, according to a recent piece on Quartz. It's the mouthful of silver spoon they were born with. "The most common trait among entrepreneurs is access to financial capital," the piece notes, citing a wide range of research.

Cash parentage is the critical factor: parents who have, for good reasons or not, succeeded and accumulated a lot of wealth (rich, but not super-rich, by any means) are in possession of certain characteristics:

1. They have a lot of connections
2. They have a lot of cash
3. They themselves received, and can afford excellent educational experiences for their children
4. They model how financial success operates.

It isn't that Silicon Valley clones are all brilliant people who can hardly fail at whatever they set their minds to. They got in on the ground floor of a new industry and most of them went to colleges and universities (like Stanford) that prepared them to succeed in this kind of industry.

The point is, if you take your average kid from anywhere USA, give him an excellent education, show him how the world works, provide cash to experiment with (a grant, not a loan), and help him accumulate the contacts that privileged people have, HE TOO will be a great success.

Why doesn't Any Kid, USA succeed? People who don't have extra money tend not to take risks. They don't know people with loads of money (especially on equal terms) so they do not learn how to hobnob among this layer of society. They don't have the money to send their children to community colleges, let alone Princeton or Stanford.

It boils down to silver spoons, not gold plated talent.

BC

universal basic income — Purple Pond

Even Milton Friedman though a universal basic income was a good idea. How expensive would it be? Maybe not as much as one would think. Those who receive, and really need a basic income are going to spend all the money they get. It will flow back into the economy very rapidly. One of the purposes of the UBI is to enable ordinary people to afford taking risks which they might otherwise not take, to get a better job, earn a better income, get more training, etc.

Yes, some people will use the money to stay at home and spend all day on The Philosophy Forum. That's OK, because they will still have to buy food, clothing, shelter, etc. and that stimulates the economy.

Besides spending, other benefit programs would no longer continue--like unemployment, disability, and the like. The critical factor would be setting the UBI at the appropriate level. It can't be too high or too low. If it's too low, it won't allow people to benefit; if it's too high, the cost-benefit ratio would probably become unfavorable.

BC

↪WISDOMfromPO-MO

That seems like an improbably positive interpretation to apply to the Africa, S. Asia, SE Asia, and south America all at once.

ArguingWAristotleTiff

Modest proposal:

Limit the amount of inheritance outside of spouse to a maximum, say $1 million dollars for entire estate. — Cavacava

Ack! I almost lost my coffee reading your post Cavacava!
If MY choice is to work my entire life, to leave my family set on finances, who the f*#& are you to decide that outside of my spouse, my children will only be entitled to $1 million dollars of my PERSONAL estate, that might be worth well over $20 million? Who is the recipient of the remaining money?

What motivation would there be for me to work that hard in life, pay taxes on that work in life, pay property taxes for the land I own and run my ranch on, which the government will be happy to tax me on while I am living, only to have it taken from me upon my death?
Talk to me about the motivation to work hard enough to employ others, only to have the government take away their very jobs, when I as their employer dies and my estate is decimated.
I am listening....

Agustino

Wow, I just saw this thread.

Ack! I almost lost my coffee reading your post Cavacava!
If MY choice is to work my entire life, to leave my family set on finances, who the f*#& are you to decide that outside of my spouse, my children will only be entitled to $1 million dollars of my PERSONAL estate, that might be worth well over $20 million? Who is the recipient of the remaining money?

What motivation would there be for me to work that hard in life, pay taxes on that work in life, pay property taxes for the land I own and run my ranch on, which the government will be happy to tax me on while I am living, only to have it taken from me upon my death?
Talk to me about the motivation to work hard enough to employ others, only to have the government take away their very jobs, when I as their employer dies and my estate is decimated.
I am listening.... — ArguingWAristotleTiff

I agree with you. Btw, congratulations for your family's new purchase of a car! (Y)

Limit the amount of inheritance outside of spouse to a maximum, say $1 million dollars for entire estate. — Cavacava

Empires are built on blood, since loyalty is only extracted, in the last instance, through blood relations. Limiting inheritance is not a good thing.

