Over the past two years, there has been a significant political debate in the United States about the distribution of wealth. Statistics suggest that in 2007, the richest 1% of the population controlled about 35% of the wealth in the US, and that the top 20% controlled about 85% of the wealth.
People who approve of this distribution in wealth typically argue that the wealthiest Americans have earned their money through hard work and individual effort and that their business practices, spending patterns, and investments ultimately improve the quality of life for everyone. Those who disapprove of this distribution argue that government and social policies helped the wealthiest Americans to develop their wealth. They typically support policies that would redistribute wealth by levying higher taxes on the richest Americans and using that money for policies that would support people with fewer resources.
It is clear that many Americans who are not in wealthiest 20% support policies that maintain the inequality in the distribution of wealth. Over the past fifteen years, tax rates have been cut across the board and attempts to increase tax rates on the wealthiest 1 to 2% of Americans have been blocked. The politicians who have blocked these tax increases have been re-elected. Clearly, many people are voting for these candidates, suggesting that there is broad support for the current inequality in wealth.
Why is that?
This question was explored in an interesting paper by Krishna Savani and Anneta Rattan in the July 2012 issue of Psychological Science. They conducted six studies suggesting that when Americans focus on the concept of individual choice, they become more accepting of inequalities in wealth.
All of their studies were done using Amazon's Mechanical Turk, which is an on-line system for collecting data. Using this system allowed the researchers to get participants with a distribution of ages, political affiliations, and ethnicity.
In one study, participants watched a video of a person going about a set of daily activities. In the control condition, people pressed a button every time the person touched an object. In the choice condition, people pressed a button every time they believed the person made a choice. Afterward, participants were given 10 statistics about the distribution of wealth in the United States (like the fact that the wealthiest 20% of Americans own 85% of the wealth) and were asked to rate how disturbed they were by these facts.
As you might expect, people who identified themselves as liberals were more disturbed by these facts than people who identified themselves as conservatives. Interestingly, people who perceived themselves to be relatively upper-class were more disturbed by these facts than those who perceived themselves to be relatively lower-class. Women were more disturbed than men. People who identified as White were more disturbed than those who identified as non-White. After controlling statistically for all of these factors, though, people who were primed to think about choices were less disturbed by these facts than people who were not.
Two other studies in this series are also interesting.
One experiment looked at people's beliefs about whether the success of wealthy people is caused primarily by their own individual effort or whether that success was aided by society and government policies. People primed to think about choice were more likely to endorse that the success of wealthy people is driven more by their individual effort than by society or the government.
A second experiment looked at whether people approved of policies that would redistribute wealth from the richest Americans to poorer Americans. Those primed to think about choice looked less favorably on policies that would redistribute wealth than those who were not. Interestingly, participants were also asked about government policies that would aid everyone equally. Those who were primed with choice were still in favor of government programs that would help everyone. Thus, thinking about individual choice did not simply reduce people's interest in government programs in general.
The concept of individual choice is a core value for Americans. We are deep believers that people should have individual freedoms and that individual effort allows people to make their way in society. An interesting side-effect of this belief, though, is our acceptance of significant inequalities in wealth. It looks like this acceptance arises because our beliefs about individual choice focus us on the role that individuals play in their own success and de-emphasize the role that society and government play in success.
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1. In a free society, a wide range of wealth inequality is both normal and healthy. Most people support the notion that each individual should be free to pursue their interests, with the attendant variation in prospects for wealth accumulation through their lifetime.
2. A civil society must take care of its own. We are, indeed, our brothers' (and sisters') keepers. Wealth inequality should never be allowed to get to the point where members of our society at the low end of the income spectrum are forced to accept wages that don't support their existence. A minimum wage should NEVER be below LIVING WAGE.
As a result of these two seemingly opposing views, I would advocate making sure that any full-time work should be compensated at least with a LIVING WAGE, and let the free market take care of the rest of the distribution.
