Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
More battles at the political fringes
Published on September 25, 2007 By Draginol In World Trade Issues

Over at a fringe left-wing site, a discussion on economics recently came up. It was very interesting to see some of the viewpoints on how wealth is created and used and so forth.

Here are some of the highlights:

Income has nothing to do with it really. Income is only a derivative, the real culprit is WEALTH. Income comes in two ways, (1) from work i.e., being paid for your labor or (2) from WEALTH applied over time, whether you call it rent, interest, capital gains, property appreciation, or whatever. Those whose only income comes from work will never become wealthy.

On the other hand, the wealthy have gotten away for far too long, saying "who, me??" when it is time to cough up money for the common good. They all nod in agreement that wealth will trickle down, then they install an impermeable barrier to reduce that trickle to mere molecules.

I would propose something along the lines of Jonathan Swift's comments on children as to how the wealthy should be treated -- we should eat them! Every time I see a picture of Carlos Slim, I think that he's not slim at all, nice amount of marbling on that meat, he would be great barbecued. Maybe a little adobada marinade and then just plop him on the asadero --yum! The only drawback I can see is at first there would be a lot like Sumner Redstone and Kirk Kirkorian; way past their prime and tough and stringy. You would have to stew them a long time to make them palatable. But once all the old goats have been consumed, there would be better pickings among the ones left.

There is a certain logic in having them give back to humanity while they are alive, er make that shortly after they are alive, as it would just be a waste to let them be cremated way past the point of well done. If they wanted, they could even be memorialized with a plaque on the barbecue.

Next time you go to WalMart and see all those barbecues out front, think how nice it would be if one of Sam's kids was there, slow cooking with a spicy rub. Nothing like jerked rich jerk to whet the appetite.

Here you see someone who doesn't understand how the wealthy got wealthy and thinks that the wealthy don't give back to the "common good". This person is apparently unaware the the wealthy are the ones who pay most of the taxes. The top 1% pay over a third of the taxes. Moreover, the wealthy are the ones who overwhelmingly contribute the most to charity (ironically, statistically the very rich and the working poor are the two groups that give the most, even accounting as a % of income).

Another person has made an argument for having a cap on how much someone can make and then "force them out of the system":

I've always been partial to a "career cap" instead of an annual cap, upon which point one is kicked out of the system so that that accumulated mega-wealth then can't be used to further undermine the common good or manipulate the system further via lobbying, deregulation campaigns, anti-environmental propoganda, stockholder/board influence, RW thinktanks, accumulated interest, kickbacks to regulators/investigators, etc.

When I argued that a cap on income would create disincentives for people to work the response was:

Most inventors invent for the same reason musicians make music -- because it's what they do. Saying they couldn't become more than multi-millionaires probably wouldn't stop them.

The obscenely wealthy Walton family has done nothing of value for the country or the world -- once Sam died. The Walton children are now just parasites who make money by treating other people as shit.

Most people who have made valuable contributions to society made those contributions long before they would have hit any income cap.

Most of the people in the financial industry make money by gambling with other people's money -- not by producing anything of value to the country.

Most of the CEOs who run the giant corporations aren't necessarily any better than other people. They just belong to a very exclusive club that rewards failure. Fuck up one company and you'll be hired by another within a month. Look at George Bush -- screwed up every business he every touched, and was bailed out repeatedly, until he got his hands on the big enchilada and he's flushing that down the toilet, using both hands.

The idea that an income cap would stifle creativity and inventiveness is just corporatist crap. It's actually the other way around. A lot of inventiveness is stifled because the corporatists have made the cost of entry so high.

So the idea here is that the rich are hogging the wealth.  Wealth is produced by the people and the rich are people who are stealing this wealth. If we could kick these people out of the system, then other people would have their turn.

Or as one person wrote:

Make the income tax progressive again with no limit on the top marginal rate. Let it rise above 100%. It would be a polite way of asking the biggest pigs to step away from the trough and let the others have a chance.

In their reality, the Bill Gates or the Henry Fords of the world are easily replaced. Everyone can do what they did if they just got a chance instead of being held down by these "pigs".

Another person, arguing against my position that caps on income would remove the incentive for the most productive to keep working wrote:

You're assuming money is the reason extraordinary people do extraordinary things. I doubt that. Take away the money and extraordinary people would still do extraordinary things. Maybe more so.

Sociologists have known for a long time that in a "gift society" the motivation for greatness is still there - just different. The incentives are tribal status, self-fulfillment and altruism.

