The rich - poor gap

[pork911]

Wealth inequality of itself is no real issue except for those wishing to feel envious (or play politics based on them).

Anyone earning over around £25k is actually part of the 1% worldwide.

Wishing to restrict that to a smaller pool highlights the dishonesty in the argument - wealth inequality is only a 'bad' thing iff you are unhappy with your lot and then pick some grouping that makes you the hard done by.

It's just myopic pessimism.

[Derek Smith]

Gogoplata said:

Is it actually a problem though?

There was some international research fairly recently, within 10 years, about stable/unstable countries/communities.

They found that for the average to increase steadily (and the highest percentage of people to suggest they are 'happy'), there needs to be a 'stable' society. The reason for this was, according to the research, unknown, and I would assume our individual guesses would have something to do with our prejudices.

One of the conclusions was that one of the situations that makes a stable society in this context, i.e. steady increases in GDP, that sort of thing, was a low gap between the rich and the poor.

Everyone benefits, it would seem, from a more even distribution of wealth. People in general, they suggest, do not want things to be equal so much as fair in their minds. And massive gaps between rich and poor equals unfairness. Further, as someone said, a certain, reasonable gap give those lower down the scale some hope.

Before we get to the 'left-wing/socialist/devil-worshiper' (pick your own bête noire) accusations, this was from a mainly right of centre (at the time) country.

The countries studied included European, North American, other western-style countries and many emerging nations. Also included were countries that were believed to be emerging.

It would appear, therefore, that if Scotland votes for the end of the Union then both it and the rUK will suffer financially. Unstable, you see.

In certain cases recovering from a natural disaster can stabilise a country.

Going back over history of the last 350 years or so, there seems to be some justification of the stable/increase wealth bit, at least for this country. Further, if you want aggravation, then let's have an 'elite' with oddles and power.

[Fittster]

Gogoplata said:

Is it actually a problem though?

Inequality leads to inequality of opportunity. A few public schools produce a disproportion number of people who take the top jobs. If you're poor you won't be sending your children to Eton.

Then there's the problem of disproportionate political influence. Many inequalities come from the power of the individuals not from the free market. This power can be used to influence the decisions of the state(e.g. should we bail out bankers). Another example of political power resulting in wealth:

"Emma Harrison nets £1.375m for her role in struggling jobseeker business
David Cameron's ex-adviser quit helm of A4e after outrage at her massive bonus pay dividends"

http://www.theguardian.com/uk/2012/dec/02/emma-har... Is her wealth due to a healthy free market or her political connections?

The problem is inequality of power not of wealth.

[AJS-]

I think the first question should be whether or not the gap is in itself a bad thing. I don't see why so long as incomes are rising. It's very easy for those with a few million in assets to generate a decent return, and much harder for those with no or even negative assets, which is basically most working people.

The point is that it really doesn't bother me if the Hindujas made another million last year, or another 100 million. I care what I made and what I will make this year.

[ChemicalChaos]

The rich-poor gap would probably shrink by a very considerable amount if some people stopped altering the terms of "poverty" when producing such reports - as explained by this article:

http://www.dailymail.co.uk/debate/article-2159868/...

[98elise]

AA999 said:

doogz said:

Where is the line?

I'm curious to know if I'm rich or poor, as it seems you have to be one or the other.

Its a good question.

I don't think I could put a number on income as to when one is deemed poor or whereby one is deemed rich.

I think its fair to say that incomes over £50,000 per year are very much considered rich. But how an individual chooses to spend their 'richness' to provide them with long term wealth is another issue I would have thought.
Maybe its fair to say that incomes lower than £15,000 per year can be considered 'poor'?....after taking off taxes, VATs, food, rent/mortgage etc. there's not much left...in UK terms that is.

Where the media draw the line between those values I do not know.

You can't just draw a line. If it was 50k, then in the past 4 years I have been rich, poor, rich, poor....and now I'm rich again. When I retire I will be poor, but will have around 1m in assets generating my income.