It's OK for some brilliant/productive/creative/hardworking people to make $100M per year, but only if the janitor or ditchdigger or burger-flipper can make a living wage doing their respective jobs.
And note that that 'living wage' includes enough to:
Live on! (this should include enough money to avoid subsidies like public transportation and housing, medicaid, food stamps, etc.)
+pay for medical insurance
+pay into a retirement insurance plan (social security or other) that will support the individual in retirement (including their medical insurance)
+enough to pay income taxes (to shut up the wingnuts)
2. Because I earn $100 doesn't mean you can't earn $100 too.
People complain about the "wealthy". My company have nearly 500 people that cater to the wealthy. we are all well paid (above average) and have pretty good security and benefits. Our clients are the Wealthy who can afford our products.
But so what?
I am convinced that the entire problem is solved by doing two things:
1. Maintain full employment. This is the one of the great failures of 'free market' economics. If the private sector cannot maintain full employment, then the government should step in to employ people, either through contracting work or direct hires.
2. A LIVING wage should be required as the minimum wage.
If we do those two things, income inequality is not a problem.
If we DON'T do those two things, no matter what else you do, income inequality IS a problem.
It's OK, as long as the least of us working that minimum wage job can make an adequate living doing so. Any job worth doing is worth a LIVING WAGE. If you are not willing to pay a LIVING WAGE to have a job done, then it is not worth doing by a human being, i.e., it is not a legitimate 'job'.
Why? Because if YOU don't pay a LIVING WAGE, someone else must step in (government, church, you, me, mom, dad, etc.) to SUBSIDIZE that job.
This, in effect means that the society as a whole (or, conversely, a few bleeding hearts) subsidize not that worker, but the EMPLOYER, because the difference between that sub-living wage and a living wage is paid by the subsidizers and that difference goes right into the pocket of the employer. Welfare for the 'job creators', if you will...
The Middle Class rant about Wealth Inequality because they want to feel more entitled than they are. And what better entitlement is there than showing a wad of cash to prove their worth. Both the Rich and the Middle Class have no idea about struggle. They don't struggle to eat. They gripe about high gas prices, but wouldn't dare walk like some Poor who have no car. Middle Class wish they could go to fancier restaurants, but feel eating leftovers is beneath them, whereas Poor are grateful they can eat a meal.
Wealth Inequality? It's the Haves(Rich and Middle Class)against the Poor, and they want to keep it that way because they feel more superior. They have no humility. It's devastating for a Rich Person to reach Middle Class status, and Middle Class would sooner jump off a cliff than to be penniless, and the Poor are either ignored, or blamed.
I make quite a bit of money, but I have no problem eating leftovers, I hate to waste food, and I don't like fancy restaurants! Stereotypes are useless ways to avoid seeing people as individuals.
Don't you dare lecture me about "generalization" starchildjg24. I hear Middle Class crabbing as if bad times are only around when YOUR class have slight disruptions. You've never starved, you can get help NOT to be homeless where Poor are expected to be, where you've never gone hungry more than a few hours, when you whine about gas prices but won't give UP your car and actually walk more than 10 feet.
You "intensely dislike rampant generalizations"? FINE! Be in the Poor class for ONE month and hear YOUR class, trash us, blame us, judge us on stereotypes and judge all Poor and the bad acts of a few!
False statement. Many of us think the poor need adequate support. Enough to live on properly. Our society should provide them with jobs. Jobs that pay a LIVING WAGE.
Otherwise, they have no stake in the society that doesn't meet their needs. If they have no stake in society, then it is in their best interest to destroy it and replace it with something that serves them better.
"Freedom's just another word for nothing left to lose."
Indeed.
You Middle Class blame us for everything. YOU think only unemployment affects YOUR class. Never ONCE has Obama or any other president ranted about giving Poor jubs, JUST the Middle Class "working poor." Don't yell at me about a "LIVING WAGE". I'll take ANYTHING! But you Middle Class won't. So you tell me, huff post reader, when YOU give me a job, I'll believe you.