Obsessive money lust is pervasive nowadays, but societies without it have functioned fine.

The issue I take here is that what exactly is a "gift society".  Our society certainly doesn't match that.  Motivated people tend to be competitive whether that be in sports, business, or elsewhere.  Competitive people want recognition for their achievements. In athletics, we give trophies, medals, ribbons and other marks of success.  Our soldiers win medals and ribbons for bravey, tours of duty, etc.  And yes, successful businessmen buy things that demonstrate their success.  Perhaps if successful businessmen weren't so profoundly villainized in the media and in society in general but instead rewarded them with accolades, medals, etc. then the incentive for successful businessmen to purchase their own rewards would be lessened.

I argued that no one is 100% altruistic. There are limits.  I may enjoy writing software but there comes a time where it's not fun or I have to sacrifice something in order to achieve my objective. To do things that aren't fun, people have to be compensated. That's why I wrote the article "Robots of Capitalism" to illustrate this point.

But the response was that by my logic, garbage men should make a lot more money than CEOs because a garbage man's job is a lot less fun than that of a CEO.

To which I wrote:

A garbage man doesn't make as much as a professor (usually anyway) because the number of people who can be a garbage man are far more than the number of people who can be a professor.

As I mentioned elsewhere, the reason why CEOs and pro basketball players make so much is because only a tiny percentage of the population can do what they do at their level.

So what makes people mega rich? Again, it boils down to supply and demand: In a capitalistic system, how much we make is tied to how much wealth we produce combined with the competition for people who can produce that wealth.

The value of what we produce is determined by other people (which is what makes capitalism work in the first place). Bill Gates doesn't get to decide he's rich. Society does by valuing what he does enough to pay him for the products and services he provides.

The responses I got to this included:

If only the selfish personal motive is what you recognize that drives people because your mindset is authoritarian or 'free market' disciple, rather than elevating the common good out of common concern, you're not really equipped to be living in, or contributing to, a democratic society with the collective wellbeing in mind. A rising tide should lift all boats, not just the fanciest 5 ships in the marina; -especially if the rising tide or productivity is generated by those being cut out of their corresponding contribution.

To which I say: Yea, I don't like to do things I don't want to do. So sue me. If I'm doing things I find unpleasant, then I expect to get something out of it. But the nice thing in a capitalistic system is that by being rewarded for doing things that I don't enjoy, I might choose to produce things that I'm better at doing than other people rather than spending my time playing frisbee or something. And if the things I'm good at producing are valued by society, society does in fact benefit.

Human nature is pretty straight forward on this point: We want to do the things we want to do and we don't want to do the things we don't want to do.  Capitalism works reasonably well as a way to motivate people to do what they're good at rather than doing just what they want to do.

 


Comments (Page 3)
on Sep 26, 2007

Gene's world view is so different that there's really no basis for discussion.

To me, money is money. The question is purely who will create more wealth with that money - the government or the people with a proven track record at creating wealth.

If one looks at the government as just another very large corporation rather than as some benevolent entity that exists in a vacuum, I think it's easy to see that the only reason the government exists as it does is because it has a monopoly on the use of force to achieve its objectives.

Giving money to the government and expecting it benefit society more so than keeping the money in the hands of people who have proven they can make money (which benefits society) is illogical to the extreme.

on Sep 26, 2007

“No, you are just using insults since you have no arguments. I rely on professional experts like Friedman, Greenspan, Volker, and now Bernanke. Not a political hack. With an agenda.”

Walker is NO political hack. He heads the GAO. Greenspan has just published a book and appeared last week on 60 Minutes to say the fiscal policy of Bush with his deficits and tax cuts with no surplus was wrong. Paul O’Neil also said the Bush tax cuts should only continue so long as there was a surplus and for that Bush got rid of him.
on Sep 26, 2007
I read somewhere once, or maybe it was on some current affairs program, that rich people are better at telling lies. Primarily because they tell so many of them. The suggestion being that white lies move you forward, strict adherence to honesty doesn't. Basic schmoozing bullshit, "you look good", " your kids are great", that kinda crap.

So I dunno if the rich are greedy pigs but it seems they tell more porkers.

on Sep 26, 2007
So I dunno if the rich are greedy pigs but it seems they tell more porkers.


Seems someone does not know, and is just envious.
on Sep 26, 2007
Seems someone does not know, and is just envious.


