10/14/2011 7:17 PM ET|
Why US should spread the wealth
America sacrificed equity for the false promise of efficiency and growth, and society is now more unequal than at any time since the early part of the last century.
Many economists worry that making societies more equal through income redistribution or other means reduces economic growth.
This big trade-off between equality and efficiency, which is supported by comparisons of capitalist and socialist countries, implies that there's a limit to how much redistribution a society should pursue. At some point, the trade-off of more equality for less output -- which worsens as we push toward more and more equality -- becomes intolerable.
However, while the trade-off is quite unfavorable as we push to extremes, recent experience suggests there is a wide region where the trade-off is hard to detect. Thus, worries about this trade-off appear to be overblown.
For example, the Bush tax cuts were justified, in part, by the assertion that equity had overshadowed efficiency in tax policy. Taxes on the wealthy, and the inefficiencies that come with them, were much too high, it was argued, and lowering taxes would cause output to go up enough to lift all boats substantially.
Accordingly, the lower end of the income distribution would fare much better after income trickled down than it would under redistributive policy.
The economy did grow after the Bush tax cuts, but the rate of growth was unremarkable, especially for jobs, and there's little evidence that they caused large increases in output growth, as promised.
In fact, there's little evidence that the Bush tax cuts had any effect at all. The trade-off simply wasn't there.
And the tax cuts at the upper end of the income distribution did nothing to correct for the fact that although worker productivity was rising, wages remained flat -- a problem that began in the mid-1970s.
This was an indication that something was amiss in the mechanism that distributes income to different members of society. Workers were helping to increase the size of the pie, but income did not trickle down, and their share of the pie was no larger than before.
This is not the only way in which the distribution of income has become disconnected from productivity. While some argue that those at the top of the income distribution earn every cent they receive, and hence deserve to keep all of it, there is plenty of evidence that the compensation of financial executives, CEOs of major corporations and others at the top of the pyramid far exceeds the value of what they contribute to society.
That holds true even without the 2008-09 financial crisis, but how, exactly, can we justify the extraordinarily high income of this group when the result of their actions was to ruin the economy?
If those at the top of the income distribution receive far more than the value of what they create, and those at lower income levels receive less, then one way to correct this is to increase taxes at the upper end of the income distribution and use the proceeds to protect important social programs that benefit working-class households, programs that are currently threatened by budget deficits.
This would help to rectify the maldistribution of income that is preventing workers from realizing their share of the gains from economic growth.
And there is another reason why taxes on the wealthy should go up. Someone has to pay taxes, and the question is how to distribute the burden among taxpayers. Many believe, and I am one of them, that progressive taxes are the most equitable way to do this. In particular, the guiding principle is that the last dollar of taxes paid should cause the same amount of sacrifice for rich and poor alike.
There has been an attempt to make it appear that taxes are mostly paid by the wealthy; the deceptive claim that half of the people pay no taxes is part of this. But taxes are less progressive than before the Bush tax cuts, and when all taxes at all levels of government are taken into account, "the U.S. tax system just barely qualifies as progressive," according to a 2010 report from Citizens for Tax Justice.
We face a choice between cutting key benefits for the middle class and creating an ever more unequal society, or raising taxes on the wealthy to preserve the social programs that lower-income households rely upon.
We hear that raising taxes is unfair and that tax increases will harm economic growth. But there's nothing unfair about correcting the maldistribution of income that we've seen in recent decades, or about making sure the burden from paying taxes is more equitable than it is now.
And there's no reason to fear that economic growth will be lower if taxes are increased. Cutting taxes on the wealthy during the Bush years didn't stimulate growth, and raising taxes back to the levels we've had in the past -- when growth was quite robust -- won't have much of an effect either.
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Socialism at its worst coming to our country with the help of msn. And its radical liberal youths whom they allow to write this rot.
We have a great country stop messing with us.
You can play the blame game as much as you want but... the truth is, the person responsible for the current situation is looking at you in the mirror! This country needs a major political, legislative and economical overhaul. No country, not even the mighty USA, can go on forever, piling deficit over deficit and building a humongous debt without suffering severe consequences.
Congress MUST find a way to balance the budget. If this means taxing the rich and the corporations, if this means cutting back on Defense, if this means cutting on entitlement programs, SO BE IT! The problem affects everyone, therefore the solution should be comprehensive and global. And make no mistake, it will be painful. Now's the time to ask what you can do for your country...
It's later than most people believe. Printing money out of thin air, keeping interest rates to the floor only creates bubbles, sky high deficits and will lead to the crash of the US dollar. Then all will be poor and the republic's very existence will be threatened. Occupy Wall Street is only the first salvo, it should be understood as a serious, serious warning. Get your act together and clean up the mess before the crisis gets out of hand.
Call it whatever you want,but clearly the current form of capitalism enriches the top 1% at the expense of everyone and everything else.That is what the Occupy Wall Street movement is about.How much paper money can be created out of thin air?How many bailout of banks can be tolerated?How long can the Fed manipulate interest rates?Manipulate bonds?Hold onto worthless derivatives?The derviatives market is now $1.5 quadrillion!This is 20X the yearly global GDP.I suppose this is a necessary element of ypur mixed economy.This is fraud and treason,and needs to be killed.As I stated before,without fraud in the system,there is no economy!
