Does it matter how rich the rich are?

rockefeller
Wikimedia Commons
People try to keep up with Jones, not the Rockefeller family

Answering the question in the headline is way above my pay grade. For the moment, I raise it mostly to suggest that you check out this piece in the Blog Cabin by my righty friend Peder DeFor, who suggests that the current high concentration of wealth and income doesn’t trouble him as much as they do me, Robert Reich, a former secretary of labor, and most lefties.

(An aside: I’ve known Peder for years, first as a commenter on my old Strib blog, and now as a friend in a category of friend I value highly because we are able to civilly discuss issues across the left-right divide. If you don’t have any friends like that, I recommend acquiring some. It’s easier to talk with people that agree with you, but you don’t learn as much.)

A common view on the right is that the left seethes with the politics of envy. Calling it the “politics of envy” is a pejorative, suggesting that, like a certain kind of Bolshevik, the left cares more about making the rich less rich than about making life better for the poor and the middle class. Peder doesn’t make this claim, but it’s implicit in these passages, which captures the essence of his argument:

“That isn’t how wealth works. For instance, even as wealth inequality has been growing, the average house size has too. The middle class of today owns more house, better cars and is able to afford more entertainment than they could have a generation ago. In real terms, each generation is wealthier than the previous one. If you want to visualize wealth as some kind of divided pie, then you have to understand that the pie is growing larger and larger…”

and…

“It wouldn’t bother me if the top 1% had 90% of the wealth if the rest of us could still live well. This is the heart of how the right understands wealth distribution. We think that people will try to keep up with Jones, but not the Rockefeller family. As long as we still have sustainable paths for average people to create the lives they want, the overall American dream is fine.”

Peder concedes that some level of wealth concentration would be problem, but he doesn’t know what the level is. I concede that not every dollar in the Koch Brothers’ or George Soros’ net worth is a dollar that might otherwise relieve the hunger of a poor American. There is some magic to wealth creation that is beyond a zero-sum game. And we both concede that we don’t know the ideal level of wealth distribution. I even concede some truth to Peder’s point that, depending on how you measure it, a middle-class American of today is better off than his middle-class ancestors.

Of course, at a less cosmic level, the perpetual left-right argument is about whether there are things a government can do to both help people that need help and stimulate economic growth and what these things are.

Not to be snotty, but I must mention two things about the first graphic that Peder posted:

The concentration of wealth in the top 1 percent is much greater than the concentration of income. We need to think about both. And this graphic, which stops in 2008 as the top 1 percent was taking a hit from the crash, doesn’t capture the trend of the last five years during which, on net, the gains from the recovery have almost entirely gone to the top 1 percent.

Comments (101)

  1. Submitted by Todd Hintz on 10/25/2013 - 01:42 pm.

    Wealth Distribution

    The problem with the philosophy Eric’s friend Peder put forth is that the wealth redistribution doesn’t stop at 90%. When you have most of the assets in the country, you can afford to buy the rest of the assets in ever greater amounts as well as hire lawyers, accountants, and politicians to protect it. The end result is the system is rigged in their favor, accelerating their asset gain and everyone else’s asset loss.

    It doesn’t take much of a leap to see how that system is fundamentally broken. Not to mention that it takes away people’s incentive to work hard. Why bust your chops for a few crumbs when the guy at the top owns not just the bakery, but the grocery stores, distribution system, and wheat farms.

    Yes, we do indeed some mobility in society and wealth accumulation to foster new innovations. It gives people a reason to strive to do better than the last guy and come up with new innovations in products and services. But a good thing taken too far is still a bad thing. Bad for people and bad for society. Call it socialism if you will, but people need to make enough money to provide for themselves, their family, and retirement. And for a vast swath of society we don’t have that anymore.

    • Submitted by Dennis Tester on 10/26/2013 - 07:52 am.

      You just made an argument against union labor

      Why bust your chops when the guy next to you makes the exact same thing.

      • Submitted by Susanne Wissink on 10/26/2013 - 04:05 pm.

        It is hard to see how you extrapolated his comments to that conclusion.

        Unions do help to level the playing field. With a system rigged to favor the few with the most assets, collective collaboration seems the only way to give the people at the bottom a fair shake to make it into the middle class.

  2. Submitted by Neal Rovick on 10/25/2013 - 02:43 pm.

    The troubling part of the current inequality regime is that the fortunes of many are falling, as opposed to the “good ol’ days” when the fortunes of the many were apparently rising.

    It is far more likely that the push to dismantle democracy will occur when it is clear to the rich and powerful that their interests are not served by general suffrage. Was it a coincidence that fascism–the confluence of business, military and exclusionary politics–rose on the economic collapse of the Great Depression?

    Is it a coincidence that the underclass is most adversely affected by the voting restrictions being installed across the country? Is it a coincidence that there is a swelling of attacks against democracy itself, including those by some of the people who comment on this site? I think not.

  3. Submitted by Hiram Foster on 10/25/2013 - 02:57 pm.

    Pies

    For me it’s a question of how the rich are getting richer. Is it because they are getting an expanding piece of an expanding pie? Or are they just getting a bigger piece of a pie that isn’t growing which means that their wealth is coming at someone else’s expense?

    • Submitted by Frank Phelan on 10/25/2013 - 04:18 pm.

      All Gains

      The pie is expanding, but all of the gains are going to the top. Real incomes (and wealth) are falling for most of us.

      Conservatives only call it redistribution when it’s downward.

    • Submitted by Todd Hintz on 10/25/2013 - 04:41 pm.

      2PieR

      It should be a simple matter to compare the growth of GNP for the past 50 years to the growth rate of the top 1%, 10%, and 20%. That will easily tell if Peder has a point or if his assumptions are off base.

      My guess without looking up any data is that we’ll find that indeed the pie is growing, but the slice for the one percenters is growing far faster.

      • Submitted by Paul Brandon on 10/25/2013 - 08:49 pm.

        Some data

        There’s a graph of US Real GDP Per Capita since 1950
        at
        http://www.multpl.com/us-real-gdp-per-capita
        It’s about tripled.
        I can’t find any data on the growth rate of the actual income of the top 1%; just the growth of the share of total GDP. But if their share of a growing GDP is increasing, obviously their actual income is growing even more rapidly.
        So it’s true that they are getting a larger share of an expanding pie, and the poor today are probably better off than the poor 50 years ago, at least in terms of those variables which can be held constant (how do you measure the value of a cell phone in 1963?).
        And by most variables the poor today are better off than anyone who lived a thousand years ago.
        But comparisons change, so the argument is that a comparison with other people living at the same time is more valid than a comparison with people in the past, since standards (of living and of other things) have changed.

  4. Submitted by Peder DeFor on 10/25/2013 - 03:13 pm.

    What Governments can do

    Eric, thank you for the response.
    “Of course, at a less cosmic level, the perpetual left-right argument is about whether there are things a government can do to both help people that need help and stimulate economic growth and what these things are.”
    This is exactly right. As I mention, the gov’t efforts on health care costs and education prices have had exactly the opposite of intended effect. Our welfare system hasn’t exactly been a ringing success in ending poverty either.
    Things like food stamps and EITC have done some good. I’d note that both of them are fairly modest in goals and they work within the market structure, rather than try to change it. Although you could say the same thing of the mortgage tax credits and that hasn’t done a thing to help home costs.
    A mixed bag, with small successes.

  5. Submitted by Ann Spencer on 10/25/2013 - 03:28 pm.

    “The politics of envy”…

    is another example of what Professor Reich was talking about—the right’s success in framing the conversation. The characterization of any expression of concern about income (and wealth) inequality as simple jealousy effectively shuts most people up. Who wants to be thought of as envious of their more successful neighbors? Politicians avoid the subject for fear of the dreaded epithet “socialism.”

    What is at stake is the future of a viable democracy. When wealth and income distribution are wildly askew (and I don’t pretend to know what that point is), the number one concern of the haves becomes protecting their personal security and their assets from the hordes of have-nots. Government becomes primarily the servant of the haves, its principal function guarding their property from the have-nots. Civil liberties go by the wayside in the interest of preserving order.

    We’re not there yet, but the trends are in that direction. This should concern everyone, have and have-not alike.

    • Submitted by Todd Hintz on 10/25/2013 - 04:38 pm.

      Good Points

      Ann, you hit the nail on the head. Calling it the “politics of envy” is one side’s attempt to frame the message and discredit the opposition. That’s not a great way to start the debate on an issue that requires a large degree of intelligent thought.

      The haves will be much less interested though in the state of the democracy as they have the resources to move elsewhere or simply hire private security to protect their assets. And we’re already in the position where they subvert the democratic process to favor their businesses and interests. Capital gains are taxed at a much lower rate than income, investments are sheltered overseas, no social security tax at all over a certain level, labor unions are being dismantled left and right, and funding for social programs are being cut at the same time tax rates for the wealthy are slashed. Not to mention money is considered free speech and corporations are equivalent to people.

      The system is systematically being rigged to favor the haves and cut all benefits to the have-nots.

      • Submitted by Steve Titterud on 10/25/2013 - 06:07 pm.

        Agree with the whole list you’ve given, and one more…

        …to add to it is this: the propaganda machine is virtually owned by the same “haves”, so the public messaging in general is used to advance their interests.

      • Submitted by Jon Kingstad on 10/25/2013 - 09:09 pm.

