Wealth Inequality in America (from a helping perspective)

Malta's picture
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Just curious to hear everyone's thoughts on wealth inequality. We're all people of numbers, so the data shows this does exist and is a problem.

Personally, I have no idea how to possibly do anything more than a drop in the bucket. I'd like to volunteer more for lower income areas and help guide people towards higher education. It's not the answer to everyone, but casting a broad net might just catch some people and help them out. I think if more, poorer people could be told that a prestigious school (even if state, UCs are great/ Georgia Tech/ U Michigan/ etc) is a possibility- more would apply themselves to academics.

Sure, education is overpriced and it's true value is questionable. But, at least in America, having a degree makes life a hell of a lot easier. Not saying it's a prerequisite for success. I digress.

I'm also very passionate about helping homeless people. For a large percentage of them, they're just dealt a bad hand in life. It's difficult to say, "Pick yourself up by the bootstraps" to someone who was born schizophrenic or bipolar (just to name a few of many possibilities).

Anyone else have good ideas on how to do something for others regarding this issue?

Comments (145)

Controversial
May 31, 2020

Good thread and I like the assistance element to it.

I like the idea of providing them with the appropriate guidance to succeed. Enough with the wealth transfer. Generally speaking, welfare is a scam that enables the poor to sit on their ass and live passively.

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May 31, 2020

Eh - no one here is going to like this, including me really, but you fix wealth inequality through taxation.

There are tons of different ways you can do this, from simply increasing the highest marginal tax rate, to bringing the capital gains tax rate more in line with the income tax rate, to shifting to a more consumption-based tax, etc. Each has its own positives and negatives, but all of it involves the government taxing more money from the rich.

The last time we had such a massive wealth gap, that's how the government fixed it too. It sucks, but the negative effects of a vastly unequal society sucks a lot more and will continue to get worse.

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May 31, 2020

Good points and I support taxation for the country itself - infrastructure, public schools, etc, but honestly not so much as a tool for wealth transfer.

This is def a controversial take but the recipients of our tax dollars are largely ungrateful. Many such cases of immigrants coming here with nothing and making something out of their lives by busting their ass. Other than those desperately in need due to medical conditions, etc, why must we help out the poor via $$ rather than guidance?

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May 31, 2020
rererere:

Good points and I support taxation for the country itself - infrastructure, public schools, etc, but honestly not so much as a tool for wealth transfer.

My point was more, "It is the only effective tool for wealth transfer" as much as it makes everyone uncomfortable. There isn't another tool.

rererere:

This is def a controversial take but the recipients of our tax dollars are largely ungrateful. Many such cases of immigrants coming here with nothing and making something out of their lives by busting their ass. Other than those desperately in need due to medical conditions, etc, why must we help out the poor via $$ rather than guidance?

Money vs. guidance is a false choice. People should have a baseline of acceptable existence and the ability to improve their existence through education, work, luck, etc. Guidance is a major part of that, especially with disadvantaged groups, but not everyone can bootstrap themselves to success.

I would rethink how you describe other human beings, though. Calling people "ungrateful" is in-group/out-group nonsense, as if there are a group of people grateful and deserving of money and help and freedom and another group inherently undeserving who should just be happy to be there. It also doesn't reflect reality - you haven't done polling on disadvantaged groups to see how appreciative they are of government benefits - you're just giving a hot take.

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Jun 1, 2020

Since you're in the habit of disagreeing with everything I say. I shall do likewise. Higher taxation assumes that the government is already good at providing services that alleviate this problem.

Even with governors and mayors launching their sexy anti-homeless and anti-poverty programs in the past--homelessness and poverty rates have only gone up. Why then, give the government more money when it's clear they haven't been able to solve this in the past?

Higher taxes isn't the answer. In a capitalist society, there must be capitalist incentives to solve this problem. At the moment, there isn't besides a few startups that will eventually give up when altruism runs in the capitalist reality.

What the government should do is pay private businesses that repurpose old shipping containers and make houses out of them for the homeless. They're cheap and can be built at massive scale quickly.

Things get tricky at education. Government schools in low income areas are notoriously cash strapped and could barely provide critical tutoring services. Just look at the outcomes of poor kids who attended public schools in wealthy zip codes vs those that didn't. Education services matter. But the nature of politics at the state level don't like sending more money to low performing schools. Here again, is where capitalist incentives matter: government should pay private institutions to provide this service better and more cost effective than the government ever would.
hi

Array

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Funniest
Jun 1, 2020
Rashers:

Since you're in the habit of disagreeing with everything I say. I shall do likewise. Higher taxation assumes that the government is already good at providing services that alleviate this problem.

Not, it doesn't. Please go re-read what I said and look at the topic of the very thread you're posting in.

I said that taxation is the way you fix wealth inequality. Elsewhere, I called it the only effective tool for wealth transfer. I didn't say this was morally right, or economically right, or make any statements or assumptions on the efficiency of the distribution of those tax dollars. The entire rest of your post is based off a strawman argument that I didn't make, apparently out of a desire to simply disagree with me as opposed to my statements.

I don't care about you enough to "disagree with everything you say." You do have a history of posting racist garbage, getting downvoted to oblivion, and getting your threads deleted and I have historically called you out on it from time to time. Do not confuse my opposition to the more corrosive views you share with any personal interest in you as an individual.

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Jun 1, 2020

Negative income tax would be great for addressing inequality and for the economy. Our current EITC is a small nod to the concept.

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Jun 1, 2020

agree. it's a step in the right direction even if something people principally disagree with in some sense it is more transparent to have this / UBI than give people poor incentives etc.

Jun 1, 2020

A great book on this is Capital in the Twenty-First Century by French economist Thomas Piketty

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Jun 1, 2020

which is an interesting read, but largely invalidated because of the presence of certain clear and obvious factors that Piketty missed out on.

Mainstream economists and Piketty himself now believe that better access to education and increased quality of education is the key to resolving "unhealthy amount" of inequality.

Finance Data Science

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  • Intern in IB-M&A
Jun 2, 2020

Piketty as an "Economist" - HA!

Jun 1, 2020
CRE:

Each has its own positives and negatives, but all of it involves the government taxing more money from the rich.

Income tax? Then maybe. Wealth Tax, no freaking way. Ideas alike "Wealth tax" and "anti-globalization" just won't work as they'll have massive long-term and short-term damages compared to tiny amount of short-term benefits.

But overall, progressive income tax makes a lot of sense because spending once you go above a certain level of income doesn't increase. Whether you're making 200K or 300K, your total spending would probably be similar. And as long as the tax increase isn't a crazy amount, some portion of your money not going into savings account probably wouldn't bee that bad.

But the trap here is that that "additional tax revenue" needs to go to improving the quality of education. If it ends up being used to "raise public servant wages" or to "fund USPS or the Department of Agriculture", then that's tax revenue completely fucking wasted.

CRE:

The last time we had such a massive wealth gap, that's how the government fixed it too. It sucks, but the negative effects of a vastly unequal society sucks a lot more and will continue to get worse.

This has to be done very smartly. We're currently facing the long-term damages of the "solutions" for the Great Depression further aggravated by the Cold War. Simply put, direct government intervention at the federal level, through creation of government organizations that hires tons of people, has now caused huge budget deficit issues and very very siloed Federal government organizations that are quite frankly run like a joke. Only exception is perhaps the military and related organizations. The US federal gov't has been "Big and Dumb" for quite some time. Too many organizations are just outdated and shouldn't exist, yet they still do. too many organizations should be smaller, but they are large and growing in size. Too many organizations spend way too much money because they can and they always want more funding so they have to convince Congress that they're always running short.

