The rich - poor gap
Discussion
It's interesting to see the same old people argue the same old tired points.
Once it has been demonstrated that you're wrong, the classy thing to do would be to concede.
I emplore anyone with the talent and acumen to do well in other economies to do so and leave this Island in a festering pool of envy and self pity.
Once it has been demonstrated that you're wrong, the classy thing to do would be to concede.
I emplore anyone with the talent and acumen to do well in other economies to do so and leave this Island in a festering pool of envy and self pity.
Digga said:
turbobloke said:
It's thought-provoking for sure.
From my reading of it, there are a couple of points not answered because they can't be answered...
As I see it - with reference, for example, of students walking out of a Harvard economics lecture because of the narrow subject matter - the text is a fairly direct attack on the Harvard-Keynsian ideal (and thereby MMT) and establishment. It is fairly clear, from this topic, that zero interest rate policy (ZIRP) has benefited only the elite and has not helped private individuals or firms in any material way, whilst at the same time fueling inflation, from whose effects they most certainly do suffer.From my reading of it, there are a couple of points not answered because they can't be answered...
What he does not say, but is an equal part of the problem (because they form the herds and also the elite who benefit from their own actions) is that those who have been in power have been lining the pockets of their own crowd.
One problem is that those that lay out the rules tend to consider all companies, public and private as one lump. Or at least they do when things don't go as planned.
Companies are all individual entities that must not only strive to succeed but also have to compete against one another for their market share.
ZIRP enabled companies to refinance existing debt putting them in a better financial position.
Availability of cheap money does not mean that every company out there should borrow to expand just because it suits the Government.
I believe more damage to the economy has been done by individuals using ZIRP to pay ridiculous amounts for houses. Which amounts to incredible funding of non performing assets.
Which reduces discretionary spending, hardly the environment for a company to expand!
The economists have to take responsibility for the animal they created, it was not each and every company collaborating to reach this rather precarious situation.
jeff m2 said:
Digga said:
turbobloke said:
It's thought-provoking for sure.
From my reading of it, there are a couple of points not answered because they can't be answered...
As I see it - with reference, for example, of students walking out of a Harvard economics lecture because of the narrow subject matter - the text is a fairly direct attack on the Harvard-Keynsian ideal (and thereby MMT) and establishment. It is fairly clear, from this topic, that zero interest rate policy (ZIRP) has benefited only the elite and has not helped private individuals or firms in any material way, whilst at the same time fueling inflation, from whose effects they most certainly do suffer.From my reading of it, there are a couple of points not answered because they can't be answered...
What he does not say, but is an equal part of the problem (because they form the herds and also the elite who benefit from their own actions) is that those who have been in power have been lining the pockets of their own crowd.
One problem is that those that lay out the rules tend to consider all companies, public and private as one lump. Or at least they do when things don't go as planned.
Companies are all individual entities that must not only strive to succeed but also have to compete against one another for their market share. . .
Taint nexuscarily so!
In the late 1800's Morgan, Rockefella and Carnegie were worth a $trillion between them (inflation adjusted), they made Gates, Buffett and Ellison look positively destitute. Carnegie sold US Steel for almost $500m. His workers made 30c/hour. You have to take all this gini coefficient crap with a pinch of salt; would you rather be poor in 2014 or 1914?
fblm said:
In the late 1800's Morgan, Rockefella and Carnegie were worth a $trillion between them (inflation adjusted), they made Gates, Buffett and Ellison look positively destitute. Carnegie sold US Steel for almost $500m. His workers made 30c/hour. You have to take all this gini coefficient crap with a pinch of salt; would you rather be poor in 2014 or 1914?
Absolutely. 'Poor' has very different meanings depending who you ask. To define it as a percentage of mean, median or average incomes is silly because you can make the poor 'richer' by making the rich less so, as happened in the recent recession.If you have warm and dry accommodation, food, clothing, education and healthcare then to my mind you are not poor in the real sense. The rest is up to you.