This mixed economy does not include the division of labor any longer.Actual good paying jobs for the middle class have been replaced with an endless revenue stream which is based on the promise of paying back debt on the fictitious revenue of financial instruments that require the theft of real wealth from future generations.Actual GDP growth is not required in a system now totally dependant on Central Bank participation.
And until the current free-floating exchange rate based fiat money dollar currency system backed by nothing is destroyed and replaced with a monetary system that makes sense,the continuing global economic inequality will eventually result in a systemic collapse of all paper money.It is a mathematical certainty.The free market wil determine yet again what is and isn't money.One thing is for sure,the nefarious schemes of Goldman,JPMorgan et al has destroyed any viable system of commerce and industry.2008 was the just the beginning,not the end.August 15,1971 was indeed a dark day for humanity.
I do believe the Bush tax cuts should just be allowed to expire, but hopefully as a package including spending cuts so as to reduce the deficit. We can't continue like this without crashing the currency. (If you think this wouldn't harm you, you are an idiot.)
However, the idea of "soak the rich" won't work in the modern world. All that will accomplish is to cause capital flight (Bermuda is a close destination), and that won't help the jobs situation at all.
This is just typical looter philosophy anyway. There's a story about a visitor to Andrew Carnegie who said he should spread his great wealth around to everyone. He figured a little, then gave the guy a nickel, saying "OK, here's your share, considering the population of the whole country. Now get out."
THE PLAIN FACT IS THAT WE HAVE A GOVERNING CLASS WHOSE PERSONAL INTERESTS ARE VERY DIFFERENT FROM THE INTERESTS OF ALL THE REST OF US.
WALL STREET PROTESTERS ARE EXPRESSING A REAL INEQUITY BUT TELL US WHO MADE THE LAWS FOR WALL STREET? WHERE DO YOU SUPPOSE YOU SHOULD BE PROTESTING?
UNEMPLOYED? WHO STOPS PIPELINES FROM BEING BUILT, WELLS FROM BEING SAFELY DRILLED, WHO FAILS TO ARRANGE FOR GAS UTILITIES TO REPLACE OLD GAS PIPELINES SO THEY WON'T BLOW UP OUR ENTIRE NEIGHBORHOOD AND KILL PEOPLE LIKE HAPPENED IN SF RECENTLY?
wHO CALLS LOUDLY FOR JOBS AGAIN AND AGAIN AS A CAMPAIGN SLOGAN BUT STANDS IN THE WAY AND PREVENTS THE OBVIOUS, OBVIOUS THINGS THAT NEED DOING AND WOULD RESULT IN MANY HUNDREDS OF THOUSANDS OF WELL PAID JOBS?
WHO TALKS ABOUT 'SHOVEL READY' JOBS AND HARDLY KNOWS WHAT A SHOVEL IS?
You have never studied economics, have you? You realize that we haven't been a capitalist (free market) economy for a long, long time don't you? In fact, we've been what is known as a mixed economy for the entirety of your life. There isn't one "free market" economy among the world's major economies.
Open a book from time to time...
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. Most mixed economies can be described as market economies with strong regulatory oversight, in addition to having a variety of government-sponsored aspects
I continually hear that people want to make a fair wage but I am not sure what that really means. If you are a maid in a hotel with limited skills you should make less than 30k a year while the person who owns a maid service that supplies maids to businesses or households deserves to make over a 100k because of the skills and risk involved. You can put this scenario on many jobs (Mechanics, landscapers, non-skilled labor unions, office manager, accountant ect). Of course the scale of what is a fair wage moves with the skills needed to do the job and the supply vrs demand for workers with specific skill sets but the worker vrs the leader pay difference IS FAIR. I do agree that CEO pay is out of hand but when you get to know most of these weasels you realize that many of us would not want to be as cut throat and non-caring as many of them regardless of how much many we made doing a job that eliminates a normal family life.
So many people cause many of their own issues by prioritizing everything but improving their skills and education while others just have bad life situations but in either case the wages they make are most likely equal to their skill set. Sorry that seems unfair to most people but look in the mirror and really ask yourself what your true skills are worth if you were the employer. If you do not like your answer change your skill sets and stop looking for someone else to give you something you do not deserve.
Let the liberal rant begin in response but basically this is real life and I am a moderate/independent voter that dislikes both major parties.
This article is a bunch of C R A P.
Who determined that the government was supposed to be a re-distribution center for our tax money? Nobody. not in the constitution, no where.....
The taxes should pay for the government and defense only....
If we are to have SS and Medicare and Medicaid, then the funds collected for them should be totally separate, and un-reachable by anybody except what they were collected for.
get rid of all the support programs, this is getting ridiculous. Just as ridiculous as Mark Thomas is for writing this C R A P.
THE PROBLEM WITH INCREASING TAXES IS THAT INCREASED MONEY GOES TO OUR CONGRESS TO SPEND.