A leaner and smarter govt has a much higher chance to stay effective and succeed. The US government is the complete opposite of that.

Finance Data Science

Jun 2, 2020
Milton Friedchickenman:
CRE:

Each has its own positives and negatives, but all of it involves the government taxing more money from the rich.

Income tax? Then maybe. Wealth Tax, no freaking way. Ideas alike "Wealth tax" and "anti-globalization" just won't work as they'll have massive long-term and short-term damages compared to tiny amount of short-term benefits.

But overall, progressive income tax makes a lot of sense because spending once you go above a certain level of income doesn't increase. Whether you're making 200K or 300K, your total spending would probably be similar. And as long as the tax increase isn't a crazy amount, some portion of your money not going into savings account probably wouldn't bee that bad.

But the trap here is that that "additional tax revenue" needs to go to improving the quality of education. If it ends up being used to "raise public servant wages" or to "fund USPS or the Department of Agriculture", then that's tax revenue completely fucking wasted.

CRE:

The last time we had such a massive wealth gap, that's how the government fixed it too. It sucks, but the negative effects of a vastly unequal society sucks a lot more and will continue to get worse.

This has to be done very smartly. We're currently facing the long-term damages of the "solutions" for the Great Depression further aggravated by the Cold War. Simply put, direct government intervention at the federal level, through creation of government organizations that hires tons of people, has now caused huge budget deficit issues and very very siloed Federal government organizations that are quite frankly run like a joke. Only exception is perhaps the military and related organizations. The US federal gov't has been "Big and Dumb" for quite some time. Too many organizations are just outdated and shouldn't exist, yet they still do. too many organizations should be smaller, but they are large and growing in size. Too many organizations spend way too much money because they can and they always want more funding so they have to convince Congress that they're always running short.

A leaner and smarter govt has a much higher chance to stay effective and succeed. The US government is the complete opposite of that.

Lol why does a wealth tax have worse outcomes than an income tax? Please explain the economics behind that theory.

I'd much rather incentivize people to work harder and make more income than hoard wealth. If you're arguing it's because it disincentivizes investment, please do explain that bit as well because I would argue it makes the wealthy more reliant on investment income if that were the only way for them to maintain their level of wealth.

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Jun 1, 2020

I think people generally agree it makes people more 'equal' but the total pie shrinks with that mentality. difference is at which point do you value the size of the pie and how'equal' you want people e.g. equally poor

May 31, 2020

Corporate and individual tax rates are likely to rise. Medical and education expenses are the real issue, though. The US spends a ton of money on both with middling outcomes. We spend money so inefficiently. While tax increases are very likely necessary, more important than raising tax revenues is finding ways to get a multiplier on government spend.

Perhaps we could start by incentivizing leaner admin staffs.

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Jun 1, 2020

Don't touch corporate tax rates, increase the capital gains, dividend, and income taxes themselves. Corporations are owned by people, and it makes more sense to tax the people who own the companies than the companies themselves, which are an abstract concept. Taxing the companies means you also end up taxing charities, pension funds, endowments, and other non-profit endeavors. Raising personal rates is how you tackle wealth disparity, not corporate rates.

Array

May 31, 2020

Was thinking about this today myself. I can honesty understand people's issues with multi billionaires. To pretend that someone who've worth tens of billions of dollars is worth that because "they worked hard" is absolutely ludicrous. Of course I believe in building a level of personal wealth but having interacted with wealthy people and taken part in creating wealth, owning enough of a company to be worth tens of billions of dollars is less a function of hard work and more just a function of luck and proper and (currently) "fair" gaming of equity ownership within large businesses.

I think there needs to be a real focus on building a stronger middle class. Poor kids and their parents shouldn't need to jump through 10 hopes just to make ends meet. The sooner inequality is addressed, the sooner crime becomes less of a means to and end and ultimately, the less crime occurs. Frankly, I have no clue how we get there and doubt we will ever get there within any of our lifetimes.

Lastly, I truly think we will see a loud uprising against the current system of capitalism in our lifetimes, if not within the next 10 years, its already beginning. We're seeing a slow end of celebrity culture and an end to the shared aspiration of wealth occur before our eyes. Unless a real effort is made in addressing wealth inequalities it's only a matter of time.

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May 31, 2020

What we're seeing is the spread of a destructive, wicked ideology that tells people it is moral to envy what others have when that is actually inverted morality. One of the 10 Commandments instructs us not to covet our neighbors' belongings, not because that hurts our neighbor but because it is destructive to our own souls.

You say we should have "issues" with multibillionaires who got there more by luck than by skill. But why? Wealth creation is not a zero sum game. Why should I have "issues" with a person who legally acquired his or her wealth, especially if their wealth doesn't prevent my own success?

I think a lot of people who push this destructive ideology conflate wealth creation and acquisition with crony capitalism, where monopolies or oligopolies are enforced by the government. In instances of unfair trade practices, monopoly, corruption, or other cronyism, the best way to deal with this is to make gov't less. The bigger the government the more important cronyism becomes to the success of an enterprise. This destructive ideology has everything backwards--it calls the immoral moral and its prescribes increasing the size/influence of government to reduce unfairness in wealth generation.

May 31, 2020

Agreed.

I believe it was Louie CK who said (dunno if someone said it before him), don't look in your neighbors basket to see how much he has to eat, only look to make sure he has something to eat.

Imagine if Bezos (I know its a lot of paper money in stock) could only make, say $10M, would he have pushed AMazon as far?

Jun 1, 2020

I think you make a fair point on that. Not that I completely ascribe to these folk's ideology but I think theres an idea that its often impossible to build that level of wealth without using a cheap, unfairly treated labour and thats what often causes for folks having issues with Bezos vs. not really having issues with someone like Evan Spiegel. Optically, if you have Jeff Bezos with incomprehensible wealth who - again optically or as expressed by media - creates this wealth while unfairly treating workers, its only inevitable people get pissed off.

Ultimately, the stronger the middle class and the fewer poor people, the less of a push against extreme wealth. Until then (and I admit thats a near utopian vision), the idea that extreme wealth can only be accumulated via the exploitation of cheaper labour will exist. Whether this is fair or technically true won't really matter if enough anger or collective ideology is built.

Jun 1, 2020

Let's unpack this.

real_Skankhunt42:

What we're seeing is the spread of a destructive, wicked ideology that tells people it is moral to envy what others have when that is actually inverted morality. One of the 10 Commandments instructs us not to covet our neighbors' belongings, not because that hurts our neighbor but because it is destructive to our own souls.

It is well documented by economists that extreme wealth inequality is destructive to a society. America's wealth inequality has grown dramatically in the past 30-40 years and is only growing. This harms not only actual people, but also the economic growth of our country.

You can preach about morality and the 10 Commandments and your soul and whatnot, but I live in the real world. It is not often that you get the chance to help people AND promote economic growth all at the same time. Decreasing the wealth gap does both of those, so if you want to talk about morality, I'm happy to listen to your moral argument as to why we shouldn't help people twice over.

real_Skankhunt42:

You say we should have "issues" with multibillionaires who got there more by luck than by skill. But why? Wealth creation is not a zero sum game. Why should I have "issues" with a person who legally acquired his or her wealth, especially if their wealth doesn't prevent my own success?

For the record - and I know this wasn't addressed to me but I wanted to set a baseline - I don't have an issue with multibillionaires. I think they should be taxed higher, but I'm happy for them that they achieved success.

real_Skankhunt42:

I think a lot of people who push this destructive ideology conflate wealth creation and acquisition with crony capitalism, where monopolies or oligopolies are enforced by the government. In instances of unfair trade practices, monopoly, corruption, or other cronyism, the best way to deal with this is to make gov't less. The bigger the government the more important cronyism becomes to the success of an enterprise. This destructive ideology has everything backwards--it calls the immoral moral and its prescribes increasing the size/influence of government to reduce unfairness in wealth generation.

