How to distribute wealth equally?

[billvon]

They were intent on defrauding the public, and they cared because there was a lot of money to be made that way.

Of course they weren't. They were intent on making money - as were the flippers. If that involved defrauding the public they did that. If that involved defrauding a bank they did that. If that involved building a lot of houses they did that. The problem is not the motivation (greed) - the problem is that some actions taken to make money destabilize the economy.

An insistence on blaming isolated bad actors, rather than addressing the root causes of the problem, will guarantee that you fail at finding a solution.

 

[iceaura]

Of course they weren't. They were intent on making money - as were the flippers. If that involved defrauding the public they did that. If that involved defrauding a bank they did that.

That's like saying a bank robber was not intent on robbing a bank, only on obtaining money from it.

An insistence on blaming isolated bad actors, rather than addressing the root causes of the problem

They weren't isolated. That's the problem. http://fortune.com/2010/12/23/how-the-roof-fell-in-on-countrywide/

Countrywide Financial, co-founded in 1968 by Angelo Mozilo and David Loeb, was by 1992 the largest originator of single-family mortgages in the country, issuing close to 40 billion in mortgages that year alone. Just as rising rates had crushed the S&Ls a decade before, so did falling interest rates now turbocharge Countrywide’s growth. Lower interest rates helped more people afford homes. But Countrywide began advertising a technique that allowed people who already owned their home to take advantage of lower rates. Refinancing, it was called.
- - -
The discrepancy between private worry and public proclamation would later cause the SEC to charge Mozilo and several of his top aides with fraud for not disclosing Countrywide’s growing risks to investors. In Mozilo’s case, the government also charged him with insider trading: From November 2006 through August 2007, he got total proceeds of almost 140 million from cashing in stock options. A judge overseeing a class-action lawsuit filed against Countrywide wrote in one ruling that it was “extraordinary” how the “company’s essential operations were so at odds with the company’s public statements.”

LTCM and Enron were not "isolated", but dominant and widely influential manifestations of systemic failure. Madoff was the largest entity of his kind on Wall Street. Countrywide was the biggest mortgage lender in the US, Wells Fargo and the boys not far behind. Goldman and Lehman and JP Morgan and Merrill Lynch and Bear Sterns and so forth were the biggest banks, with influence everywhere. AIG was the largest insurance company in its field. The ratings agencies involved were between them handling almost all the ratings for the entire market. The fraudulent derivatives made up the large majority of the traded derivatives.

There was nothing"isolated" about any of this stuff and any of these guys. There still isn't. https://en.wikipedia.org/wiki/American_International_Group
The bad actors in banking are isolated only by rigorous enforcement of stringent regulations. Absent that, they multiply and coordinate and and spawn minions and take over. That's how they crash entire economies. That's how they crashed the US economy - both in '29 and '08.

 

[billvon]

That's like saying a bank robber was not intent on robbing a bank, only on obtaining money from it.

No. It's like saying that the flippers out there were not intent on defrauding the public, just in flipping their homes to make money.

Again, your repeated desire to find a few bad actors to scapegoat will lead to you trying to solve the wrong problem.

 

[iceaura]

No. It's like saying that the flippers out there were not intent on defrauding the public, just in flipping their homes to make money.

A few innocent flippers do not crash the economy. You are looking for a few good actors to redeem a fraudulent system dominated by piracy and scam.
The economy crashed because it's majority, dominant, market standard behavior was defrauding people for profit. And this fraudulent behavior - exemplified by the largest and market dominating institutions, all of them - was conscious, deliberate, aware. Recall the tapes of the traders at Goldman, describing the hosings they were perpetrating in the months before the Crash. Recall the recordings of the traders at Enron, laughing at the ripped off taxpayers of California. Recall the testimony of the executives at AIG, justifying their diversion of bailout monies to their own bonuses.

These were not the isolated. These were the central, market defining, standard-setting players in the US economy.
And the world economy, for that matter - at least the industrialized First World.

Again, your repeated desire to find a few bad actors to scapegoat will lead to you trying to solve the wrong problem.

You are the advocate of the "few bad actors" paradigm.
I'm the one pointing to systemic, economy-wide, fundamental trouble, that has not been addressed.

