Constructive gadfly
Published on October 29, 2008 By stevendedalus In Politics

 

The much talked about Redistributor in Chief took place in 1981 when Reagan took the progressive tax structure on the wealthy from 70% down to 28%, the inevitable consequence of which simply brought into reality the adage the rich got richer and the poor got poorer. The additional bonus was the rise in numerous tax shelters to the point that true earnings were distorted. and to rub it in, investors looked to cheap foreign labor to enrich themselves further. Meanwhile in Washington union busting prevailed and living wages began to tank, roiling redistribution even more .    


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on Oct 29, 2008

Call it what you will, but wealth has shifted.

This assumes 2 things: 1) the economy is a zero-sum game and 2) people who started in the bottom 20% stayed in the bottom 20%.  Neither is true, and nothing has 'shifted' - money did not 'move' from the bottom 20% to the top 20%, though a bunch of people certainly did.

on Oct 30, 2008

Larry Kuperman... you posted a graph saying "the rich kept getting richer" in support of the old false adage "the rich got richer and the poor got poorer"... however the graph shows the top twnty percent making more, AND the bottom twenty ALSO make more... just not as much more...

The rich got richer by 76%, and the poor got 35% richer. Hardly "taking from the poor and giving to the rich". However if you would have taken from the "rich" and given to the "poor" EVERYONE would be poorer... but the rich would be poorer by a higher percentage...

Wealth is not relative, it is absolute. And in a FREE society, the wider the gap, the richer EVERYONE is, the smaller the gap, the poorer EVERYONE is. (if you have slavery or totalitarianism then this is obviously not the case).

on Oct 30, 2008

As for the original poster... where is the argument, all I see is a little blurb of lies and word redefinition, nothing is actually being argued.

on Oct 30, 2008

Let me counter things ahead of time...

Wealth redistribution from the rich to the poor is bad, it makes everyone poorer due to less people putting forth the effort to create.

Wealth redistribution from the poor to the rich IS EVEN WORSE... examples of it include SLAVERY and SERFDOM, where the lord owns the land, the people, and everything produced on it. In the SHORT term it makes the rich slightly richer, in the long term it makes the rich poorer and the poor completely destitute. cutting taxes on the rich is NOT wealth redistribution from the poor to the rich.

Heavier taxation for the purpose of welfare is wealth redistribtion.

Heavier taxation for the funding programs that are NOT of the welfare nature (police, roads, etc) are NOT redistributive.

Heavier taxation of business makes the rich poorer and the poor poorer.

Lower taxation of business makes the rich richer and the poor richer. (but the rich get richerER)

Heavier taxation of individuals making more money decreases the incentive to make more money, and reduces the amount of people willing to dedicate themselves to intensive schooling (law, medicine, REAL business).

Heavier taxation of individuals making little money leads to feelings of resentment, which destabalizes the government.

A balance must be found between taxing high income and low income PEOPLE (not businessess). Because both have negatives. But this is NOT when dealing with wealth redistribution, but only with taxation for the purpose of providing services (water, electricity, military, police, road, etc)

 

Redistribution: Party C (government) Take from party A and give to party B.

Taxation: Party C (government) takes from party A and from party B, in differing amounts, to provide a service to both of them.

on Oct 30, 2008

Call it what you will, but wealth has shifted.

Your graph doesn't show wealth having "shifted". Did you pick the wrong graph?

 

on Oct 30, 2008

The much talked about Redistributor in Chief took place in 1981 when Reagan took the progressive tax structure on the wealthy from 70% down to 28%, the inevitable consequence of which simply brought into reality the adage the rich got richer and the poor got poorer. The additional bonus was the rise in numerous tax shelters to the point that true earnings were distorted. and to rub it in, investors looked to cheap foreign labor to enrich themselves further. Meanwhile in Washington union busting prevailed and living wages began to tank, roiling redistribution even more .

YOu are wrong on so many points.  First, Reagan did not "redistribute" anything.  He took less.  Redistribute means to take from those that have, and give to those who dont have (even if they have some, they get more than they had).

Second, you are 100% wrong on tax shelters.  The fact that the percent of taxes paid by the wealthiest actually increased significantly because it no longer paid to put money in tax shelters blows part 2 of your diatribe out of the water.

3rd - cheap foreign labor was and is nothing new.  But then you get into the issue of what to defend - illegal immigration?  Or upholding the law?  You cant have it both ways.  And Union Busting?  Reagan was a Union president!  He busted nothing, they busted themselves.  Even Unions have to obey the law (for now, that will probably change in the next 4 years).

This is not one of your better works.

on Oct 30, 2008

Redistribution: Party C (government) Take from party A and give to party B.

Exactly.

 

Taxation: Party C (government) takes from party A and from party B, in differing amounts, to provide a service to both of them.

I know you are summarising, but just to be more precise, let me add the following.

Groups A and B are groups defined using any definition and might be more than two groups.

