A Formula for Inequity, Told in Four Generations

Tom the Dancing Bug, IN WHICH Lucky Ducky and Hollingsworth Hound, and their forebears, demonstrate that r is indeed > g.

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  1. Let's pretend that you do really well for yourself. You are able to leave your kids a million dollars each. They invest it in companies that shuffle financial dealings around like mortgages but don't actually invest in products or services. They then live off the investments and do not have to actually work or use their capital to make life better for others but instead just raise rents on the real estate or keep ahead of the financial markets by charging high APRs, putting others further down in a financial hole.

    When they have kids they then give their kids three million dollars and those investments maintain a high level of living with no job creation or products, only financial shuffling. Or they send their cash overseas to a holding company that hides any taxes from the US government.

    It's this latter behavior that is being demonized here, not people who invest in products or services that add to the economy. The idea that some people are born on third base and act like they had to do a lot of work to get a triple when they've never used a bat.

  2. Both are entirely fair. In the first you are pretty dumb if you bet more than $1, but I don't understand why it would be called "unfair." The only thing that is unfair is that the game doesn't give people who already have a lot of money more options than people who don't. The assumption that we are supposed to reward people for already having money is so baked into our culture that you actually think it's unfair when we don't.

    We need facts, not thought experiments, and the facts are in. Having money earns a better return than any kind of work and if you have enough money the risk disappears. Let's make another game to contrast to the ones you've presented:

    3) The minimum bet is $1000. If you win you get $2010 back, if you lose you lose your money.

    The very poor can't afford a ticket. The less poor can't afford to risk losing $1000 for such a modest return. But if you had $1B then you'd buy 1M tickets and the game would make sure you won $5M. This is much closer to the reality of investment. Risk is not rewarded, wealth is.

    I'm very happy that successful and talented people can earn six figure salaries, and that people in very demanding professions can do the same. When six figures becomes nine, ten, or eleven we are handing extremely outsized influence to individuals who will use that influence to alter the system to favour them.

    If you want to understand how the system is broken, just look around at the high unemployment and crumbling infrastructure. We've got lots of work that needs to be done and lots of people who want to do work, but we are paralyzed when we ask, "Who is going to pay for it." It's another way of saying, "We can't do anything to better ourselves without the permission of the rich." How is that making things better?

  3. Unfortunately, those of us that start businesses aren't what would generally be referred to as rich. I, like yourself, come from a humble background, and through a combination of luck and hard work have "Made It". My family doesn't have to worry about income related issues. We are in the top 5% of US earners as a household.

    The one thing I have learned is that it is much easier to hand our savings to an asset manager and say "Make us money with the following guidelines...." At the end of the year our manager says, "Hey look at this money you earned, minus my fee! You owe 15% tax on that. Oh, and I'm referring you to an accountant friend to help you offset that.". Our household wealth, due to growth of invested assets, is growing much faster than our employment income. Before you ask, yes, we have a small business owner in the household.

    Compared to the taxes paid on the money we earn in our demanding 50+ hour/week jobs, 15% is paltry. This illustrates a key point. Those that have money, particularly those with millions of dollars, are able to accumulate wealth at a much faster rate than those burdened with the need to work for it. This is driven by flat or diminishing incomes for the vast majority of households, a concentration of wealth into the hands of fewer and fewer people, and a tax code that disproportionately taxes work compared to wealth. As a member of the top 7%,we have experienced the growth illustrated by the following Pew report: http://www.pewsocialtrends.org/2013/04/23/a-rise-in-wealth-for-the-wealthydeclines-for-the-lower-93/. My father's household, who is in the lower 93% can tell you all about the drop in wealth he's experienced, primarily due to an increase in costs that he must pay (medical, housing, general inflation) that far outstrips the growth he and his wife have seen in their incomes.

    So, I'm sorry, but I disagree. My household should be paying more taxes, and the "lazy rich" should be paying a hell of a lot more, while my father and his cohort should be seeing both more income and fewer taxes.

  4. You lost all credibility as soon as you put “poor” in scare quotes, or maybe a few words earlier. Poor people are not exempt from sales or Social Security or property taxes, or the various flat fees that hit them grossly disproportionately (i.e., $175 to renew your driver’s license is sofa-cushion change to even middle-class people, but for someone on minimum wage who needs that license to keep her job it’s a big hit, the kind that ruins not only her Christmas but the four months after that too.) Not to mention all the other costs that aren’t technically taxes but still need to be paid. Repeating the lie that “poor people don’t have to pay taxes” is a libel and a sin and y’all need to knock it the fuck off.

  5. Wow, only four sentences in and you're already working under the assumption that the people at the bottom of the food chain have houses they can mortgage.

Continue the discussion bbs.boingboing.net

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