gixxer1000 wrote:
Well thank you for keeping the discussion cordial. I see the point that you both are making but I just see it differently.
Well jallenmorris it's probably because I am a liberal or progressive liberal to be more precise. But I guess it all depends on your viewpoint. I come from a lower middle class family (single mother who makes $20/hr). So while I currently make more than 150% of what she does at 50% of her age I still relate more to her lifestyle than my coworkers who grew up in a household that makes considerable more than what we do know. I'm happy that America has given me this opportunity to do more than my mother, Here's where we are most different. I believe you weren't 'given' anything. America never 'gave' you anything. It provided you an opportunity and 'YOU' took advantage of it. but I also know that I received a lot of help from the government to get here. I was taught at public schools and drove on public roads and yes even benefited from welfare programs after leaving the military. Which is why I don't mind giving a increasingly more amount of the wealth I have achieved back to others who need it as I have. Which is fine, you are free to give as much back as you want, but why force others to do the same? Also, the efficiency of private charities vs. government welfare is generally 75% vs. 35%. Meaning that for every $1 given to a charity 25% is allocated to administrative costs and 75% to help people. Governments generally spend 65-70% on administrative and beauracracy costs. I personally would rather voluntarily give my money to a charity then have the government take it from me. If I one day become a millionaire I know that it wouldn't have been possible without the government programs that are funded through taxation. It would have been possible, just harder Which results in me now having disposable income to buy cell phones, cars, and flat screen tvs. So without this taxation Taxation did not give you these things, your hard work allowed you to purchase them these hardworking corporations would not have me as a customer.
"gixxer, it also appears that you're approaching economic analysis as a zero sum formula, like when one person moves out of the middle class, another moves in"
I would actually argue that for every one person who becomes rich, there are hundreds of people who move from middle to lower class. While that may be the case, they are mutually exclusive events. One person does not get rich at the expense of another except through crime. If I rob you, then yes I get rich at your expense, but in normal situations this is not accurate. Actually, the only entity that gets rich at the expense of others is government because they can take by force.
I have an example that takes from one of my previous posts about the middle class, see below:
"if 10,000 more people earn a bachelor's degree this year than last year, then there won't be enough jobs for those 10,000 people and they'll be stuck in an entry level job. Education creates wealth because education leads to creativity, problem solving and innovation. These educated people go out and create their own wealth. if this were not the case, no country's GNP would ever increase beyond inflation."
I agree with most of this but I feel that while even thought the GNP increases overall, it doesn't increase proportionately. I have no problem if the rich get richer and the middle and poor stay the same. But that doesn't seem to be the case. The rich get richer and poor and middle get poorer. What happens when all the middle and poor are tapped out. Now who buys the cell phones, cars and flat screen tvs. Actually trade benefits these people even more than it does the rich. Thier dollar goes so much further today than it ever did before. Think about all of the things that the middle class and even poor have today that they didn't have 50 years ago. How many middle class families own their own home? Nearly 80% today, closer to 55% in 1950. The average size of a home has doubled in the last 50 years. Up until the 1980s people didn't have AC. How many own two cars? How many can send their kids to college? Go on vacations every summer? Own cell phones, big screen tvs, cable televisions, fancy clothes? These were things that only the rich could afford 25 years ago.
"I know personally that I want to be rich one day, so why would I want a 70% or even 50% tax rate? If I graduate B-school and plan to be a MC or IB, why do I want to pay a 50% tax rate on $120,000 salary?"
