Author
|
Topic: Income Gap Is Widening, Data Shows (Read 2482 times) |
|
Blunderov
Archon
Gender: 
Posts: 3160
Reputation: 8.90
Rate Blunderov
"We think in generalities, we live in details"
  
|
 |
Re:Income Gap Is Widening, Data Shows
« Reply #15 on: 2007-04-09 20:06:56 » |
 |
[Lucifer]
...I find it weird that other organizations pay their employees huge sums to throw balls through hoops. But shouldn't private companies be allowed to pay their employees whatever they negotiate?
[Bl.1] 'Nothing is either good nor bad but thinking makes it so'. A different world view might consider such behaviour as profiteering; the taking of cynical economic advantage of the misfortunes of others. There are limits it seems, even for free market libertarians who sometimes call for controls on price gouging in emergency situations. Quite where one draws the line exactly I'm not too sure.
[Lucifer]
I agree envy is a big problem, but it makes a very poor foundation for social policy.
[Bl.1] I agree. A sad reality but there it is; it must be reckoned with.
[Bl.]I'm not yet conviced that my assumptions are false. Whilst rich people may not hoard cash they divert massive amounts of money into currency transactions which syphon money out of the economy without adding a whit of value to anything at all. It's a private rich peoples' club for making money amongst themseves by taking it away from the people who work for it.
[Lucifer]
What are you referring to here? Do you have links to any articles I could read to learn more?
[Bl.1] I thought this quite illuminating.
http://www.socialismtoday.org/105/capitalism.html
<snip>
Globalisation & the US-China axis
ONE OF THE most significant trends since the 1990s has been the enormously increased role of finance capital, most dramatic in the US and other ‘Anglo-Saxon’ economies. In the US aggregate profits of financial corporations were about one-fifth as big as non-financial profits in the 1970s and 1980s. By 2000 they were more than half as big. This development reflects one of the basic trends of the neo-liberal phase. On the one side, there was a restoration of profitability (through intensified exploitation of workers); on the other, a stagnation of global accumulation (with notable exceptions such as China). Profit levels in major OECD economies in the 1990s returned to the peak levels of the 1960s. Yet the growth of fixed capital stock was only half the level of the 1960s. More and more profits have been channelled into financial speculation rather than productive investment. The international, short-term capital flows associated with speculation are extremely volatile, and increasingly threaten to destabilise economies
The finance houses, of course, channel some of their investments into manufacturing, construction, and infrastructure developments. But their drive for the maximisation of profits, often judging results on a quarter-to-quarter basis, puts intense pressure on corporate managers to squeeze as much as possible from their workers, as quickly as possible. Short-termism reigns.
This is dressed up as the search for so-called ‘shareholder value’. But share ownership is in fact highly concentrated and financial institutions (investment banks, insurance companies, mutual funds, hedge funds, etc) wield immense power over corporate bosses and governments. Their drive for short-term gain reinforces the underlying polarisation of wealth within society.</snip>
|
|
|
|
|
Walter Watts
Archon
Gender:
Posts: 1571
Reputation: 8.89
Rate Walter Watts
Just when I thought I was out-they pull me back in
|
|
Re:Income Gap Is Widening, Data Shows
« Reply #16 on: 2007-04-09 23:47:44 » |
|
I guess I have some socialist leanings hidden deep within.
Unfettered capitalism does seem somewhat mythical when compared with reality.
I found the following comment morally refreshing. It's from the post:
http://www.churchofvirus.org/bbs/index.php?board=69;action=display;threadid=38973
--WW
---------------------------------------------------------------------------------------------------------------
Profit, I learned as a child, is a cost of doing business in a capitalist system. Just as an honorable ongoing business will pay its workers, taxes, power bills and hundreds of other obligations it also pays investors in the form of profit. Profit is one more bill that must be paid.
By this understanding, a goal of maximizing profit makes no more sense than a goal of maximizing the health insurance costs. That so many businesses have adopted profit as an absurd goal rather than a necessary expense only serves to increase the cost of capital and handicap business achievement.
What do we really want business to achieve? How about goods and services. Quality jobs. Innovation. Wise use of resources.