Digga said:
turbobloke said:
something must be done, anything is something, we must do it.
I read it as suggesting that the "something must be done..." criticism could be laid at the door of the ZIRP crowd.GT03ROB said:
Very true.
Where I'm employed, I earn around 250x what the tea boy earns, this is a rich poor gap. He smiles he's cheerful, he's polite. He's happy he has the opportunity to earn what he does. He does it becasue he's still better off than if he'd stayed at home. He gets paid what he does because there's billions on the planet that can do what he does, I get paid what I do because there maybe tens on the planet that can do what I do & are prepared to. It's an extreme case of supply & demand. But rich/poor is nothing more than supply & demand. Simple basic economics.
If the tea boy is on minimum wage that puts you on over £1,600 per hour! Blimey, what do you do, that's premier league footballer money.Where I'm employed, I earn around 250x what the tea boy earns, this is a rich poor gap. He smiles he's cheerful, he's polite. He's happy he has the opportunity to earn what he does. He does it becasue he's still better off than if he'd stayed at home. He gets paid what he does because there's billions on the planet that can do what he does, I get paid what I do because there maybe tens on the planet that can do what I do & are prepared to. It's an extreme case of supply & demand. But rich/poor is nothing more than supply & demand. Simple basic economics.
Thankyou4calling said:
If the tea boy is on minimum wage that puts you on over £1,600 per hour! Blimey, what do you do, that's premier league footballer money.
..... and here lies the fallacy of the minimum wage.... If we did have a UK style minimum wage would we have a tea boy? No. We'd go & make it ourselves, no big deal. But where would that leave the teaboy? He'd be back in Bangladesh, making some sort of living I guess, but in real poverty, not some illusion of poverty the UK has. The UK has fiddled around with the labour markets to such an extent, primarily with welfare, but also minimum wages, that we no longer have a properly functioning market for labour. I'm not defending the labour market here, parts of it are pure evil. But it does provide real world examples of where things such as minimum wages are not good for the "poor".
I showed this thread to the teaboy by the way a few minutes back. He read it & said "Pistonheads & their 1st world problems." He shrugged his shoulders & went off to get me another coffee.
jeff m2 said:
ZIRP enabled companies to refinance existing debt putting them in a better financial position.
Availability of cheap money does not mean that every company out there should borrow to expand just because it suits the Government.
No, not necessarily, but it does lead to malinvestment and if you believe the Austrians, the destruction of wealth.Availability of cheap money does not mean that every company out there should borrow to expand just because it suits the Government.
AA999 said:
I think the point he may be getting at is that even tomorrow the top end rich will soak that up too, to leave little remaining for the rest to divide out.
Taking a snap shot in time to simplify things can be one way to look at it. But obviously the entire complexity of nation's/world economies from day to day may be impossible to explain within the space allowed on our PH forum
I also think that we need a system that allows individuals to become 'rich' (that is capitalism) and that this system depends on the majority to be 'poor'.
But like one poster mentioned above, is the balance too heavily weighted in favour of the rich, meaning that the majority poor are not left with enough 'available wealth' (at any given moment in time) to create a prosperous UK ?
TB and others have already commented, but it's worth saying again; no-one is soaking up anything, if Bill Gates' pie is bigger than yours which is a better solution, you being given a slice of his pie by government decree or you making your own pie? In the latter case, there's a net increase in pie availability and everyone has more pie. We don't do enough to encourage people to make their own pie. Obviously there is an ongoing need to supply pie to people without the ability to make their own, but simply doleing out pie disincentivises people from homebakery.Taking a snap shot in time to simplify things can be one way to look at it. But obviously the entire complexity of nation's/world economies from day to day may be impossible to explain within the space allowed on our PH forum
I also think that we need a system that allows individuals to become 'rich' (that is capitalism) and that this system depends on the majority to be 'poor'.
But like one poster mentioned above, is the balance too heavily weighted in favour of the rich, meaning that the majority poor are not left with enough 'available wealth' (at any given moment in time) to create a prosperous UK ?
