Gap between the Rich and Poor

[Second_in_pie]

Another thing that you've seemed to have missed is that I stated that it isn't necessarily a bad thing that the rich are getting richer. Why shouldn't someone get richer if they work hard for example or get a better job if they go to university compared to someone that doesn't?

Just as GraphicMatt pointed out, there are many rich people that have done barely anything to attain their wealth, just as there are plenty of poor people that have worked their heart out and still have next to nothing. There are also many extremely rich people that are uneducated, and many university or college graduates that are still poor or working desk or secretarial jobs. You can't blame poverty on uneducated bums.

And, just in case you were wondering, I am against this gap. I'm also against global corporations and current free market capitalism in general, but that's a slightly different (though not totally unrelated) story. Capitalism has it's roles, but it needs context. It really doesn't have the ability to create a stable, happy economy on it's own.

Also, I think that you are assuming that wealth creation is zero sum - that to get richer one has to steal from someone else. The fact that GDP can expand clearly shows this isn't the case. The reality is that the poor don't really participate in the economy or if they do it is on the margins. The rich getting richer isn't the problem. The problem is that the poor are not getting richer. Ways need to be found to move the poor from the margins of society. I personally think that the best way to do this is through education. That's why for the last few years I have been donating to an organization called Pathways to Education. I encourage you to check it out. Their results are truly amazing IMO.

Obviously it is not. But honestly, do you think that billionaires and CEOs of the world need that extra million or two dollars? If you were to cut a CEO's payroll to even double that of a regular office worker, you'd open up money for other people. Maybe hire new employees so more could have money and your employees would be under less stress and able to do more things outside of work. Maybe just give your employees pay raises so they can live more comfortably. Do you think it's better for one extremely lucky, backstabbing, or lifeless person to live a life of luxury, or better livelihoods for a hundred? When you start talking about CEOs and presidents of bigger companies, their payrolls could benefit thousands of their employees.
But in reality, the only way the heads of those big multinational corporations get their billions of dollars is by sucking the wealth out of other people. Sure, all businesses do this, but the larger the corporation, the easier it becomes. I'm not against private business, in fact I'm quite for it. Some weird communist idea of government run convenience stores doesn't make sense. But think of this: a GTA clothing store might have access to maybe 9 million potential customers. People buy things, some money goes out to the employees. Then the rest goes to the managers. But when you've got only 9 million potential customers, a 6 or 8 outlet clothing store won't garnish a huge sum of money. But what happens to a global chain like Wal-Mart or Nike, who have access to a billion customers? The same thing happens, but the heads of those companies get the money of a billion potential customers as opposed to 9 million. The problem is that money still goes to a few select people.
There's also the psychology of it too. Remember Jerry McGuire? He may not have his private yacht like the other sports agents, but both he and his player are thoroughly happy. If a corporation stays small, it can focus on improving service to it's customers and keeping a steady business. Without big clothing companies sucking up all the business, our little GTA clothing store could focus on the passion that clothes designing and selling brings the owners and employees. Also, instead of just being everywhere, it gives something special to it's local GTA.

Re your comment about the pop seller - the one thing you don't seem to get about the market is that it rewards people for producing things that people want. Money is merely a proxy for this. The fact that a pop seller makes more money than say a painter simply tells me that more people want pop than art. Personally I think this is unfortunate but it is the reality especially in Canada where culture is undervalued). Also, I'm not sure why you used "exploit" in relation to someone selling pop. It's water and sugar in an aluminum can. Who's being exploited? Maybe you should have used the manufacture of running shoes (or anything else) in a third world country as your example instead.

Finally, re your last point - I'm not sure where in my post you gleaned that I was saying the multibillionaires deserve their money because they can make people do things. Please enlighten me. I said that going to school, working hard, taking risks, having ideas and making good investments can create jobs. Is Steve Jobs a monarch, oligarch or autocrat? No - he's a successful business guy who went to school, work his butt off and took a risk developing a product that was new. Or maybe you're thinking about some of these oil guys in Russia - that's a different subject.