Profit? Like other bills, it is to be paid at the lowest rate possible.
— Posted by George Cottay
-------------------------------------------------------------------------------------------------------------
|
Walter Watts
Tulsa Network Solutions, Inc.
No one gets to see the Wizard! Not nobody! Not no how!
|
|
|
Blunderov
Archon
Gender:
Posts: 3160
Reputation: 8.90
Rate Blunderov
"We think in generalities, we live in details"
|
|
Re:Income Gap Is Widening, Data Shows
« Reply #17 on: 2007-04-10 08:43:00 » |
|
Quote from: Walter Watts on 2007-04-09 23:47:44
I guess I have some socialist leanings hidden deep within.
|
[Blunderov] I think a combination of Capitalism with Conscience and Sensible Socialism could achieve wonders for the human condition world wide.
With regard to profit considered as an expense, my mother-in-law, whom I admire tremedously, is the only person I actually know who lives by this principle. Recently she demanded a LOWER price for the house which she was selling. Of course this incensed the agent who had a vested interest in the form of a percentage of the sale price but the Politburo's mother had her way.
(I am surrounded, you will gather, by some rather formidable women. Sometimes that works out OK. Other times, not so much.)
Best regards.
|
|
|
|
|
David Lucifer
Archon
Posts: 2642
Reputation: 8.94
Rate David Lucifer
Enlighten me.
|
|
Re:Income Gap Is Widening, Data Shows
« Reply #18 on: 2007-04-11 11:32:17 » |
|
Quote:
The finance houses, of course, channel some of their investments into manufacturing, construction, and infrastructure developments. But their drive for the maximisation of profits, often judging results on a quarter-to-quarter basis, puts intense pressure on corporate managers to squeeze as much as possible from their workers, as quickly as possible. Short-termism reigns.
|
So before I get into this I want to ask, is it your opinion that the global finance markets serve no useful purpose (other than extracting wealth from the besieged working class)?
|
|
|
|
|
Blunderov
Archon
Gender:
Posts: 3160
Reputation: 8.90
Rate Blunderov
"We think in generalities, we live in details"
|
|
Re:Income Gap Is Widening, Data Shows
« Reply #19 on: 2007-04-11 12:27:36 » |
|
Quote from: David Lucifer on 2007-04-11 11:32:17
So before I get into this I want to ask, is it your opinion that the global finance markets serve no useful purpose (other than extracting wealth from the besieged working class)?
|
[Blunderov] Well I'm sure it serves a very useful purpose for capitalist imperialists. Whether the rest of humanity derives the same, or even any, utility from the system seems to me to be very much up for debate.
"Lenin saw imperial capitalism spreading through two structures of the IPE: production and finance. Both of these structures were so constituted, under capitalism, as to create dependency and facilitate exploitation. Cutthroat competition among poorer nations made them easy targets for monopolies in the production structure in the capitalist core. The same forces were at work within the finance structure, where the superabundance of finance capital, controlled by monopolistic banks, was used to exploit less developed countries...The same forces that drive the bourgeoisie to exploit the proletariat ultimately drive the capitalist core nations to dominate and exploit less developed countries."
http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/ess_leninscritique.html
|
|
|
|
|
MoEnzyme
Acolyte
Gender:
Posts: 2256
Reputation: 4.69
Rate MoEnzyme
infidel lab animal
|
|
Re:Income Gap Is Widening, Data Shows
« Reply #20 on: 2007-04-11 12:47:24 » |
|
As a Democrat, I suppose I am already considered part of the problem by those promoting the envy/greed problem. Personally I don't see income disparity by itself as the root of any relevant problems, although it may serve as a symptom of things going wrong depending on other factors. To me basic quality of life (especially as it relates to overall workforce productivity) and possibilities for individual economic advancement are much more important concerns. In this sense, if we provide for a productive bottom line, income disparity actually increases individuals' sense of possibility and hence their commitment to a system which can realize such possibilities. If it really is possible for any sufficiently motivated and talented person born in the bottom of the heap to move into the company of the Bill Gates of our society, than such income disparity provides if anything a greater sense of possibility.
