Social Question

ETpro's avatar

Doesn't wealth always get redistributed?

Asked by ETpro (34202 points ) October 9th, 2012

Isn’t the whole point of money that it flows? What good would it be to anyone if it just stayed frozen in position, never being spent or earned?

Why is redistribution of wealth terrible when it is done by a democratically elected government to enhance the common good but wonderful when done by the most greedy and powerful among us in order to concentrate all wealth in their hands? Since wealth is going to be redistributed anyway, doesn’t it make sense for society to exercise some control over its accumulation in order to assure the common good? Can’t this be done without resorting to pure socialism (government ownership of all means of production and distribution of wealth)?

Was the redistribution of wealth during the age of the robber barons and trusts inherently more equitable than it was after Teddy Roosevelt broke up the trusts? Do we really want to go back to the Gilded Age, robber barons and monopolies with all redistribution of wealth going to the richest families on Earth? Why would we peons vote to do that?

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22 Answers

Qingu's avatar

Only the Invisible Hand of Our Lord and Savior, the Freemarket, can justly and virtuously redistribute wealth.

Surely you don’t think a democratically-elected government has the moral authority to decide how to allocate scarce resources!?

ETpro's avatar

Ha! That was a quick response. Indeed.

wundayatta's avatar

I’m tired of all these Romney supporters answering first. Socialists deserve equal time!

woodcutter's avatar

Sure, just like beer is only rented.

rojo's avatar

Mom aways said it was “made round to to round”.

Dad alway responded that is was “made flat to pile up”.

Linda_Owl's avatar

Unfortunately for us, our ‘Democratically’ elected government rarely sees those of us who have the least… because our ‘Democratically’ elected government officials are composed of the very ‘Robber Barons’ that would dearly love to return to the Age of the Robber Barons! Where the rich had all the power & all of the money, & there were no Unions & the rich were free to exploit the poor. For this mentality, a return to the ‘Gilded Age’ is a wet-dream come true.

ETpro's avatar

@wundayatta Hear, hear. I demand equal time for all!

@woodcutter Definitely a short term investment for me.

@rojo I think the right answer is a bit of both.

@Linda_Owl Some of our far-right members have actually argued that we did better as a nation in the Gilded Age. They see it as America’s moment in the sun.

Jaxk's avatar

It is the difference between the American Dream and the Liberal Dream of Utopia. It is the squashing of the upward mobility that has characterized America. Liberals like to talk about the upper class as a stationary group. Once there you stay there and no one else is admitted. That’s just not the case.

In America, no one’s station in life is cast at birth. If it were, Obama would be cleaning toilets. Upward mobility is the American Dream. As we move towards socialism, towards income redistribution, we limit that upward mobility. As we eliminate the ability to achieve, we relegate everyone to a lower standard of living. We don’t create wealth we create poverty. And what is even worse, we create a privileged political class. Not based on ability or hard work but rather on political connections and family ties.

Not everyone will achieve the American Dream but the opportunity is there. And that’s what keeps driving us forward. When you steal our dream, we’re done.

Qingu's avatar

Sounds great @Jaxk. The American Dream!

But I wonder why social mobility is more prevalent in places like Canada, Britain and Denmark than in America.

I’d also love to hear how you think cutting taxes for the rich and slashing spending that benefits the poor will somehow make it easier for poor people to climb out of poverty. I’m sure you have a wonderful explanation.

woodcutter's avatar

_ “Political connections and family ties”. Where would the wealthy be without those? It’s a bad thing only when poor people want them? Not taking sides but it looks like everything each side hates for the other side to have is better if they have it?

ETpro's avatar

@Jaxk If the American dream means leaving 80% of the country so depleted in resources that the consumer spending engine that drives our economy grinds to a halt, that will kill the goose that lays the golden egg. In 1983, the bottom 80% of Americans held 18.7% of the total net worth of the nation. By 2010, that share had shrunk to just 11.1%.

Jaxk's avatar

@ETpro

I don’t disagree with the numbers in your article only the conclusions. It is the last four years that account for the lion’s share of that change. And it was the 90s that the top 1% did the best.