Possibly but then that's their problem.
on Sep 26, 2007
Geez, how did this become a debate Col Klink's stupidity thread? Oh yeah, the moron actually posted here.
on Sep 27, 2007
MasonMSeptember 26, 2007 22:19:06Reply #36
“Geez, how did this become a debate Col Klink's stupidity thread? Oh yeah, the moron actually posted here”.

Since what I am saying is in agreement with Greenspan, O'Neil and Walker, I guess you are also calling them names as well. What stupidity you and others of your ilk post.
on Sep 27, 2007
Since what I am saying is in agreement with Greenspan, O'Neil and Walker


Quotes out of context and tangential to a discussion are not in agreement with anyone but your own one trick pony.
on Sep 30, 2007
Thank you, Draginol, for another insightful article. Since most of the users here live in the USA, you may have not recognized it, but the quotes VERY accurately resemble those of the late communist regimes in Eastern Europe.

I am an 18 years old Czech, so I myself had not a first hand experience, but I have read, heard and seen quite a lot from different sources, as I have been really curious about it. I think that most of the indented quotes would not look like strange ones if one described them as quotes from the communist regimes in Eastern Europe, especially from the toughest period of late 40's and early 50's. The last two indented quotes ("You're assuming..." and "If only the selfish personal motive...") are the most striking ones. After reading those, this connection popped up in my head almost immediately.

However, do not just rely on me. I think it would be quite worthy to go and get some old communist propaganda translated into English to see the things for yourself, although I am afraid that there won't be available so much of it, since after reading one easily realizes that it is utterly rubish. Problem is that most people after making this observation do not remember to keep it for others...

Nevertheless, the late communist regimes are perhaps also a very good showcase of what happens when the ideas mentioned are implemented in reality.
on Sep 30, 2007

Reply By: Jakub Kaplan

That is an outstanding post!  Thank you for sharing with us!

on Mar 06, 2008

 I agree with Jakub. Many of those comments sound alot like something you read from Marx. While I agree it all sounds real good, the reality is that anyplace in the world where it has been attempted has completely tanked. Human nature is what it is those in power will always have more money, at least in the capitalist system everyone has a chance of meeting their basic needs and beyond.

on Mar 06, 2008
There's nothing wrong with people getting rich, but there IS something wrong with a system where Warren Buffet pays a lower tax rate than his secretary -- especially at a time when the government is racking up massive debt.
on Mar 07, 2008

Warren Buffet would not pay a lower rate if this so called "progressive" tax system was scrapped in favor of something that worked. No tax credits, no deductions, no shelters, no tax defferal, no tax brackets everyone just pays a flat rate on ALL income. Say 10% was choosen, then a person making 30k a year pays 3k taking home 27k. A CEO making 3 million a year, but recieving an additional 5-10 million in bonuses or stock options would pay 10% of everything. 800k to 1.3 million. I gaurantee you that the rich would end up paying more tax but we would no longer be providing a dissincentive to excel. The only "disadvantage" is that legions of lawyers and accountants would find themselves out of work.

on Jul 01, 2008

An Intreseting corollary between the natural law of electronics and economics can be made   

if the votage pressure (capital) ever equals the resistance (totality of the system) the circuit (system) is dead

inreversely

The source sum must always be greater then the sum of its parts

on Aug 17, 2008

chrizzle
The only "disadvantage" is that legions of lawyers and accountants would find themselves out of work.
I'm sure they would find lots of work just trying to figure out how to value income and what income is. Let's face it, the ultra rich will always have more resources to reduce their tax burden. Case in point: one of Australia's richest men, Kerry Packer (RIP), would brag that he never paid any taxes.

As for wages, the tournament theory likely applies to explain why lots of people with almost the same level of 'desirability' for the job get widly different wages. It's not a perfect system, nor an equitable one, but it keeps the system going. No one said capitalism was perfect, it just seems to be better than the alternatives.

There probably is an element of chance. Possibly a big one. I certainly don't think anyone can make it, on the other hand, I think many people could have who don't. In reality, it's hard to tell because we only see the survivors. It's also easy, after the fact, to find a reason why. But strangely, when several companies/people are competing, people seem to have a harder time predicting who will win.

I do think that wealth inequality might be self-sustaining, past a certain point. It's not impossible to imagine how a small fraction of the population with the majority of the wealth could simply keep it in their own hands.

Conversely, it's also not hard to see how someone born into abject poverty has much less of a chance of getting out of it. I know some people do manage it, but how do we know who tries and fails?