        Conspicuous consumption

        Minnesota’s own Thorstein Veblen nailed it when he identified “conspicuous consumption” and the pride, satisfaction and hedonistic pleasure which the wealthy derive from lording their wealth and ability to pay over others. To denounce the criticism of excessive accumulation of wealth is equivalent to criticizing a starving person for drooling over a restaurant display of a sumptious meal.

      • Submitted by John Appelen on 10/29/2013 - 05:18 pm.

        Earned Benefit?

        If Social Security and Medicare are earned benefits, meaning benefit is related to contribution, why would you think some should pay more for the same maximum benefit?

        Do you really want people to start seeing SS and Medicare as welfare programs?

  6. Submitted by Paul Brandon on 10/25/2013 - 05:30 pm.

    I would be less concerned

    if the top 0.1% paid their fair share of income tax.
    The tax code needs a real cleaning up so that super wealthy individuals and corporations (which tend to overlap at that level) can’t hide their income overseas.

    One question is how ‘income’ is defined.
    Does it refer to wages? Interest? Dividends? Bonuses in the form of cash? In the form of stock options?
    I checked their Web site; I couldn’t find that graph but similar ones appear to exclude capital gains.

    And of course in today’s political world money = power; our system is becoming more one dollar/one vote than one person/one vote. Most political contributions (pace la Michelle) come from wealthy individuals and corporations, and that’s not factoring in the fact that it takes money to raise money.

    I agree that Peder is a good and honorable intellectual sparring partner. Of course, Piketty and Saez are also righties, and this is a secondary source. You’d have to look up their journal article to find out where they’re getting their data. I’d be happier with something from a source like the CBO or the St. Louis Fed.

    And Peder, our welfare system is meant to mitigate poverty, not end it.
    During a major recession (which decreases government resources), trying to end poverty is like walking behind an elephant with a spoon instead of a shovel. At best it can speed the end of a recession by increasing demand by putting more money in the hands of those who are likely to spend it immediately rather than stashing it away. And if corporations do not respond to increased profits by increasing wages, ending the recession will have only limited benefits for the economy.

  7. Submitted by Jon Kingstad on 10/25/2013 - 05:12 pm.

    Another graph

    I recently saw another graph that depicted the unequal distribution of wealth in the US in more startling terms showing as it really as as opposed to what most people think it is.

    http://www.youtube.com/watch?v=QPKKQnijnsM

    Mr. DeFor is apparently is unmoved and worse, unconcerned, by the appalling level of squalor in this country, a country which prides itself for its material prosperity.

    It’s my belief that this growing maldistribution of wealth is inherent in what Veblen called the “price system” which also is based upon compound interest. This compounding of interest favors those who work in and around money and against those who earn their living or toil with the soil. The New Deal was the first and last government as far as I can tell which acknowledge this and attempted to counterbalance the tendency of law, policy and custom to redistribute wealth to the wealthy, financial classes. This has led us to the plutocracy we have today and frankly a failure of the promise and hope of America.

    • Submitted by Peder DeFor on 10/25/2013 - 11:16 pm.

      Opinion Charts

      I’ve seen that video before and frankly I think it’s silly. Optimal wealth distribution is a hugely technical question. Trying to figure it out by opinion poll is like polling people on how the electrical grid should be wired. A better comparison might be that it’s like going out to the MOA and asking people to restructure the Vikings roster allotments. Meanwhile, when you poll people on their actual concerns, ‘wealth inequality’ doesn’t chart.
      Jon, you don’t know me from Adam, so kindly keep your suppositions about my concerns to yourself. I live in a lower-middle class neighborhood and frankly think that ‘squalor’ is a slur. We do have some very poor people in our country, but what country doesn’t? We also have great opportunities. Some of the paths to those opportunities have gotten harder because of government meddling. I don’t know if you’re unmoved, or worse, unconcerned about that, but you should be.

      • Submitted by Paul Brandon on 10/26/2013 - 11:11 am.

        What opportunities?

        The fact is that we has less social mobility than most developed nations.
        If you’re born lower middle class, you’re likely to die there, and so are your children.
        Horatio Alger anecdotal myths don’t change this reality.

      • Submitted by Richard Helle on 10/26/2013 - 11:20 am.

        That’s your takeaway from this?

        Wow, I mean I’ve seen obtuse thinking before but this is really amazing. So, the vast disparity of wealth ownership in this country is a matter of faulty polling practices? Then, to take offense that the term squalor might apply to “your” neighborhood plays into the traditional “oh my stars and garters” manufactured outrage the right typically trots out. Some of the those paths to opportunities have gotten harder because of government meddling? Cite please. I can think of of one path to higher wages that could benefit from government meddling. That would be a raise in the minimum wage.

        • Submitted by Peder DeFor on 10/26/2013 - 02:03 pm.

          Minimum Wage

          There is strong correlation between raising the minimum wage and increased unemployment for the young. You don’t help poor people by making it harder to employ them.
          I mentioned two big obstacles that middle class people have now, that were made worse by government intervention. Health care costs have sky-rocketed ever since the government tried to control the market forces there. That isn’t a coincidence.
          A different problem has blown college prices out of whack. The government has thrown heaps of money in terms of grants and cheap loans at universities. This money hasn’t helped dropped prices. Instead, colleges have simply raised tuition so they could capture the additional money. This wouldn’t have happened without the government interference.

          • Submitted by Richard Helle on 10/26/2013 - 06:58 pm.

            Cites?

            There is strong correlation between the use of opinion and not providing any supporting data. As far as raising the minimum wage, when I first started working, it was 1.65 an hour, it’s now more then that and yet, teens are still working. Here’s a study.

            http://www.epi.org/publication/briefingpapers_bp150/

            Increasing minimum wages increases economic activity among those making minimum wage. And how about we look at adults making minimum wage, the largest group. Many of those working for highly profitable corporations are forced to use food stamps and other welfare programs to help support themselves and their families. In essence, tax payers are subsidizing corporations paying low wages. You don’t want to subsidize highly profitable corporations, do you?

            The Health Care system has been in a death spiral for the last 30 or 40 years and to try and pin those costs on government actions is a over simplification at best. The same can be said for the rise in higher education costs.

            No matter what shade of lip stick you put on this libertarian pig, it’s still a pig and not really worthy of any kind of serious consideration. There’s a place in the debate for conservatism, not fairy tales.

            • Submitted by Paul Brandon on 10/27/2013 - 09:47 am.

              The difference is

              that the minimum wage is not just for teens any more.
              People are trying to support families working for Mickey D’s.
              As our economy has shifted from manufacturing to service, more people are working at low end jobs.

          • Submitted by Paul Brandon on 10/27/2013 - 09:44 am.

            The facts are

            First of all, Peder, you know about correlation and causation. And this particular correlation itself is questionable.

            That state support of college education has dropped precipitously in the past 30 years (I taught at a second tier state college->university from 1969 to 2008. That’s the sort of school that most American students attend). Typically, from 2/3 of the cost of educating a student to 1/3. At the same to total costs have risen. There are many factor, starting with the energy cost increases in 1974 and including the shift in emphasis from the liberal arts to the STEM, which means more competition in hiring faculty who have skills that are in demand in the private sector (yes, capitalism and the free market affects public education).
            These costs have to be made up, and tuition is the main source of the additional income, although colleges have also tried to solicit funding from the businesses whose future employees they educate. This of course also influences the nature of higher education; it moves from teaching basic skills to vocational training.

            To sum, one college president quipped that his school had gone from state-supported to state-assisted to state-located. In sum, government at various levels is spending LESS on higher education than it did a generation or two ago.

      • Submitted by Jon Kingstad on 10/26/2013 - 04:31 pm.

        Technical question?

        I don’t understand what you mean by a “technical question”. Do you mean it’s a matter of coming up with some econometric idea that “solves” the problem of wealth inequality? If I understood your article discussed by Eric, I took you to mean that inequality in wealth or income is not even a problem. I don’t see anything “technical” in solving what someone does not even think is a problem. I’m sorry if my use if the term “squalor” offended you but how would you describe the conditions in places like Detroit which has how tens of thousands of abandoned and foreclosed houses? There are vast numbers of such homes throughout the country, even in the Twin Cities. That conditions exists while millions of people go hungry and homeless. Not by their choice I might add.

        We’ve “solved” the technical questions in the last century in the sense that we know how to make that not happen. Our nation has chosen not to reduce wealth and income inequality even though we have the technical know-how. It’s more important for people to own five or six homes and seventeen Mercedes SUV’s which they’re “earned” by manipulating hedge funds to loot pensions than it is to tax such wealth to end widespread suffering.

        I think the chart which you ind so silly would surprise many people, especially if you stared looking at the numbers at the lower end to realize than many of those people lives in their cars or under bridges.

  8. Submitted by Bruce Kvam on 10/25/2013 - 05:15 pm.

    All Rich People Aren’t the Same

    The question isn’t about how rich the rich are, but how much direct and indirect public subsidy they receive.

    For example, Walmart and McDonald’s make billions in profits annually, yet they pay their employees less than a living wage. Employees with children have to supplement their incomes through public assistance such as Medicaid, food stamps and earned income tax credits.

    Those companies are taking advantage of the system and shifting their costs to the rest of us by not paying enough for the true cost of the labor their employees provide. However, companies like Costco pay their employees a living wage, and don’t shift their costs to the public.

    Similarly, oil and gas companies that pay nothing for leasing rights by drilling on public land for next to nothing and receive massive tax breaks similarly receive public subsidies that the rest of us pay for through our taxes.

