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The Sound of Milton Friedman Rolling in His Grave

I’ve been up all night working on a research paper, so I really wasn’t in the right mental state to watch this video posted over at Blue Oregon:

I’ve heard all about the horrible scourge of income disparity, but, frankly, I’ve always wondered what happens after the Great and Just Redistribution of Wealth. Lets just assume, as shown in the video, that that the private wealth of the country is equally divided and every family gets $500,000. What happens next?

Color me crazy, but wouldn’t people just, y’know, get rich and poor again? Or would we continually redistribute wealth to stop any sort of evil income disparity? Would people who make good business decisions or investments have their earnings redistributed to people who blew their $500K on strippers and coke (read: me)? Of course, maybe the presenters in the video are just assuming we’ll be in the midst of the glorious dictatorship of the proletariat by then.

I’m reminded of my days back in a 100-level polisci class when we discussed wealth redistribution. One of my classmates, a staunch Republican, spoke up and said, “If you gave everybody the same amount of money, some people would buy Cheetos … and some people would buy a Cheetos factory.”

  1. Vincent says:

    Too bad by the end of his life Solzhenitsyn was a cheerleader for Russian chauvinism and Serbian aggression.

    But no one talks about that. In the West, Solzhenitsyn is a secular saint.

  2. C.T. Behemoth says:

    Hey McCloud, get off my ewe!

  3. Andy says:

    What is the message? That the use of force is justifiable if it is for altruistic ends? Do you liberals want to go down that road? Just remember that you do not have the tools of force individually, and although those whom you support now have control of a very deadly tool called the US Gov, it is not yours and they will not protect you. The use of force is only justifiable to repel the violation of natural rights. Violating an innocent’s rights is never justifiable – you liberal peaceniks should be jive to that huh?

    But you’re not – your as corrupt and bloodthirsty as the neocons. As long as force is used to further your agenda that is the only justification needed. To bad they don’t teach Solzhenitsyn in schools anymore… Beware all of you who whom know nothing of violence yet advocate for its use.

  4. C.T. Behemoth says:

    Again, nice commentary.

    I am not advocating that the government do it all. It’s a good point about the IRS, et al. I just think that, somewhere along the line, Americans and America in general (i.e. governments local, state and federal) need to take a minute and assess where we are and where we could/should be.

    I don’t have the answers either. I’m just pointing something out that bothers the living shit out of me as an American and it fits into the general context of this thread.

    Whatever the outcome, I think that an intelligent combination of ideas that make sense is what we need. Granted, I can probably chalk that up to a pipe dream and get on with my life. : )

    I’m a cynical humanist in all of this, if you can’t tell.

  5. Timothy says:

    CT – I think it’s possible to agree on a definition of a problem, but not agree on the solution or whether there even is one. Some of that is going to run into philosophical differences over the proper role of government.*

    That aside, I agree that what we get for our money in education and healthcare isn’t always impressive. I’m not sure how the same people who brought us the post office, the DMV, the VA, Medicaid, the IRS and the DEA are going to make them better, either. I think some changes in regulator schemes would help, but those changes would all be away from centralization in my mind.

    In terms of higher ed, well, the vast proportion of benefits to education accrue to the person being educated, so it makes some sense that he/she/it would be the person paying for it long-term.

    In terms of healthcare, well, basically 100% of the benefit of that beyond vaccinations accrues to the person receiving the care, and again it makes sense that he or she pay for it. That’s not to say that we should allow the indigent to die in the streets, but we need to be very careful about how we approach solving that problem. Does it make any sense to impose a government solution on people who, really, can afford to pay their own way?

    Me, on my salary (which is not high by any stretch) I can afford insurance (good insurance), regular eye exams out of pocket, these sorts of things. Does it make any sense to tax and have some third party pay for my care and determine who I see and what I wait for and when? Doesn’t that just add an unneeded layer of complexity? At the same time, there’s some level of care we want to make sure that even the indigent receive. But we probably don’t want to force me onto Medicaid any more than we want to start charging the $10k a year day laborer $100 a month for BlueCross. Once you start unravelling all of that, things become very messy very fast.