In these trying times the only people that matter is the Middle Class who think wages should be raised for THEM.. Poor are ignored or villainized!
Liberals tend to see themselves as being a culmination of circumstances. They understand that human beings were once primates, and that this planet has existed for billions of years. In contrast, the non-liberal take on life focuses on the importance of a single event rather than a succession of events. It emphasizes the concepts of purity and creativity with a focus on glorifying the creator. Non-liberals believe in a world in which there is a greater and a lesser while liberals strive to create a world in which there is neither. Veneration of perceived greatness is the basis of non-liberal ideology and is mistakenly referred to as humility, and it is that focus on veneration which distorts the importance of any one event, leading non-liberals to ignore the importance of balance or lack thereof, such as in the case of a dysfunctional distribution of wealth in our society.
Too bad History is against them.
Of course your post doesn't address my point, which is that these supposedly "job creators" aren't, and the Republican lies about having to continually reduce their tax burdens to make them "confident" in the economy to create these supposed jobs hasn't work, and never will work, and that most of them are just as much an inherited aristocracy contributing nothing to society as any 18th century French noble.
Assume it doesn't.
Then, they have the right, no the moral imperative to destroy that government and the society that permits it, to be replaced by something else, anything else, that suits them better.
So, your 'ideal world' will quickly devolve to a brutal police state in an attempt to keep the underclass thoroughly cowed and under the public bootheel, else, it will be overthrown by a large subset of the population that have nothing to lose and everything to gain by doing so.
That, of course, is the fundamental (and fatal) flaw with libertarianism. It is, at best, meta-stable. It can never be stable; it will revert to a totalitarian state or chaos.
If it doesn't, then those who have no part in it and cannot succeed (survive) in it, have a direct imperative to destroy it and replace it with something that works. Their very survival, after all, is at stake.
Clearly they didn't built it themselves.
Secondly, the overwhelming majority of the top 1% did not earn their wealth; they inherited most or all of it. It is conceivable that people can become a millionaire through their own merit. With a few exceptions, most billionaires and muliti billionaires did not. In that light, the upper 1% become a group that mostly "earned" their money via choosing the right parents, and whom are unlikely to be joined by any self-made billionaires; the new American aristocracy, in their place in society primarily through birth. Furthermore, no one is talking about "taking" what they own. There has been a significant migration of wealth upwards over the last few decades, without a corresponding increase in taxes on that wealth. In short, the rich have become MUCH richer, while their tax burdens have fallen. All that is really being discussed is a rather mild correction in tax rates.
http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105
Of the 1%, by the 1%, for the 1% | Society | Vanity Fair
"...Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul. There are several reasons for this.
First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible. Second, many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy..."
It's getting harder for young people to achieve upward mobility because opportunity inequality.
http://www.counterpunch.org/roberts10082010.html
Paul Craig Roberts: America's Third World Economy
"For a number of years I reported on the monthly nonfarm payroll jobs data. The data did not support the praises economists were singing to the “New Economy.” The “New Economy” consisted, allegedly, of financial services, innovation, and high-tech services.
This economy was taking the place of the old “dirty fingernail” economy of industry and manufacturing. Education would retrain the workforce, and we would move on to a higher level of prosperity.
Time after time I reported that there was no sign of the “New Economy” jobs, but that the old economy jobs were disappearing. The only net new jobs were in lowly paid domestic services such as waitresses and bartenders, retail clerks, health care and social assistance (mainly ambulatory health care services), and, before the bubble burst, construction.
The facts, issued monthly by the US Bureau of Labor Statistics, had no impact on the ”New Economy” propaganda. Economists continued to wax eloquently about how globalism was a boon for our future.
The millions of unemployed today are blamed on the popped real estate bubble and the subprime derivative financial crisis. However, the US economy has been losing jobs for a decade. As manufacturing, information technology, software engineering, research, development, and tradable professional services have been moved offshore, the American middle class has shriveled. The ladders of upward mobility that made American an “opportunity society” have been dismantled..."