At this point, I'm not going to pretend that we have that issue solved. Personally I favor some sort of universal health coverage and education for just such a reason. If people willing to take personal responsibility for their health and education are given the means to fulfill that will, they become much more willing and able to consider other longer term risks for their personal advancement. In short if the poorest can at least avail themselves to some basic education, health care, and real economic opportunity, I don't think government owes anyone a solution to their personal envies. I think most Republicans refuse to see these realities, but this certainly isn't the Socialist solution either.
|
I will fight your gods for food,
Mo Enzyme
(consolidation of handles: Jake Sapiens; memelab; logicnazi; Loki; Every1Hz; and Shadow)
|
|
|
David Lucifer
Archon
Posts: 2642
Reputation: 8.94
Rate David Lucifer
Enlighten me.
|
|
Re:Income Gap Is Widening, Data Shows
« Reply #21 on: 2007-04-11 20:19:58 » |
|
Quote from: Blunderov on 2007-04-11 12:27:36
[Blunderov] Well I'm sure it serves a very useful purpose for capitalist imperialists. Whether the rest of humanity derives the same, or even any, utility from the system seems to me to be very much up for debate.
|
It is true that every financial derivative contract such as an interest-rate swap or a foreign-exchange multi-touch digital option has a speculator on one side, someone who stands to gain by correctly predicting how the risk factors are going to move in the future. But what you have to understand is that every contract has a counterparty, someone who buys in to hedge their risks. These instruments are insurance for the business world. So unless you think insurance serves no useful purpose I think you'll have to revise your assumptions here.
|
|
|
|
|
Blunderov
Archon
Gender:
Posts: 3160
Reputation: 8.90
Rate Blunderov
"We think in generalities, we live in details"
|
|
Re:Income Gap Is Widening, Data Shows
« Reply #22 on: 2007-04-12 08:29:27 » |
|
Quote from: David Lucifer on 2007-04-11 20:19:58 It is true that every financial derivative contract such as an interest-rate swap or a foreign-exchange multi-touch digital option has a speculator on one side, someone who stands to gain by correctly predicting how the risk factors are going to move in the future. But what you have to understand is that every contract has a counterparty, someone who buys in to hedge their risks. These instruments are insurance for the business world. So unless you think insurance serves no useful purpose I think you'll have to revise your assumptions here.
|
[Blunderov] Well, perhaps I can define my sheep back inside the pen by suggesting that insurance is the exception which proves the rule? Or that the principle of distributing risk fairly across the risk taking community speaks to quite a socialist, in the sense of collective, ethic?
OK, insurance can add value. This is by no means the case with all financial instruments however. And I do think there are larger moral considerations in relation to some kinds of insurance which need to be considered.
If persons or businesses are largely immunised by the insurance industry against the effects of crime, the motivation to deal with the actual problem is reduced. And once again the underclass is thrown to the wolves; they have neither the advantage of insurance nor the commitment of leadership to tackle the root problem. The cracks are simply papered over and devil take the hindmost.
Going back to a previous point about envy, I happened across this interesting post at Future Pundit
People Will Spend Money To Make Wealthier Poorer
James Fowler at UC San Diego and colleagues have performed an interesting study about the willingness of people to spend their own money to lower the wealth of others. (PDF format)
Participants in laboratory games are often willing to alter others’ incomes at a cost to themselves, and this behaviour has the effect of promoting cooperation1–3. What motivates this action is unclear: punishment and reward aimed at promoting cooperation cannot be distinguished from attempts to produce equality4. To understand costly taking and costly giving, we create an experimental game that isolates egalitarian motives. The results show that subjects reduce and augment others’ incomes, at a personal cost, even when there is no cooperative behaviour to be reinforced. Furthermore, the size and frequency of income alterations are strongly influenced by inequality. Emotions towards top earners become increasingly negative as inequality increases, and those who express these emotions spend more to reduce above-average earners’ incomes and to increase below-average earners’ incomes. The results suggest that egalitarian motives affect income-altering behaviours, and may therefore be an important factor underlying the evolution of strong reciprocity5 and, hence, cooperation in humans.
