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  1. #11
    royal member Rasofy's Avatar
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    Quote Originally Posted by Lark View Post
    What if you had more than average income?
    Then that would mean the quality and specialization of my job justifies the added value. But in case my income was less than average, I would conclude society is unfair. That's called talking your position. Most people do it unconsciously, but I took it to another level.
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    A man builds. A parasite asks 'Where is my share?'
    A man creates. A parasite says, 'What will the neighbors think?'
    A man invents. A parasite says, 'Watch out, or you might tread on the toes of God... '


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  2. #12

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    Quote Originally Posted by Rasofy View Post
    Then that would mean the quality and specialization of my job justifies the added value. But in case my income was less than average, I would conclude society is unfair. That's called talking your position. Most people do it unconsciously, but I took it to another level.
    There is no higher incomes which is unjustifiable then? Do you think that everyone simply considers their circumstances with a view to its improvement?

    My point was about people behaving in a way which I think perhaps you could be describing, with the greater the distance provided by wealth, or even its lack or want of, are people not less and less inclined to think of anything from a more objective stand point?

  3. #13
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    Insofar as it is reflective of a financial system with institutional problems, and counterproductive incentives it matters (to me at least).

    The problem I have (insofar as I understand anything about finance), is that most of the explosive growth in income within the finance community originates with the use of increasingly complex and risky investment vehicles and financial instruments.

    Once the economy came to depend on the wealth created by investment vehicles like credit default swaps, collateralized debt obligations, or credit derivatives, it was only a matter of time before the whole (increasingly over leveraged and under insured) house of cards came tumbling down.

    These instruments (I believe) have increasingly corralled profits within the financial community, while only producing a marketable benefit to financial institutions by hedging risk against default in the market.

    In effect, financial institutions were able to spin money out of essentially nothing.

    To illustrate the problem:
    A credit default swap (CDS) is an agreement that the seller of the CDS will compensate the buyer in the event of a loan default. The buyer of the CDS makes a series of payments (the CDS "fee" or "spread") to the seller and, in exchange, receives a payoff if the loan defaults. In the event of default the buyer of the CDS receives compensation (usually the face value of the loan), and the seller of the CDS takes possession of the defaulted loan.
    Credit default swaps have also faced criticism that they contributed to a breakdown in negotiations during the 2009 General Motors Chapter 11 reorganization, because bondholders would benefit from the credit event of a GM bankruptcy due to their holding of CDSs. Critics speculate that these creditors were incentivized into pushing for the company to enter bankruptcy protection.[77]
    http://en.wikipedia.org/wiki/Credit_default_swap

    In the interest of hedging risk, the financial industry has gone so far as to subsidize bankruptcy.

    The instant a company or corporation becomes more beholden to it's stock holders, than it is to it's customers, is the instant that company starts being part of the problem with the economy and not the solution to it.

  4. #14
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by reason View Post
    It's often complained that while incomes have risen on average over the last twenty or years or so, incomes have risen faster than average for the top income brackets.

    This doesn't necessarily mean that high-income people are getting wealthier faster than people in lower income brackets. People move in and out of different income brackets all of the time, especially over decades. Some people who were in a top income bracket ten years ago will have fallen into a lower bracket today, and the opposite is true for some people who were in lower brackets ten years ago. Statistical categories imply very little about flesh and blood human beings. It is actually consistent with such claims to suppose that everyone in the top 1 percent of earners began their careers at the very bottom, and that would seem to suggest that very poor people were getting wealthier much faster than everyone else. This scenario may be highly improbable, but it exposes how lacking in meaningful content these broad statistical claims usually are--it's the intellectual baggage that you bring to the numbers that does most of the heavy lifting.

    The default explanation for why some people are increasing their incomes faster than average ought to be that they are increasing their productivity faster than average. Your income is the market value of what you produce, and those who produce goods and services with a higher market value achieve higher incomes.

    There are some professions where income inequality is very high and others were it is very low. For example, inequality among sportsmen is very high, while it is relatively low among plumbers. I would expect that more is spent on plumbing services each year than professional sports, and so aggregate income is probably higher among plumbers than sportsmen. However, there are probably only a handful of plumbers who earn anything near what top sportsmen earn. It's relatively obvious why this would be. If plumbing services could be broadcast into peoples' homes across the globe at relatively low cost, then a minority of extremely skilled and experienced plumbers could dominate the market. Likewise, if everyone had to watch professional sports in their home town, then many less gifted sportsmen could make a reasonable living providing that kind of entertainment. The reasons for income inequality in these professions have little to do with greed, corruption, capitalist exploitation, or whatever else.