 

[billvon]

A few innocent flippers do not crash the economy. You are looking for a few good actors to redeem a fraudulent system dominated by piracy and scam.

Nope.

You keep looking for heroes and villains, then try to force them into roles as driving factors for this complex system we call the economy. The system is not enabled (or redeemed) by a few good actors. The system is not derailed by a few bad actors. The system operates on greed - the desire for people to get stuff for themselves. For homeowners, that means money and real estate. For fund managers, that means more return for their investors. For investors, that means primarily lots of short term gain. (Long term gain is, unfortunately, less sought after in general.) And this works, in general.

There are ways that that greed is exercised that damages the system (like monopolies, which restrain free trade in capitalist markets.) Trying to prevent such damage by labeling evildoers and prosecuting them will fail - because the problem is not that evil people exist, the problem is that the system itself encourages behaviors that result in anti-competitive structures. A better way is to pass laws that prevent such anti-competitive structures. (Or in the case of the housing bubble, regulate bad loans and risky loan-based derivatives.)

(There will, of course, always be evil people. We already have laws against fraud, theft etc to deal with them.)

The economy crashed because it's majority, dominant, market standard behavior was defrauding people for profit.

No. The system crashed (to be specific, went into a recession) because standard market behavior involves making as much money as possible - a drive shared by ALL actors. If there is a way to do that and damage the system, then people will exploit it, good or bad. Thus the need for regulation to prevent such damage.

 

[iceaura]

You keep looking for heroes and villains, then try to force them into roles as driving factors for this complex system we call the economy. The system is not enabled (or redeemed) by a few good actors. The system is not derailed by a few bad actors.

You seem to have completely inverted my posting.
I am the one pointing out - over and over again - that the system was not derailed by a few bad actors, but by systematic and ubiquitous bad acting, dominance of fraud, an entire population of bad actors running the show. I am the one pointing out that the existence of some good actors does not redeem a system dominated by fraud and piracy.
That's my line, not yours.

Trying to prevent such damage by labeling evildoers and prosecuting them will fail

Maybe, if that's all you do - but why not give it a try, for once? Might surprise you.
Because refusing to label evildoers, refusing to prosecute them, and instead allowing them to take over and dominate your economy with impunity, did fail. That's documented.
But you yourself recognize this aspect:

A better way is to pass laws that prevent such anti-competitive structures. (Or in the case of the housing bubble, regulate bad loans and risky loan-based derivatives.)

And then enforce those laws and regulations - that is: label some people lawbreakers, and jail their fraudulent asses. That's how you keep them from taking over.
That lack of enforcement of remaining and existing law was a key aspect of the Crash. The regulations that did exist - in particular here for mortgage lending, which was regulated, and things such as bond and derivative rating, which was regulated - were not enforced. There was massive, industry-wide fraud. Hundreds of billions of dollars worth.
We saw more than one eyewitness on Wall Street say more or less the same thing, about these ruinous financial implosions: all it would take is one or two of these corner office guys perpwalked in cuffs out the front door of one of those towers, taken to jail in the back of a squad car, and parked in a regular Federal prison cell with all the other perps for a few years, and it would stop. It would all stop.
These guys are the classic example of a population of criminals that can be deterred from crime by the prospect of jail.

No. The system crashed (to be specific, went into a recession) because standard market behavior involves making as much money as possible - a drive shared by ALL actors. If there is a way to do that and damage the system, then people will exploit it, good or bad. Thus the need for regulation to prevent such damage.

You are assuming enforcement, there. ok.

So you meant "Yes", not "No".

You agree that this statement is accurate: "The economy crashed because it's majority, dominant, market standard behavior was defrauding people for profit."

 

[Dinosaur]

I have read some but not many of the Posts to this Thread.

The concept of distributing wealth equally is fundamentally flawed.

Note that it requires a potentially tyrannical government to implicate it.

Distributing wealth equally fails to recognize that those who have & use superior abilities deserve a better standard of living.

How many of the more competent folks would apply their abilities if not rewarded with a better than average income?

Distributing wealth equally seems likely to result in less wealth to distribute.
​

Note that many who acquire significantly more than an average income contribute to the welfare of others.