What should be limited (or eradicated), should be the possibility for making money out of financial speculation (non-productive activities), or hoarding money without a plan (not putting it to use, above a certain sum of course).

Who is the recipient of the remaining money? — ArguingWAristotleTiff

Government bureaucrats who never worked a day in their lives X-)

Agustino

One of the recent trends is "assortative mating," in which upscale professionals mate and create privileged offspring. We have rampant inequality, worse even than the gilded age of the 1920's. — fishfry

As far as I'm concerned, that is a good development. It means that we (the middle class) are spared of golddiggers - who would want to marry a golddigger anyway?

Why doesn't Any Kid, USA succeed? — Bitter Crank

Well, from my experience, most entrepreneurs do not come from families with money, quite the contrary. Usually "wantrepreneurs" from families with money don't do very well, since they have other interests (sex, drinking, partying, you get the idea). They are like Trump - not great, but they have the support of an already existing empire, which can afford a lot of mistakes. It's good to work with such people, since many times they are stupid with money >:) - they don't realise the value of money.

Any kid could succeed, provided that he really wanted this, and kept at it for long enough. Success in these matters seems to be somewhat elusive - a large share of it seems to be social, just being able to pull sufficient strings. A large part of it also seems to be in the knowledge of which strings to pull. So it takes a lot of trial and error before you really "get it". Like any other practical thing really. It takes time to learn tennis, why wouldn't it take time to learn to be a successful entrepreneur? The hard thing with entrepreneurship, unlike say, tennis, is that no one can really teach you here. There are not many great resources around. It's something you pretty much have to learn on your own. If you can't learn by yourself, well, tough luck.

Cavacava

↪ArguingWAristotleTiff

The problem I think, has to do with living in an equitable society. The current accumulation of wealth seen as a generational effect and not based on labor, in my opinion over time this creates an aristocratic class of non productive, landed gentry.

I think the more equal a society can become, the better off all members of the society are. We are caught in a economy that has created pockets of wealth that own the vast majority of assets in this country, the 1%.

This is empire building as @Agustino quoted:

Empires are built on blood, since loyalty is only extracted, in the last instance, through blood relations. Limiting inheritance is not a good thing.

Do you really want to live in an empire? Under the arbitrary rule of people who have flat out misconceptions of what it is to be poor and struggling....eat the rich.

As far as incentives go, I think such a system would be more productive, and creative. Parents would be much more inclined to care about their children's education, their practical or common sense, and not simply shuffle them off to learn.

Agustino

Do you really want to live in an empire? Under the arbitrary rule of people who have flat out misconceptions of what it is to be poor and struggling....eat the rich. — Cavacava

Everyone else profits from empires, because they create lasting order, when well-administred.

in my opinion over time this creates an aristocratic class of non productive, landed gentry. — Cavacava

That is why they will lose their empire, obviously.

Cavacava

↪Agustino

Everyone else profits from empires, because they create lasting order, when well-administred.

No autocratic/blood/tribal rule can be just regardless of how well ordered, because such rule is always arbitrary.

Agustino

No autocratic/blood/tribal rule can be just regardless of how well ordered, because such rule is always arbitrary. — Cavacava

Existence is arbitrary though. That is precisely part of its beauty. Not to be arbitrary is to be monotonous - it is what Nietzsche would call being nihilistic.

Agustino

↪Cavacava

It is its arbitrariness that makes both the emperor and the peasant grateful, and makes both of them not take their positions for granted.

Cavacava

↪Agustino

Survival and what we have to do to survive makes us creative. People want a say in how they live their life and they want to be treated fairly. Your bucolic idealization is just that, history has always proved it wrong or is there any doubt that social inequity was a major contributing factor to the French Revolution.

Does wealth create poverty?

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