Me too, which is why I don't think that $120k should fall in the 50% tax bracket. I personally feel that $250k is a reasonable salary especially in certain cities. But what if you bring in $43 million in one year. Good for you, congratulations it's yours to keep. Donate it to Make-A-Wish, build a swimming pool and fill it with $1 bills and swim in it. Who cares, that's your money and you should keep it At some point it becomes excessive. If you think it's excessive then give it all away. Just don't use the police power of government to take my money away. Especially considering the only reason your able to charge the prices you do is because America has such a large middle class. I argue that if corporations keep taking excessive profits Excessive profit: definition - some arbitrary number that a liberal deems as too much and therefore feels an obligation to take by force and redistribute because they know better how to spend it than the CEO and managers of the company. How much is too much? Who decides when is too much? at some point the markets will correct themselves. So once the price of entertainment, transportation, healthcare, utilities, food, housing, etc. have all increased to the point where the majority of Americans cant afford them there will be a huge correction and you will no longer be able to charge $15 for a CD or $100 for tickets to see a college football game. It will never happen because there are always substitutes. If CDs cost too much, I'll download the songs on my IPOD. College Football Tickets cost too much, then I'll stay home and watch it on tv. Housing costs too much then I'll rent. There will not be a huge correction. At some price point people will choose other options, demand will slow and the price will return to what the market demands. It's the law of supply and demand. The middle class will not be wrecked. But why wreck the middle class to figure that out.
You can suck all the money I have now until I'm completely broke and can never buy anything from you again or you can use some of you profits to make sure I'm sustainable and can continue to buy from you for the rest of my life. I have no idea what your point is here
So we know it is a fact that economics is not a zero-sum game, and that trade brings benefits to both parties. So why is it that there are so many bitter people in Ohio and Pennsylvania?
The answer is that while economics is not a zero-sum game, and trade always benefits the participants, change can still produce winners and losers.
Let’s take a look at the plight of the Detroit auto worker. In the old days, Mr. UAW managed to make a good living on the assembly line even without the benefit of a college degree or unusual technical skills. Then along came Toyota, Honda, and Nissan, and pretty soon Michael Moore was running around Flint, Michigan railing against the evils of capitalism.
Someone won (Japanese auto makers), and someone lost (Detroit auto workers). So is that an example of a zero-sum game?
Not really. What’s missing is a full accounting of winners and losers. Most importantly, American motorists were big winners. The Japanese auto makers produced cheaper, safer, more reliable cars. Car buyers ended up saving money AND getting a better product (which probably even saved a large number of people from dying in accidents).
Not only did the benefits accruing to the Japanese auto makers and American motorists outweigh the losses suffered by Detroit auto workers, the net benefit to Americans was almost certainly positive.
The reason we think of the rise of the Japanese auto industry as being bad for America is because the winners are largely invisible (and unaware) and the losers are highly visible (and loud).
In 2005, the Big 3 US auto makers employed 250,000 workers, who were paid an average of $50/hour, or $100,000 per year (this compensation figure includes benefits). The total value these workers received was $25 billion. Americans buy about $600 billion of cars per year (17 million vehicles per year). Do you think that American consumers have benefited at least 4.2% on the cost of new cars because of Japanese competition? If anything, the equation seems like it is wildly on the favorable side, especially when you consider that those 250,000 workers could, presumably, get other jobs.
The problem is that the 17 million car buyers each year don’t think of themselves as a special interest group and don’t have their own political action committee to bribe–er, support–members of Congress.
However, even if America as a whole benefits from Japanese competition, our friend Mr. UAW does lose out. There aren’t that many $100K jobs available for people without college degrees or specialized technical skills. Most of the autoworkers who lost their jobs probably didn’t have the skills to make as much money in other fields.
So you see, it's not that economics is a zero-sum game where some people have to lose for other people to win. Detroit suffered because the Japanese could do things better and cheaper.
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27 Aug 2008, 08:32
. You mentioned something in a prior post about passing wealth onto one's children. I've read an article somewhere, and I'll try to find it, that in America over the last few centuries, the wealth created by people that have been self-made and started companies and become very rich does not last for more than 2 generations. This could partly that the companies are organized and sold into shares, thereby creating a finite amount of wealth rather than continuously owning a business that is constantly making money, or the fact that some people would rather just live their life and be a teacher. I really will try to find that article.