Entrepreneurs pay salaries to employees & run businesses which contribute to to the economy in other ways.
​

Note that while some form of government is necessary, to a large extent it is overhead to the economy.

The criminal justice functions seem to be necessary for the foreseeable future.

The civil justice system also seems necessary.​

BTW: Many complain about those who benefit from inherited wealth.

Instead of focusing on the heirs, why not focus on the one who acquired the wealth?​

Does he/she who earned the wealth not have the right to dispose of it as he/she pleases?

Money willed or given to heirs comes from after tax income. Inheritance & gift taxes are double taxation of the same income.​

 

[RainbowSingularity]

outsourcing is totaly legit in the USA
giving you free access to the consumer market and no tax and no wages costs & you can fly the USA flag to make money off it while not paying for it.

its totally capitalist.
everyone is loving it.

 

[Michael 345]

How many of the more competent folks would apply their abilities if not rewarded with a better than average income?

I'm sure many competent folk would apply their abilities and obtain a better standard of living

I see the problem as being those who accumulate wealth and then make money by selling money ie lending money at interest

Of course you do need people who want to buy stuff they want (note want not need). Paying interest in effect lowers the value of their money

 

[kx000]

It's unnatural for democracy to allow the 1% to be more rich than the majority of people.

 

[Gawdzilla Sama]

Money is how we keep score. There will never be equality among humans, get used to it.

 

[Write4U]

It's unnatural for democracy to allow the 1% to be more rich than the majority of people.

No, and that is not expected. Equitable distribution does not mean equal pay for all people.

It just means that upper limits should be imposed so that not a single person can end up with all the money. These upper limits can be generous, but must be earned.

It is the unearned income which is in question. Money (not labor) making money is unproductive in many respects.

 

[billvon]

It's unnatural for democracy to allow the 1% to be more rich than the majority of people.

It's perfectly natural. It may not be a desired outcome - but it's natural for wealth to be concentrated in a few people over time in any capitalistic democracy.

 

[RainbowSingularity]

Top ten richest men almost have 50% of the total wealth of middle class people.
This is not balanced.
How to distribute wealth equally?

You do not need billions to survive, do you?
So, why accumulate billions of wealth? Greedy?

Can we make all people to have enough money to survive?

1st stop paying tax
then see what happens
who crys foul then ?

 

[CptBork]

If you put a cap on how much someone can earn, that will also put a cap on what they're willing to risk in investments, and how much time and effort they're going to spend making money. They'll just stop working, producing or investing as soon as they hit the cap.

If you ban people from lending money or try to tightly restrict interest rates, then people will simply stop lending money and either sit on their wealth or spend it on personal needs, while those who need one won't be able to get a loan.

 

[Dinosaur]

From Oystein Post 55

It's the ones that don't earn their money, you know, the ones born into it. The Trumps of the world. I have BIG problems with them.

Note that the money willed to heirs or given to (usually) relatives is after tax income. In both cases it is taxed, which is unfair double taxation. If your father had money to will or give to you, what would you want him to do with it?

Instead of focusing attention on the recipient, why not focus on the one who gives or wills money?

The money is his/hers & is after tax income. Why should he/she not be allowed to decide how to spend or otherwise dispose of it without it being taxed again? ​

BTW: My father was affluent, but would not be considered wealthy. He let me know that he intended to die broke & almost did.

He was afraid that I might rely on an inheritance instead of learning how to earn a living on my own.​

Some folks do not understand the banking & insurance businesses.

From Michael 345 Post 149

I see the problem as being those who accumulate wealth and then make money by selling money ie lending money at interest.

Note that banks & insurance companies lend money at interest. The source of bank money is depositors; The source of insurance company money is premiums from those who will collect later from the insurance company or have money left to their heirs after their death.

If those with money in excess of what they require for housing, food, clothing, entertainment, etcetera could not get interest on their money from banks or later payments/benefits with interest from insurance companies, they would have no reason to supply money to banks or insurance companies. The banks would have no money to finance mortgages & the insurance companies would have not money to pay death benefits or annuities.