End of tortured pie/baking analogy, as it's making me hungry; mmm, pie.
turbobloke said:
It can't possibly be suggesting that abolishing boom and bust is possible and desirable no matter what, Gordon Brown claimed something similar had been achieved not long before the roof blew off.
Again, a great deal of intelligent people would argue that without central bank meddling, exactly that would happen.Boom / Bust cyclical, not much one can do about that.
Professionals see opportunities ,put money in,later on the herd notice that opportunity put their money in ,market becomes saturated,overheats and busts.
This latest crisis is somewhat different as I see it.
The banks did not appear to have correct self regulation in place as regards risk management.
Best example is dodgy mortgage lending by American banks,then they tried to get rid of those dodgy loans by bundling them up in derivatives and it all snowballed ending in crisis.
I think the bonus system also did not have sufficient checks and balances as it encouraged reckless dealing.
Also the constant expectation by shareholders of short term gain put pressure on companies to take on dubious risk to increase profit at any long term expense.
I do not wish to see too much Government intervention,it skews the markets and usually makes matters worse but the governments had little choice if they wanted to avoid Big Banks failing which would have caused complete meltdown.
Of course none of this really has much bearing on the rich/poor gap.
What is has done is to make the general public aware of the huge fortunes made by bankers that then walked away with very few being "punished"for their recklessness,this has ,not unexpectedly,caused resentment as the general public has suffered because of the criss.
It may be said that the general public did not help themselves by taking on too much debt but once again this was encouraged by the lenders attracted by the easy pickings and short term rewards.
Professionals see opportunities ,put money in,later on the herd notice that opportunity put their money in ,market becomes saturated,overheats and busts.
This latest crisis is somewhat different as I see it.
The banks did not appear to have correct self regulation in place as regards risk management.
Best example is dodgy mortgage lending by American banks,then they tried to get rid of those dodgy loans by bundling them up in derivatives and it all snowballed ending in crisis.
I think the bonus system also did not have sufficient checks and balances as it encouraged reckless dealing.
Also the constant expectation by shareholders of short term gain put pressure on companies to take on dubious risk to increase profit at any long term expense.
I do not wish to see too much Government intervention,it skews the markets and usually makes matters worse but the governments had little choice if they wanted to avoid Big Banks failing which would have caused complete meltdown.
Of course none of this really has much bearing on the rich/poor gap.
What is has done is to make the general public aware of the huge fortunes made by bankers that then walked away with very few being "punished"for their recklessness,this has ,not unexpectedly,caused resentment as the general public has suffered because of the criss.
It may be said that the general public did not help themselves by taking on too much debt but once again this was encouraged by the lenders attracted by the easy pickings and short term rewards.
Art0ir said:
turbobloke said:
It can't possibly be suggesting that abolishing boom and bust is possible and desirable no matter what, Gordon Brown claimed something similar had been achieved not long before the roof blew off.
Again, a great deal of intelligent people would argue that without central bank meddling, exactly that would happen.I think perhaps the "poor" is being misunderstood with respect to UK or other western hem countries.
A possible better definition would be those with few or no financial options. (Choices)
Those unable to take advantage of a dip in the market, or those that cannot grab the car they really want when it is 30% below list.
A other words, quite a lot of the population.
Everyone probably falls into this category at some point in their life, and of course many remain there ad infinitum.
It may not include all those on benefits, some adapt and have a happier and less stressful financial life than those that consider themselves to be "not poor".
Similarly, for want of a better example, the guy that tarmacs your driveway, he is likely to be less poor and is hated for it by those that are.
Unfortunately, for the immediate future, that's the way it has to stay because the government cannot allow discretionary spending to raise inflation as it has so many outgoings linked to CPI.
So high taxation of the rich, or the attempted high taxation of the rich has dual purpose, limits dis spending and collects the funds needed to pay index linked benefits. A balancing act at best.
The rich however are, as a group a lot smarter than the guy at number 11, they can position themselves to take advantage of the moves that the Gov make.