    Finally, there’s the disparity between capital gains and income tax rates. A surgeon, lawyer, football player or Hollywood actor who makes half a million dollars a year pays the highest possible tax rate, but an “investor” who makes the same amount of money from qualified dividends and buying stock on the NYSE and selling it after holding it a year will pay half as much in taxes. Yet that “investor” has provided no new capital to a business (only IPO stock directly funds businesses), performed no service, has created no products and has contributed nothing of value to the economy.

  9. Submitted by chuck holtman on 10/25/2013 - 06:17 pm.

    Matters just a little.

    Wealth is the relative ability not only to command labor and resources, but more importantly to define the public discourse, buy or install those who make the laws, prevent those inclined to make laws one doesn’t like from reaching office, and credibly threaten them if they do. The consequences of the existence of a “1%” for our nation and globe are existential.

    Mr DeFor asks, perhaps rhetorically, how inequality caused the recession. Wealth is just notations in a ledger, and indeed if you’re wealthy enough, you get to be in the select group to decide who gets notations and how many. In this way, indeed, the existence of a 1% was the central and proximate cause of the recession. At the risk of being colloquial, those in the select group hired legislators to do things like repeal Glass-Steagall, got together & gave themselves trillions of ledger notations (i.e., derivatives), and then blended those notations with those of ordinary folks in things like savings accounts and pension funds. When the farce was detected, everyone’s ledger notations were devalued (though some could hire legal & political labor to keep their notations from being devalued as much as others) and the broad realization that notations could be fashioned out of such impossibly thin air, along with the further shift of public liquidity to the benefit of the 1% thru the “shock doctrine,” have chilled economic transaction since.

    Those who are wealthy get to tax productive activity (return to capital). This artificially inflates the amount of economic activity that is needed to lift the smaller boats. This in turn ensures the perpetuation of “growth” as the unquestioned prescription for economic health. If the only way to survive as a nation and global community is thru reduced economic production, the distribution of wealth forecloses our survival.

    Those who are wealthier have the impregnable means to protect their wealth. This means that certain societal shifts that are critical to national and global survival, but that would redistribute returns from those parts of the economy that the 1% control (e.g., fossil fuels, military industries, agribusiness), are precluded. By far, the chief reason we are taking no action on climate change is because doing so would grossly deprive the 1% of the motherlode of economic rents. So, I suppose Hurricane Sandy was another consequence of unequal wealth distribution (joking … maybe).

    Mr DeFor’s essay implicitly assumes that each of us judges our satisfaction solely by the level of privatized material existence that we can reach. I’d suggest a broader criterion – whether the wealth distribution that we have is consistent with our survival as a species.

    • Submitted by Dennis Tester on 10/26/2013 - 07:57 am.

      Yet we have a governor

      who was elected by most people reading this, who shelters his inherited wealth in South Dakota.

      • Submitted by Paul Brandon on 10/26/2013 - 02:06 pm.

        Mark Dayton

        was elected by the population of the State of Minnesota (that’s called democracy).
        And the last I heard, South Dakota was part of these United States, and his income was still subject to Federal taxes.

        • Submitted by Dennis Tester on 10/26/2013 - 08:12 pm.

          I don’t care what any rich person does

          with his money. But apparently you people do, remember? Isn’t what this article is about?

    • Submitted by Richard Helle on 10/27/2013 - 09:26 pm.

      Survival

      The 1% would survive.

  10. Submitted by Joe Musich on 10/25/2013 - 07:00 pm.

    Is it good….

    for half of all public school children to be living in poverty ? This the USA. The situation is indefensible.

    • Submitted by Peder DeFor on 10/25/2013 - 10:26 pm.

      Public School Children

      Got a cite for that?

      • Submitted by Neal Rovick on 10/26/2013 - 11:09 am.

        I’ll conquer the google-monster for you, Mr. Defor

        After copying the phrase in question to the search bar, just hit enter.

        http://www.washingtonpost.com/local/education/study-poor-children-are-now-the-majority-in-american-public-schools-in-south-west/2013/10/16/34eb4984-35bb-11e3-8a0e-4e2cf80831fc_story.html?wpmk=MK0000202

        (quote)

        But by 2011, almost half of the nation’s 50 million public-school students — 48 percent — qualified for free or reduced-price meals. In some states, such as Mississippi, that proportion rose as high as 71 percent.

        (end quote)

        Now that wasn’t so hard, was it?

        Now why Mr. Defor didn’t do the 10 second search himself, instead of posting it as a question that implies “fact creation”. That’s not how one plays the “reasonable discussion” game, is it?

        • Submitted by Paul Brandon on 10/26/2013 - 02:04 pm.

          Because

          that’s just a -government- definition of poverty — not ‘real’ poverty.

        • Submitted by Peder DeFor on 10/26/2013 - 02:08 pm.

          Poverty Line

          Reduced lunch isn’t set at the poverty line, it’s set at nearly twice the poverty line (185%). I found that through a Google search in this article: http://www.theatlantic.com/business/archive/2013/10/study-almost-half-of-public-school-students-are-now-low-income/280664/
          I guess that Mr Rovick missed that in his Google searches. Maybe the chance to strike out at someone was more important than being reasonable.

          • Submitted by Neal Rovick on 10/26/2013 - 06:13 pm.

            I knew you could….

            I feel better now—you CAN conquer the google monster!!

            Why play the coy possum?

            • Submitted by Peder DeFor on 10/27/2013 - 08:33 am.

              Simple

              When I Googled, I found a different answer. I thought maybe there was different info out there. Apparently not. Maybe with some work, you can conquer the rude monster!!

          • Submitted by Paul Brandon on 10/27/2013 - 09:52 am.

            Take a look at the numbers.

            Try supporting a family of four (including paying for their health care) at 185% of the ‘poverty line’. Apparently it’s OK as long as people are not actually starving to death.
            Those subsidized lunches sometimes help people avoid choosing between eating and health care.

        • Submitted by Pat Berg on 10/27/2013 - 07:55 am.

          In defense

          I would defend the right of any commenter in a thread to request a cite, regardless of how easy it may be to Google the information.

          Keeping the discussions fact-based with the cited facts laid out right then and there rather than assumed is what helps to keep these MinnPost discussions civil. It also gives the other commenters the opportunity to directly examine the legitimacy of the underpinnings of any stated position, which is only fair.

          No one should ever hesitate to ask for a cite whenever something is stated as a fact rather than as an opinion.

  11. Submitted by Ray Schoch on 10/25/2013 - 07:11 pm.

    Does it matter?

    Yes.

    Not all the time. Not immediately. Not necessarily logically or sensibly.

    But it matters.

    Wealth is not, it seems to me, automatically evil in and of itself. Circumstances and good fortune bestow blessings on some and not on others, and far more to some while far less to some others. It happens. What matters is what takes place *after* it happens.

    While I might quarrel with a few of the details — he was rather far removed from anything today’s world would recognize as “liberal” — I think Andrew Carnegie’s “Gospel of Wealth” is something that modern-day defenders of wealth ought to study, and study closely.

    My primary takeaway can be boiled down to this: It’s not your money. Circumstance, happenstance, your own hard work, the hard work of many others, and likely some other factors completely beyond your control have converged, if you will, to dispense a greater share of society’s wealth on a relative handful of individuals. Those individuals are merely trustees of that portion of society’s wealth — temporary guardians, if you will — and not “owners” in any real sense of the word. As guardians, their responsibility is to use that wealth, given to them by the rest of society through little more than good fortune, for the betterment of society.

    Of course there are bound to be arguments over what constitutes the “betterment” of society, and that might be a place where today’s liberals and conservatives justifiably part ways. Nonetheless, Carnegie’s argument, expressed publicly and forcefully, was that the benefits of wealth ought to be *public* and *not* private.

    Like others above, I don’t pretend to know the point at which wealth becomes stops being something harmless and begins to become something detrimental to society, but I think there *is* such a point. So did Carnegie, and for years, I’ve liked his approach to the issue, as well as some of his partial solutions, whether it was building public libraries, heavy taxation of the wealthy, or immense gifts to charities that undeniably benefited the public, and not just some select portion of the citizenry.

    I’d say those who argue sincerely that it doesn’t matter how rich the rich are ought to go back and review 1793 and 1794 in France. Were the peasants who stormed the Bastille practicing the “politics of envy?” Absolutely. Doing so does not automatically render their cause irrelevant or narrowly selfish.

  12. Submitted by Ilya Gutman on 10/25/2013 - 10:31 pm.

    Be careful what you wish for

    There is no doubt that envy is a big part of this whole debate. In general, if one lives well, he or she should not care if a neighbor lives better. However, I would not accuse the left of being envious; rather, they use this people’s envy to achieve the goal of getting to power which they can use to push redistribution thus expanding their power base even further. Unfortunately, this leads to dependency, entitlement, and general decline of public morale which at some point may threaten the whole country . One of the people’s mottoes in the Soviet Union was “it is better NOT to work for 100 rubbles than work for 200 rubbles.” Of course, officially everyone had a job in the USSR; people just didn’t do much at work.

    I see the main divide between the left and the right (in economic sense) not in how much to help people who need help but in who actually needs help. A theory of personal responsibility requires that people be responsible for themselves and only those who deserve help should get it. The left, on the other hand, think that everyone who needs help should get help and in this they go even beyond the Socialist slogan “from each according to his ability, to each according to his contribution” giving everyone according to the minimal needs, which is actually a Communist ideal.