How many folks could buy a home without financing from a bank or insurance company? How many folks would manage to leave money to heirs without using the services of an insurance company? How many folks would save enough for their retirement without insurance companies who earn interest on premium money & later pay an annuity to the policy holder?​

 

[iceaura]

If you put a cap on how much someone can earn, that will also put a cap on what they're willing to risk in investments, and how much time and effort they're going to spend making money. They'll just stop working, producing or investing as soon as they hit the cap.

1) If it happens, good. Then others will have access to the money they would otherwise monopolize - that diversification increases overall efficiency and productivity, to everyone's benefit.
However:
2) When there was such a de facto cap - the days of 90% income tax brackets in the US, otherwise known as the days of booming prosperity never before seen on this planet - rich people and productive people apparently worked hard and invested much and produced like mad, anyway;
and
3) Have you noticed the wealthy and productive putting in five or ten times as much effort as they used to, say thirty years ago? Being five or ten times as well paid, they would have to - if they aren't, we're paying for nothing.
(Hint: we're paying for nothing.)
( In some cases less than nothing - the last analysis I checked indicated that the large Wall Street "hedge funds", whose billionaire CEOs pay the lowest overall tax rates of anyone with a job in the US, were reducing US economic growth by about 1.4%).

It's perfectly natural. It may not be a desired outcome - but it's natural for wealth to be concentrated in a few people over time in any capitalistic democracy.

Which is a central flaw or vulnerability of market based capitalism - it will destroy its own economic structure and any democratic society harboring it, in that way, unless prevented. The simplest first step prophylactic is a steeply progressive income tax, with capital gains included as income. One also needs a seriously confiscatory inheritance tax on wealth.

 

[iceaura]

Note that the money willed to heirs or given to (usually) relatives is after tax income. In both cases it is taxed, which is unfair double taxation.

Nonsense.

Most large inheritance is capital gains, for starters, and has not been taxed. The cutoff on inheritance taxes - in the millions, at last view, in the US - is easily sufficient to protect the ordinary wealth of a paid for house or retirement savings. (Which is already a distortion and an unfair governmental screwing around with a market capitalism - look at how it perpetuates the robbery of wealth and opportunity from black people whose ancestors were impoverished by racism).

In the second place, almost all money transfers involve money that has already been taxed somewhere along the line - sales tax is double taxation, property tax is double taxation, the poor are doubly taxed every time they buy a beer. What would you do - stamp a dollar bill that's been taxed and exempt its use from all further taxation? Goofy.

Instead of focusing attention on the recipient, why not focus on the one who gives or wills money?

They're dead.
The government, as a service, takes control of their suddenly unowned wealth, protects it by law and armed force, and delivers it to some other person who has done nothing - produced nothing, benefitted nobody as far as is known - to "earn" it. That is not a free will exchange - it is government transfer of money, a government transfer payment, like Social Security or Food Stamps. Welfare.

That violates every principle of free market capitalism, including the principles underlying the derivation of all its benefits - the efficiency, the flexible and beneficial flow of money toward demand/need, the justice of the correlation between production and payoff, all of them - the moral and ethical and economic and societal benefits of free market capitalism are tossed aside by inheritance of great wealth. It's a leftover of feudalism.

 

[Gawdzilla Sama]

Until people are absolutely equal there will be disparities in what they're paid.

 

[billvon]

Note that the money willed to heirs or given to (usually) relatives is after tax income. In both cases it is taxed, which is unfair double taxation.

Lots of taxation is 'double.' I make $10,000? I pay a percentage of that as income tax. I put it in the bank? I pay a percentage of the interest as income. I later buy something with it? Sales tax. Three sets of taxes on the same money. But not unfair. (Unless of course you consider all taxation as 'unfair.')

If your father had money to will or give to you, what would you want him to do with it?

Well, first off, whatever he wants. It's his money. But secondly, if I was going to get it, I'd want him to invest it.

The money is his/hers & is after tax income. Why should he/she not be allowed to decide how to spend or otherwise dispose of it without it being taxed again?

Because in most places in the US we have sales tax.

How many folks could buy a home without financing from a bank or insurance company?

Most people; it would just take longer. Anyone who can afford a 30 year mortgage can buy a similar house by saving up for 20 years.

How many folks would manage to leave money to heirs without using the services of an insurance company?

Almost all of them.