For the first part, that's the tragedy. Would you say that pop cans are better than a beautiful painting or good music? I'd initially assume no, but in today's world it certainly seems like they do. We aren't arguing about how the system works, it's whether it's right. Obviously the current economic system (which covers a lot more than strictly money-based activities,) is based on who can sell stuff and make stuff better. But should it be? Perhaps it should be about individual livelihoods: you know, living; or perhaps on giving people the best they can get. With today's advanced society and technology, experiencing life as it really is should be easy, at least easier than ever before. Yet instead, we're obsessed with working our butts off. Obviously, work's needed. But with the technology, knowledge and social/philosophical ideas that we have today, work could be minimal, and based on what you really want to do. The major, major thing that's stopping people from spending time with their families is that free market capitalism and the stock market has made it so all businesses do everything to make as much money as possible. What if all that money that goes towards the top of corporations and expanding them instead goes towards allowing employees to spend more time with their families? The money's there.

I compared successful businessmen to dictators and autocrats because both gain power by controlling people. For dictators, it's sending your police in and keeping all civilians in fear. For businessmen, it's convincing people they need something and getting partners to make deals with them. The most successful businessmen are the best at convincing people they need a product and the best at convincing partners they need themselves as a partner.

 

[GenerationW]

I'm also against global corporations and current free market capitalism in general, but that's a slightly different (though not totally unrelated) story. Capitalism has it's roles, but it needs context. It really doesn't have the ability to create a stable, happy economy on it's own.

What does? What ever has?

And capitalist theory never accounted for giant, global corporations. In the interests of competition, my prescription is to break them up every few decades, and then rinse and repeat.

If you were to cut a CEO's payroll to even double that of a regular office worker, you'd open up money for other people. Maybe hire new employees so more could have money and your employees would be under less stress and able to do more things outside of work. Maybe just give your employees pay raises so they can live more comfortably.

Sounds wonderful but who is "you" -- some huge (it would have to be), bureaucratic, watchdog agency that will oversee these huge, bureaucratic corporations? And in theory, shareholders and regulatory agencies (insert joke here!) can watch corporations. Who watches "you"?

The major, major thing that's stopping people from spending time with their families is that free market capitalism and the stock market has made it so all businesses do everything to make as much money as possible.

Looking at it historically, I think the major reason is that most people live, work and commute in and around cities and not on farms or in small villages. We're not tied to the land. Men, women and children used to work as one in the same limited area. Today, men leave home to work, most women do the same, and teens work part-time.

I compared successful businessmen to dictators and autocrats because both gain power by controlling people. For dictators, it's sending your police in and keeping all civilians in fear. For businessmen, it's convincing people they need something and getting partners to make deals with them. The most successful businessmen are the best at convincing people they need a product and the best at convincing partners they need themselves as a partner.

So people should stop having ideas? Or just businessmen?

 

[Second_in_pie]

So people should stop having ideas? Or just businessmen?

I never said that. Did I not state my belief in strong local/regional businesses clearly enough? Business ideas are great. What's not great is having one person who got lucky or got there first taking up the opportunity for everyone else. Hence, smaller businesses. In turn, that means more need for specialization, which not only leaves room for many other specializations of the trade in the region, but a separate business and management for each separate region. The result is x100 possibilities for individuals with ideas.

 

[Catapult]

I never said that. Did I not state my belief in strong local/regional businesses clearly enough? Business ideas are great. What's not great is having one person who got lucky or got there first taking up the opportunity for everyone else. Hence, smaller businesses. In turn, that means more need for specialization, which not only leaves room for many other specializations of the trade in the region, but a separate business and management for each separate region. The result is x100 possibilities for individuals with ideas.

So GTA Inc., a local company founded by research scientists, has developed a cure for AIDs. Are you saying they should not sell their cure beyond the GTA? The other thing you don't get is that it costs money to bring an idea to market. If the CEO of GTA Inc. told potential investors that she was only going to sell his product in the GTA she wouldn't raise a cent and the cure would never be developed.

While I agree with your sentiment that some CEO salaries seem high, the reality is that the market is willing to pay them these salaries. The cold hard truth is that what they do is 1000x more valuable to their company and their shareholders (ie. the ones investing in the company) then someone sowing a button on a shirt.

 

[GraphicMatt]

Anyone who would attempt to profit off selling the cure for AIDS would be an inhuman monster, so your example maybe isn't very good.

I don't think I'd take my arguments quite as far as SIP, but the problem is essentially this: economic mobility sucks. While "work hard every day and you will be rich some day" is a nice fairytale, the reality is that wealthy people tend to be born into wealthy families. (This is all relative - some dude who was born into an upper middle-class family and then went on to make millions is not a rags-to-riches story.) I know you can name examples of people who contradict this, but the fact that you CAN specifically name them indicates that they're a rarity.

This isn't necessarily a bad thing in and of itself. I mean, yeah, it sucks, but it's life. We have to accept that capitalism offers some stability that maybe communism or whatever doesn't, and work within those bounds.