DO YOU THINK CONGRESS HAS SHOWN ANY SENSE OF RESPONSIBILITY AS TO WHO GETS THE MONEY WE PAY IN TAXES? iF A CORPORATION HANDLED MONEY THE WAY CONGRESS DOES, THE OFFICERS OF THAT CORPORATION WOULD BE FOUND GUILTY OF CORRUPTION AND SENT TO FEDERAL PRISON.
From each according to his ability, to each according to his need (or needs) Karl Marx 1875
"Tax the Rich and make them pay their fair share" Obama 2011.
Bush put us, economically, where we were before this administration.
Terribleidea,you are a complete moron.The moment Bush gave the keys to the Treasury Dept and a $700 billion check to Hank Paulson,we became a socialist nation.My god ,man,wake up!How can a regular working class perosn like you defend the billionaires responsible for the destruction of our economy,and the world's,for that matter, is unbelievable.
You do understand that free market capitalism DOES NOT INCLUDE bailouts,stimulus,QE,money printing,high frequency trading,near zero interest rates,and a redistribution of the world's wealth back to the elitist class.Our nation now has the widest gap between rich and poor among advanced economies!Let's just give it all to them!
Stop trying to get lifted up on other's efforts?You can't be serious.Most people bust their butt everyday to make a better life for themselves and their family.Where would ANY OF THESE BANKS OR HEDGE FUNDS OR CEOs BE IF NOT FOR CONSTANT MONEY PRINTING AND FRAUD?What efforts are you referring to?Committing acts of financial terror and getting free money again and again.What a great system we have now.Let's Bundle sub-prime mortgages together,fraudulently sell them to investors,back stop them with credit default swaps,loot pensions,manipulate the COMEX and then get taxpayer money to commit even more fraud!
Oh,by the way,your pursuit of happiness has contributed to EVERYTHING I have illustrated above.You are without a doubt one of the most ignorant,uninformed,brainwashed,despicable people to ever blog on MSN money.Our democracy,our freedom,our dollar,and our economy are all dead.You are nothing more than a zombie suffering from Stockholm Syndrome unwittingly serving the Socialist Crony-Capitalist System that has no problem spending $1 trillion on defense while cutting social services or creating $18 trillion dollars out of thin air to bail out both domestic and foreign banks with,yes,some OF YOUR TAX DOLLARS. And how is that 0% interest rate on your savings working out for you?
Please buy a book on Economics and get a clue.Start here,genius:
HUMAN ACTION- Ludwig von Mises
WHAT HAS THE GOVERNMENT DONE TO OUR MONEY-Murray Rothbard
Terrible the middle class is not holding peoples success against them.love how everyone jumps to extremes.not everyone wants to be super rich and have million dollar homes, yachts and private planes.i like my job..i make around 50k a year...i can live fine with that...but when i made $950 this week and they took out $235 in taxes..im sure you can add..that leaves me with about 700$ check.thats almost 25% taxes...because i had 17 hours overtime.
So if someone wants to work non stop and be super rich..so be it..no one cares...the problem comes when companies like Ge paid like 6% taxes on billions of profits..they pay 100+ lawyers to find loopholes..whats the ceo of ge make 10million+ easily a year..again thats fine...but even if he pays 25% of his earnings like i did...2.5m..whats the problem? im sure he can survive on 7.5m for that year...
i always hear people calling calling names because people just want everyone to pay the same share...no one cares about the money they make...i would rather work a nice stress free job and spend time with family then work 24/7..but i pay my taxes and dont try to avoid them and waste money paying lawyers to pay less..
all the million/billionaires made thier money because of america..they should be giving back and not trying to screw it every chance they get..its 100% greed is the problem..when is enough enough?
I have a great idea; lets increase taxes on the people who can barely make ends meet right now.
Then we can find out what tens of millions of people who can't afford to buy food will do.
I mean the Romans didn't know anything about maintaining social order for hundreds of years. They gave grain to the poor Romans and provided gladatorial games (bread and circuses) because the Romans were such kind humanitarians.
The plantation owners work so much harder than the slaves do, so they deserve to keep it all. Its hard work figuring out how to get billions in government subsidies and creating jobs in China and India.
Big government propaganda. These articles NEVER mention that reducing government waste must be a part of the solution. Want me to pay more taxes? Sure, if i knew that every single cent was going to debt reduction and was married to the obliteration of unnecessary government programs.
The article is based on the premise that governments role is to make everything equal. I spent a lot of time in the eastern block after the fall. It was no panacea. I am not a believer in Marxism for a lot of reasons, the first being that it encourages people to take less personal responsibility for their own lives and for the lives of the others around them.
Sure executives earn rediculous wages especially compared with their equivalents in Asia and even Europe. However the American workers are never going to improve their position as long as free trade (not fair trade) is allowed with countries that pay their people a pittance.
Free trade only benefits the worker when it exists between countries with similar wage and social structures. Taxing the rich to improve the lot of the worker is a croc that the left tries to pass off as thoughtfull economic policy.
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