Why "x% of people have y% of the wealth" is irrelevant.

[Borodog]

I've seen this tired old horse trotted out so many times it's pathetic. It's time to finally put it out of my misery.

A) The pie is getting bigger. It does not matter if 3% of the people own 90% of the wealth (numbers from another thread which I will not bother to investigate or dispute, since it is irrelevent regardless of what the numbers actually are), if the standard of living of the individuals continues to go up, which it does in a capitalist society. It doesn't matter if the "Gini" coefficient, a measure of "wealth concentration" continues to go up, because the standard of living of all individuals in society continues to go up. Anyone who doesn't believe this is invited to compare the standard of living of a modern janitor in the United States to kings and queens of prior centuries. The standard of living of the janitor is higher in practically every respect, with the exception of the ability to command servants.

B) Wealth turns over. As pvn has pointed out before, empirical studies have shown that 90% of affluent families lose their fortunes within 3 generations. Under capitalism, fortunes can only be build by continually innovating and pleasing large numbers of customers. Once that process stops, say when dilletant children take over the family business, poor decisions accumulate and that capital stock is lost, spent. It finds it's way into the hands of other capitalists better able to provide consumers what they want.

C) Concentrated wealth is good for consumers. Henry Ford started out with a capital investment of $25,000. By 1947 he was worth $1 billion. The reason he was worth $1 billion is because he provided consumers with what they wanted, a high quality inexpensive automobile. Better yet, he could provide high quality inexpensive automobiles because of the high productivity of his plants, which was only possible because of, you guessed it, a large capital accumulation; i.e. the factories and machineries whose value represented most of his $1 billion of "wealth". I.e. the vast majority of the "wealth" that all those evil capitalists have is the capital stock that they put to work for YOU. I don't have to own Ford to benefit from all of that capital. I don't even have to be a stockholder. All I have to do is buy a car, at far higher quality than I could build myself, and at far lower cost, and I gain the MASSIVE benefit of all that accumulated capital and productivity. I don't have to own Exxon's oil derricks, refineries, pipelines and trucks to gain the benefit of all that accumulated capital. All I need do is buy the gallon of gas at far lower cost and higher quality than I could ever hope to provide myself.

[pokerbobo]

Great post Boro...just wanted to add something for everyone to think about.

I often hear about the gap between rich and poor getting bigger.....What is better?

Choice 1) Rich people all have ten million more than they had last year...poor people all have 10000 more than they had last year. Net result rich to poor gap grows by almost ten million.

Choice 2) All rich people have 10 million less than last year...all poor people have 1 dollar more...net result rich to poor gap is smaller.

Do you socialists really want the gap between rich and poor to be smaller...or do you just want to stick it to the rich so they are a little bit closer to the hardships of being poor.? Be honest with yourselves.

[Arnfinn Madsen]

[ QUOTE ]
Do you socialists really want the gap between rich and poor to be smaller...

[/ QUOTE ]

I am probably a socialist based on American nomenclature (I wouldn't be called in Europe). That the gap becomes smaller to the richest is not an important goal, it is about securing an adequate living standard for everybody. You cannot do that in any way which will not hurt the rich either through direct taxation of them or through any other interference into business life that will affect them negatively. For me the x% has y% is more a way to show that there are funds available for distribution.

[TomCollins]

[ QUOTE ]
[ QUOTE ]
Do you socialists really want the gap between rich and poor to be smaller...

[/ QUOTE ]

I am probably a socialist based on American nomenclature (I wouldn't be called in Europe). That the gap becomes smaller to the richest is not an important goal, it is about securing an adequate living standard for everybody. You cannot do that in any way which will not hurt the rich either through direct taxation of them or through any other interference into business life that will affect them negatively. For me the x% has y% is more a way to show that there are funds available for distribution.

[/ QUOTE ]
Wow

[GoodCallYouWin]

Despite your conclusion that there is something 'great' or 'morally right' about capitalism, it is in the end, just another economic theory. One that is working, to be sure, but still it has its flaws and will eventually be replaced by some other product of human reasoning and imagination. That you write off the symptom's of your systems failure you dismissively merely reawakens the viewer to your huge bias towards this system.