There's been a disturbing trend over the last decade, however, where the gap between the rich and poor is widening. The rich are actually getting richer off the backs of the poor (The U.S. mortgage crisis sent a huge number of low-income people into foreclosure and bankruptcy, and caused huge job losses at several companies, and yet all the top-level CEOs and managers walked away with millions, and in some cases billions, of dollars.). And for all this talk of rich CEOs as the lifeblood of the economy and job creators - they haven't been. Not recently.

 

[GenerationW]

Anyone who would attempt to profit off selling the cure for AIDS would be an inhuman monster, so your example maybe isn't very good.

Prediction: If someone finds a cure for AIDS, they will profit from it.

 

[Second_in_pie]

^^Though I'll hazard to guess that the person who actually found the cure wouldn't be the one profiting.

So GTA Inc., a local company founded by research scientists, has developed a cure for AIDs. Are you saying they should not sell their cure beyond the GTA? The other thing you don't get is that it costs money to bring an idea to market. If the CEO of GTA Inc. told potential investors that she was only going to sell his product in the GTA she wouldn't raise a cent and the cure would never be developed.

Firstly, I'm okay with some multinational corporations. Especially things like shipping companies, it just doesn't work for such a thing to serve regionally only.

Secondly, if someone was to discover a cure for AIDS, wouldn't it be reasonable that the cure doesn't just go to one company? Could the cure not be produced by many different companies in different regions? (Perhaps larger than just city regions, but still.)
I'm not saying that an issue like that doesn't need to be addressed, but it's kind of circular thinking.

And thirdly, this outlines one of the biggest problems I see with the way the capitalism thing works: it takes hard, hard work to start up a company. You need investors, and once you have those investors they want their money to grow. What if the government had a program to give loans to start up businesses, complete with government programs to help that business get off the ground?

 

[afransen]

You're ignoring economies of scale. Calling for huge reduction in these economies of scales is another way of saying you want society as a whole to be more wasteful and less wealthy.

 

[Glen]

While I agree with your sentiment that some CEO salaries seem high, the reality is that the market is willing to pay them these salaries. The cold hard truth is that what they do is 1000x more valuable to their company and their shareholders (ie. the ones investing in the company) then someone sowing a button on a shirt.

The problem with the market logic is that rarely is there any look into how things are manipulated. Take the CEO salary debate. In Germany the average CEO pay is far less than in NA. Yet the companies are very successful, arguably more so than ours. Clearly CEO pay is not an indicator of performance or ability. Further to that, as the recent crisis has shown in NA we judge performance quarter by quarter, with little regard to the long term. As such companies frequently make decisions that are beneficial in the short term but detrimental in the long run. Yet whomever is at the helm during enjoying the glow of the short term benefits, gets credit and compensation accordingly, but when the ramifications become apparent escapes consequences.

 

[cacruden]

And thirdly, this outlines one of the biggest problems I see with the way the capitalism thing works: it takes hard, hard work to start up a company. You need investors, and once you have those investors they want their money to grow. What if the government had a program to give loans to start up businesses, complete with government programs to help that business get off the ground?

So your against hard work as well as getting rewarded for it

Even the government should want their money to grow, your talking about venture capitalism and a very high percentage of companies started don't succeed for a variety of reasons, the higher the risk - the more you expect to get paid for the successful ones - which will offset the loses on unsuccessful ones plus a reasonable return - which hedges against inflation and if your lucky - a little bit more.

I have seen socialist countries (not countries with some social programs) and all that seems to come out of them is that most of the people are brought down to a common denominator - not the masses pulled up to a higher level. Sure capitalism has flaws (which is why we have some social programs to offset some problems), but it seems the be the best of the alternatives.

 

[GraphicMatt]

So your against hard work as well as getting rewarded for it

Even the government should want their money to grow, your talking about venture capitalism and a very high percentage of companies started don't succeed for a variety of reasons, the higher the risk - the more you expect to get paid for the successful ones - which will offset the loses on unsuccessful ones plus a reasonable return - which hedges against inflation and if your lucky - a little bit more.

I have seen socialist countries (not countries with some social programs) and all that seems to come out of them is that most of the people are brought down to a common denominator - not the masses pulled up to a higher level. Sure capitalism has flaws (which is why we have some social programs to offset some problems), but it seems the be the best of the alternatives.