Taxation is also when C (government) takes the same amounts from A and B while providing services to both of them.

And taxation is also when C takes from A but not B while providing services to both of them.

The second point is a bit difficult because it seems like taking from A and using those proceeds to provide to B is redistribution. And it is. However, the principle that redistribution is wrong is not a basic principle of taxation (and taxation can legally be used for redistribution). The services provided by government to A and B are services nobody can legally buy from other providers (police protection, an army etc.). They are forced monopolies (and should be).

Hence, since group B is forced to receive those services from C, C must provide those services, even if it means redistributing wealth in taking from A and using the money to provide services to B. That is not the redistribution being criticised by tax purists, as long as those services are services that cannot legally be provided by anybody else.

 

 

on Oct 30, 2008

You are opposed to taxes, I believe?

An erroenous assumption, and one of the talking points of the left.

You are arguing that they should not include the public welfare, I argue they should.

And perhaps you could point to that in the Constitution?  It's not there?  Ok, then you could propose an amendment.  No?  You mean the American people dont really want it? (if they did an amendment would be a piece of cake).

My point of view is that any taxation is a redistribution of wealth, whether its a poor man's or a rich man's. How can it not be?

There is a serious disconnect here.  Taxes collected and used for common services is not redistribution.  The poor are not paid because a road is built, or a city defended.  They benefit, but they do not receive a stipend for it. 

on Oct 30, 2008

Heavier taxation of individuals making more money decreases the incentive to make more money, and reduces the amount of people willing to dedicate themselves to intensive schooling (law, medicine, REAL business).

That's bull, more money is more money a better job is a better job, the only way this would have any truth is if you put a 100% tax on what you earned after a point. If you add a 5% tax to someone's income they still have the same choice, work less = less money, work more = more money. Go to college = better job, doing something you like, more money and respect. Don't go to college = less money doing a job you don't like, less respect and status in the community and innovation still yields the same rewards.

Redistribution: Party C (government) Take from party A and give to party B.

You have a selective definition of the term "redistribution of the wealth". Money and services are interchangeable, discounting or providing a service or a product for someone that doesn't pay their share because they can't afford it is "wealth redistribution", it's just not the definition or the use you have a problem with. Which is fine, that's what this is all about, electing a government that spends our money and resources on the things we think are important.  Now we're again choosing an administration that most closely resembles our will and this is one area were we all pay the same.

on Oct 30, 2008

I see that none of you conservatives,  are actually dealing with the problem of lower taxes as Larry pointed out, as I have pointed out in far too many posts.  When you reduce your income you cannot pay your bills. Its not rocket science.

So, how do you Mr. Conservative, plan to reduce the trillion dollar deficit?

As to Dr. Guy and his comment about the constitution and taxes, its true, but then, the framer's were dealing with 13 states, little to no Army, no infrastructure as we commonly consider it, and people died very early in life.  Things have changed.

Be well

on Oct 30, 2008

That's bull, more money is more money a better job is a better job, the only way this would have any truth is if you put a 100% tax on what you earned after a point. If you add a 5% tax to someone's income they still have the same choice, work less = less money, work more = more money.

Assuming their time is worth nothing to them and that they have an infinite amount of it.

I can tell you that I value my free hours and if taxes are too high I would work less if instead of making X per hour I'd make Y per hour, with Y being X after the new taxes and Y being below the amount I value my time at.

Don't call things "bull" if you don't understand them!

 

You have a selective definition of the term "redistribution of the wealth". Money and services are interchangeable, discounting or providing a service or a product for someone that doesn't pay their share because they can't afford it is "wealth redistribution", it's just not the definition or the use you have a problem with.

All definitions are selective. That's what a "definition" is. His definition of "redistribution of wealth" is very precise.

 

on Oct 30, 2008

That blasted edit button is not working.  Please ignore the comma in the first sentence. 

on Oct 30, 2008

I see that none of you conservatives,  are actually dealing with the problem of lower taxes as Larry pointed out, as I have pointed out in far too many posts.  When you reduce your income you cannot pay your bills. Its not rocket science.

Sodaiho, the fact that you DISAGREE with the theory that lowering taxes can actually increase government income (because it stimulates the economy) doesn't mean that conservatives don't address the "problem".

In fact the "problem" only exists when one confuses relative and absolutel numbers. While 10% of X is less than 20% of X, it is not necessarily less than 20% of Y, with Y being a number greater or smaller than X.

The "problem of lower taxes" exists when taxes are lower in absolute terms.

I like word games myself, but I don't think they are a substitute for a point.

But by taking the term "lower taxes" and pretending that it refers to an absolute number, even though conservatives argue that a lowe tax rate will actually result in higher tax income IS a word game.

 

So, how do you Mr. Conservative, plan to reduce the trillion dollar deficit?


I am myself not convinced that a deficit is a bad thing. Governments can borrow money for far better conditions than anybody else.

 

on Oct 30, 2008

Don't call things "bull" if you don't understand them!