The rich would generally just be happy to sit in Gilts, receive a nice revenue stream from Gov backed paper. The Bond Market is large enough to accommodate all the rich people and more.
But...because of the low int policy there IS NO rev stream and that money is forced into the smaller and more volatile stock market causing irrational volatility.
Banks have traded that government induced volatility and profited.
Should banks (and individuals) have traded this volatility is another question, but if one does the others have no choice, they have to, or they get left in the dust.
IMO Governments have caused this situation either knowingly or maybe by pure incompetence, or possibly just a lack of foresight.
Now they choose to blame the rich as they have few options to put things right.
A possible better definition would be those with few or no financial options. (Choices)
Those unable to take advantage of a dip in the market, or those that cannot grab the car they really want when it is 30% below list.
A other words, quite a lot of the population.
Everyone probably falls into this category at some point in their life, and of course many remain there ad infinitum.
It may not include all those on benefits, some adapt and have a happier and less stressful financial life than those that consider themselves to be "not poor".
Similarly, for want of a better example, the guy that tarmacs your driveway, he is likely to be less poor and is hated for it by those that are.
Unfortunately, for the immediate future, that's the way it has to stay because the government cannot allow discretionary spending to raise inflation as it has so many outgoings linked to CPI.
So high taxation of the rich, or the attempted high taxation of the rich has dual purpose, limits dis spending and collects the funds needed to pay index linked benefits. A balancing act at best.
The rich however are, as a group a lot smarter than the guy at number 11, they can position themselves to take advantage of the moves that the Gov make.
The rich would generally just be happy to sit in Gilts, receive a nice revenue stream from Gov backed paper. The Bond Market is large enough to accommodate all the rich people and more.
But...because of the low int policy there IS NO rev stream and that money is forced into the smaller and more volatile stock market causing irrational volatility.
Banks have traded that government induced volatility and profited.
Should banks (and individuals) have traded this volatility is another question, but if one does the others have no choice, they have to, or they get left in the dust.
IMO Governments have caused this situation either knowingly or maybe by pure incompetence, or possibly just a lack of foresight.
Now they choose to blame the rich as they have few options to put things right.
turbobloke said:
speedy_thrills said:
Randy Winkman said:
I'm not sure about some posters' question "Why are people bothered about what others have?". That's how the human brain works isn't it? We look around the world and learn from it.
One of the primary reasons it bothers me is because I’m involved in investing (though in a smaller way that some here no doubt). In a very wishy-washy holistic way I think that in many ways business is really the manifestation of social forces driving people to aspire towards an ever higher consumption of goods and services.
k off out of it, taking their unhelpful base human instincts and excuses with them.If not such a monster then what is capitalism now? We have created, by our inaction, a colossal industry based around credit and leverage but often make little of bread-on-the-table value. As soon as that industry coughed our only course of action was to devalue our currency and hence punish those who has been prudent, pushed debt obligations that nationalised high risk private debt and we are still kicking the can further down the road by redistributing debt such that it becomes intergenerational. How can a businesses operate in an environment where it may rapidly be forced to stop important business activities like R&D or new market growth to concentrate on short-term cash flow? How can ordinary people live with a highly cyclical economic system when they have constant needs? Regardless of the present economic situation ordinary people still need jobs, sustenance and shelter. On a societal level it’s just not negotiable to post-enlightenment human morality, that’s why economic affairs are presently of pressing concern to society. The societal and economic impacts are inextricably linked IMO.
I’m not expecting everyone to rush out and join the communist party but it would seem irrational not to expect people not to have some questions and thoughts about if the way our economy is run wouldn’t benefit from better management. The way workforce participants are rewarded is a major and important part of that.
For active share market participants though how predictable though that we are back to staring at near imperceptible shapes in the darkness and listening carefully for a rustling or leaved or breaking of twigs with our fingers over the “sell” button. We still fear this form of capitalism that can wildly swing to destroy previously profitable companies, how can investors be expected to price for that or moral hazard?
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