Wealth Distribution in the USA

Right, but it hasn't always been like that. The graph does not steadily trend toward the rich getting richer and the poor getting poorer.We've had "robber barons" and slave owners and today's obscenely wealthy, but we've also had blowbacks against those things. We abolished slavery. We instituted wide-reaching labor laws. We had the New Deal. We've had many periods in our history where the middle and lower classes were far more even with the wealthy. It's never been totally flat of course, but there were periods when the marginal tax rate topped out at ~90%...as opposed to the paltry ~35% of today.Not all of these took violent action to accomplish. They took strong leaders, a responsible press, and a population of politically aware voters from the oppressed classes...and a few socially responsible and compassionate members of the privileged class.Today's problem isn't merely one of the judiciary or Congress. It's a problem of voter apathy and misinformation causing people to often vote against their own best interest...when they vote at all. And that, too, is just the tip of the iceberg.

The end of the Great Depression.During the Depression the difference between rich and poor was immense.The postwar period turned America into an economic superpower...through the generation of an extremely strong middle class. Top tax margins were at their highest rate ever, and yet the potential to have a job making a living wage, own your own home, have a few luxuries, and have a positive retirement were all made possible by utilizing those tax dollars to set up the so-called "entitlement" programs we know of today like Social Security.It's not like "taxation" is the end of the equasion. It all comes down to what you spend the money on. When the tax dollars are funnelled back into the economy through massive public works programs, "entitlement" programs (let's be honest here, every dollar that gets paid out of Social Security goes right back into the economy, which can only ever be a good thing), and even war spending, you stimulate economic growth that simply isn't sustainable through private industry alone. Tax dollars allow for incentives for creating and maintaining infrastructure, and provide for thousands upon thousands of real jobs that continue the flow of money.

THis entire thread, and indeed most discussions on the topic, revolves around extremely simplistic views of economics driven not at all by facts or numbers, but instead by principles.There's this notion of "fairness" that somehow seems to apply to one class but not to another. For some reason one group of people is responsible for driving the economy and the other class is not. Reality is the farthest thing from most of these conversations.The fact is that national and global economies are incredibly complex. You cannot in any way point to a single group of people and say "these people create wealth" and point to another group and say "these do not," unless the second group is completely detached from trade.Economic activity is a function of creation and consumption. It's very much akin to ecology - any given economy is dependent on balanced function of all of its components, meaning the rich to the poor, much in the way a given habitat is dependent on a wide variety of organisms and conditions in order to remain self-sustaining.The goal of an economy is not to create as many wealthy people as possible, or make the wealthy as rich as possible.The goal of an economy is to be self-sustaining. Modern economies depend on continued growth to sustain themselves, and that's fine. They are strongly driven by greed and the desire to acquire more wealth and purchase more goods, and that also is fine (at least to a degree).The problem arises when we become so blinded by the driving forces behind economics that we forget that those forces are not our goals in and of themselves.Stockpiled money stagnates and is good for nobody. A population that cannot afford to consume products is good for nobody. The ideal is to allow for wealth accumulation sufficient to retain greed as a motivating factor, yet to limit poverty such that we retain the maximum number of consumers."Fairness" doesn't really come into the equation at all - it's a red herring. Nobody "deserves" to starve, and indeed letting the poor remain extremely poor doesn't actually generate any economic activity, whereas even raw government handouts are 100% funneled right back into the economy (not that government handouts are the best solution)."Fairness" is a buzzword that appeals to the human innate desire for equity, but has nothing whatsoever to do with generating a functioning economy.If there is any ethical principle that should have any bearing on a discussion of economics, it's simply that, in a modern first-world economy, there is simply no excuse to fail to provide a minimum standard of living for all citizens, even the lazy, including food, shelter, and medical care...and even a little beyond, simply to spur continued economic activity through consumption. The interests of ethics and the interests of maintaining a self-sustaining, growing economy actually coincide.And that's what's so frustrating about these debates - the focus is always turned to whether we should or should not "reward" people for being "lazy," and how we should or should not "reward" those who "create wealth." We always wind up talking in circles about the driving force behind an economy as if it were the actual goal in and of itself.It's more complicated than that. We all create economic activity - even the lazy. Many of the incredibly wealthy are also lazy and most produce relatively little economic activity (as measured by their income-spending ratios). The focus should be on making the economy sustainable, much like an ecosystem. We need to encourage consumption and production, and we need to acknowledge that what's "fair" isn't really relevant to the discussion at all. We need to encourage investment, and yet not rig the system so that only those who are already wealthy can make money through investment; we need to encourage savings without encouraging hoarding, because money in an offshore account isn't producing and economic activity. Edited by Rahvin, : No reason given.