    If no one envies the rich, they will not feel threatened and will not try to rig the system to protect themselves. So the easiest way for them to keep their wealth is to make sure that majority lives well. It is interesting that both French and Russian revolutions were partially results of envy even though at least the Russian revolution was to great extent bankrolled by rich philanthropists. Of course, both revolutions did not end well (like most revolutions in the world – an American revolution is one of the few exceptions) so people should understand that encouraging the envy is a dangerous path.

    • Submitted by Dennis Tester on 10/26/2013 - 08:16 am.

      My mission was to destroy the Soviet Union

      But nothing makes me prouder than to meet former citizens of that system who have come here to enjoy the blessings of liberty. I remember meeting a Russian family who, after settling into their new apartment on West 7th street, were browsing the Supervalu store across the street. They spent an hour there just in amazement of the fully stocked shelves of products from more than one manufacturer, enabling them to actually compare prices for a can of corn or a loaf of bread. I was close to tears in my joy for them. I can imagine what those folks think of the American Left.

      • Submitted by Susanne Wissink on 10/26/2013 - 03:52 pm.

        Are you being snarky?

        “I can imagine what those folks think of the American Left.” I cannot tell what you mean by this. The comment sounds a little snarky.

        I would think they would thank the American Left for championing for an environment that can provide healthy food, for FDA regulations that ensure a safe food supply system, for public roads that allow the delivery of the product, and a safety net if needed. It does no good to be able to compare prices for a can of corn if you cannot buy any of them.

        • Submitted by Dennis Tester on 10/27/2013 - 01:37 pm.

          What I mean by this

          is that people who escaped the Soviet Union thought they were getting away from the policies embraced and advanced by the American Left and they know where it leads. The difference between a democrat and a communist is that a communist has bothered to read the Manifesto.

          • Submitted by Susanne Wissink on 10/27/2013 - 07:31 pm.

            Perhaps I am missing the connection between the “American Left” and the “Soviet Union”. Do you have definitions for these groups or are you putting everyone who does not think like you in one category? Soundbites without actual meanings do not provide insight into your point of view. I am sure the Soviets you met would not return to the Soviet Union.

          • Submitted by Sarah Nagle on 10/28/2013 - 06:03 pm.

            “Capitalism” in the Soviet Union

            The income disparity in the former USSR has increased dramatically in the past 20 years. Look at how the countries of residence of Forbes’s world billionaires have changed, and how much of London and NYC are being bought up by Russian billionaires. The average Russian is a lot worse off now (which is why they love SuperValu); their pensions and salaries, if paid at all, no longer cover the essentials. Funny how this is paralled by the stagnation of real wages in the US during the past 30 years. So this US vs. USSR comparison no longer works.

      • Submitted by Paul Brandon on 10/27/2013 - 09:55 am.

        Actually

        Putin’s oligocapitalism provides a good natural experiment.
        Russia’s economy is ‘freer’ than ours — meaning that their are fewer checks on the formation of monopolies.
        Current life expectancy is down to 55 years and many people are seriously advocating the return of soviet (pseudo) communism.

    • Submitted by Todd Hintz on 10/27/2013 - 08:33 pm.

      Envy

      Ilya, just to be clear: while I’m sure some people do indeed envy the rich, that is not the primary motivator of this debate. The issue is whether or not there is a level playing field in society and the people at the bottom of the social/economic scale are getting their basic needs taken care of. That’s not a matter of “entitlement,” as people on the conservative side try to frame the debate. Rather it’s an attempt to bring society back to notions from the 19th century, such as the noblesse riche, where the super wealthy had an obligation to use their stupendous wealth to help care for the less fortunate in society.

      The narrative should not be “I got mine and screw all you poor people,” but rather one where economic prosperity benefits everyone in society, not just those at the very top. Gains in GDP should not only benefit the one percenters, but everyone in society. And I think that’s something we can all agree on.

  13. Submitted by Peder DeFor on 10/25/2013 - 10:44 pm.

    Politics of Envy

    I’m actually making a different argument, almost the opposite here. I don’t think most people are motivated by an envy of the very rich. They may have Powerball dreams (I do sometimes), but they aren’t eaten up by them. People who think of themselves as middle class, as most Americans do, have a mental idea of what the middle class has and they’re ok if they hit that mark.
    This means being able to afford a place to live, be able to eat what they want, etc, etc. It means having middle class comforts. As long as people have an honest chance at making it, they’ll be ok with that. That’s what I meant by ‘keeping up with the Jones’. (Has that phrase disappeared?)
    I don’t know how much the left is motivated by envy. Sometimes I hear an echo of the Marxist belief that the rich are stealing from the poor but that’s not quite the same thing. More often though is the idea that there is some kind of collective desire among the rich to keep the proles down. This isn’t the case. Last year Romney did carry the wealthiest voters, but by less than 10%. Even if you believe in the caricature of the oligarchic Republican (and I know some of you do), this hardly seems like some kind of danger point.

    • Submitted by Neal Rovick on 10/28/2013 - 01:46 pm.

      Au contraire…

      It’s the rich that are filled with envy.

      The right functions as a victimhood cult. Always being taken advantage of. Having to work so hard for everything. Everyone else gets something for nothing. A nation of takers, not makers. The 47%.

      It sure looks like envy. (After all, why is the style of the poor so copied and appropriated?)

      The right and the wealthy right crowd is always filled with righteous indignation about what someone is getting away with–it’s a key part of every campaign.

      They begrudge the poor because they think the poor are gaming the system (and they think they are not, because they are the real “victims”)

    • Submitted by John Appelen on 10/28/2013 - 09:13 pm.

      I agree with Peder

      I just posted this link over on my site, I always find it fascinating how the Liberal folks say that the “rich” don’t pay their fair share. Even when their effective rate is 3+ times higher than other folks.

      Total Effective Taxes

      And even more when one considers the cash and service benefits that the lower income folks get paid by the government, that are withheld from the “rich”. And the fact that “payroll tax” is more like a mandatory savings and insurance plan than a “real tax”. I mean folks are still calling them “earned benefits, right???

      • Submitted by Paul Brandon on 10/30/2013 - 09:08 am.

        So you’re arguing

        for a flat income tax rather than a progressive one?
        Most wealthy individuals and corporations pay a very small proportion of their nominal tax rate (which only covers income earned in the United States). That’s why the middle class pays a higher proportion of their total real income in taxes than the rich do.
        And the rich also receive many benefits paid for by taxes (do I really have to spell them out at this point?).

        • Submitted by John Appelen on 10/30/2013 - 07:37 pm.

          Not according to this source…

          It looks incredibly progressive to me…
          http://ctj.org/images/2013/wp2013c4hq.jpg

          What is the source of your opinion?

          Especially since the first 7.5% up to $105,000 is supposedly an earned benefit… Meaning that 7.5% is supposedly like forced savings and insurance. (ie not treated like normal tax, where you get nothing back) So one could actually subtract that off the tax rates of those people.

          And then if you add back what low income folks get in cash and service benefits, it is likely many are recovering more than they pay.

        • Submitted by John Appelen on 10/30/2013 - 07:44 pm.

          Tax Code Benefits

          Normal people can write off their home mortgage interest, what is your point?

          I am actually a fan of getting rid of that write off, it may have reduced the number of folks that got in over their head in the 2000’s, which contributed to the housing bubble / crash. How many 3000+ sq ft houses do we really need?

          Would you support getting rid of all tax exemptions, deductions and credits? Or just those you don’t support?

    • Submitted by John Appelen on 10/29/2013 - 10:47 am.

      Oops missed link

      Total Effective Tax Rates

      http://ctj.org/images/2013/wp2013c4hq.jpg

  14. Submitted by Richard Helle on 10/26/2013 - 10:04 am.

    Marxist?

    ,,,the Marxist belief that the rich are stealing from the poor,,,

    Really? It’s not Marxist to believe that the rich and powerful steal from the poor and powerless, it’s simple observation. This isn’t something government can or will fix. The government is controlled by those same interests that are doing the stealing so nothing will change any time soon. When workers decide to organize and demand a larger share of the economic pie, the money will then begin to percolate down the line. Until then, the parasitic wealthy elite will continue to be the primary drag on the economy.

    • Submitted by Peder DeFor on 10/26/2013 - 02:13 pm.

      Yes Marxist

      The idea that the rich are stealing from the poor was widely popularized by Karl Marx. I’m not saying that if you believe it, then you must follow all other Marxist teachings. In fact, I was clear as to what I *think* is the prevailing belief on the left today, that concentrated wealth pools too much power. If I’m wrong on that, I apologize, but it seems to match several comments up above.

      • Submitted by Richard Helle on 10/26/2013 - 06:28 pm.

        Marx did not “popularize”

        To say Marx “popularized” the notion that the rich steal from the poor is the same as saying Marx “popularized” the notion that 2 + 2 = 4.

        As far as wealth pooling too much power in the hands of very few, look at the election industry and how billions of dollars are going to the business of electing local, state and national candidates. Imagine if we put strict time and financial limits on the whole process. That’s neither a left or right position.

        Bottom line, in the last 30 years, we’ve seen a shift from Keynesian economics to Freidman and the Chicago school. From distributive to extractive economics. It’s widely known at least 32 trillion dollars has been hidden off shore in tax havens. That’s a nice size hunk of cash that could be working for the world’s middle class.