    For many libertarians, myself among them, that’s the biggest issue with centralized control or government interventions. Even the best intentioned ruler will not have enough information to make many improvements and can, through not seeing all the newly created incentives, cause a lot of disturbance. I’m not going to say there’s no place for some basic ground rules enforced by the state, nor a place for simple and few subsidies and the like, but I’d argue that those most likely to acheive their stated ends are those which leverage existing private (for profit or charity, whatever) systems rather than those that try to build a centrally planned solution that’s subject to all of the weirdness that comes along with public choice.

    *As an aside, when did I become the reasonable one? Isn’t that Ruff’s job? Where is that guy?

  6. C.T. Behemoth says:

    I forgot to add that if students at the U of O are not prepared to compete academically with the rest of the world, it puts all of the non-college-educated Americans in an even worse light…in terms of how they contribute to America’s future.

  7. C.T. Behemoth says:

    I hear you.

    I guess my line of questioning is more in line of what vision ‘we’ have for America. Is it one where education is not a right, but something one must pay for and usually go into a lot of debt for given tuition increases, student loan cuts, etc? Is it one where getting cancer means you die because you can’t afford treatment? Is it one where there is even ONE person who is working a reasonable job that people value but is not being paid enough to pay for all of his/her basic needs (or that of his/her family’s basic needs)?

    To me, America is better than a lot of the bullshit that pops up, and looking at where things have headed in the last 60 years, I am depressed. Sure, it’s the evolution of our economy (i.e. manufacturing is dead), but I think that Americans should be better prepared to fit the new niches required by the global economy and, frankly, Americans are not prepared for this. Sure, some of this falls on the shoulders of the individual, but a lot could be done institutionally so that we had a country that could compete more effectively for the long-term. The problems I am talking about are plainly obvious working here at the U of O where students come in lacking a decent preparation for their academic careers. It’s sad, and given the amount of money that the US spends on these things, I think that we should have a better education system. Even in health care, the US outspends Europe and others who provide for more of their population with less.

    It may not be an issue of what’s “fair”, but what is expected of a country like ours.

    We, apparently, have shitty expectations. That’s what upsets me.

    America used to have answers. Now all we have are excuses.

    I hear where you’re coming from though. You make great points up there, and Patrick Dempsey…well, that guy’s good looks are subjective. I suppose ‘fair’ might be subjective as well, but again, for me it ties back into what one can reasonably expect from a country that is allegedly as great as ours is/was.

  8. Timothy says:

    CT – To be clear, in a market economy labor is a good like anything else and therefore worth what people are willing to pay for it. Some labor is very valuable, some labor isn’t – usually for reasons of scarcity (IE there are many more people qualified to flip burgers than run Exxon, and these things are priced accordingly). This is not a moral judgement, I do not mean to imply that some kinds of labor are morally superior to others, only that some are more scarce and therefore demand a higher premium. This is a fact. Assuming that labor is labor is one of the great falings of both Marxism and econ 101 models of the world, but I digress.

    In regard to healthcare and education – we’re looking at the distinction between negative and positive rights. I don’t think people have a “right” to be educated, I don’t think they have a “right” to health care in the way that they have a right to freedom from self incrimination and a right to due process. That’s not to say that I think education and healthcare aren’t valuable, or couldn’t be provided in better ways than they are now — they are, and they could. But a rights framework for those sorts of evaluations leads exactly where you ended up in your second paragraph: “This isn’t fair! Why can’t we make it fair!”

    And that’s a problem — because nothing is ever fair. Is it fair in any real cosmic sense that I’m smarter than most of the population? How fair is it that any number of people are better endowed endurance athletes than I am? That Patrick Dempsey is prettier than me? Do we Harrison Bergeron the hell out of the world to correct all the unfairness? And what kind of metric is fairness, anyway? It’s incredibly subjective, incredibly arbitrary, and too subject to the whim of whomever happens to be in charge today. Throw in unforseen changes and these things become impossible to manage over the long-term.

    Investments, well, the current mess is unfortunate. Sometimes unfortunate things don’t have solutions. I will say that if you’re over 50 and you didn’t have significant cash holdings and some of your retirement savings in bonds, you’re kind of foolish. If you purchased a house as a primary savings vehicle, well, that was dumb. Understandable, but dumb. And if you’re screwed now, that’s sad, but I’m having trouble coming up with a reason why I should be obligated to help you. That last is what gets forgotten — any time you create a government program or do a bailout, you are forcing me to give my money to somebody else, and you’d better have a goodamned good reason. Unfortunately, it’s not like the folks who were ruined by this mess will be able to go back on the legions of policy makers and bureaucrats at the center of this mess for a refund.