The truth is that the housing bust destroyed a lot of wealth. The middle class was hit the hardest as much of thier wealth was tied up in thier homes. If you had $100K in equity and your home value dropped in half, you immediately went to negative equity. I don’t see the solution as raising taxes, I see it as recovering from this recession. We seem to be addressing the symptoms rather than the cause.

Obama has reduced the payroll taxes (temporarily) which he touts as a major accomplishment for the middle class. It works out to $20 some odd dollars a month. Meanwhile the price of gas has risen by $2/gallon costing the average middle class an extra $100 dollars a month. And we wonder why the middle class is going broke. They’ve lost the value in thier home and thier disposable income has dropped by $80/month. And those are conservative figures that only count the direct cost of gas. I won’t even start on the cost of regulation, I know you hate that.

This recession is killing us. We need to focus on getting us out of the recession and stop trying to fix all the problems in the world while we’re crippled. Let’s heal, then attack all the problems in the world.

Qingu's avatar

@Jaxk, I love the implication that Obama is somehow to blame for high gas prices.

It almost sounds like you’re arguing that payroll tax cuts should be even higher, to make up for energy price inflation.

Of course, you wouldn’t be arguing that, because you’re the guy who thinks that payroll taxes aren’t taxes and cutting them is fiscally irresponsible as opposed to cutting wealthy people’s taxes, which is awesome.

And I agree that the recession is Public Enemy Number One. One wonders why Republicans keep on torpedoing Obama’s American Jobs Act….

ETpro's avatar

@Jaxk Sorry, but if you follow the link you will see that the percentage of the nation’s total wealth held by the bottom 80% of Americans has been on a steady decline except for the Clinton years. It fell from 18.7% in 1983 to 16.1% in 1995, then climbed back to 16.6% under Clinton. It began falling again under W, and crashed from 15.0% in 2007 to 11.1% thanks to the Republican Great Recession. Blaming Obama for that is like blaming FDR for the damage of the Great Depression still being around in 1936.

Jaxk's avatar

@ETpro

I didn’t blame Obama for the loss, I blamed the recession. We lost over $4 trillion in wealth just in the housing market. The total national wealth shrank. It’s not so much that the rich gained as it is the middle class lost. That made the percentage of the wealth held by the middle class smaller. Now you seem to want to shrink the wealth of the higher incomes to compensate for that. I think it is much better to grow the wealth of the middle class rather than shrink the wealth of others.

If you believe that we have reached a new norm and that the president does not have the ability to change it, it shouldn’t matter who is in that office. I don’t buy that. Energy policy will affect the price of gas. Taxes and regulation will affect the number of jobs. And debt will affect the prosperity of all. I won’t measure success by how much we take from one group and give to another. The goal should not be to give more to the poor but rather to reduce the number of people who are poor. That number is growing which means what we’re doing isn’t working. It didn’t work in 1836 either.

ETpro's avatar

@Jaxk I totally agree that the most precipitous drop in wealth among the lower echelons was due to Bush’s Great Recession. I strongly disagree that the right course now is to double down on all the mistakes Bush and administrations before him made to bring on that financial crisis.

The wealthy have more wealth than they have ever had in the history of the USA. Our problem really is not that our millionaires, billionaires and major corporations are too poor. Our problem is the great bank of consumers who give the investors a reason to invest in new production—they are too poor—they can’t go out shopping. Corporate America is sitting on $2 trillion in cash. They are not going to invest it in new production and hire more workers to produce goods and services till the market for those goods and services recovers. Taking another trillion form the middle class and shipping it of to those that are flush with cash will only drive employment offshore, where it’s profitable to invest that cash right now.

Jaxk's avatar

@ETpro

Just for the record, it is only the ‘great recession’ because of the policies that won’t allow us to recover. We generated more tax revenue to the government under the Bush tax cuts than any time in history. The top 1% paid more in taxes under the Bush tax plan than they did under Clinton’s tax hikes. Inconvenient facts to be sure.