That depends largely on other conditions.The real test is to compare the practical differences between slavery and employee treatment.Some of the obvious differences are control over a slave's body - slaves can be beaten, branded, can be separated from their families by force, can be "bred," and other abuses.Typically even the lowest-paid workers don;t suffer quite so badly.But in other comparisons the differences blur more. A slave might receive at least shelter and food, possibly even medical care. But paying a "Wage" and making the person an "employee," the "employer" is unburdened from the responsibility of making sure that the worker is healthy and fed and sheltered. The "employer" can pay less than a livable wage and simply depend on government to make up the difference...which is exactly what happens. Meanwhile the "employee" is dependent on their job and the government to be able to retain shelter, food, etc.The independantly wealthy are not subject to this dependance. They are the truly free - they can work or not; they can go where they please; they are insulated from the whims of their employer or even economic downturns.But there is another way as well - in many countries a basic, minimum standard of living is guaranteed interdependently of the employer. If you lose your job, you will not be homeless, you will not starve, and you will still receive healthcare. The urge to innovate is still present in these societies...but the fear is not.American workers, at least the middle- and lower-classes, are far more similar to slaves than we would ever care to admit. Most of us are one bad day or just a few months away from losing everything. We cannot bargain in good faith with our employers because at the end of the day we always need them more than they need us, at least individually. We don't have the option of letting the "market" work for us to weed out bad employers, because the real incentive is to remain employed at all costs, because unemployment will cost you everything. For the working poor, employers receive nearly all of the benefits of slave labor without actually needing to provide for their physical well-being.$2-3/hr may not actually be abusive and inhumane...if the employee actually has recourse against abuse and inhumane treatment, if the employee can quit at will without fear of starvation or denial of other basic human needs due to lack of money.$10/hr can still be abusive and inhumane...if it costs twice that to be able to afford food and shelter and transportation to work, and if the employee is entirely beholden to the employer for fear of starving or becoming homeless on unemployment."Slavery" is not necessarily a simple concept.

So what you're saying is that today's masters have engineered society such that their slaves will beg to be allowed to work, in chains of economic impotence instead of iron, and with the threat of starvation or homelessness replacing the whip.Is that about right?

I believe that there is a minimum amount of income that a person can actually survive on. I believe that no person deserves to be homeless, or to starve, or to lack medical care, due to lack of money.What if I valued your work at $2/hr? What would happen to you? What if that was the best job you could find?Do you really think that I'm advocating communism? Are you seriously going to oversimplify my statements and economics in general to the point that we either accept pure market-guided salaries with no controls at all or else full-blown communism?

If I hold a gun to your head and command you to work, are you exercising "free will" by working?If I hold your paycheck and you will starve to death without it and command you to work, are you exercising "free will" by working?An employee may have some limited ability to choose who to work for, but work is not exactly an option Percy. You know that.

Maybe you should try reading again, Percy.

My previous employer was similar - it was an "employee-owned" company, meaning only employees were allowed to purchase or retain stock, and shares were given as a portion of the 401(k) "matching" offered by the company. Virtually every employee was a shareholder, and the company was not beholden to anyone else. Leaving the company for any reason (like when I quit) forces a liquidation of all shares.