How you fix crony capitalism isn't with less government intervention. In what world does that make any sense whatsoever? People have rigged the system so the solution is to remove the system and let them run wild? No. You fix crony capitalism with tighter restrictions, clear rules, and a balanced playing field for all involved.

Setting the framework for people to live out their lives is literally the fundamental purpose of government. Government provides safety, security, and should provide a level playing field for all to pursue their right to happiness, peace, and prosperity. It works as bowling bumpers do - keeping the bowling balls in line and keeping them out of the gutter. You're welcome to throw a heavy ball or a light ball, put some spin on it or try to roll it straight, and at the end of the day how many pins you knock down is up to you.

What you're advocating for is not only "fuck the bumpers, let people throw straight gutterballs" with their lives because of some warped "morality" but also "take away the rule that says you can't run up and knock all the pins down by hand because clearly some people do that currently even though it's outlawed."

The rules, and the government, are what allow people to fairly find success, wealth, happiness, or spares and strikes.

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May 31, 2020

Education is very important for so many reasons, and not only because going to college will get you a better job. When you go to school at a higher level, you will interact with people who are more likely to succeed financially, socially, morally, etc. I fully support the government funding college for everyone. The ROI (financial and non financial) would for this investment would be very high. I would gladly pay higher taxes to give the government the financial ability to pay for college.

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May 31, 2020
financeabc:

Education is very important for so many reasons, and not only because going to college will get you a better job. When you go to school at a higher level, you will interact with people who are more likely to succeed financially, socially, morally, etc. I fully support the government funding college for everyone. The ROI (financial and non financial) would for this investment would be very high. I would gladly pay higher taxes to give the government the financial ability to pay for college.

How does creating a next level of high school, thus establishing a new minimum floor for obtaining basic employment, serve to further the goal of reducing wealth inequality? Where now you have to have a high school diploma to work almost any job, under your plan you would have to have a college degree to work almost any job. A master's degree would become the new bachelor's degree.

Jun 1, 2020
financeabc:

Education is very important for so many reasons, and not only because going to college will get you a better job. When you go to school at a higher level, you will interact with people who are more likely to succeed financially, socially, morally, etc.

Not exactly. For some people, going to college is the right choice. For some people, trade schools that teaches specific skills work just fine.

More access to higher education is part of the solution. But we should not confuse "higher education for anyone who wants to go" with "higher education for everyone".

That being said, education is one of few fields that I believe government should take an active role. But regardless, I trust the efficacy of the federal government so little that I'd rather have the state governments take care of it. Massachusetts and Texas are doing a good job. But considering the lack of efficacy in other state governments, I'd say that government roles in the US should end at funding and setting certain standards.

Finance Data Science

May 31, 2020

I don't accept your premise that the data show that wealth inequality is a problem. There always has been and always will be "wealth inequality"--extremely poor societies have historically been the most equal. The data don't show that wealth inequality generically is a problem--it shows that in areas where people either don't perceive or actually have a path to improve their lot in life and they are situated with those who are well off then it manifests itself in violence. Arguably, much of the U.S. does not exhibit this phenomenon, but there are some areas that may exhibit this phenomenon, particularly in the big cities where you have high income people living next to impoverished people who don't perceive a way of achieving those career goals. The first solution would be to throw out the politicians who have represented these communities for the last 70 years and replace them with people who have a new way of thinking.

But beyond circumstances where people really don't have much opportunity, I'm sorry, a man's personal resentment for someone else who legally acquired wealth is his own spiritual issue that you aren't going to solve through taxation. Taxation is for the purpose of raising revenue, not to fight some social justice narrative that leaves no one better off and is spiritually destructive.

May 31, 2020
real_Skankhunt42:

I don't accept your premise that the data show that wealth inequality is a problem. There always has been and always will be "wealth inequality"--extremely poor societies have historically been the most equal. The data don't show that wealth inequality generically is a problem--it shows that in areas where people either don't perceive or actually have a path to improve their lot in life and they are situated with those who are well off then it manifests itself in violence. Arguably, much of the U.S. does not exhibit this phenomenon, but there are some areas that may exhibit this phenomenon, particularly in the big cities where you have high income people living next to impoverished people who don't perceive a way of achieving those career goals. The first solution would be to throw out the politicians who have represented these communities for the last 70 years and replace them with people who have a new way of thinking.

But beyond circumstances where people really don't have much opportunity, I'm sorry, a man's personal resentment for someone else who legally acquired wealth is his own spiritual issue that you aren't going to solve through taxation. Taxation is for the purpose of raising revenue, not to fight some social justice narrative that leaves no one better off and is spiritually destructive.

It's not resentment and it's not a personal issue. Wealth inequality contributes to a less cohesive society. It causes social unrest, abuse of the 'sin markets', all types of psychological dysfunctions, and leads to political revolutions.

People who disregard this issue show themselves incapable of civilly contributing to the dialogue and well-being of the nation.

And the notion you seem to have that it's a poor people problem who just want to steal from what other's have accomplished is very ignorant. The middle of the income pool has been facing the same issue as the bottom.

Additionally, people like to compare Bezos to the lowest earning fieldworker, when that's only a tiny fraction representing the general population, as well as those are generally outliers.

Data collections has shown this problem is affecting a lot of people in a number different ways.

What I would like to see is use of data to make the economic mechanism on which we reward work to be a little more efficient. (Even something like more remote work to push down the cost of living is a helpful use of data).

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Jun 1, 2020
Billion with a B:

It's not resentment and it's not a personal issue. Wealth inequality contributes to a less cohesive society. It causes social unrest, abuse of the 'sin markets', all types of psychological dysfunctions, and leads to political revolutions.

Are you not consciously aware of what you're saying? You're agreeing with me. You're as much as admitting that there is not a tangible reason (such as poverty caused by wealth being sucked up to a few) that wealth inequality is a problem. You're saying--and I agree--that wealth inequality is a problem because of the psychological impact it has on (some) people. Yes, that's my point. If you are not lacking in opportunity and you have plenty of material goods and you're suffering psychological problems due to wealth inequality then it's because of resentment and envy. And that's a "you" problem, not a problem with the system.

Billion with a B:

People who disregard this issue show themselves incapable of civilly contributing to the dialogue and well-being of the nation.

I'm not sure you actually read my statement--I specifically said that the data show that wealth inequality is a problem, in particular, within areas where an underclass has little opportunity and no obvious way of moving up the social ladder. It has been demonstrated that this does contribute to crime and violence. But this issue is not a universal problem with wealth inequality; it's specific to certain areas that really do lack opportunity.

Billion with a B:

And the notion you seem to have that it's a poor people problem who just want to steal from what other's have accomplished is very ignorant. The middle of the income pool has been facing the same issue as the bottom.

No, I have a far more nuanced position than the straw man you are setting up here. If you actually read what I wrote then maybe you'll learn something for a change. For what it's worth, I think the white, upper middle class Left are the ones fanning the flames of social unrest over wealth inequality, not the poor.

Billion with a B:

Additionally, people like to compare Bezos to the lowest earning fieldworker, when that's only a tiny fraction representing the general population, as well as those are generally outliers.

I'm almost certain you didn't read what I wrote since I never even hinted at this suggestion.

Billion with a B:

Data collections has shown this problem is affecting a lot of people in a number different ways.

What I would like to see is use of data to make the economic mechanism on which we reward work to be a little more efficient. (Even something like more remote work to push down the cost of living is a helpful use of data).