I suppose it depends on how you're defining a 'socialist country', but I'd definitely argue that countries that are more socialist than us - the Scandanavian countries, most notably - are doing better than us in almost every metric that matters. Except for, I suppose, CEO compensation and things like that.

If you're talking about countries that have abandoned capitalism completely then, yeah, I agree with you fully.

 

[cacruden]

I don't define european countries as socialist I define those as capitalist with some social programs

 

[js97]

There's been a disturbing trend over the last decade, however, where the gap between the rich and poor is widening. The rich are actually getting richer off the backs of the poor (The U.S. mortgage crisis sent a huge number of low-income people into foreclosure and bankruptcy, and caused huge job losses at several companies, and yet all the top-level CEOs and managers walked away with millions, and in some cases billions, of dollars.). And for all this talk of rich CEOs as the lifeblood of the economy and job creators - they haven't been. Not recently.

On that same dime, the U.S. mortgage crisis started as an initiative to provided MANY people with the opportunity to own homes that would otherwise never have had the opportunity.

People fliping homes within the first 5 years didn't seem to complain.

That is a prime example of capitalism providing an opportunity for someone to raise their standard of living. But it's also a great example of capitalism, if left unchecked, can be destructive in it's nature.

Also, as I pointed out before, those scandanavian countries, their source of funding to provide excellent social programs? - capitalist funding, in the form of oil money.

As they say, everything comes full circle and you eventually run out of OTHER people's money to spend.

 

[Catapult]

The problem with the market logic is that rarely is there any look into how things are manipulated. Take the CEO salary debate. In Germany the average CEO pay is far less than in NA. Yet the companies are very successful, arguably more so than ours. Clearly CEO pay is not an indicator of performance or ability.

Germany has unique industrial relations that would have significant influence on this. Unions work with company boards to determine wages. It would not work if the CEO's got huge amounts. I bet if you look at why this is there is a good market explanation. Supply and demand forces work at the level of labour relations as well. Eg, where there is a relative over supply of labour, wages and the bargaining paower of labour tend to be low. I suspect after WW1 and 2 there was a relative shortage of labour in Germany which resulted in the model being put in place.

 

[Second_in_pie]

So your against hard work as well as getting rewarded for it

I'm confused, how do you argue that such a system wouldn't reward hard work? Individuals would still have opportunities to start up businesses and make money. It's just that they wouldn't be able to work hard enough to control the world.

I honestly think that everyone would be much, much happier if you went towards smaller business. Business owners would be less about rolling in money and more about finding their passion. People like Bill Gates didn't set out on a quest to make money. They set out to do what they enjoyed and try to make a profit while you're at it. Let's take pioneering owners of GTA clothing store. Instead of pouring all their money and resources into managing hundreds of different stores, they can fit themselves into their own business instead of alienating everyone. Meet with employees, maybe design some new clothes for the business to sell. The customers will end up getting a special, friendly local clothing store.

Even the government should want their money to grow, your talking about venture capitalism and a very high percentage of companies started don't succeed for a variety of reasons, the higher the risk - the more you expect to get paid for the successful ones - which will offset the loses on unsuccessful ones plus a reasonable return - which hedges against inflation and if your lucky - a little bit more.

I have seen socialist countries (not countries with some social programs) and all that seems to come out of them is that most of the people are brought down to a common denominator - not the masses pulled up to a higher level. Sure capitalism has flaws (which is why we have some social programs to offset some problems), but it seems the be the best of the alternatives.

The government would benefit in the long run off of taxes on those businesses they helped build. And instead of a set price with inflation, the business just has to make as much money as it wants. If the owners don't feel like they need to make that much money, they don't and the government collects less on tax. They feel like going bigger, and they pay back more to the government. Comparing that to a situation where you have to make a certain amount in profit (plus interest,) the first one seems like a much more relaxed situation. And if the world could function and be more relaxed at the same time, wouldn't you want that?

Regarding socialist countries, if you're talking about the likes of Russia, China, Cuba, etc. Then there's a slightly different problem there.
First of all is an autocratic system of government which means the people get no say. People in dictatorships are rarely happy, and so you can't blame unhappiness in the USSR on communism alone.

I'd like to remind you, as you harp on about people making it on their own and what not, that there is a very, very loose correlation between happiness and money, if any at all, when you're above the poverty line. People are tricked into thinking that fancy cars and big houses will make them happy. What really makes people happy are those integral things; family, friendship, and pursuing your interests. Capitalism doesn't offer this. Individual opportunity is certainly required for the really important things, but not as in the cutthroat, profit-based world that it exists in today.