      • Submitted by Neal Rovick on 10/28/2013 - 04:48 pm.

        The idea that the rich are stealing from the poor was widely popularized by Karl Marx….

        Well, the idea that poor are stealing from the rich is widely and continuously popularized by the Republican party.

        Which idea is more odious?

        Which lie is more unbelievable?

        Which group is “winning” in the wealth game?

        Who are you going to believe?

  15. Submitted by Paul Udstrand on 10/26/2013 - 10:12 am.

    A couple basic considerations

    Carrying over from Peder’s Blog Cabin piece the basic question here whether or not a highly disparate economy works?

    One of the funny things about conservatives is that they like to be skeptical about scientific theories like evolution, but tend to assume that economies and wealth distribution are the product of some kind of evolution. It’s important to remember that we design economies, they may be chaotic systems of sorts but by and large they are what we make them, we do not discover them in nature.

    When we ask whether not economies are “working” we always have to ask for whom are they working and well? We KNOW that highly disparate economies with concentrated wealth do NOT work well for most of the population. For some reason Peder can’t figure out whether or not the bottom 20% in the EU are worse off than the bottom US 20% (Peder’s not trying very hard, this information is readily available and they ARE better off) but the point is that we HAVE a bottom 20% for whom the economy is barely working if at all. Any cursory examination of history will show that concentrated wealth does not trickle down, it stays put, and it causes frequent recessions that harm the majority while leaving the top 1% largely unscathed. Frequent devastating recessions, “panics”, depressions etc. were a standard features of capitalist economies prior to and including the “Great Depression”. There’s nothing theoretical about this, it’s history it’s not an accident that we went 60 years without another Great Depression and that the Great Recession emerged when disparity hit the same pre-GD levels, look at Peder’s graph.

    All economies redistribute wealth, and all government redistribute wealth. The existence of wealth redistribution is not the issue, it’s the nature of that redistribution that we must decide, and it’s a decision, not an accident of history or a product of social evolution. The whole point of democratic forms of government is to give the majority an opportunity to make such decisions.

    No one is saying that there should be no wealthy people, there aren’t even very many actual Marxists or Communists promoting flat distribution these days. However we can have a much more equitable distribution that will better serve the majority and provide more economic stability. This is not magic, it’s perfectly doable.

    All Pedor is offering us here is trickle down economics. The problem with trickle down theories is that they assume the wealthy are actually entitled to their wealth without explaining why that is in any convincing way. In fact, the wealthy do not create their wealth, the extract it from the economy. The 1% do work harder than coal miners or construction workers, they simply find way to extract wealth from other peoples work product. As we’ve seen in the recent financial debacle the wealthy are not “smarter” or even better business people, they are sometimes clever enough to take advantage of a situation. So be it. We can have an economy with that has wealthy, but also provides for the poorest amongst us, but the distribution would have to flatter. Personally I’ve always that just anyone could squeeze by on a couple million dollars a years. We have people who extract a couple million dollars a week from out economy.

    • Submitted by Peder DeFor on 10/26/2013 - 02:28 pm.

      Economies

      Paul, you’re 100% wrong here and in an important way. Economies are largely organic. Governments do some things around the fringes, but the vast, vast amount of actions (production, purchases, etc.) are done through a big distributed network of individuals. We have plenty of evidence over the last century that governments that try to command and control economies, fail utterly. Free markets, that are allowed to grow on their own do much better.
      This is important, btw, so please don’t just brush over this. Right now we’re on the verge of destroying the non-employment insurance market because some people thought they could simply tell it what to do. Some reflection is in order here. Perhaps some humility too.
      Why didn’t we hit the great recession in the late 90’s when disparity was almost as high as it was in 2007? We did have a recession when the dot.com bubble burst, but it wasn’t anything like the pit that we’re currently in. Why not?
      And what is it with you guys and trying to stick words in people’s mouths? I haven’t said one word about trickle down economics. I’ve said that I’m not convinced that any of our problems are based on wealth disparity and I’ve said that some of the problems we have right now are caused by government intervention.

      • Submitted by Paul Udstrand on 10/28/2013 - 01:01 am.

        sticking words in your mouth?

        Pedor, I think it’s obvious I’m not pretending to be you when I post, for one thing, your name isn’t “Paul”. Just because you choose not to use a term that perfectly describes the economy your advocating doesn’t mean no one else can. By the way, “free markets” simply do not exist.

      • Submitted by Neal Rovick on 10/28/2013 - 04:40 pm.

        …destroying the non-employment insurance …

        I assume you have evidence that it is a market that is worth preserving?

  16. Submitted by Paul Brandon on 10/26/2013 - 11:15 am.

    Got a cite for that 😉

    “…the Marxist belief that the rich are stealing from the poor.”

    • Submitted by Peder DeFor on 10/26/2013 - 02:18 pm.

      Cite

      You can find it in here: http://www.gutenberg.org/ebooks/61
      🙂

      • Submitted by Paul Brandon on 10/27/2013 - 04:43 pm.

        I’ve got my own copy (also the Red Book)

        but I haven’t read in in many years (I took a course in theories of economic reform in college). So I downloaded it.
        Did some searching; the word ‘stealing’ is not in there. In fact, the words ‘rich’ and ‘poor’ occur only a few times, and in different contexts. I suppose I could check the original Deutsche, but my German is a bit rusty.
        So again, a citation? Maybe it’s in a different publication, like Kapital?
        Or did you just assume that it would be there?

        • Submitted by Paul Udstrand on 10/28/2013 - 01:15 am.

          In 30 years or so….

          I have yet to run into a Conservative/Libertarian that actually understood Marxism. All you get are references to self referential stereotypes. The phrase: “property is theft” was in vogue for a while amongst some Marxists but that was in reference to liberal capitalism, not wealth disparity.

  17. Submitted by Dennis Wagner on 10/26/2013 - 01:04 pm.

    Most interesting dailogue

    The term rich and poor are never well qualified.
    Example: To Peder’s point, family A, makes $250K a year and squanders it Y/Y on living large, vacations, homes, dining, and material goods, one day they wake up with more debt than ability to pay, are they now poor?
    Example: Family B, makes $50K a year and faithfully live below their means, invest the nickles and dimes, over some years they wake up millionaires, are they now rich?

    With out qualifying life style, budget, life style choices, etc. the terms rich-poor are mildly relative as we tend to use the extreme’s to make our comparisons, and we tend to make them in political terms, right-left, which ignores the key question. When are you poor and when are you rich, and are you there because of a skewed political system, or bad personal choices. One is freedom to fail and or succeed, the other is failure of fair and competent governance, do we not actually live in both worlds?

    To Peder: For me, not envy, but sense of fair play, and a level of moral conviction/principle that as a government the focus should be on “We the people in order to form a more perfect union” not divide, which means from this perspective, the radical fringes, rich-poor need to move the most, or surely we all fail. .

  18. Submitted by Paul Udstrand on 10/27/2013 - 10:21 am.

    Organic?

    “Paul, you’re 100% wrong here and in an important way. Economies are largely organic. ”

    Sorry Pedor, you’re wrong. Economies are as “organic” as we make them. Governments can be more less involved, unless your promoting an Anarchist no-state system. The only societies that have come close to the Anarchist vision are some pre-1900 tribal societies. Governments can command economies as the Soviet system did, or they can be nearly invisible as in Somalia or Bangladesh. In pre-capitalist Europe and China social and economic status was determined by the government (i.e. Royalty). In India pre-capitalist social and economic status was determined by Cast and Hindi dictates that were part and parcel of the governing system. Even the tribal societies like those found in North America had complex and deliberate rules and expectations. But if Pedor wants to point us in the Tribal direction I would have to point out that they didn’t have a top OR bottom 20%, which is why they came close to being the Anarchist societies envisioned by European radicals at the turn of the 20th century.

    This idea that economies are organic is a capitalist illusion based on misapplied Darwinism with a dash of 20th century Eugenic theory, Ayn Rand gibberish, and Libertarian fantasy pretending to be economics.

    Libertarian/conservatives like to fantasize about limited government utopias but the fact is without government the wealthy can’t exist. Without the coercive power of the state in one way or another, whether it be the Sheriff of Nottingham or Federal Tax codes and business friendly labor laws, the wealthy can’t extract the wealth from the economy and keep it. This is why you don’t see American and European billionaires flocking to the the small government havens of Somalia and Bangladesh to live the dream. The primary fact that folks like Pedor have to blind themselves to is the mundane observation that the wealthiest countries with the wealthiest people in the world are those with well established and powerful central governments. This is why Afghanistan is NOT the land of opportunity for would-be billionaires looking to take advantage of “organic” economies with low taxes and zero regulation.

    There is literally an inverse relationship between Pedor’s economic theory and reality. From the constitutional convention through to Obamacare the US government has become more extensive and powerful. Our government is literally the most powerful government on the planet, yet we haven’t seen a progressive slide into poverty. On the contrary, has the government has grown in scale and influence so has the nation’s wealth. If Libertarian/Conservative economic theory were anywhere near reality the US would be one of the poorest nations on the planet by now.

    To recap:

    All economies and governments redistribute wealth. It is the nature of redistribution, not the existence of it that we must decide.

    Economies follow the rules we create, they do not emerge from nature. They are very complex entities, but economies are not accidental.

    Without a powerful state apparatus, i.e. government, the wealthy cannot exist. This is why the warlords of Somalia are not the wealthiest people on earth.