  9. C.T. Behemoth says:

    So personal freedom in America is tied directly to the US dollar?

    (I’m being facetious for fun, and it’s an interesting discussion)

    What about the cost of education? If you have no other means than taking out loans in order to better yourself and your prospects for employment, is it fair that you have to go into such debt to do so? Granted, this ties you to the system given that you HAVE to work after graduation….somewhere….anywhere….so that you can pay off your loan, but is this a bad decision and not living within your means? Or is education something that is ‘extra’ in our society, and if you can’t afford it…good luck pumping gas?

    What about the issue of health care? If I found out that I had brain cancer, my insurance would cover some of the cost, but soon the cost would outpace my insurance and my income. I would also have to continue working in order to maintain my insurance. If I couldn’t work, I would lose my insurance and then spiral further into debt and eventually die because I wouldn’t be able to secure loans to pay for treatment. Is that fair to me? I’ve made responsible decisions, saved money, I don’t smoke, I don’t have kids, I live within my means, I have educated myself and lived the American dream. Yet, one little mutation in my brain (or other organ) and I’m fucked because I can’t afford to survive in this system. Fiscal Darwinism?

    I won’t get into it because it’s somewhat tangential, but what about the people who made sound investments, planned for the future, worked hard, lived within their means and made all of the right decisions…only to have their portfolio go up in smoke because of what happened on Wall Street? Is that fair, or do we just tell them that they were stupid for investing in the stock market and trusting corporations, et al. to act in their own interest and in the interest of their customers? Do we chalk it up to risk…even though low-risk portfolios were also lost?

    What answers do Americans have when it comes to planning for their future? Stocks? No. Real Estate….not really. 401K’s? No, they’re tied to the market too. IRA’s? Maybe. Gold?

    Again, I’m not looking for people to get hand-outs…

  10. Gsim says:

    I read the working professionals turn to food bank article. Again, a critical anaylsis debunks.

    First, people with 350,000 dollar condominiums and making six figures are not by any definition the “working poor.”

    Second, if she was recently laid off she isn’t working which, probably further removes her from being categorized as “working poor.” She is simply unemployed. Yes, the trials and tribulations of life can throw a curve ball and occasionally people need a hand up. This lady even said she doesn’t know if she’ll go back to the food. How desperate can she be?

    Finally, I’ll answer your question about cigarettes and children. Those were brought up as examples of bad decisions repeatedly made. If you make a pathetic wage you should not have things you cannot afford. If you are struggling to make your 300 dollar rent or don’t have money for car repairs so you can get to work don’t have another kid and reduce all unnecessary expenses like cigarettes. But, the people described as “working poor” are unable for reasons I stated above cannot to do this. They make 7.50 and hour, buy as many cigarettes as the can smoke, drink a six pack every night and then are bewildered when their 30 year old junker needs a new water pump but they “gots no money to fix it.”

    People are not entitled to have cigarettes, children or anything else. You must live within your means.

  11. C.T. Behemoth says:

    “I think the only fair generalization is that if you have a job and can barely support yourself, your labor is simply not particularly valuable.”

    I’m not sure if that is fair, but it is a generalization.

  12. Tom Vail says:

    Has anyone done the math?

    In the video clip, I heard $167,000,000 ($167 M) per household (for the top 1%), 112,000,000 (112 M) households, and 56,000,000,000,000 ($56 T) total assets. 1% of 112,000,000 households is 1,120,000 households. Multiply that times the $167,000,000 and I think you should get $187+ Trillion. That’s 3.34 times the total Assets ($56 Trillion). If the top 1% of households control over 1/3rd of all the wealth, that would mean $18.66 Trillion, not $187 Trillion.

    It looks to me like the ‘mistake’ caused 10 times as many beans to be poured into the pot than should have been. Either I messed up the math or the video showed a calculation that was 10 times greater than it should be. Looks to me like neither Chuck Collins and the Working Group on Extreme Inequality, nor their supporters, should have any control over our economy.

