I see no problem with different people making different choices for earning different incomes. After all, different people have different preferences (requiring different balances between income and leisure to optimally fulfil), so a one-size-fits-all approach makes no sense. Someone who enjoys hiking in the woods would be better off making different choices from someone who enjoys collecting watches.

The problem is that income generating capacity does not end with choices. It’s not only “I want to make more money, so I will work until 10PM each day” or “I want to make more money, so I will get a PhD” or whatever else. In an advanced economy (and taking luck out of consideration), the ability of a person to generate and/or capture value is a product of talent x effort x tools. Of course, already captured value can be used to acquire more/better tools, leading to the autocatalysis described. Given enough money, one stops needing anything other than money to make money (since one now has the power to capture and extract value being generated by others). As privilege rises, it becomes increasingly easier to keep than it is to earn (so no more equality of opportunity), with most efforts then being spent competing for positions than generating value at those positions, and economic structure becoming rent-seeking and extractive. Depending on how one deploys one’s earnings, one’s earning money today can become a way to diminish another’s ability to earn money in the future. Given enough accumulation, a small group can monopolise access to productive assets, with the great, unwashed masses then having to beg them for a turn – a few own everything and everyone else in a slum… it’s exactly what happened during feudal times, and exactly why economic growth at that point was close to non-existent.

Put simply, it is a difference between income inequality and wealth inequality. Person invents something smart and makes a ton of money – great. Person then uses that money to cement his position (looking at other, just starting, inventors and using his factory to quickly copy and perfect their ideas before they are able to do so in their garage) – not so great.

So, no problem with income inequality provided inequality in de facto control over productive and/or fungible wealth is low. Of course, without such wealth inequality, I strongly suspect that the scope for income inequality – the scope for income as determined by CHOICES – would be a hell of a lot lower than we see today.

Why did great fortunes in America used to be made at the frontier (and are still made at innovation frontiers today)? Why was America-as-frontier so attractive to Europeans? Because frontiers were too far for established wealth to extend its dominance to. Greater equality of wealth then made for greater equality of opportunity, greater progress, and greater growth.

So what does this mean? Are you saying that people should meekly resign themselves to a never-ending horizon of economic exploitation? If life isn’t fair, then  perhaps the rich should meekly resign themselves to being heavily taxed by everyone else.

internalsyndication: “And remember, money is not happiness.”

A surplus of money does not provide much happiness, but a lack of money to acquire even basic necessities (food, shelter, health care) opens wide the door to a vast horizon of abject and unnecessary suffering.

internalsyndication: “Envy is disgusting…”

If envy is disgusting, then greed is also disgusting. And because the driving force behind capitalism is both envy and greed (two sides of the same coin), then it too must be disgusting.

“People who do/provide the most, earn the most.”

This is wrong in so many ways, but it is characteristic of the simple black-and-white version of the world that many conservatives have.

1) Money is merely an artificial creation of marketplace capitalism. It isn’t the same thing as the ‘value’ of what people provide or create. It also ignores the intrinsic value of human existence that predates capitalism, and that will ultimately postdate it.

2) About one-half of the money that is ‘earned’ in a capitalist society doesn’t even come from labor — it is derived from ownership of some form of capital. A person can lie in a comatose state for years and still derive income from capital. This is not possible when someone derives income from their labor.

3) Many people engage in forms of labor that are important to our society, and yet they never receive a dime from capitalism. Consider the role of women in our society in relation to the tasks of raising children and maintaining a home. Do they earn wages from the capitalist system while engaging in this important behavior? They do not. Does this mean that these domestic tasks have no value? Obviously this is untrue. Therefore, money does not equal value.

4) Furthermore, some people are handsomely rewarded for activities that can be considered harmful to the broader society. Some international drug dealers are multimillionaires, and yet people assign a negative value to this means of acquiring wealth. Similarly, some people have become incredibly wealthy by owning gambling casinos, and yet there are many members of our society who think this kind of business causes more harm than good to our society.

5) Capitalism rewards people for the mass-marketing of junk food, tobacco products, stock market manipulations, and other dubious items of commerce, and yet it fails to reward people for the finest creations of science and art because there isn’t any mass market for it.  Advances in quantum physics, astronomy, philosophy, etc., occur largely outside of capitalist markets.

It’s nice that you are optimistic and ambitious. Those are healthy qualities in a young person. But don’t make the very common mistake of extrapolating from your experience to the general case, because 300 million people (to take the US example) will defeat your expectations. Morality, like microeconomics, scales unevenly and with funky results.

So much of this is trying to boil down to “To each according to his need, from each according to his ability”, and I’m not trying to just shout this and say case closed. Just understand that going down that rabbit hole of an ideology has not worked well in the past. 

Nobody chooses to have poor parents, or to go to crappy schools, or to have bad role models, or to be a bit “off” in the head. Some people have a much harder time than others, for reasons that are entirely unrelated to their choices (though they may relate to yours). Before you measure yourself against another man you should climb down from your stilts and give him a hand up from the ditch in which he stands.

(guy at piano bar plays Danny Boy) You know, these economic times are like a baseball team on a losing streak. Fingers point, tempers flare, wholesale change is demanded. Once we string together some hits, get a mini-boom going, put people back to work, recharge the housing market – all this desperate measure talk will be a thing of the past.

The use of the word “distribution” for nearly all of the economy is a terribly misleading term.

