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Jessica Olsen

Wealth Distribution - 0 views

robertdfeinman.com/...wealth_distribution.html

income money news distribution debate research politics us economy wealth inequality info

shared by Jessica Olsen on 12 Jan 13 - Cached
  • The democratic argument: The concentration of wealth in a small group allows for anti-democratic influence of social policy. The wealthy have the ability to create their own "think tanks" and astro-turf front organizations. These are then used to create the perception that the public is in support of their self-serving objectives. Recent studies have shown how these techniques were used in the repeal of the estate tax debate as well as in the rise of new factions opposing the liberal social policies of the Episcopal church. When such vast amounts of money are under the control of a tiny group the basic mechanisms of democracy are undermined
  • When the wealth of a society gets sufficiently unbalanced it ceases to valuable since there are no people with the resources to purchase it. During the French revolution most of the furniture in the estates was looted and much of it was used for firewood. It had no value in a peasant's home. It didn't fit, wasn't practical, and the decorative detail was useless.
  • So any plan that is going to shift the balance of wealth has to deal with issues of extracting real value from the accumulations of the wealthy without causing a drop in the marketability of the assets.
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  • Can wealth redistribution take place in the US? The least disruptive approach would be changing the tax code to be more progressive. This could be modifications to the income tax, the restructuring (not elimination) of the estate tax, and imposition of either wealth taxes or consumption taxes. The wealthy can be expected to object to all of these changes. In addition they have the political and economic clout to promote their self interests. A concerted effort by the people can succeed. Recent examples in countries like the Phillipines and Poland show the power the people can have when they join peacefully for a change in the organization of society.
  • Only the rich can create economic growth In the US this is contradicted by the history of our country. All the great industries of the 19th and 20th Centuries were created by individuals with no prior wealth. Andrew Carnegie, Henry Ford, Bill Gates, etc. started with essentially nothing and built huge enterprises. On the other hand the children of these entrepreneurs have not been especially noted for doing anything notable. Andrew Carnegie felt so strongly that each generation should make its own way that he left the bulk of his estate to charity. His children had to make their own way. The secret of a successful entrepreneur is his ability to raise capital to expand his enterprise. This is obtained from banks and selling stock and not generally from personal wealth. One doesn't need rich people to build a business. The capital of a bank can be $1000 from one hundred people or $100,000 from one person. The amount available to lend is the same. Wealth does not have to be concentrated to be available for investment. In the developed world much of the available capital comes from pension funds and is thus not provided by the wealthy.
  • The only areas which continue the patronage model and are still the domain of the wealthy are opera, classical music and big fine art museum
  • The fairness argument: As all people come into the world equally helpless they should ultimately reach at least approximate equality of condition when they mature. People have an innate sense of what is fair as many psychological experiments have demonstrated. The intrinsic sense of fairness requires basic economic equality.
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