No you don't understand what I was responding to. taltamir said "Heavier taxation of individuals making more money decreases the incentive to make more money", that's a broad erroneous assumption on on what motivates people and how the wealthy would respond to a tax increase. Some would expand their business to make their time more valuable. Some might cut spending. I think a very small percentage would simply accept less income and even cut it further by working less like you, and a tax increase does not change the incentives for education, even if your only incentive is more money.

All definitions are selective. That's what a "definition" is. His definition of "redistribution of wealth" is very precise.

No Leauki, narrowing the definition to include only one form of wealth distribution is not more precise. Just like narrowing the definition of taxes to only include income tax is not more precise.

on Oct 30, 2008

Hey, I'm all for what is called "redistribution" although, I would simply call it "distribution"

But no matter. Whatever you choose to call it really isn't important. A rose by any other name, right?

But here's the point behind "distribution", and it's one that was figured out quite well by a capitalist.

Henry Ford realized that the ideal situation both for himself and his company would be if his own workers could afford to buy the products they were making. So, on a purely hypothetical basis let's say his personal take home profit was 20 million dollars, but if he cut that to 15 or 10 million dollars and upped his workers wages, they could all buy brand new model-T's (or whatever) and probably at the same time, if they saved responsibly, scrape together enough for a downpayment on a home in their town.

So, Mr. Ford personally takes a cut to his profit. But his company sees increased sales, his workers are happier and more productive, therefore increasing his company's productivity, and his shareholders are happier that the company's making a healthier profit AND more productive, and this has the added bonus of attracting more investors.

On top of it, the town is very happy with Ford as all the Ford factory workers are buying houses and adding to the municipalities revenue through property taxes and the like, meaning that the town can afford to pave the roads and upgrade their water treatment system (both of which benefit Ford indirectly anyway) All of the other businesses in town also benefit from the fact that Mr. Ford's workers are making more money because they are spending that money directly in the local economy on goods and services in the town (they aren't squirelling it away in swiss bank accounts!) So this causes other businesses to grow in town, and some of the employees of those businesses end up buying even more model-T's from Ford!

You see, Mr. Ford has learned the lesson that if more people can afford to buy his product and the local economy is better off, it will come back to benefit his company immensely or even cycle the money back to him indirectly (increased sales bring more investors, etc)

So, everyone can win, if we just go by the basic rule we supposedly learned in Kindergarten to share our toys.

The importance of this kind of "distribution" of wealth cannot be underestimated as it has many far-reaching implications.

When all of Mr. Ford's factory workers can afford a car, a house, and still put a little money in the bank...not going into debt... that means they're secure and happy, not living paycheque to paycheque. This does wonders for the community, and means that the children of the Ford factory workers will probably get a decent education and good upbringing (usually when parents are happy so are kids). The Ford factory workers themselves, now that they are not worrying about taking out a predatory payday loan to pay the light bill, will probably get a little more active in politics whether at the municipal, state or federal level.

This goes back to the whole educated citizenry thing. When people have the time and aren't worrying about survival, they generally tend to improve themselves. When people improve themselves everyone benefits. As Mr. Ford's workers improve themselves, not only are they happier but perhaps they are more innovative on the job and come up with some creative ways to increase production. Going one step further, many of his brighter employees will be prime candidates for manager positions a few years down the road, which will be easier on Ford as it won't have to bring in someone from outside the company and get them established in town.

But anywho. Let's zoom out for a moment- this goes back to a basic law of nature. Any system, whether it be an organism or weather system, does it's best when at equilibrium. All systems in nature attempt to reach and maintain equilibrium.

What is equilibrium?

It's more or less a sustainable distribution of energy. If you'll harken back to your days in high school math (or if you took physics or electronics) life is a sine wave. It always has and always will be!

Society functions best when as much of the waveform as possible is above the poverty line... if you have too much power concentrated in only a few hands, you end up getting something called a pure carrier, which is a graph that has a very, very sharply steeped curve that rises very far while pretty much everything else is down at the noise floor. If you distribute the energy, you have the bulk of the populace doing good, with a little bit at the top and a little bit at the bottom with everyone else in the middle- the middle class! Overall, the peak of the carrier ends up being much lower than a pure carrier, but this leads to the question-

What situation results in society being better off?

1) Are we better off if most of the power is concentrated in a few hands while everyone else gets almost nothing?

2) Are we better off if the power is distributed more or less equally. Yes, there is still a "top" but it is considerably lower than if all the power was concentrated, whereas more people are better educated and generally well off.

If wealth is not "distributed" or redistributed or whatever you want to call it, then we will eventually end up back in a Feudal society in which the have's live in castles while the have-nots end up doing all the work and fighting wars between fiefs on behalf of the haves!

If wealth is not distributed then we will go back to the days of debtor prisons and company towns in which the workers are forever beholden to the company store for their entire lives....coal mining towns from the 19th century anyone?

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