Hypothetical: Tim works his butt off everyday, and volunteers for more hours whenever possible. Let’s also say Tim only has 1 kid. Say he averages 60hrs a week with overtime pay. Sam values home life more and only works 30hrs a week because he wants to be with his kids more. Sam,for the sake of argument has 4 kids.

Over the course of their careers earning the same $/hr, based on prudent saving Tim could easily have hundreds of thousands of dollars more than Sam. How can anyone in their right mind refer to this as unequal “distribution” of wealth. More $’s in Tim’s pocket does not equal fewer $’s in Sam’s.

I know this is a gross simplification, but I’ve made a lot of choices to go down the path of future higher earnings. I will one day be in that much despised 1%. How have my life choices taken anything away from anyone else (in terms of earning opportunities)?

I don’t think taxes are tyranny, however, so YMMV.

I see a lot of spending being paid for with future dollars, and that seems pretty concerning to me (and a lot of others as well).

Rich people don’t sock their money away in mattresses. Even it’s in the bank, that means that it is most likely invested.

I’m not saying people shouldn’t make a lot of money for their talent and hard work. I’m saying that they shouldn’t be able to change the rules so they can hold on to all of it, and block the next generation(s) from having the same chances.

Once the credit runs dry and unemployment rises even further, you’d best read up on what the French Revolution was about. Hint: it wasn’t envy.

economies exist because groups of people agree to trade with each other in various ways. the group sets the rules. the rules are there to make the economy work better for everyone, at least in the long run.

you claim “Being rich does not mean being immoral”. hard to argue with that. but equally hard to argue with is the fact that there are plenty of people who ARE immoral and rich. i’m not envious of them – i’m angry with them.

the current rich and powerful didn’t play by the rules. they changed the rules, and they broke the rules. the vitriol isn’t envy – its the same as the anger you would have at the person who broke into your house. the hypothetical “free market” landscape in which companies and individuals compete to offer services and goods has been dead for a long time, if it ever truly existed, and what you have now is a collection of rentiers erecting barriers to entry in the marketplace and in the legislatures.

http://www.amazon.com/Wealth-Our-Commonwealth-Accumulated-Fortunes/dp/0807047198

Gates, whose son cofounded Microsoft and became the wealthiest man on the planet, teams up with Collins, program director of the nonprofit United for a Fair Economy and Responsible Wealth, to explain why the government should continue to levy estate taxes on the fortunes of America’s wealthiest citizens (which President Bush, advocating its elimination, has provocatively called the “death tax”). In reviewing the tax’s history, the authors explain the Founding Fathers’ concern with maintaining conditions of equitability that would enable any American with sufficient ambition and perseverance to accumulate a fortune within his lifetime without creating a new aristocracy. The robber barons of the Gilded Age thwarted those intentions, so the estate tax was established in 1916. The tax was controversial from its inception, and the authors reveal how carefully orchestrated efforts by a handful of wealthy families, think tanks and PR firms drummed up public opposition in the 1990s, even though the tax didn’t apply to most Americans.
Congress voted to repeal the estate tax in 2001. It’s bad enough, Gates and Collins argue, that the government will lose $30 billion a year over the next decade because of the repeal

I asked him how he made his money, and he told me, and I asked him how his customers paid him, and he told me, and I asked him what they would use to pay him if they didn’t have any money, because the wealthiest people had it all and gave it to their children. He hadn’t considered it.

Then I told him that the only reason he was able to better himself was because some angry folks got together around the turn of the 20th century and instituted an estate tax. I told him that he could have worked his fingers to the bone for his whole short life before then and never made a dime of profit, because there just wasn’t enough money being spent. And at the end of it, I think I made him see the economy as something other than a morality tale with ants and grasshoppers.

People can be convinced. You just need to get them away from their friends.

You say that people will pay X for a service “only when they prefer the good/service more than the money in their hands.” That’s true. But what if the good/service costs more than they can reasonably pay? If I can afford to hire a $500/hour tax attorney, I can keep a lot more of my pay, regardless of my salary. Problem is, very few people making $30,000/year can afford that. So someone with more money is in a position to keep it regardless of my ability/desire to pay for similar treatment.

And buying the time/attention of the politicians who create the tax rules falls under the same condition. If I can write Rep. X a check for $5 million on behalf of a bunch of rich people who want Exemption Y continued… guess what happens to the group of people who can’t afford to write that check? Their exemptions go away (or never existed).

There will never be a level playing field, no. “Them that has shall gets, them that’s not shall lose.” Money always will help. You can be a much more comfortable idiot with a lot of money. That’s fine. What we’re seeing, though, are systems put in place that discourage actual merit in favor of people who can pay to get around and change the rules that would normally encourage improvements.

We’ve confused the size of the trophy with the requirements to do something trophy-worthy. It’s like the winners in a race getting to decide how to run, judge and reward the next race. I got no beef with people who win getting to enjoy the spoils… I just don’t want them to be able to redefine “win” forever and ever.

Ha, that is simply untrue in many cases, never mind that the hierarchy that you so passionately defend often just rewards existing wealth with more wealth.  Rentier capitalism, shifting/controlling/conjuring up assets, none of this has to do with providing or “doing’, and that has become even more painfully obvious with the great recession. When bosses of failed banks get rewarded for their failures, do you think people are *angry*, or just “envious” as you suggest?

There’s a reason that the poor in the U.S. mostly stay poor while the rich almost all stay rich, and it has nothing to do with “merit”.