    My hunch is that the economy as a whole, over the last thirty years, has become more like professional sports and less like plumbing, and this is most noticeable in finance. Just as the invention of the television massively increased inequality among sportsmen, the rise of communications technology and globalisation have allowed a minority (especially in high finance) to increase their productivity much faster than average. This trend may continue or it may be grinding to a halt right now--I don't know.

    It's worth reflecting that there have been times in history when income increased disproportionately among lower income groups, and that was in times with far fewer efforts to "redistribute income" than today.

    Another thing--a lot of income is double-counted. Returns on savings are often counted as income in a way that defies basic economic principles.
    Income statistics are misleading. Some of the wealthiest people in the world have little or no income.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  5. #15
    royal member Rasofy's Avatar
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    Quote Originally Posted by Lark View Post
    There is no higher incomes which is unjustifiable then?

    Do you think that everyone simply considers their circumstances with a view to its improvement?

    My point was about people behaving in a way which I think perhaps you could be describing, with the greater the distance provided by wealth, or even its lack or want of, are people not less and less inclined to think of anything from a more objective stand point?
    It's hard to be objective when we don't start neutral. But, picturing an extreme scenario, a society with a rigid income equality would be chaotic and stagnant because there would be no motivation to become more productive - and that's when people get lazy. So, in the end, the combined result is worse and without perspectives of improvement.
    That's the most objective consideration I can make.
    -----------------

    A man builds. A parasite asks 'Where is my share?'
    A man creates. A parasite says, 'What will the neighbors think?'
    A man invents. A parasite says, 'Watch out, or you might tread on the toes of God... '


    -----------------

  6. #16
    Senior Member reason's Avatar
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    Quote Originally Posted by Lateralus View Post
    Income statistics are misleading. Some of the wealthiest people in the world have little or no income.
    Sure, I was careful to qualify some of my comments about income because of that. Some very wealthy people have low incomes and some people with very high incomes have very little wealth. There is also the matter that consumption is the real measure of material well-being, and there are many people with low incomes that enjoy relatively high consumption. We could go on and on.
    A criticism that can be brought against everything ought not to be brought against anything.

  7. #17
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by reason View Post
    Sure, I was careful to qualify some of my comments about income because of that. Some very wealthy people have low incomes and some people with very high incomes have very little wealth. There is also the matter that consumption is the real measure of material well-being, and there are many people with low incomes that enjoy relatively high consumption. We could go on and on.
    I wasn't trying to call you out. The purpose on my post was merely to point out that people should be more concerned about wealth inequality than income inequality.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  8. #18
    ^He pronks, too! Magic Poriferan's Avatar
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    Quote Originally Posted by Lateralus View Post
    I wasn't trying to call you out. The purpose on my post was merely to point out that people should be more concerned about wealth inequality than income inequality.
    I'll agree with you on that.
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  9. #19
    Feline Member kelric's Avatar
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    Yes, it matters -- not in so far as incomes are inequal, but the sheer magnitude of the inequality, and the fact that it's grown much larger the last generation, matters to me. I tried to look up some statistics, and the chart that kept popping up is this one:


    Now, I think that this is very likely skewed by the fact that it focuses only on the largest companies, but the disparity's pretty glaring, especially compared to Japan. But even if you call it wrong by a factor of ten, CEO's are bringing in close to fifty times as much as an average worker. Frankly I doubt the disparity in skill and effort is that large.

    What concerns me more is the effect that this has on the concentration of power, particularly political power -- but that's a topic for another (million) threads.

    Quote Originally Posted by DiscoBiscuit View Post
    The instant a company or corporation becomes more beholden to it's stock holders, than it is to it's customers, is the instant that company starts being part of the problem with the economy and not the solution to it.
    I think that this is a great point -- when the *entire* focus of an organization is to enrich shareholders (and accumulate political power to further enrich shareholders, many of whom often are the executives who run the organization), its place in the economy tends toward plunder, rather than playing a part in a web of industry. The recent/current financial fiasco illustrates that pretty well.
    [SIGPIC][/SIGPIC]

  10. #20
    Senior Member captain curmudgeon's Avatar
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    Yes. The repercussions of income inequality are felt throughout society, not just by those who are not the wealthiest. Here is a TED talk on the subject:


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