    There is no such thing as “free markets.” The most ironic historical fact of the 20th century is that the only place Chicago School/Libertarian/Friedman economics were ever implemented as envisioned were dictatorships otherwise known as totalitarian states. The closer democracies have come to implementing such economic regimes, the more unstable our economies have become. If such economies were in fact “organic”, you would not need the crushing power of a totalitarian state to implement them, and Somalia or Bangladesh would have the most prosperous economies on the planet.

    finally, and obviously, large economies cannot be effectively commanded in total by systems like the old Soviet system. This is why liberal democracies have survived as long as they have. But the idea that government is irrelevant to economies or wealth distribution is simply mistaken.

    By the way you guys, the 80s called, they want their economic arguments back.

    • Submitted by Peder DeFor on 10/28/2013 - 08:47 am.

      Yes, Organic

      Paul, first of all, my name is Peder. P-E-D-E-R. I know it’s unusual, but it’s also written in a number of spots, including every single mention of me that you’ve ever encountered. Please, try and get it right.

      Ok, now with that out of the way, you’re still wrong. Markets grow up on their own, organically and THEN government regulation moves in. Some of that regulation is good. I have no problem with regulation that creates basic safety measures and protects against fraud. Some of it is bad. The failed launch of Obamacare is threatening to create a death spiral in the independent insurance market in part because Dems thought they could move the levers in that particular market without any negative consequences.
      Markets start on their own. Products, and variations on products start on their own and after a certain size, the state becomes involved. In healthy markets, the state doesn’t have to get too involved. If there was a government commission deciding what websites could be created, the internet would be a much sadder and poorer place.
      If you want to narrow your definition to a free market, as some kind of equivalence to anarchy, fine. But if you think in terms of a spectrum, then you have more and less free markets. The less free ones do much worse. Think of the split between Eastern and Western Germany during the cold war.
      The cracks about Somalia and Bangladesh are sadly typical. There is a reason that they aren’t as successful and it isn’t because they don’t have enough regulation. It’s funny, I remember when liberals bristled at the whole ‘America, love it or leave it’. It looks like some portion of them have now embraced that message.

      • Submitted by Logan Foreman on 10/28/2013 - 09:36 am.

        There was absolutely nothing

        Good about the old “independent” health insurance. The rich could afford it regardless of age, preexisting conditions or cost. The poor could not and thus turned to Medicaid and Emergency Rooms costing the taxpayers a fortune. The middle class, including those with preexisting conditions, were of course damaged the most because they did not have unlimited funds for health insurance or the ability to turn to the govt for help (except for federal bankruptcy court). Corporate health insurers do not care about anything but profits. Like big business, however, they relish taking govt money in subsidies, tax breaks, and lax regulation – socialist capitalism. Free markets with minimal regulations would result in 2 classes in my opinion – the very rich and the rest. Hardly the American dream.

      • Submitted by Paul Udstrand on 10/28/2013 - 10:20 am.

        I stand corrected, but your still wrong.

        Sorry Peder, I stand corrected and apologize for getting your name wrong.

        Listen, Peder, the nature of history and economics is not a matter of your declarations. You can make all the declarations about “organic” economies and “free markets” you want but that doesn’t make it so.

        Your problem is (I’m not trying to insult you) that while you have an ideology, you don’t have a clear understanding of government or economics. You claim for instance that markets emerge before governments get involved. I remind you that Columbus’s voyage was financed by the Spanish government. It was the Royal Navy not entrepreneurs that established the constantly sunlit British Empire and it’s trade routes. In fact, pick an empire, any empire, and you’ll find that government be it in the form of Alexander the Great’s army or the covert CIA overthrow of Allende established and protected territory and trade routes.

        Here in the United States it was the government that made the Louisiana Purchase and fought the Mexican American war that added territory, natural resources, and trade routes from Louisiana to California. Custer was killed trying to make mineral rich lands accessible for capitalist exploitation. If the US government hadn’t fought the Indian wars James J. Hill would have no rail road to the coast and Jacob Astor would have had no fur trade. Governments grant and dissolve monopolies, protect property, suppress popular rebellions against inequality. Ask Marie Antoinette.

        All corporations operate under government granted charters. Copyrights, Trademarks, Patents, and Contracts are all enforced by government offices. Without the government funded research of the 50s and 60s Bill Gates and Steve Jobs have no GUI interface, mouse pointers, or silicon chips to play with in the 70s. I could go on but I think I’ve made my point.

        In fact we’ve been cutting our government funding for basic research while our competitors are increasing their funding, and we’re slipping behind because of it. It’s taken the private sector longer to put a rocket in orbit than it took NASA to put a man on the moon.

        Yes, creative individuals invent and innovate, but without a stable environment within which to make those innovations they can’t be developed and marketed… that environment is established by the existence off stable governments in a variety of ways.

        At the very core it seems like people like yourself don’t seem to understand that the private and public “sectors” are not two separate economies, or economies in competition with each other. The public and private sectors are essential and complimentary components of the same economy.

        At any rate the misconceptions behind these Libertarian/Free market proposals are legion and I don’t have the space or the time to address them all here. We can only scratch the surface.

        Suffice to say ideology is not knowledge and no amount of debate or declaration can make it so.

        • Submitted by chuck holtman on 10/28/2013 - 02:21 pm.

          Paul – Let me try to sum it up.

          When Peder says that markets are organic, I can only think that he is saying that individuals tentatively bartering with each other precedes organized markets with rules. In other words, correct but trivial.

          I’d propose that one way to describe the difference between the left and the libertarian right (and Peder, I’m not classifying you here or anywhere) is the way each views the “initial position.” The left recognizes that the “initial position” on which market theory rests, with its assumption that bargainers have equal endowments and are equally situated, is a heuristic; that equality is disturbed with the first trade and the heteronomy of things that are valued; and that over time advantages magnify until a lack of collective rules means that a fortunate few will prosper and most will suffer. Accordingly, the purpose of collective action (i.e., “government”) is to constructively reinstate the “initial position” as a context for the “market” in a careful balance with considerations like incentives and just reward.

          Conversely, libertarians think that the “initial position” is an actual, existing, static context for market trades and, accordingly, any collective action can only move the context of trades away from the initial position, rather than draw the context back closer to it.

          Adhering to a “free market” rationale is a leftist position because it is a collective commitment to dynamically adjusting economic and political structures to minimize the distance from the “initial position” that defines a market transaction. In colloquial terms, “equal opportunity.” “Free market” to the libertarian right is something that comes out of Milton Friedman’s “Freedom to Choose” and, in the real world, results in the opposite of freedom, except for the “fortunate” few.

          • Submitted by Paul Udstrand on 10/30/2013 - 09:12 am.

            Interesting

            I agree that individual bartering preceded more complex economics, however that brings us back to the Tribal systems previously discussed wherein wealth disparity is not a predominant feature. I don’t think that’s where Peder wants to go. In other words, the more organic the economy is, the less wealth disparity.

            I like your observation that one difference between libertarians and liberals are the assumptions about baseline levels of distributions. If understand your comment you suggesting that liberal assume a less disparate baseline or starting point, while libertarians assume a more disparate baseline or starting point.

            • Submitted by chuck holtman on 10/31/2013 - 10:10 am.

              Not sure you understand my comment – I’ll offer this way:

              1. Theory posits a society of free market exchanges (economic, political) as the framework that best furthers overall social welfare (freedom, self-determination).
              2. Theory however defines a “free market exchange” only as one that proceeds from the initial position, i.e., both parties have equal endowments, can bargain absent coercion, etc.
              3. The left recognizes (as does orthodox economic theory) that in the real world, no bargains except the most trivial proceed from the initial position. The left theory believes that the role of collective (i.e., “government”) action is to adjust the bargaining structure, at least in the most important economic and political contexts, to nudge it in the direction of the initial position, both to “level the playing field” and to reduce the external costs (such as wars and the carbon economy) of grossly unequal bargaining positions.
              4. Conversely, the libertarian right simply manipulates slogans, it does not engage in reason. When it talks about “free market exchanges” it does not concern itself with the precondition that connects such exchanges with actual freedom. It does not recognize that economic and political bargaining power is unevenly distributed. If it is familiar with the initial position as an actual precondition for the “free market” to promote freedom, it doesn’t care whether the precondition exists.
              5. In sum, the left considers “free market exchange” an aspiration, and the role of government is to move society toward it. The libertarian right considers “free market exchange” a thing that precedes society and that just exists, quietly but industriously promoting freedom. Thus government action can only be destructive to this happy economic Arcadia.

      • Submitted by Paul Udstrand on 10/28/2013 - 10:36 am.

        And again…

        “If you want to narrow your definition to a free market, as some kind of equivalence to anarchy, fine. But if you think in terms of a spectrum, then you have more and less free markets. The less free ones do much worse.”

        The question is “much worse” for whom? Clearly the free market dictatorships we promoted in central/south America, Asia, and Africa didn’t provide widespread prosperity. Imelda Marcos did get nice collection of shoes out of the deal though.

        As for liberals loving America, as far as I’ve been able to tell Conservatives have been the biggest American haters in the country for the last three decades at least. The only worse than bringing Americans to Somalia is bringing Somalia to America and that’s apparently the agenda.

      • Submitted by Todd Hintz on 10/28/2013 - 12:57 pm.