It is no wonder that redistibutive taxes are popular. Economists argue against highly progressive taxes by claiming (probably accurately) that such taxes reduce economic growth. But the participants in this experiment showed themselves willing to reduce their own net worths in order to reduce the net worths of wealthier people. The economists therefore are arguing against a harm that many people are in fact quite willing to inflict on themselves. I see this as driven by a need to lower the status of others who have much higher status. The feeling of one's status position is a relative feeling. If the money spent lowering status of others is less than the money lost by others then policies that do offer considerable appeal.
To separate motives, we use a simple experimental design to examine whether individuals reduce or augment others’ incomes when there is no cooperative normto advance (see Methods). We call these behaviours ‘taking’ and ‘giving’ instead of ‘punishment’ and ‘reward’ to indicate that income alteration cannot change the behaviour of the target. Subjects are divided into groups having four anonymousmembers each. Each player receives a sum of money randomly generated by a computer. Subjects are shown the payoffs of other group members for that round and are then provided an opportunity to give ‘negative’ or ‘positive’ tokens to other players. Each negative token reduces the purchaser’s payoff by one monetary unit (MU) and decreases the payoff of a targeted individual by three MUs; positive tokens decrease the purchaser’s payoff by one monetary unit (MU) and increase the targeted individual’s payoff by threeMUs. Groups are randomized after each round to prevent reputation from influencing decisions; interactions between players are strictly anonymous and subjects know this. Also, by allowing participants more than one behavioural alternative, the experiment eliminates possible experimenter demand effects12—if subjects were only permitted to punish, they might engage in this behaviour because they believe it is what the experimenters want.
Over the five sessions income alteration was frequent. Among participants, 68% reduced another player’s income at least once, 28% did so five times or more, and 6% did so ten times or more. Also, 74% of participants increased another player’s income at least once, 33% did so five times or more, and 10% did so ten times or more. Most (71%) negative tokens were given to above-average earners in each group, whereas most (62%) positive tokens were targeted at below-average earners in each group.
I see a lesson here that is applicable to the immigration debate: Human societies have a limit to the amount of inequality that people will tolerate. Given that many of the forces that generate inequality do so by incentivizing the most productive to generate wealth we should ask whether we should avoid other policies that generate inequality without generating much wealth.
To put it another way: Think of societies as having inequality budgets. A society has a fixed amount of inequality to spend. In my view it is better to spend that inequality on policies that cause economies to generate the most wealth per person and the most new technology and science. Policies that generate a lot of inequality with little increase in productivity of wealth creators (e.g. immigration of people who have low skills and low earnings power) essentially waste inequality that would be better spent on incentive systems for those with the most potential to generate wealth.
Beyond some level of inequality the masses will demand taxes and other measures to limit the extent of inequality. The masses probably wont' show fairness or wisdom when they demand such taxes and other restrictions on the power of wealth. But by supporting such policies they are catering to their own very deeply felt needs for higher relative status and a reduction in the feeling that wealthier people control their lives.
One of the fundamental problems I see in the world: Globalization is making people part of much larger status hierarchies. In an earlier era of much less communications technology one could only worry about one's status vis a vis one's local community. Now one can develop an appreciation of what one's status is vis a vis all the billionaires or all the national leaders or all the corporate CEOs or all the best athletes or prettiest models around the room. This inevitably gives most people a much larger group of people who seem like they have higher status. Therefore global feelings of lower relative status might well be growing.
By Randall Parker at 2007 April 11 11:56 PM Brain Economics |
|
|
|
|
|
MoEnzyme
Acolyte
Gender:
Posts: 2256
Reputation: 4.69
Rate MoEnzyme
infidel lab animal
|
|
Re:Income Gap Is Widening, Data Shows
« Reply #23 on: 2007-04-12 14:36:14 » |
|
Certainly a confined game points up some basic human behavioral dynamics of envy and greed. It shouldn't surprise anyone reasonable that the universe of humans are on average funamentally capable of greed and envy. However this operates in the less defined and more open real world cannot ignore individual and cultural factors which might affect one's choices in a supposedly confined game.