My father in law would certainly be classed as poor as he lives on benefits. Last week he showed me a brochure for the brand new car he's buying!

[turbobloke]

johnfm said:

Interesting new treatise by a (left leaning) French economist published recently.

WHile I do not agree with his proposed solutions of very large taxes on wealth, his reasoning is simple enough:

There has developed a large difference between the tax on income and the taxes on capital returns;

if captial returns (ie rent for example) exceed economic growth, the gap between wealth and earnings widens at an accelerated rate.

In a nutshell, income tax is too high, inheritance and capital gains taxes are too low.

Mind the gap.

A wealth gap is mostly of interest to left wing activists as it's a natural outcome of differential aptitudes for taking sensible life decisions.

If the position of the 'poor' is getting better, albeit the position of already wealthier people is getting better faster, both are doing well.

To make progress more equal, continue with equality of opportunity (of course) but get those making bad life decisions to make better ones, rather than penalise enterprise and success at individual and corporate levels.

If this cannot be done, and Labour failed over 13 years (virtually every poverty measure increased) note that the position of the 'poor' is improving and leave French leftist theorising to its natural fate.

[Digga]

pork911 said:

Anyone earning over around £25k is actually part of the 1% worldwide.

^That, and the fact that a good many on decent wages are only have jobs because someone with balls, vision, luck, good connexions happened to create the entity that employs them escapes an awful lot of people.

Not many people consider the 99% of the planet and ever think about how they escaped real poverty.

[turbobloke]

Digga said:

Not many people consider the 99% of the planet and ever think about how they escaped real poverty.

Notable members of that club include Polly Toynbee.

Real poverty does not compute, only synthetic relative poverty which can be made to exist in perpetuity.

[AA999]

I'll be the first to admit that the majority of my 'wealth' has been from inheritance, and I am pretty sure without this I would be one of the many that would be in a position of financial struggle.
But I have had comments thrown my way in the past questioning whether a person should morally have so much wealth (not that I am claiming to be hugely wealthy of course), just putting forward some of the comments I have received.
Questions such as; is it morally fair for one person to own so much more money/assets than another human in the same society. (Very lefty stance of course).

There is also the issue that for the rich to be classed as rich then there needs to be a significant amount of poor (very crass statement of things I know).
A large amount of poor ensures that product prices are kept within limits of the majority and enables the rich to splash out in a way that separates them high above the rest (again a crass statement of things).

Is there a danger of the rich soaking/grabbing up too much of the UK's wealth and leaving too little for the rest?

[turbobloke]

AA999 said:

Is there a danger of the rich soaking/grabbing up too much of the UK's wealth and leaving too little for the rest?

What does that mean exactly?

When people get a promotion and continue to get promotions should the state intervene somehow to keep them down, or expect them to take on more responsibility for no reward? Presumably on the basis that clock-watching mediocrity will get left behind.

When businesses do well should the money they need for investment and development be taxed out of sight so expansion remains out of their reach? That way they will be more equal...to the businesses stagnating and failing around them.

For those individuals or corporations who worked smart, hard and took considered risks and are already successful, the rewards of the effort and risk should presumably be snaffled to make some gap of interest to leftist theorising smaller.

None of the above makes any sense at all.

Or are you saying that inheritance tax should be whacked up to the hilt so there is equality of poverty and the state acquires even more vast wealth?

That also makes no sense, politicians and astronomical sums of money don't make a good mix.

[AA999]

turbobloke said:

What does that mean exactly?

Totally 'open' interpretation to anyone giving an answer, as I guess it will mean different things to different people.
I fully accept this is a very leftist topic and I knew it would generate a number of comments here on PH

I am not a lefty by the way, but I am just throwing a few questions up in the air regardless of swing.

I don't know if there is a fair solution to the above or not.

[turbobloke]

Totally open leaves plenty of room for The Law Of Unintended Consequences to rip a riot sized new hole in any pathway paved with good intentions.

[pork911]

AA999 said:

Is there a danger of the rich soaking/grabbing up too much of the UK's wealth and leaving too little for the rest?