How is wealth inequality impacting people? Like you said, in the U.S., for the most part, wealth inequality is impacting people by creating psychological problems, and I would add that those problems are, at their root, wicked impulses of envy. There are some instances, however, where the lower classes feel like (and may be right that) they have no way of improving their lot and that does create social problems. While we agree on this point, the problem is your solutions are almost certainly wrong and mine are almost certainly right.

Jun 1, 2020
real_Skankhunt42:

I don't accept your premise that the data show that wealth inequality is a problem.

alternative facts

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Jun 1, 2020

hold on here. you gotta carefully assess what he meant by that.

2 possible meanings:

1) Wealth inequality is never a problem.

2) Wealth inequality in the US is not a problem currently.

Two very very different messages here. The first is flat out wrong. The second depends.

Like I keep saying, inequality is neither good nor bad. It just is. It's the amount of inequality that could be bad. There is such thing as "healthy amount of inequality". That being said, the amount of wealth and income inequality in the US is not healthy.

Finance Data Science

Jun 1, 2020

Considering our past "debates" looks like we have the tendency to go into heated and tangential arguments without much substance. So, let's try to avoid that. Overall, I agree with your message that "resentment is not an economic issue but a spiritual/psychological one". But, I do take issue with some of the details and perhaps a subtle and hidden message that you might not be trying to say. By that I mean, it kinda sounds like you're saying "Inequality is a problem only because people think it is. No need to do anything about it".

real_Skankhunt42:

I don't accept your premise that the data show that wealth inequality is a problem. There always has been and always will be "wealth inequality"--extremely poor societies have historically been the most equal. The data don't show that wealth inequality generically is a problem

You're right that wealth inequality by itself is not a problem. In fact, there is such thing as healthy amount of inequality in both income and wealth. But, that means that there also is an unhealthy amount of inequality. The US, as of now, certainly has unhealthy amount of inequality in both. I'm not talking about how "x% of the wealth is held by the top y%", quite frankly that's just a dumb metric and you probably already know that. But the "nominal wealth" of lower and medium income households isn't that great. Nominal income has been growing much more slowly compared to many other places in the world. While the current amount of income inequality is a bigger problem, the current state of wealth inequality is problematic as well. But I suppose the causes of the current state of wealth inequality partly has to do with financial illiteracy, but surely income levels do come into play for the middle class and below. For most people, if you can't save money, then you can't build wealth.

real_Skankhunt42:

it shows that in areas where people either don't perceive or actually have a path to improve their lot in life and they are situated with those who are well off then it manifests itself in violence. Arguably, much of the U.S. does not exhibit this phenomenon, but there are some areas that may exhibit this phenomenon, particularly in the big cities where you have high income people living next to impoverished people who don't perceive a way of achieving those career goals.

Would like to see some data on this. Idk if this is merely correlated or some causality behind it. This is an interesting and perhaps even expected phenomenon, if true. The "envy" is certainly true, but not sure about the violence. I can literally see it in people's behaviors in some parts of the world. In the US, I'd say along the 2 coast lines but not so much in the Midwest.

real_Skankhunt42:

The first solution would be to throw out the politicians who have represented these communities for the last 70 years and replace them with people who have a new way of thinking.

Well, yes. But, how is this feasible when people are the ones voting in these politicians? Unless you can change the people, you can't change the politicians. So I'd say the first solution is to get these people to a place where they won't be voting in these destructive politicians. This is achievable by providing them what they need the most (not what they want because it's just dumb for obvious reasons as you know) - better education of any form (whether it be a college degree, a trade school, or whatever should be their choice), better access to healthcare, etc.. I mean whatever gives them more opportunity to live a "better" life.

Finance Data Science

  • Analyst 1 in S&T - Other
May 31, 2020

Easiest way to fix wealth inequality is to hike interest rates.

Fed could hike to 4% and stop the rampant asset inflation

  • Intern in CorpDev
May 31, 2020

Would also destroy the growth of our economy...

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Jun 1, 2020
Intern in CorpDev:

Would also destroy the growth of our economy...

For many ideologues, that's a feature, not a bug. The "wealth inequality" ideologues are not opposed to equality by any means necessary (except for themselves, of course--they will make sure they are always wealthy and/or powerful. "All animals are equal but some animals are more equal than the others").

Jun 1, 2020

Exactly how would this ever help?

Finance Data Science

May 31, 2020

Easiest way to fix "wealth" to is identify it for most people. It's like that meme of "movie billionaires" (with pictures of fast and the furious movie) vs "Actual billionaries" (pictures of gates/buffett) (i'm not going to look for the meme.) A lot of people don't know that wealth is just ownership, they think well is things.

Wealth really just comes down to discipline. Could you save your way to a billion dollars, maybe? Probably not likely for most. But you could save enough for investing, have emergency money. Problem is, most people aren't disciplined.

As an example, I think you really have three type of people financially, what I call beer money, champagne glass money, and champagne bottle money (could be lower, middle, upper). If you have beer money, you need to have beer taste, if you have champagne bottle money, its okay to have higher tastes. Probably is, people with beer money what to live a champagne lifestyle.

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Jun 1, 2020

Problem is that so many people have beer money while thinking they have champagne glass money while having Krug magnum (opened with a sword, of course) tastes

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Jun 1, 2020

Thats the idea right. But the idea behind it is people have no idea how to create wealth, or what wealth is. Couple that with, people see others doing things and they want to have the same experience (essentially, they see someone else having champagne bottles and they want that too).

I think a big thing in the country (maybe the world), is that we've found ways to spend $100 to fix a $1 problem. Which you can call luxuries, problem is, only a certain few can actually afford to have luxuries in every part of their life, but many more spend life they can afford it.

For example, take Peloton. It's essentially a luxury. It's ~$2k (i think) for a stationary bike you can use to get in shape. If your goal is to get in shape, you could just use a regular stationary bike, probably find one for free on Craigslist or on the curb. I know it creates an atmosphere, and its fun to workout with others, and that's great. However, not great if you really can't afford it.

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Jun 1, 2020
KREBSCYCLEOMG:

Problem is that so many people have beer money while thinking they have champagne glass money while having Krug magnum (opened with a sword, of course) tastes

This can't be overstated. This is the cause of a lot of envy. There is easy access to the knowledge of endless material goods, but many material goods are not easily accessible economically to the masses of people (myself included). It's extremely difficult to not become lost in envy for those who don't spiritually combat it.

Here is a quote from a TSLAQ (an anti-Tesla, anti-Musk group) member: "If I were a rioter, I would absolutely go for the superchargers. Fuck Superchargers. They're just parking spaces for rich people."

Is this a sentiment from a person who has been denied opportunity in life by an unfair system? Is this a sentiment expressed by a persona unfairly dispossessed of his goods by evil rich people? I suspect not. My guess is that this is a middle class person who is not concerned with finding his next meal. I suspect this sentiment is expressed by a person who has become lost in envy.

May 31, 2020

The major issue is a lack of equal opportunity. The huge gap between the haves and the have-nots is pretty big... I'm guessing we will see more riots & civil unrest once the effects of COVID really kick in and we experience prolonged economic retraction.

May 31, 2020

I can't imagine future protests being worse than this. The gov't forced 40 million people out of their jobs, disproportionately young people and in the lower classes, released prisoners in large quantities, forced most of the other 330 million Americans into months of social isolation and removed all outlets of recreational release, from concert venues and bars to open air parks, took away religious services, and have dehumanized the population with mask mandates. These riots were a powder keg ready to ignite and the sewer that is social media fanned the flames after ignition.

May 31, 2020
m_1:

The major issue is a lack of equal opportunity. The huge gap between the haves and the have-nots is pretty big... I'm guessing we will see more riots & civil unrest once the effects of COVID really kick in and we experience prolonged economic retraction.