How large is the universe of other players the player in question considering as far as status goes? Perhaps the lowest paid US citizens are actually higher (>50%) in status (standard of living) if they considered themselves within a globalized labor market. Do they actually consider themselves this way? Does providing an individual with a few basic things like health care and education change such attitudes and perceptions?
Of course modern media sources tell anyone listening of such global realities, but to whom is such information even meaningful? Does a worker without health insurance (or other socialized medical solutions) and a lack of education rationally compare themselves to somebody in India they are only likely to encounter on the telephone for technical support, and then highly unlikely to compare personal notes with?
My guess is that if a few of these more basic needs are met, an individual is less likely to punish those at the top of whatever inequality we are considering. On the other hand if more basic needs aren't met, I'm guessing the subject is much more willing to punish anyone either relatively higher than themselves, perceptually higher than themselves, or even those they simply feel competition with. "Those funny-sounding foreigners on the phone are stealing my opportunities" even if they are actually worse off than the subject. I think Maslow's hierarchy of needs has something to say about that, and that it really has far less to do with raw inequality as it does as it does with meeting more basic human needs.
http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs
|
I will fight your gods for food,
Mo Enzyme
(consolidation of handles: Jake Sapiens; memelab; logicnazi; Loki; Every1Hz; and Shadow)
|
|
|
Hermit
Archon
Posts: 4287
Reputation: 8.94
Rate Hermit
Prime example of a practically perfect person
|
|
Re:Income Gap Is Widening, Data Shows
« Reply #24 on: 2007-04-17 18:40:54 » |
|
Lucifer
When I said, "Which I think leaves this putative response in tatters." I was referring specifically to "This has changed because the extremely rich generally got that way through commerce, not conquest or force" which of course was your reply to my comment that "Historically it is one of the principle leading indicators of social instability. Why should this have changed?" and rejected the idea that the way the wealthy get rich world has changed in any significant way, because, since we started keeping written records, there is no time in recorded history that rulers have not been forced to extract money from their populace to support their wars and colonization programs, rather than their wars or colonies providing them with wealth.
Which takes us right back to why this is a very bad idea.
You might also consider the tests which show that we share a very finely tuned "fairness evaluation system" with other apes. And (these numbers from memory so potentially wrong) when Japan has a 30:1 ratio between highest and lowest remuneration packages paid in their companies and America has a 20,000:1 ratio, one has to wonder whether it is that the the lowest paid Americans are really significantly worse producers than Japanese workers, or whether it is the American managers that are so much spectacularly better than their Japanese competitors.
Having said that, and related to the specific instance initially raised, Americans are working far harder, with higher productivity, for longer hours than the people of any other nation. And repeated quality of life surveys show that Americans have much less for it, except when it comes to debt, and what little they have is generally of poorer quality - and this traps the next generation into the same miserable pattern.
So far as I am aware, all of the "hopeful" economic ideas being propounded are based on there being continuous growth. And like Russia before us, we are running into immovable objects that are going to scupper that idea permanently. Like clean water. And cheap fuel. And a befuddled population of people who are about to discover that they owe far more on their properties than they will ever be worth. These are no longer problems for the next generations. These are problems being faced by people around the world today, and in the near future, in America. It is going to get much worse and I doubt it will be getting better.
There are answers to it, but I don't think we are going to take them. In my opinion, the most fundamental is that we have misunderstood money since somewhere between 2000 and 1000 BCE. Money was instantiated as an alternative means of value representation when grain storage was socialized (which was very good) and so could not be used for barter, and somehow rather than plenty for all (the original very successful plan and outcome) came to represent value which is instituted only through scarcity (ie a thing is perceived as valuable only when not everyone has it or can have it).
Consider alternative games, because if we don't learn how to play them I rather think we are going to have a rather torrid time in the near future. I do have some suggestions, but as you know, I'm rather busy.
Kindest Regards
Hermit
|
With or without religion, you would have good people doing good things and evil people doing evil things. But for good people to do evil things, that takes religion. - Steven Weinberg, 1999
|
|
|
|
Logged