Only if you believe it's a zero sum (cake cutting) game. Which it isn't.

Those that criticise 'the rich' (a weird concept since it's relative, to the speaker) forward arguments about redistribution or whatever predicated on principles they cannot see apply equally to them, when poorer people than them are factored in.

[900T-R]

pork911 said:

Only if you believe it's a zero sum (cake cutting) game. Which it isn't.

To an extent it is, as - no matter how much wealth you 'create' by shuffling pieces of paper around that somehow manage increase in 'value' along the way, all the money in the world is ultimately chasing the same finite resources.
The 'best' housing locations, travel, concerts of the top 1% of artists in whatever field, luxury food, fine wines, classic and exclusive cars, jewellery - all are available from limited (and more often than not dwindling) stock.

People don't get rich to have the greatest IT solutions or a safe full of derivatives from their bank - they want all of the above. Just like the rest of us...

Now the moment someone finds a way to have food on the table for everyone, 'free' energy to use that doesn't involve burning up what's the earth has created in the course of millions of years within a few decades, finds a cure for cancer, anything tangible that people in the end will want - then you are making the pie bigger.

Sadly, I don't see anything in my lifetime so far having done so.

[turbobloke]

900T-R said:

pork911 said:

Only if you believe it's a zero sum (cake cutting) game. Which it isn't.

To an extent it is, as - no matter how much wealth you 'create' by shuffling pieces of paper around that somehow manage increase in 'value' along the way, all the money in the world is ultimately chasing the same finite resources.

The 'best' housing locations, travel, concerts of the top 1% of artists in whatever field, luxury food, fine wines, classic and exclusive cars, jewellery - all are available from limited (and more often than not dwindling) stock.

People don't get rich to have the greatest IT solutions or a safe full of derivatives from their bank - they want all of the above. Just like the rest of us...

Now the moment someone finds a way to have food on the table for everyone, 'free' energy to use that doesn't involve burning up what's the earth has created in the course of millions of years within a few decades, finds a cure for cancer, anything tangible that people in the end will want - then you are making the pie bigger.

Sadly, I don't see anything in my lifetime so far having done so.

ISWYM but it's still 'not'.

Person A getting richer does not neccessarily and unavoidably imply B getting poorer.

[Digga]

There is another point, often conveniently forgotten in this matter:

Gordon Gecko said:

A fool and his money were lucky to get together in the first place.

Some people are their own worst enemies and, no matter how much help - financial or otherwise - they are given, will always manage to make the wrong choices.

[Ozzie Osmond]

Mr Will said:

Remove the incentive to better yourself and you end up with a lower class that either gives up or revolts - neither of which is good for those on top in the long term!

IMO that's right on target.

But then, as the "anti-socialists" must surely be aware, the way you suppress that is by giving the lower class enough money to stop them revolting - which brings you right back where you started.

Yes, to straighten things out kids need to be able to believe that if they pay attention in school and then do some work they can have a decent reward in terms of both pay and opportunity.

You can tell what a society values by what gets a big advertising budget. Today that seems to be gambling and quick loans - neither of which point remotely in the direction that's needed.

[walm]

900T-R said:

To an extent it is, as - no matter how much wealth you 'create' by shuffling pieces of paper around that somehow manage increase in 'value' along the way, all the money in the world is ultimately chasing the same finite resources.

You are forgetting a very important part of the equation: productivity.

If we can use those resources more efficiently then we have created value.
The semiconductors and internet are amazing examples of recent productivity enhancement.

Without the internet, taking a dump would be a total waste of time... but now I can browse PH from the can! Result!
It may have improved productivity in other ways too.

Competition encourages innovation and innovation often strives to improve productivity.

[iphonedyou]

Fittster said:

Inequality leads to inequality of opportunity. A few public schools produce a disproportion number of people who take the top jobs. If you're poor you won't be sending your children to Eton.

Equality of oppportunity is good. Equality of outcome is absolutely terrible. To me, your point here risks conflating the two.