        In-Organic

        Actually the internet that you use today came about as a government program. It was a self healing communication system that was designed to keep running even if portions of it were taken out in a nuclear attack. After the military developed it the technology spread to universities and from there to the general public.

        So to say that markets develop on their own and then the government gets involved only tracks two thirds of the equation. Peder is correct that the government does indeed step in after a market has developed and adds regulations and taxes. But his point of view ignores the fact that many markets are first born from government programs doing basic research, something that companies are loath to do unless there’s a clear path to a profitable product in the short term. We covered the internet above, but here are a few more that readily come to mind.

        -The Cathode Ray Tubes (CRTs) industry was kept alive by the government in the 1930s because they knew it would be needed for RADAR during the war. After the war concluded we saw the explosion of the television industry.

        -Speaking of TV, raise your hand if you catch the evening weather report. All those images come via satellites, which was developed by NASA. You can also thank NASA for the velcro on your backpack and kid’s shoes. The list of NASA inventions is legendary. I suggest you Google it and check them out.

        -Nuclear technology. Chances are some of the power you use to read this was generated by either the Prairie Island or Monticello nuclear plants. Nuclear energy was famously unleashed with the Manhattan Project in WWII. That same research also lead to the development of nuclear power plants that allow you to turn on your computers and lights.

        The thing that really bothers me about this whole debate is the notion that the free market will take care of everything if government would just get out of the way. That’s so completely untrue and easily proven just by looking at the city around us. But people are stuck in this ideological notion that free market is fantastic and the best government is a small government that can easily be drown in a bathtub.

        I hate to be so blunt, but that’s not simply silly, it is, quite frankly, dumb. The whole small government vs large government is, in my opinion, a nonstarter. It’s like saying a small rock is better than a big rock. Sometimes that is indeed true, like when you’re putting gravel on a country road. But try to build a dam with small rocks–that would be the height of folly as you watch the fast flowing stream wash all your rock away.

        So it is with government. Yes, there are times when a small government entity is the right choice to solve a problem. But other problems are just too big for a small municipality or even a state to tackle. Most small towns in Minnesota can’t afford to build their own sewage treatment plant, so they rely on state funding to get the job done. Most states can’t afford to hand a natural disaster on their own, so they look to the federal government to help them out.

        So it is with other large problems, such as healthcare. Obviously the free market is not going to solve the problem because it’s in their best interest to maintain the status quo. They’ve had every opportunity to work out a system that benefits society and at each step have instead worked to deny people coverage, thereby minimizing expanses and maximizing profits. That’s one of the reasons why we need to migrate to a universal single payer health system and take the profit motive out. Don’t get me wrong: I think profits are a great thing and work extremely well in some areas. But let’s not kid ourselves and pretend it works well in ALL areas.

        Personally, I’m more of a pragmatic individual. Sometimes a free market solution is the way to go. Other times, socialism is the best solution. More often than not it takes a combination of the two. Does that make me a Capitalist or a Socialist? I prefer to think of myself as neither and both.

        • Submitted by Paul Udstrand on 10/28/2013 - 02:10 pm.

          It SHOULD have been a non-starter

          “The thing that really bothers me about this whole debate is the notion that the free market will take care of everything if government would just get out of the way. ”

          Yes, I actually think it’s magical thinking, cut taxes, regulations, and government services and wait for the magic to happen. What’s even more depressing is the fact that it never would have got off ground in a big way if it weren’t for liberals buying into it.

        • Submitted by Paul Udstrand on 10/28/2013 - 02:27 pm.

          False dichotomies

          Actually, the large v. small government debate is worse than useless. The question is never how large or small the government should be, the question is always what do we want the government to do or not do. The size is self regulating, the government needs to be as big as it needs to be in order to do the things you want it to do. Obviously we all want the government to be as efficient as can be but assuming a small government is more efficient than a large one is magical thinking. You’ll note that in all these decades of “small” government championing we’ve never been given a target, never told exactly how big or small a government should be, or even what that means. Are we talking about square footage? Number of government employees? Percentage of GDP? What? No matter the question the answer is always the same… “smaller.” The whole point of democracy is for citizens to decide what they want the government to do, not how “big” or “small” they want the government to be. Debating size is simply incoherent, yet that’s what we’ve been doing for decades, and yeah, it’s dumb.

          There have never been any champions of inefficient government or “big” government just for the sake of “bigness”. Common sense dictates that you want solutions that “fit” the problems, St. Louis Park does not need 500 police officers or fire fighters, but then no one is advocating such a thing.

        • Submitted by Paul Udstrand on 10/28/2013 - 03:54 pm.

          Finally…

          One thing that’s always bother me is this blind faith in private sector efficiency, again, magical thinking. Look at the financial collapse, the explosion of the oil wells in the Gulf, our health care system, etc. The private financial sector was supposed to be the most efficient system on the planet and it turned out they didn’t even know who actually held mortgages on millions of homes. Then these guys got into charge of our MN Orchestra and did the same thing to it that they did our housing sector.

  19. Submitted by Neal Rovick on 10/27/2013 - 10:32 am.

    The irreducible core of the Republican belief is that the rich are not too rich and the poor are not too poor.

    The political strategy is to get those in the middle to agree with them.

    When it becomes clear that they have lost the middle in this game, then “watch out, democracy!”

  20. Submitted by Dennis Wagner on 10/27/2013 - 06:51 pm.

    To Paul U.

    Thank you, I learned a great angle on perspective today! My notion has been for quite sometime, why don’t conservatives move to Somali, No Govt, no Taxes , lots of Guns, your perspective brought, additional Clarity to the question,
    Yes Minn post you will receive a donation prior to year end, the dialogue was well worth $120!

    • Submitted by Todd Hintz on 10/27/2013 - 08:16 pm.

      Paul

      Dennis, you reflect my perspective exactly. Not to construct a Paul Admiration Society, but he’s clearly intelligent and articulate to the point of being someone who’s worth watching.

      My finances don’t allow me to contribute to MinnPost at the moment, but that won’t always be the case. I like the intelligent discourse not only from Paul Urstrand, but also Eric Black, Ray Schoch, Neil Rovick, Paul Brandon, Ann Spencer, and many others here on MinnPost. This is what civil discussion looks like: people solving the problems of today’s society using facts and logic to back up their arguments. It’s provocative and fact-based, using truth to talk to power.

      If only Congress were so intelligent.

  21. Submitted by Paul Udstrand on 10/28/2013 - 09:02 am.

    Minnpost deserves credit

    And contributions. We do have interesting and informative conversations and Minnposts comment policy makes that possible. Their articles give us a lot of interesting things to talk about, and they keep our conversations for the most part civil while at the same time giving us enough latitude to express ourselves.

    Minnpost also makes good use of reader contributions. I remind everyone that this thread began on the Blog Cabin where my blog is also featured on occasion.

  22. Submitted by Paul Udstrand on 10/28/2013 - 12:00 pm.

    Tribes and free markets

    Just to clarify my point. When I was talking about North American tribal cultures and economies I was discussing concept of “organic” economics, i.e. the idea that economies emerge from societies. I was not trying to define free markets. There’s no point in defining “free markets” because they simply don’t exist, it would like arguing about the characteristics of a spaghetti monster.

    I would point out however that as far as sustainable economies and governance is concerned many of the tribal systems in North America were the most sustainable in human history. We brag about our governments lasting a few hundred year while their systems lasted for thousands of years. They chugged along while the Egyptian, Greek, and Roman empires came and went. It wasn’t until they were confronted with overwhelming force that they started to break down and even then, they still exist today despite multiple attempts of genocide.

    Something to think about.

  23. Submitted by Karen Sandness on 10/29/2013 - 11:18 am.

    I’m currently reading a book called

    “Debt: The First 5000 Years,” by David Graeber. It’s a rambling but fascinating look at the concept of debt throughout recorded history and across cultures, and it blows holes in some of the assumptions of both right-wing and mainstream economics.

    Instead of going on and on with unprovable theories, it looks at what did happen under various economic systems in the past and what does happen under currently existing economic systems, both industrial and pre-industrial (tribal, peasant).

    It’s really a thought-provoking read.

    • Submitted by Dennis Tester on 10/29/2013 - 03:00 pm.

      Well think about this Karen

      Service on the national debt is now $415 billion per year.
      http://treasurydirect.gov/govt/reports/ir/ir_expense.htm

      Just think of all the liberal feel good government programs you could get for that kind of money.

      • Submitted by Paul Brandon on 10/30/2013 - 09:13 am.

        And what proportion of the GDP

        is that?
        Talk to a real business person about the cost of doing business, and the need for a line of operating credit to cover cash flow.
        Of course, there is the interesting question of who that debt service is paid to (it might surprise you; I suspect that you get some of it, unless you keep your savings under your mattress).

  24. Submitted by John Appelen on 10/29/2013 - 06:10 pm.

    Wealth Gap Causation?

    It is one of my favorite topics, and I post about it fairly often. So I have to ask:

    Do the Liberals here who buy foreign cars, phones, clothing, furniture, appliances, etc understand that your choices are one of the key drivers of the wealth gap and union destruction that you dislike so much?

    I mean Conservatives get a pass here because their belief system is that people should do what is best for themselves. (ie Ayn Rand) However Liberals who say we should do what is best for the American worker, and then turn around and avoid “Buying American, now that is hypocracy at its finest.

    Checkout G2A for details, but the short version is that American’s favored “American Products and Companies” until ~1980. Then they got a taste of and became hooked on low cost / high quality, which was the beginning of the big change. Much less money was spent to support the inefficient and ineffective companies and their unions, so compensation declined. And the worst companies and unions failed altogether.