In terms of opportunity, I think the whole COVID situation has shined the light on jobs that we need, and those we don't. It's not really "opportunity" as in jobs, its about good paying jobs. We should move back to having more manual labor jobs, those not regarding a degree.

For example, when driving on the NJ turnpike, they had signs saying that toll collectors will be returning. in 2020, with EZ pass, do we really need toll collectors? Probably not, but we could redploy those jobs to fixing up properties or structures.

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Jun 1, 2020

We shipped most of those those jobs to China, supported by both Dems and Repubs, because "something, something, Muh GDP growth." But hey, at least we can all buy 70" TVs for $300! Worth the tradeoff, right!?

Jun 1, 2020

I see things in a weird perspective. I view nations as a "League or Tier" kind of like the NBA is the top tier league for basketball (OR in English Football, EPL is the top league, and if you are not good enough, you get loaned out to the Championship League), and if you are not good enough, you go to the Minor or G League or even China. If you prove yourself in the weaker minor leagues, you can go back to the NBA.

So, if you are struggling to make ends meet here in the USA, you should move elsewhere like Canada, Sweden or Australia where things are more relaxed and less competitive.

There is no way we should slow down the progress of the nation just to appease the poor or low performers. We should encourage them to go elsewhere. America is a great nation but it is not for everyone, just like not every player in the NBA gets much game time. Therefore, spending a year or two in the G-League could be beneficial.

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Jun 1, 2020

You judge a country by how it treats its poor, weak, and vulnerable. Where would the moral strength of America lie if the country pushed through with your recommendation? You also assume that people will be able to integrate into European culture just like that. lol. If these people can't hack it in the US, they're sure as heck can't in Europe, even though they're closer to a true meritocracy than the US. Edward Luce, FT columnist once told "you're more likelier to achieve the American dream in Great Britain than you are in the USA".

Array

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Jun 1, 2020

How are they even going to be able to move? You expect someone unemployed with no savings to spring for a $600 ticket to Europe on the prospect of maybe finding a job?

The tier system is fine from a logic standpoint, but is totally unrealistic in execution. And you really want to tell someone who's family has been in the U.S. for 6 generations and whose ancestors fought in WW2, 'hey this isn't your country anymore please leave'?

The issue is that many, many families over the course of a dozen generations have rises and falls in wealth (some structural, some personal). But you can't just take the Citadel approach and say, let's cut bottom 10% every year as it basically means 80+% of people will be cut over time due to these cylical changes in wealth. One example (there are many, I'm just offering one to not waste time) is if you're studying to be a radiolgist today. Guess what, AI can do your job better than you can. By your definition, a radiologist in residency who finds himself unemployed with $200k in medical debt should now just go to another country because he has no skills that dev markets need anymore?

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Jun 1, 2020

The problem with that recommendation wasn't the extreme apathy, but the utter ignorance combined with apathy that made blood boil. It's fine if you can grind people down and then discard them for machines that can work 3x as harder and longer than them, but remember they were people with families with futures and sources of future economic vitality.

Array

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Jun 2, 2020

I have to think realistically that number is understated. I would've guessed the debt is closer to $400k!!

Jun 1, 2020

Pretty tough to have any semblance of wealth equality when you continuously bailout those who mismanage capital and have Main St. foot the bill.

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Jun 1, 2020

Forced taxation and elimination of taxation loopholes is where you start. I've become militantly pro-labor after years of reading stories like this:

Ted Lerner, the owner of the Washington Nationals and the richest man in Maryland worth $5.3 billion, just announced he will cut minor league player stipends from $400 to $300 per month this year. Imagine how much of an impact that would make to struggling minor leaguers in the middle of a pandemic, while Lerner will never notice the difference. The backlash was so immediate, that the Nationals major league roster voted unanimously to pay out the difference.

Adam Smith invisible hand unbridled-type capitalism has no fail safe for this type of greedy "let them eat cake" behavior, so we must legislate it or else we'll be in French Revolution territory soon.

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Jun 1, 2020
Alt-Ctr-Left:

Forced taxation and elimination of taxation loopholes is where you start. I've become militantly pro-labor after years of reading stories like this:

The owner of the Nationals worth $5.3 billion, the richest man in Maryland, just announced he will cut minor league player stipends from $400 to $300 per month this year. Imagine how much of an impact that would make to struggling minor leaguers in the middle of a pandemic, while Lerner will never notice the difference. The backlash was so immediate, that the Nationals major league roster voted unanimously to pay out the difference.

Adam Smith invisible hand unbridled-type capitalism has no fail safe for this type of greedy "let them eat cake" behavior, so we must legislate it or else we'll be in French Revolution territory soon.

  • Yep, carried interest loophole needs to be gone.
  • Capital gains taxes need to be progressive, with those with limited investment assets paying almost nothing and those with a ton of investment assets (let's call it ~$10 million+) paying closer to the income tax rate.
  • Repeal corporate tax cuts, and eliminate loopholes in that system.

There is no reason for a billionaire to pay a lower effective tax rate than I do. These simple suggestions would be just the beginning of a massive overhaul though. Corporations get bailed/subsidized out over and over again and people continue to repeat the lie that this system is "capitalist" - how duplicitous . No, it's not. We live in a corporatocracy. And these recent protests are a rejection of that system.

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Jun 1, 2020

Why do you think China's takeover of Hong Kong is so scary for western companies? Because in China the CCP controls billionaires, in the US billionaires control politics.

Someone once said that Pakistan was not a country with an Army, but an Army with a country. The US is not a country with big business, it's big business with a country.

Array

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Jun 1, 2020

Maybe part of the solution is to cap person wealth creation past a certain point. There is no need for anyone to have more than $5bl dollars (inflation adjusted per year). In addition to closing corporate taxhole loops and carried interest loophole of course.

I'm not against capital gains taxes being raise on a progressive basis, but think they need to have a fairly extreme slant up to that $10ml threshold (as wealth creation under that is just harder due to a smaller scale in assets). Ex. 0% under 100k / 1% for every hundred thousand up to $1ml ending at 10% / 2% bump every mil to $5ml ending at 20% / 3% bump every mil to $10ml ending at 35% / 2% bump every 10ml after that with a cap at 50% seems pretty fair to me. The flat 15-20% makes 0 sense to me tbh.

Jun 1, 2020

Adam Smith type economics has long been gone just like how Keynesian economics have long been gone for quite some time. Neo-classical and Neo-Keynesians grow ever so similarly because history provides data that either proves/disproves or bolsters/weakens macroeconomic theories.

Virtually no mainstream economists claim that "unbridled-type" capitalism will work because the entire history of early Industrial Revolution proved it wrong.

That being said, don't forget that the "right-wing" economic schools like neo-classical and Austrian schools DO WANT SOCIAL SAFETY NETS. Just in different ways than what Neo-Keynesians want. And quite frankly this whole Modern Monetary Theory by the so-called "Post-Keynesians" is the definition of voodoo economics.

There are so many neo-classical SSN ideas that haven't been tried en masse - negative income tax, school choices through vouchers for lower income households (that allows them to choose between public and private education), slightly less regulated healthcare that causes supply-side price drop, etc... Particularly, negative income tax comes down to such a simple math (at a smaller district level of course) that it's not even that difficult to implement in practice.

More legislation and stricter regulations are very likely to cause long-term issues that our children and grandchildren will be facing because the US federal government hasn't been so wise for almost 100 years. BIG and DUMB federal government we have.

Finance Data Science

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Jun 1, 2020

Also, what do you exactly know about the Washington Nationals' financial standing? Was that pay cut justified or not? If you point out to me why they didn't have to cut the pays, that'd be nice.