  13. Timothy says:

    Like many things, poverty is complicated. Unlike poverty “boo hoo I’m broke now because I bought a huge ass house in a bubble market in a bubblelicious locale and now I’m upside down and can’t find a way to sell it or make payments” is not complicated. It’s unfortunate, but it’s not very complicated. Comes from a series of bad decisions enabled by groupthink from borrower and lenders a like.

    Regarding the “working poor” I think the only fair generalization is that if you have a job and can barely support yourself, your labor is simply not particularly valuable. Beyond that it’s a variety of causes and effects that are probably interrelated, so I’d be a little careful about making too many judgements. Although I agree that Jerome might need to lighten up a tad.

  14. C.T. Behemoth says:

    Assuming that is a good decision.

  15. Jerome Cole says:

    “The ‘working poor’ do not lack skills or abilities because of societal barriers, but because they do not have the aptitude or inherent ability to make good decisions.”

    We should offer to pay these people not to reproduce.

  16. C.T. Behemoth says:

    So, if you’re poor…then you can’t have kids or smoke cigarettes?

    : )

  17. Gsim says:

    If you can’t afford to rent a place of your own here is what you do: Get a roommate (or five). I’m not really that into history, but as I recall poor people have done that throughout the ages here in America. As I understand it, many Mexican immigrants are currently doing it to get ahead.

    Also, I’ve read all about the working poor and any sort of critical analysis of the concept reduces it to nonsense. They aren’t they working poor. They are the working a minimum wage job with no possibility of advancement, while raising two to four children, but still smoke two packs of cigarettes a day poor.

    The unfortunate position the “working poor” are in are a result of repeated bad decisions based largely upon inability to make good decisions. The “working poor” lack the intellectual fortitude required for analytical abilities like: comprehension, insight, prediction of possible outcomes, communication skills, etc.

    Ever heard of a “working poor” person who can do physics or fix plumbing? I haven’t. The “working poor” do not lack skills or abilities because of societal barriers, but because they do not have the aptitude or inherent ability to make good decisions.

    If you are a monkey, expect to get paid peanuts.

    /my heart bleeds for their wretched animal like existence.

  18. C.T. Behemoth says:

    It makes sense that the top 1% pays more if they are MAKING more. Logical, no?

    As for the working poor:

    I’m not making stuff up for the sake of argument.

  19. Vincent says:

    Oh, calm down Jerome.

  20. Ossie says:

    Listening to the 1% bean pour encouraged me to get off my ass, work harder and better contribute to society. The system works! Go America!

  21. Jerome Cole says:

    Who the hell is working but doesn’t have enough money for at least a simple place to live? How can you keep a job when your homeless?

    You are full of crap, Behemoth!

  22. Vincent says:

    I ask because this seems to indicate that the top 1% already happens to pay nearly 40% of the income taxes in this country (admittedly, the numbers are from 2004).

  23. Vincent says:

    It actually doesn’t mean much to me. More interesting would be to know what percentage of the income tax was payed by the rich in 1980 vs. now.

  24. C.T. Behemoth says:

    What does this mean to you:

    “In 1980, the top-earning 1 percent of Americans accounted for 8 percent of the total income pie; by 2006, they grabbed nearly 23 percent.”

    (snipped from Kristof’s Op-Ed today in the NYTimes)

  25. C.T. Behemoth says:

    I want to emphasize here, that I’m not whining about the system as much as I am angry with the way that the system has been…manipulated in many cases and manipulated in favor of the upper crust.

  26. C.T. Behemoth says:

    Well, considering that your wage isn’t a living wage in most cases (i.e. you can’t live off of it comfortably…within reason), your health insurance is often non-existent or partial or something you have been paying more and more and more for as premiums go up and deductibles increase, your 401K is non-existent (or bankrupt now thanks to the banks), and whatever else….

    I think your argument would have more water if more Americans had respectable compensation for what they do.

    The rich almost always get a pass because it’s always the poor clamoring for their money…it’s always the politicians whining about their wealthy benefactors’ whining…and the poor are always ‘failures’ or people who aren’t ‘working hard enough’ or ‘saving enough’ etc.

    A fair wage could be geographical really…I think that globalization has proven that. Now, if only Americans could get the same thing Bangladeshi’s do, but in terms of real spending power and not low wages.