The problem is that the fox's wealth gives him influence over henhouse security.

What about other corporations int he same market who do pay more and remain in business? In and Out Burger, from what I understand, pays significantly better than minimum wage.In fact, I've read recently that in some countries even McDonalds pays the equivalent of $14-24/hour.Profit margin does not necessarily need to be lowered to increase wages. Re-structuring salaries in general - paying top-level CEOs and the like less, and increasing the wage of the average and/or lowest-paid employees - can result in an identical bottom line where labor cost is concerned.McDonald's CEO "earned" $8.75 million last year.

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Shareholders, not employees, have reaped the rewards. McDonald’s, for example, spent $6 billion on share repurchases and dividends last year, the equivalent of $14,286 per restaurant worker employed by the company. At the same time, restaurant companies have formed an industrywide effort to freeze the minimum wage, whose purchasing power is 20 percent less than in 1968, according to the Economic Policy Institute, a think tank that advocates for low- and middle-income workers.

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The responsibility of a corporation is, of course, to its shareholders - but in the interest of "protecting the chickens," to carry an earlier metaphor, we could quite easily institute new regulations tying the minimum wage to cost-of-living, or providing major tax penalties when top employees make more than a certain multiple of the lowest-wage employee, and so on. We can also easily protect smaller businesses, or businesses suffering from economic hardship, from the effects of those same regulations by, for instance, specifying that a certain percentage of corporate profit must be used to increase wages in accordance with the standard of living up to a minimum amount - let the shareholders keep the rest, and the company won't be affected by legislatively forced wage increases when they're losing money. Just off the top of my head. McDonalds data.The incentives of capitalism are strong and beneficial, but we all agree that capitalism requires some form of regulation to prevent the atrocities of the "Robber Barons" of the American past. I would suggest that, when an average employee would need to work 1 million hours to make what the CEO of the same company makes in a single year, that we are seeing a red flag indicating that the current incentive system has gone awry, that we are looking at an example of runaway capitalism and not healthy capitalism.After all - a single CEO will only buy so many widgets. A thousand individuals with the combined income of just that one CEO will buy a lot more widgets. It's purchasing power, not the ability to hoard wealth, that drives an economy. Which is why supply-side economics has always been a pipe-dream, a lie sold by the already-wealthy.Supply doesn't create demand - demand creates supply. Increase the average wage and watch as people buy more widgets and drive the wheels of industry. Let the average wage stagnate and watch people buy things on credit until a credit bubble pops, leaving them unable to buy more widgets, and the rest of the economy grinds to a virtual halt.I think we just watched the latter over the past few years.

I don't know their business model either. I do know that, while they don't have a $0.99 menu, their "meal" prices are not terribly far removed from McDonalds. Tastes better, too. Actually, according to what I read, the $14-24/hour wages are in a country that actually does not have a minimum wage - merely laws against "abuse of employees." I think it was Sweden; I'll try to track it down later tonight. That isn't likely only because of how many people McDonalds employs. Remember that many/most are part-time, and many locations are 24-hrs.But regardless...I think that such a massive disparity is one of the signals that new regulations are required to adjust the incentives. ...that would be why the majority of my post spoke of legislative regulation, not boardroom action. As I said, corporations are first beholden to the shareholders. Currently, the incentive exists to pay the lowest wages possible so as to keep the saved money as profit. Legislation can be passed that would alter that incentive such that lowering top-end pay, as a singular example, would provide more benefit to shareholders.The beauty of capitalism lies in its power to drive innovation. The weakness of capitalism is exposed when that innovation turns to finding ways to exploit people and resources in ways that are beneficial for the individual company but harmful for the industry or society as a whole. Business will always go in the direction of cash incentives - whether that's avoiding tax penalties or paying workers below-subsistence wages. The trick is rigging those incentives to allow for innovation, to let new businesses form and keep older businesses around, without killing off the workforce, expending all available resources, or drying up the ability of consumers to consume what business is selling.