Perhaps, if there wasn't a pay cut, the team would've been facing insolvency or other financial issues. That'd mean that those jobs or other might've disappeared. Or perhaps the team's financial health would've been so damaged that it wouldn't be able to function if they didn't cut pays.

The owner being worth $5.3B has nothing to do with it because - 1) most of that asset is not something that can be or should be liquidated, 2) the owner has no moral obligation to use his personal wealth to support. If he wanted to liquidate his wealth at the expense of losing his business or the control he exercises, then that's his choice. Or perhaps, the owner had other plans on how to use his wealth - further develop the team so more people can get jobs or idk donate that money for better usage?

Finance Data Science

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Jun 1, 2020

I wonder if as opposed to your prestigious schools idea, public schools adopted trade classes and could give out certifications. Imagine if High Schools across the nation were able to give out plumbing, electrician, welding etc. certificates to graduating seniors and those seniors didn't have to pay for that education and certification at all. It won't propel a bunch of poor kids to upper middle class immediately, but can definitely get someone off of food stamps and make them self sufficient.

  • Intern in IB-M&A
Jun 1, 2020

This seems logical, there is a trade shortage and most people could be better off doing this and preserving wealth instead of going to college. The only worry is that eventually there will be an over saturation accompanied by automation which will lead to an economic displacement. It's hard for a plumber to learn how to be a risk support for a robot or develop the time and skills to become an engineer therefore I question how will this adjust as AI becomes standardized in our economy.

Jun 2, 2020

Yeah, and I wasn't part of the Yang Gang or anything but the automation of the economy for blue collar jobs was really at the forefront of his campaign which is something I really have felt needed to be addressed for awhile. I think plumbing and electrician type jobs where someone shows up to your house are a little further off as far as being automated as opposed to some other jobs but yes still something to be analyzed.

Jun 1, 2020

I like this idea too. Little known fact that people can actually be pretty wealthy (low 7 figure net worth by 50) by running their own plumbing/ electrician/ drywall/ etc trade company. For anyone who has spent time in north Orange County (CA), you see this quite a lot. It's definitely a path to success for the entrepreneur types. Even if not, making $80k+ a year is pretty damn good. Not a lot of people realize the industry pay isn't dirt low for go getters.

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

Jun 2, 2020

yup--pool cleaner that began with a shitty Ford Ranger now earning mix six figures per year--no college--GED--set up his family in Irvine.

Array

Jun 1, 2020

In my opinion, poverty is a much bigger problem than inequality. Policy should focus toward lifting everyone up rather than lifting some up at the expense of others

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Jun 2, 2020

how would that work?

An incoming medical student interested in health tech, consulting, and entrepreneurship.

Jun 1, 2020

Raise the minimum wage

At the most basic level, a job as a cashier in the '50s would net you a level of income that could buy you X amount of goods. Since then, that basket of goods as risen in price more quickly than salaries/wages.

The initial counterarguments are often something along the lines of, "Higher min. wage makes it harder for (1) new businesses to expand / companies to hire, and (2) unskilled workers can't enter the job force because what they produce is less than what they cost". I'd agree its more expensive in terms of nominal dollars, but the business is and will still make money off of its employees.

On (1): the argument is that a landscaper (for ex) will have a tough time hiring additional workers because it is more expensive to pay them. That's true. The owner can address it by (i) raising prices, or (ii) lowering their margins. Some might say this will make all landscaping much more expensive, and yea that'd partly be true. But if one owner is willing to make $100k a year instead of $150k, that $50k can be used to pay for an additional employee, which will allow him/her to perform more work / do more business. Pick you poison. Welcome to the competitive landscape.

On (2): the argument is that people are useless until they are not, at which point they are net productive (the stuff they do is worth more than what it takes to pay them). If you look at historical wages, proportionally, McDonalds employees were more valuable before than they were now. What they used to get paid, relative to the times, was better than today. Based off the initial assumption we made, that means that they were more productive. Is that true though? Was flipping burgers more useful to the economy/society in 1970 than in 2020? (If anything, they are probably better at flipping burgers now due to efficiency improvements.) Or maybe...just maybe, corporations have realized that if top line revenue grows faster than costs do,, you become incrementally more profitable on a per dollar basis. This makes your financial statements look better, you earnings reports better, and those at the top structure their incentives to promote this, and pay themselves accordingly. And its important to unpack this "better". Are managers today really that much better than they were 50 years ago? Or have they benefitted from a global rising tide (7B people today v 3.7b in 1970)?

Simplest example I can think of right now: manufacturing company. 1 owner, 5 workers. They build toilet seats. They build everything by hand. One day the owner buys a machine to make the work easier. Now the 5 workers get more work done. The company makes more money. Should the owner be the sole financial benefactor from the introduction of the machine?

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Jun 1, 2020
KClubs:

Raise the minimum wage

Minimum wage has been one of the dumbest invention in human history. If set too high, it will decrease employment. At any level, it severely restricts businesses' abilities and choices.

Negative income tax is a far better idea that can achieve the same benefits of a minimum wage without its side effects.

KClubs:

At the most basic level, a job as a cashier in the '50s would net you a level of income that could buy you X amount of goods. Since then, that basket of goods as risen in price more quickly than salaries/wages.

The initial counterarguments are often something along the lines of, "Higher min. wage makes it harder for (1) new businesses to expand / companies to hire, and

On (1): the argument is that a landscaper (for ex) will have a tough time hiring additional workers because it is more expensive to pay them. That's true. The owner can address it by (i) raising prices, or (ii) lowering their margins. Some might say this will make all landscaping much more expensive, and yea that'd partly be true. But if one owner is willing to make $100k a year instead of $150k, that $50k can be used to pay for an additional employee, which will allow him/her to perform more work / do more business. Pick your poison. Welcome to the competitive landscape.

Your counter argument has some giant economic holes in it. Minimum wage for businesses that depend on low wage workers is essentially a "price-floor". And this price floor is gonna cause a surplus. So you pointed out, "why don't they not raise prices and hire more people?" Why would they if that $50K is going into paying the workers it already hired? Also, you can't just get more productivity by hiring more people. They're gonna end up useless and drain more money our of the businesses. If you mean expansion of the business, then think of the risks that goes along with that. You can't force all companies to take more risks. Some will take risks voluntarily, some might succeed and some might not. If you force everyone in the market to take more risks, the consequences are dire as more companies will be in trouble than what is manageable.

Let me quote Paul Krugman on the matter of increasing minimum wage, "I think $15 would be nice, but could be higher depending on the place". But, here is a catch, "I think $15 minimum wage wouldn't decrease employment. But at $20 it definitely would." See the point? The whole economic argument for higher minimum wage is that a certain amount won't impact employment rate. It's generally false that "businesses will cut non-labor costs" if they have to pay a higher wage. What's true is that many will struggle doing so and among the many who do cut non-labor costs, it won't be enough.

KClubs:

(2) unskilled workers can't enter the job force because what they produce is less than what they cost". I'd agree its more expensive in terms of nominal dollars, but the business is and will still make money off of its employees.

On (2): the argument is that people are useless until they are not, at which point they are net productive (the stuff they do is worth more than what it takes to pay them). If you look at historical wages, proportionally, McDonalds employees were more valuable before than they were now. What they used to get paid, relative to the times, was better than today. Based off the initial assumption we made, that means that they were more productive. Is that true though? Was flipping burgers more useful to the economy/society in 1970 than in 2020? (If anything, they are probably better at flipping burgers now due to efficiency improvements.) Or maybe...just maybe, corporations have realized that if top line revenue grows faster than costs do,, you become incrementally more profitable on a per dollar basis. This makes your financial statements look better, you earnings reports better, and those at the top structure their incentives to promote this, and pay themselves accordingly. And its important to unpack this "better". Are managers today really that much better than they were 50 years ago? Or have they benefitted from a global rising tide (7B people today v 3.7b in 1970)?