C) Are you so sure? Giving people what they want is not neccessarily "good for them". If my friend wants to commit suicide, should I give him a gun? Or if my friend addicted to heroin wants to shoot up, should I go out and buy him a needle? Happiness is not obtained by material things (nor, it is important to note it is not taken away by them) but there are things that can take away happiness. Starvation, for example, or a life dulled and removed from inspiration. Death. What is good for someone as a customer or consumer may not be good for a nation, or a person.

[LinusKS]

[ QUOTE ]
What do you think will stop this trend, so that it does not continue to the absurd conclusion of one small group owning all the wealth?

[/ QUOTE ]

When 1% owns 99% of all the stuff, the other 99% will rise up and take it - by force, if necessary.

[ QUOTE ]
Given the diminishing marginal utility of wealth, it would be generally preferable from a utilitarian perspective to spread wealth around as much as possible, if that spreading doesn't decrease the total amount of wealth created.

[/ QUOTE ]

From a utilitarian perspective, transfers are preferable even if they result in a net reduction of total wealth.

For example, if your annual income is ten million, ten thousand more or less is insignificant. It makes - literally - no difference. If you're making $10,000 a year, on the other hand, that amount of money is significant.

Even if transferring 10k from the owner to the worker somehow cost money - some of the money disappeared - the net result would be better than if you hadn't transferred the money at all.

[Arnfinn Madsen]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Do you socialists really want the gap between rich and poor to be smaller...

[/ QUOTE ]

I am probably a socialist based on American nomenclature (I wouldn't be called in Europe). That the gap becomes smaller to the richest is not an important goal, it is about securing an adequate living standard for everybody. You cannot do that in any way which will not hurt the rich either through direct taxation of them or through any other interference into business life that will affect them negatively. For me the x% has y% is more a way to show that there are funds available for distribution.

[/ QUOTE ]
Wow

[/ QUOTE ]

Hehe [img]/images/graemlins/cool.gif[/img]. I am not an extremist aka. communists or such, but I don't believe you have a 100% right to keep what you earn/have. I understand that taxing too hard is both hurting the economy and also crossing a moral line. But I believe that the boy next door is more entitled to your money for food and schoolbooks if he/his parents can't afford than you are too them for your own consumption. If you don't agree to that I am willing to use force to make it happen anyway.

[GoodCallYouWin]

The thing is, the real problem I have with taxes isn't that they're helping the person down the street... it's that they're not helping the person down the street. How are my taxes giving that kid food and school books? They're going to pay some beauocrat to sit in an office to create studies on the ways they waste our money.

[Borodog]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Do you socialists really want the gap between rich and poor to be smaller...

[/ QUOTE ]

I am probably a socialist based on American nomenclature (I wouldn't be called in Europe). That the gap becomes smaller to the richest is not an important goal, it is about securing an adequate living standard for everybody. You cannot do that in any way which will not hurt the rich either through direct taxation of them or through any other interference into business life that will affect them negatively. For me the x% has y% is more a way to show that there are funds available for distribution.

[/ QUOTE ]
Wow

[/ QUOTE ]

Hehe [img]/images/graemlins/cool.gif[/img]. I am not an extremist aka. communists or such, but I don't believe you have a 100% right to keep what you earn/have. I understand that taxing too hard is both hurting the economy and also crossing a moral line. But I believe that the boy next door is more entitled to your money for food and schoolbooks if he/his parents can't afford than you are too them for your own consumption.

[/ QUOTE ]

The problem with this is that, if accepted, everyone is then "entitled" to everything. All property claims become subjective verbal claims about who can put what to "the best" use. It's a recipe for never ending conflict. It destroys the very purpose of property, which is to reduce and resolve conflicts over scarce resources, not foment them.

[ QUOTE ]
If you don't agree to that I am willing to use force to make it happen anyway.

[/ QUOTE ]

Exactly my point.

PS. Why isn't the boy next door entitled to *your* money, and why don't you just hand it over instead of using force to take someone else's? My opinion is that the "compassion" that underlies this flavor of socialism is a hollow, empty compassion. The socialist doesn't actually care enough about the poor and the downtrodden to get off his duff or reach into his own pocket; he would rather stay on his duff and have a man with a gun reach into someone else's.

[Shadowrun]

The problem i have is when that top 3% or whatever number due to their power affect policy in a negative manner for everyone besides themselves.