The trillions in profits are held overseas and can’t be brought back to the US without losing up to 30% in taxes. That’s why they’re kept and invested overseas. It seems a bit ridiculous to me to not allow these profits to be brought home and invested here. Unfortunately none of this has anything to do with small businesses which are struggling.

And the reason the middle class has no money to spend is because they are being stripped of every penny by the high cost of gasoline which gets sent overseas to the oil producing countries. What little they have left is stripped by the cost of regulation which goes nowhere. It is merely flushed down the toilet.

Higher taxes is not a solution to anything. The tax hikes Obama wants won’t even make a dent in the deficit but is likely to stall what little economic growth we have. The whole democratic argument on this is based on fantasy. Somehow the democrats have convinced themselves that taxes have absolutely no affect on the economy. A theory that is not supported by any economic model. Go figure.

ETpro's avatar

@Jaxk That, my friend, is probably the most ridiculous piece of partisan nonsense you’ve floated. If the underlying statistics happened to be true, it would make a great deal of sense. In the real world, however, where things differ substantially from the down = up, topsyturvy world of today’s US cons, the exact opposite is fact. The US hit its all time high in tax revenue as a percent of GDP in 2000 at the end of the Clinton Administration, topping out at 20.6%. In 2009 the outgoing Bush Administration’s policies had dropped that amount to 15.1%, which was the lowest percentage since 1950!

I totally agree that the tax hike on the wealthy will not balance the budget. The rich simply aren’t that rich. They can’t fully fund the current US government, or any government that would adequately address our nation’s needs, on their shoulders alone. We need a mix of budget reduction and tax enhancement to get rid of spending we don’t need and pay fully for that we do need. But we are still the richest nation in Earth’s history and it is ridiculous to maintain this is an unreachable goal and that we have to eviscerate the muscle and sinew that supports a modern nation state so the wealthy can pay a lower percentage than the upper middle class in taxes.

Jaxk's avatar

@ETpro

Yes, I knew you would find it inconvenient. If you look at tax revenue in constant dollars, you will see we hit our peak in 2007. That was under the bush taxes and was the highest revenues in history. If you look at the percentage of taxes paid by the 1%, they paid over 40%, also the highest in history and also under the Bush taxes. It is also significant to note the rise in tax revenues under Bush as opposed to the much slower recovery under Obama. The difference is startling.

I understand that as a liberal you’re required to use a lot of cutesy phrases like ‘up=down’ in order to add some validity to you theories, it gets the juices flowing but they have no place in any logical discussion. What you’re suggesting is a hike in taxes AND a cut in spending. We both know that is a disastrous combination that will throw the economy back into recession just as it did in 1937. It doesn’t make sense to throw the economy down the toilet just to serve your ‘Social Justice’ agenda.

ETpro's avatar

That’s a hopelessly partisan site, and it’s talking about total tax revenues, not revenues as a percentage of GDP, which is self àdjusting for inflation. The US and inflation grew over those 9 years.

Sorry, my right-wing friend, ut you bet on the wrong horse here. There is just no rational way to get numbers that stark to reverse themselves and come out the way your ideology demands they should.

Qingu's avatar

Also worth noting that the top 1% further concentrated its share of the wealth during Bush (though this was happening under Clinton too—has been since Reagan).

I mean @Jaxk, you do realize that the top 1% controls about 40% of the nation’s wealth, right? So I’m supposed to care that they pay 40% of the nation’s taxes… why, exactly? I mean I’m looking at that figure and wondering how they got away with it.

Qingu's avatar

Also, @Jaxk, I love how you now fully accept Keynesian fiscal policy. During a recession you want the government to cut taxes and raise spending, yes? Or, at least, not cut spending?

Because Obama’s stimulus did just that. So does the American Jobs Act, which Republicans torpedoed. And for four years Republicans across the country have cut spending, have wanted to cut even more spending, and have even opposed tax cuts for poor people. Funny, that.

Why, it’s almost like you’re just making up your economic positions as you go along. Or is this newfound Keynesianism part of Romney’s new “moderate” image, and you’re just parroting the talking points like usual?

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