Simplest example I can think of right now: manufacturing company. 1 owner, 5 workers. They build toilet seats. They build everything by hand. One day the owner buys a machine to make the work easier. Now the 5 workers get more work done. The company makes more money. Should the owner be the sole financial benefactor from the introduction of the machine?

Again, this is so wrong on so many points. Businesses will not and cannot find a way to make profit out of "everyone". If they could, than why haven't we reached full employment yet? They'll figure out a way to make the best out of the pool of resources they have, which certainly isn't everyone.

The most unskilled "Who aren't as productive as what they cost" aren't in this pool because they aren't hired in the first place. PERIOD. Of course, some companies do prefer to hire people who are likely to learn fast "on the job". But, you can't just hire someone who's unqualified with no potential and hope for the best. That is ridiculous. Even in the most low-skill jobs, there are still some bars you have to pass. Why do you think they still do interviews?

Your McDonald's example is tangential at best. Of course business processes have improved and drove costs down. But guess what, improved business processes mean better usage of each employee and that means higher value per capita. Besides the supply chain costs, there have been notable differences in how almost every industry deals with tangible items whether it be making big macs or building cars.

Let me give you an example. Consider Subway's business model. Do you think it's a coincidence that Subway has this streamlined process of making sandwiches? NO. It was their main "value proposition" to make custom sandwiches as fast as possible through a highly streamlined process. This increases value per worker. The same trend can be applied here - technological advances improve average value per capita. Whoah what a surprise.

Finance Data Science

Jun 2, 2020
Milton Friedchickenman:

Also, you can't just get more productivity by hiring more people. They're gonna end up useless and drain more money our of the businesses.

If you mean expansion of the business, then think of the risks that goes along with that. You can't force all companies to take more risks. Some will take risks voluntarily, some might succeed and some might not. If you force everyone in the market to take more risks, the consequences are dire as more companies will be in trouble than what is manageable.

Let me quote Paul Krugman...

Businesses will not and cannot find a way to make profit out of "everyone". If they could, than why haven't we reached full employment yet? They'll figure out a way to make the best out of the pool of resources they have, which certainly isn't everyone.

Even in the most low-skill jobs, there are still some bars you have to pass.

Your McDonald's example is tangential at best.

Let me give you an example. Consider Subway's business model.

  1. We might be using productivity in different terms here. I think (might be wrong) that you are saying that an individuals productivity will not increase if you increase the number of individuals. Which is true. I was talking about the net productivity of a company, not the %. Ex. One guy makes $100, two guys make $200. In my eyes, that company is more productive because they are larger/making more/doing more. In your eyes (I think), productivity has remained the same, because neither guy has improved his individual performance.
  2. Isn't that a cleaner form of capitalism? Let people take the risks, if they win they win, if not they lose. Also it doesn't force anyone to do anything. I think there is definitely more risk going from running a 10-person business to a 10,000-person business. And the rewards are proportional. Let an individuals personal appetite for risk dictate that. Who knows, might be a good way to promote small businesses?
  3. Paul Krugman can lick my nuts. But seriously, doesn't that fall in line with my point? Depending on cost-of-living in certain places, minimum wage should be higher. I don't know what the magic number is, nor how to decide / measure it, but some places are more expensive than others, and people need to be able to afford to live there.
  4. I'd say a few things: (i) anytime a business hires someone, they are making money/value off of them. Full stop. Otherwise they wouldn't hire that person. (ii) I don't see full employment as a good gauge of much, isn't USA close to full employment right now? (+ some people will always choose to be on EI / welfare of some sort to not work, its their own value proposition), (iii) You're sort of bringing up a philosophical point: What do we do with the bottom rung of society (uneducated, mental illness, etc.)? And honestly I don't know dude. Historically they were cannon-fodder in wars.
  5. If humanity can teach sign language to gorillas, I think we can teach anyone how to flip burgers or push a mop. Maybe if companies stopped stroking themselves while requiring a grocery stock boy to be "detail-oriented", a "team player", with a "can-do attitude" life would be a bit easier/simpler.
  6. McDonalds? Tangential. Subway? Perfect. Hotel? Trivago.
    What is better for society: a Subway sandwich or a sandwich from the family-owned cafe on the corner?
    The Subway sandwich is a more optimal usage of resources (human capital, ingredients, etc.). So its more valuable and more productive. Totally agree.
    But I have no problem paying $3 more for a sandwich that doesn't require a global supply chain to make, isn't filled with fucked up tomatoes, and 3 week old bread chemically designed to never go stale. But hey, maybe one day Subway will IPO and I can get dividends right?
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Jun 1, 2020

Malta Monkey, your heart is in the right place. I think all of the things that you say are a drop in the bucket are huge difference makers, and that should be your focus. I can't change macro policy, as much as I'd like to. but what I can do is be a good mentor for someone, I can donate to scholarship funds, I can raise my hand to do a career fair when my firm wants to recruit from a HBC or community college.

I'm a big believer in being a positive role model, so be sure you have taken care of your house and you are the person you want others to emulate. then, roll up your sleeves and pass around the positive things you're discussing, whether it's the homeless, the impoverished, whatever. and cast a wide net because some people are not ready to be helped. I had the luck of having dinner with an NFL coach who was big into youth development, and I asked him what to do. he said you can't save everybody, so don't beat yourself up over the ones who don't listen to your message. the ones who appreciate you may not speak up, but you can make a difference in someone's life, even if you can't change the world. if enough people do that, maybe the world will change.

also, don't be shy about changing it up. maybe you're not a YMCA/boys & girls club type person, maybe you're more of a soup kitchen type. maybe you aren't that type, and would be better as a free tutor for school aged kids. plenty of good orgs out there

Jun 2, 2020

This is the response I was looking for. Thanks for this. Really appreciate your insights into a lot of situations and other posts on this forum.

Great insight, I have a few things to get squared away in my life then I'd like to do more to contribute. I have a few younger cousins who really open my eyes to see how people need help and a role model.

As for the education, my wife really opened my eyes to this. We talked about grades and how she did extremely well in school. There's lots of nearby colleges that are fantastic and I asked why her she never applied, she would've certainly gotten into one of them at least (most likely several). She just wasn't aware her family could've afford it. She applied for some scholarships but it wasn't enough. She got a decent SAT but didn't even realize she could take it multiple times. I realized how skewed the system is. It's crazy how people just aren't aware of the opportunities available.

Granted, prestige of university doesn't matter all that much outside of a few select fields (finance being a prominent one). So it's not the biggest travesty. But I can't help but wonder how many students rule out college altogether when they're fully capable of higher education.

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

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Jun 2, 2020

Curious of (both) your opinions on promoting to current students that higher education is "the goal", especially given today's high cost and unclear short-term value proposition. Can only imagine the cost of college tomorrow. full disclosure I'm one of the 30-somethings still paying off a lot of student debt - a trade-off I made willingly.

I have a hard time counseling my own siblings about this. Do I really want them to go into debt for a 4-year degree that could be replicated online for free? If you're banking on the face-to-face learning from Professors, or social interactions with friends, and that's thrown into whack by pandemic protocols... is the value of that 4-year university the same? Will colleges like my own ever figure out that turning on the sprinklers at high noon is not the most efficient way to manage the water bill? Sorry about the tangent... started really thinking about how my tuition money was spent while I was there.