    Now no “evil rich guy” forced Liberals to buy their Toyotas, Hondas, Subarus, Mazdas, VWs, Hyundais, Kias, Samsungs, LGs, Sonys, etc. It was just pure individual self centered behavior on the part of consumers. They wanted to pay the lowest cost for the highest value, no matter what it did to the other American workers.

    Therefore great “skills and academic based jobs” went abroad to where the Liberals were sending their money. Therefore the working folks incomes and opportunities languished. I mean Americans just don’t want to pay more for the “good of American Workers”, they want to save money for themselves and their families. (ie very Capitalistic)

    Now of course the investors really don’t care where the profits are made, since we can invest in foreign firms. Therefore as GM and it’s Union employees suffered due to the American consumer deserting them. The capital just shifted over to Toyota etal and so the wealth kept growing.

    Now of course the Liberals are brand loyal to their foreign brands and seemingly are blind to the consequences of their spending… Usually they don’t even consider the American designed, tested, planned, managed, etc product. They rationalize that the foreign companies are doing some assembly here, so it is ok. Not knowing that assembly is a small part of the purchase price they pay. Even as they yell at the investors for foul play…

    It is a bit humorous and ironic…

    • Submitted by Paul Brandon on 10/30/2013 - 09:15 am.

      Just where do you think those

      “Toyotas, Hondas, Subarus, Mazdas, VWs, Hyundais, Kias, Samsungs, LGs, Sonys” are made, and by who?
      Unless you don’t consider Georgia, Arkansas and Tennessee part of the United States.

      • Submitted by John Appelen on 10/30/2013 - 02:41 pm.

        Right to Work?

        Aren’t those the dreaded right to work states that the Liberals swear are terrible? I remember a huge uproar in MN when the issues came up. I wonder if Ford would still be here if we had passed right to work?

        Besides see this for a better measure of domestic content.
        http://kogodnow.com/autoindex/

        Did you really defend people who purchase Toyota and Honda by mentioning that they set up in “low cost Conservative states”? Will wonders never cease.

        • Submitted by Pat Berg on 10/30/2013 - 03:57 pm.

          Moving the ball

          The discussion was about whether these cars were manufactured inside or outside of the United States. “Right to work” was not part of the discussion and appears to be an attempt to deflect.

          It’s kind of hard to have any kind of meaningful discussion with someone when they keep moving the ball.

          • Submitted by John Appelen on 10/30/2013 - 07:58 pm.

            Ball is still in the stadium

            American cars were traditionally manufactured in strong union states. Which I believe is what the Liberal contingent supports, since they often blame the wealthy and businesses for weakening the unions in the private sector. I assume it is fair game to note that though some of these cars are technically assembled in the USA. They are being assembled in States where the Unions are weak.

            Now that is better than being assembled in Germany, Japan or South Korea, however it doesn’t give the employees much clout. Therefore the buyers of these cars have contributed to the weakening of the UAW and American Unions.

            I don’t mind that they did this since it has made us more globally competitive, however I find it odd when folks throw rocks from their glass house… I am very curious if they accept their large contribution to the problem, or if they have rationalized some way to hold themselves blameless… Don’t you?

            Like we had to punish GM and Ford for being so generous to their employees for so long…

    • Submitted by Paul Udstrand on 10/30/2013 - 09:36 am.

      Wow

      John,

      I think your problem is that you see economics in terms of “liberal” vs. “Conservative”. Ideology does not determine economic reality, although it can influence political decisions, it’s kind of like math, we don’t have two systems of mathematics, one for liberals and one for conservatives. 4+4=8 regardless.

      The disparity we currently experience is not a liberal or conservative phenomena, per se. Both liberals and conservatives bought into the “Free Market” neo-liberal model. Remember, in 1992 Ross Perot was the only one on the stage opposed to NAFTA and the WTO. Everyone else told us not worry about losing jobs and manufacturing to foreign lands because the United States economy would just make different jobs for everyone. That was magical thinking for the most part and it cut across the ideological divide.

      I don’t why you think liberals are the only ones buying imported stuff but you should know that Walmart is the largest single importer of cheap foreign stuff in the world. Neither Walmart as a company, or it’s customer base are liberal bastions. It was not conservatives in protest of WTO economic models that engaged the “Battle in Seattle” in 1999, nor is the “Buy Local” phenomena a conservative brain child.

      As for the auto industry, I would recommend Michael Moor’s movie: “Roger n Me” for a reliable liberal response to the policy of moving jobs and manufacturing offshore.

      • Submitted by John Appelen on 10/30/2013 - 02:36 pm.

        Consistency?

        I only separate them because the Conservatives are not complaining about the lower wages and wealth gap. And the Conservatives acknowledge that they are strong supporters of Capitalistism / Free Market.

        Where as it is the Liberals who say that we should support American workers and Unions, and take money from some people and give it to others. Yet they seem unwilling to pay a bit more for the Ford and GM products to support the American workers and the UAW. Therefore they seem inconsistent.

        As for “American Manufactured/Assembled”, remember that the majority of the vehicle cost is in the R&D, Mgmt, Testing, Compliance, Back Office, Overhead, etc. This link tries to account for that.
        http://kogodnow.com/autoindex/

        Please notice that Honda and Toyota are better, than others. However if you are buying many of the other brands, you maybe should just send your check to the foreign company, employees and governments coffers.

        By the way, most companies will do what it takes to please their customers. The consumers control what happens… And in this case, many folks deserted the American workers… ~Half of them were Liberals…

        Let’s take a poll, I own a Chevy Suburban… What do you drive?

        • Submitted by Paul Udstrand on 10/31/2013 - 10:25 am.

          Consistency??

          John,

          Just because conservatives don’t care or complain about poverty, low wages, and job losses, doesn’t mean they can’t be responsible for the economy produces those cirumstances. On the contrary, to the extent that conservative promote low wages and the free markets that produce them, they are more responsible for them than any other group.

          This game of “gotcha” with liberal stereotypes is a dead end. It’s counterfactual to claim that 50% liberal consumers buying cheap imported stuff are more responsible for wealth disparity than the other 50% of conservative consumers simply because the conservatives aren’t complaining about wealth disparity. Basically your trying to claim that the group that’s trying to reduce disparity is more responsible for disparity than the group that’s actually promoting disparity, that’s illogical.

          Maybe you think you’re taunting liberals with your estimation of liberal hypocrisy but the problem is you’re taunting your own stereotypes, not real liberals. Real liberals aren’t interested in your estimation of liberal hypocrisy, liberals are interested in solving the problem, hence the “complaints” about health care, wealth disparity, etc.

          • Submitted by John Appelen on 10/31/2013 - 01:55 pm.

            Blame?

            “counterfactual to claim that 50% liberal consumers buying cheap imported stuff are more responsible for wealth disparity than the other 50% of conservative consumers” Where did I claim this?

            I have asked. Do the Liberals accept their huge personal contributing role in the current situation?

            And are they willing to change their personal behaviors and spending habits to help their American co-workers?

            Or are they going to keep sending their money over seas while blaming others for what they perceive the be problems in America?

            If every Liberal bought a GM or Ford vehicle next time, just think what that would do for American jobs…

  25. Submitted by Peter Soulen on 10/29/2013 - 09:15 pm.

    Eric said…

    “I even concede some truth to Peder’s point that, depending on how you measure it, a middle-class American of today is better off than his middle-class ancestors.”

    Some yes but some no too. Is it better to be in the frying pan or in the fire…? My old friend Ray, the custodian at my college dormitory in ’77 put it another way… “Perfesser, I don’t mind if you s**t on my plate. Just don’t s**t on my spoon”

    Both metaphors imply the need for a (reasonably) level playing field. I view with deep suspicion – anyone who tells me that that is impossible to attain, or wrong to strive for.

    I post here once in a blue moon. But more often I make my point to young people… I tell my fifth graders every day that the rules don’t govern them. They govern the rules.

    But here, I say; “I am the government. You are the government. We are the government” Again, I harbor great distrust of, and will seldom accept much less validate input from anyone who comes across as anything other than, or feels that they are outside “the government”.

    But I don’t have to worry too much about changing minds here and now. I have a direct line to the future.

    Great thread!

  26. Submitted by Ann Spencer on 11/04/2013 - 01:25 pm.

    It may be even worse than it looks

    A little late to add another comment on this thread, I know, but in case anyone is still listening…

    I peeked at Saez and Piketty’s scholarly article, from which Eric’s graph is drawn, because I wondered if their data is based on individual or household income. Because they used federal income tax returns, their data compares “tax units”, i.e., the individual or group of individuals that files a single IRS return. This could be a married couple or an individual taxpayer.

    Given that, the disparity in individual incomes is probably even sharper. Based on statistics about married women in the workforce, it’s a safe bet that the majority of households below the upper 1% have two wage earners. I have no data to support this, but I think it likely that a smaller percentage of households in the upper 1% have two incomes. If individual incomes within a “tax unit” could be disaggregated, so that individual incomes were compared across the board, I suspect that income inequality would be even more skewed toward the top.

    Two incomes as the “new normal” also blunts the impact of wage stagnation. Several posters have pointed to an improvement in middle class lifestyles by some measures. To the extent this is true, for most families it is dependent on two incomes. Without that second income, many families would be falling out of the middle class altogether.

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