    Sky is not the limit…something fair is the limit. Currently, it is a disgrace for a country as great as America is. As I said, if you play by the rules, you shouldn’t be expected to eat a shit sandwich and smile about it. Things are ‘ok’, but they COULD be a whole helluvalot better. It should be. A classic example that is actually getting some attention in this regard, is the Veterans Administration. Talk about people getting screwed over a lot and the eating of shit sandwiches! Thankfully, people finally came around and decided to put some money where their war-weather enthusiasm has been.

    I know that I’m arguing something that is complex when you look at inflation, etc. I just think that there are too many scenarios playing out these days that should never happen in this country…when people do the right thing that is.

    People DIE because they don’t have 100K to pay for an operation they need. Should your ‘wealth’ dictate whether you live or die? Or should we all start saving for retirement AND that rainy day when we get cancer and need exorbitant sums of cash to try and treat the illness? Isn’t there something wrong with that?

    What about the working homeless?

    I have a job, I have some nice clothes, but I can’t afford rent for a house here. What do I do? Scrape together some cash and move….somewhere else? Somewhere that can hopefully pay me enough to eat and pay rent, utilities, etc? Somewhere with a job I can be hired in?

    I don’t know.

    I just get really pissed off sometimes when I look around and see what is being done in the US. It’s not all bad, I’m not saying that. I’m also not crying out for Socialism. I just think that Americans who do the right things should be more…….valued.

    If that’s impossible, ok, but people need to stop talking about this country the same way and realize that in a lot of cases the status quo is a raw deal.

  27. Vincent says:

    Following the rules and getting the scraps the

  28. C.T. Behemoth says:

    I think it’s worth quantifying ‘greedy’ and ‘excess’ so that the ‘rich’ aren’t always given a pass because, hey, that’s Capitalism. There is disparity that isn’t ‘fair’, but it has far less to do with redistribution of wealth and more to do with giving people a fair wage for their work.

    The fact that we have a category now entitled “Working Homeless” is just the tip of the iceberg when it comes to what I’m trying to argue.

    If you follow the rules, you should be rewarded. Following the rules and getting the scraps the ‘rich’ throw you is bullshit.

  29. Vincent says:

    Or would we continually redistribute wealth to stop any sort of evil income disparity?

    In short, the answer to your question is “yes.” Judging by all of the talk about “taxing the rich”, the idea is that once someone has passed a certain income threshold their “excess” income will be fair game for onerous taxation because it’s responsibility of “the rich” to subsidize everyone else. To do otherwise is an expression of “greed.” And since in the “progressive” narrative “greed” alone is responsible for our economic woes, a reluctance or refusal to relinquish assets for the “common good” is perceived as basically anti-social.

    Remember, “progressives” are interested in equality of outcome rather than equality of opportunity, and equality of outcome is fundamentally incompatible with liberty. It requires a powerful and intrusive state to ensure that everyone stays on the same level, regardless of their individual success, or lack thereof. In a sense, what’s “yours” is not yours. You’re merely leasing it at the pleasure of the state.

  30. C.T. Behemoth says:

    Regardless of the beans…I think there is an important issue that transcends political bickering. The issue of wealth being in the top 1% of society seems, to me anyway, to create a system that is just a glorified mirror image of a monarchy where everyone below the 1% works to supply them with wealth. Granted, Americans are far better off than the peasants of old, but there are still serious issues to discuss in terms of wealth, political power (which could be the same as wealth) and democracy.

    I don’t think that wealth should be redistributed, but a more equitable share of this wealth should be due. That is, people often argue in here that merit and hard work should lead to reward. I agree. So, how is it that there seems to be nothing wrong with a CEO of a failed bank earning 150 million for helping topple some of the global economy…whereas, the people who do MORE of the actual work (i.e. those who merit a bonus) get shafted? This is a microcosm of what I’m talking about really…

    People have to fight for a living wage so that they can have a good living…something basic and not extravagant….something like fully-funded health insurance and not a McMansion….basically, hard working Americans are chastised for daring to ask for a better basic existence while millionaire assholes are given a free ride for their antics.

    What gives?

  31. Jerome Cole says:

    Wealth inequality in the United States is exaggerated by differences in age. Older folks have had lots of time for compound interest to work it’s magic. Young people have not. We basically have a healthy, egalitarian society that rewards people for working hard and saving. Why tamper with success?

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