An educated person/society is a healthy person/society, which in the short, medium and long term will reduce healthcare costs for our country in both the private and public setting (reduced utilization of high-cost services). I'm all for this... but I find it hard to standardize a message like the importance of education without separating it from the academic institution we've embedded it into.

Then on top of all that you have to try to get a 16/17 yr old to accept and understand it! Not sure when the last time you've tried to reason with a teenager... it's like climbing up a muddy hill in the best of circumstances w/r/t attention span.

  • Analyst 1 in IB-M&A
Jun 1, 2020

I don't know if this has been said yet but trying to break the status quo is important. The idea of a target school only prevents people from different backgrounds to break into finance.

Also, I've seen people think that if you came from a community college, you're not as "smart" when those people probably worked just as hard but came from a different background. It's sad to see that people only think of people being capable if they come from a cookie cutter background and companies should try to recruit outside of their usual targets as well.

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Jun 2, 2020

I agree. Outside of being accepted to a fantastic school that doesn't take transfers (or such a small percentage of them) like Harvard, I almost always recommend community college. It's a great way to get 2 years for dirt cheap and nobody will know the difference. Just harder in finance for the sophomore internship, but for others outside the industry I think it's a great route.

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

Jun 1, 2020

I've thought about this question a lot and think this is definitely a difficult question to answer. I don't have a good answer but here are some thoughts and I would love to hear what people have to say.

I think the liberal take on wealth inequality robs 'the poor' of self responsibility and discounts the fact that economic mobility is still quite high in the U.S. and a majority of the billionaires we see today are self-made. Additionally, U.S. has one of the lowest personal savings rates of any country and highest amounts of consumer debt.

The conservative view, however, flat-out disagrees that wealth-inequality is a problem which I don't think is right either. Having grown up fairly poor, the scarcity mindset that my parents passed onto me is something that I'll never forget. When the famous marshmallow test was re-done they discovered a strong correlation between the income of the children's parents and their ability to 'pass' said test, demonstrating the self-reinforcing power of poverty and it's impact on long-term planning and delayed gratification.

Finally, I've also been thinking about what would be the most effective method for resolving income inequality because I do think that high taxation and simple redistribution via a negative income tax or ubi without solving the underlying problems will only see the money shoot right back up to the rich. Some thoughts are that healthcare and housing costs are problematic/inefficient. Maybe we should nationalize healthcare and put limits on real estate ownership (check out singapore's national housing system which limits the number of houses individuals can own while subsidizing real-estate ownership for the poor). Additionally, perhaps the government should increase the amount paid towards social security and compel citizens to save more.

TLDR Is wealth inequality in the U.S. a cultural problem or a systemic one, and if it's moreso a cultural problem, is it up to the government to fix it/how should we fix it?

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Jun 2, 2020

I would argue that most billionaires are self made in the sense of the magnitude of class/ wealth they've risen- but it's very rarely a rags to riches story. Gates, Bezos, Zuckerberg, Spiegel, Dorsey, and many others grew up pretty wealthy. That allowed them opportunities to get way ahead at a young age.

Edit: not to discount their success. But when you get private tutors to teach you programming and go to Harvard/ Stanford, when you have your parents as primary investors to afford an office or allow you to crash at their Palisades mansion, it's easier than someone trying to work through college to pay for it and flip burgers instead of studying.

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

Jun 2, 2020

Yeah that's absolutely fair. What I was getting at is that rags to riches stories are still quite common in the U.S. and there is actually data that shows that economic mobility in the U.S. is still fairly high https://www.npr.org/sections/money/2014/05/05/3083.... Is what we're looking for a completely equal society in which everyone has an equal chance of 'making it', or asking from another perspective, should being wealthy yield no marginal positive impacts for one's children?

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Jun 2, 2020

Agreed.

Everyone starts at a different point in their life, so different endpoints are different levels of success. Maybe you immigrated to this country with nothing, and now have a house and a good job, that's pretty successful. But also, take a guy like Gates, had access to a school that had a computer, a very small percentage of schools had computers at that time; look what he did with that opportunity.

Or, take someone like The Rock. He couldn't make it as a football player, so decided it get into wrestling. Did it help his father and grandfather were wrestlers, yes, but he was able to parlay that into becoming one of the biggest movie drawers. Is that fair to someone with no wrestling connecitnos, probably not, but life isn't fair.

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Jun 1, 2020

Inequality isn't itself bad. What would actually improve people's lives is increasing the median purchasing power (how much shit people can buy with each dollar they have). Meaning the cheaper consumer goods become, the better. One policy that could help this is to dramatically increase the standard deduction, or make food, housing, and medical expenses pretax

Countries with low Gini coefficients (low inequality) typically don't do shit. No groundbreaking tech industry, comparatively little medical research, etc. Inequality itself isn't bad- it actually incentivized outperformance in an economy. More competitive industries are better for everyone since the goods produced are better and cheaper. The goal is to increase the size of the pie, not divide it up more equally

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Jun 1, 2020

Let's just clarify a couple things.

1) Wealth inequality and income inequality are 2 separate things. Income is how much you make and wealth is how much you have.

2) Wealth and income inequality by themselves are neither bad nor good. They just are. It's a matter of how much. There is such thing as "healthy inequality" (in both income and wealth). This is where most people at the very bottom still enjoy a good standard of living while the market economy is still highly functional such that the smart, talented, ambitious, and hard-working ones among us can become successful lawyers, doctors, engineers, entrepreneurs, financiers, etc... and get paid better than others. Many will go on to create wealth because the system allowed them to do so. This is why metrics like "x% of wealth concentrated in the top y%" are just laughable and terribly misleading. More correct metrics are "real wage and wealth growth" (nominal values in comparison to price levels) for measuring the rate of change for inequality + differences in living standards for amount of inequality.

Now the current state of inequality: The US has unhealthy amount of inequality in both income and wealth. If you ask 100 random Americans whether they can pay $400 for some emergency, 40 of them will probably answer that they can't. As for income, too many people live on terribly unhealthy food because they're cheap and quite frankly, all they can afford. And quoting Jerome Powell here, "median and low levels of income have grown, but very slowly".

Too many people are living in this weird fantasy of "wealth tax" but that'll never help as the economic pie may actually decrease and leave the rate of productivity increase severely damaged. Key solution is better education in any form. For some, it's an opportunity to get a good college degree (none of that U of Phoenix BS) without worrying about the cost. For others, it's trade schools that allow them to get good blue collar jobs. There also is a third group, people who were displaced or will be displaced by automation or globalization. Frankly, anti-globalization is just as dumb as this "wealth tax" idea because of its quite obvious long-term and short-term damages, which are far greater than its short-term and small gains. (Virtually, no long-term gains). Instead, these people need education programs so they can pick up new skills and stay competitive in the job market.

Finance Data Science

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Jun 1, 2020

(Talking about poverty, not this inequality bs)

Hard truth is that most people are poor and no educational opportunities will change that, since wealth is always relative. If you educate everyone more, great, but only x% of people will ever be wealthy.

So what do we do? We enact policy aimed at making everything in life cheaper, so that being relatively poor can still allow you to be comfortable. More efficient, inexpensive healthcare (need tort law reform to lower doctor's operating costs and an end to capping quantity of physicians in the country by the AMA). Free trade to lower consumer prices. (Cheap clothes and plastic shit from Chinese factories and groceries from Walmart are a godsend for ~50% of Americans). Allowing people to fund basic items in their life (housing, transportation, food, education, healthcare) tax free.

Bottom line: poverty is relative. Inequality is unavoidable. So we need to make being poor hurt a lot less. Make stuff cheaper

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Jun 1, 2020
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Jun 1, 2020