Question on wealth distribution

Economics Economics Questions
1

I’m wondering if someone can point me to a decent resource. Many posters on a progressive board I visit make assertions about the wealth distribution in the USA. They say that corporations control the country, and have destroyed the middle class.

Here’s a typical statement:

They constantly talk about how the country is divided into rich and poor, with the poor constantly getting poorer, due to the (since Reagan) laissez-faire policies.

Can anyone point me to any statistics that might help me support the idea that freedom results in more wealth?

2

Consider that it might be the other way around, that people in government decide they want a piece of the pie too and go out and make deals with folks. Or that crappy businesses who are being out competed by honest, free market companies, might try to influence politicians to hurt their competitors. I.e. its not always the corporations on top doing the sleeze.

So argue like this, they want socialism. Tell them to advocate voluntary socialism. Don’t force people to become a part of your community. If you want universal health care, go for it. Let anyone join who wants to. But if someone thinks its a bad idea don’t attack them for not joining you. Remind them that fraternal associations back in the day performed this function until they were run out of the market by gov.

If they still argue with you, point out that they are advocating attacking innocent people (rich people can be innocent). And that even if you could theoretically make such a system work, its a giant moral hazard to say institutionalize Group A being able to attack Group B, and saying the latter has no right to defend itself. This is the basic model for democracy. Group A will basically get all it can out of Group B so long as A can sleep at night (no slavery, mass murder, usually).

Other than that, you can still agree with them that corporations who lobby with the government are lame. They’re basically aggressors. It’s not cool.

Anarcho-capitalists and anarcho-leftists are basically on the same side, except we believe in free association AND homesteading, which is just an extension of self ownership to one’s own labor.

3

From this, how does one reach the position that we must therefore increase the size of government? The problem is that businesses collude with the government, but we need businesses to provide the goods and services we need for survival, so the only logical conclusion, then, is to severely limit the power of the government, so that businessmen are forced to compete. If they can’t get privilege, they have to actually produce efficiently and satiate consumer desires. The big businessman’s biggest threat is the ambitious and hungry up-and-comer who wants to compete.

That’s basically a non sequitur.

4

Thanks to both Snowflake and Esuric for your replies. I often bring up the voluntary socialism idea, but they don’t seem to get it. They look at me as wanting to opt out, and then set up a straw man about how “we are a society” and “you can’t live on an island.” I have hammered hard on the idea that a 50%+1 majority has no divine right to rule over the minority. They again say things like “we’re all part of society, you can’t separate yourself from ‘We the people’”. Very collectivist.

And Esuric they constantly insist that limiting the power of government is tantamount to granting power to corporations. One of their favorite sayings is that if you are against big government then you must be for big corporations. They don’t seem to get that these big corporation they hate so much actually maintain their position through grants of privilege by the government.

It’s pretty frustrating, but you’ve both confirmed that my arguments have been sound.

(For anyone interested, I’m talking about the Thom Hartmann forum at http://www.thomhartmann.com/forum/33. You might want to take a look, and possibly set some of these folks straight.)

5

Maybe at first discuss morality and violence. French anarchist Anselme Bellegarrigue once stated that “one cannot redistribute wealth without first becoming master of all wealth; redistribution is first and foremost monopoly”. Ask them whether they can morally support a group of men (Government) becoming the overloads of all the wealth that is produced by every individual. Through force and violence no less!

Then question their absurd assertion that Government is the heroic enemy of the economic elite and the aristocracy. Historically Government has been the greatest ally of the economic elite. Say their cause/effect relationship is muddled and backwards. It is power that leads to the inefficient and wasteful concentrations of wealth in the hands of a few; not the other way round.

Considering they label themselves “Progressives”, this is a great chance talk about every libertarian’s favourite Marxist; Gabriel Kolko! Kolko argued in his book (aptly named ‘The Triumph of Conservatism’) that the Progressive Era was actually a triumph for big business and cartelization. Every government intervention in that era, while claiming to be anti-monopoly was actually pro-monopoly. Every step away from the free-market and competition futher concentrated wealth in the hands of a few. This might make them rethink their two-dimensional view of the world; maybe you can start calling them conservatives. :slight_smile:

Anyway, here’s a couple of articles that look at similar subjects;

The Utopia of Liberty: A Letter to Socialists (1848) http://mises.org/daily/2089

Left and Right: The Prospects for Liberty http://www.lewrockwell.com/rothbard/rothbard33.html

Wall Street, Banks, and American Foreign Policy http://www.lewrockwell.com/rothbard/rothbard66.html

War Collectivism in World War I http://mises.org/resources/2024

6

Thars no reason everyone has to buy the same pair of sneakers… no reason everyone has to be on the same insurance plan…

I mean if you actually shared ownership of something with them, then yeah you might be able to go your separate ways. But such cases are kind of limited to like college roommates and maybe that old example of several people homesteading a path who all come to own it. And in any case the solution isn’t government its some sort of voluntary contract.

Be adamant about your definitions. Define government as a territorial monopoly of law. A lot of people I run into think that government is just an organization. Is Pepsi a government? God… but some people think like this.

Explain why monopolies are a bad thing, why attacking innocent people is a bad thing. I mean if you structure society such that group A can attack group B without reprisal, guess what’ll happen. Its only when group A is like parents and group B is babies that this scenario really works out. But politicians typically aren’t biologically bound to benign action… hilarity ensues.

7

Thanks again guys for your feedback. I generally try to refute their agenda through the moral argument - by pointing out the aggression inherent in their policies. But sometimes I wish I had better facts to disprove their ridiculous claims. Take this recent pontification (from http://www.thomhartmann.com/forum/2010/04/rob-thy-neighbor#comment-14452):

Taxation policy reflects economic policy. When much of a nations wealth is in very few pockets…what you get is severe economic downturns.

When in-pocket income isn’t sufficient to buy production, production slows or ceases.The U.S. has been using easy credit as a means to address that. It’s maxed out.

The last time we had disparities in wealth as great as now…was just prior to the Great Depression. Tax policy has fed into that.

HIgh taxation on the wealthy tends to keep money circulating rather than being plowed into Wall Street where it just gets trapped going round and round creating fnancial bubbles. Bubbles pop..

This is one of their big themes, how the wealth in the USA is held by a tiny minority. I’ve seen them say things like 1% of the population owns 90% of the wealth. They also claim that the Great Depression (all depressions actually) are caused by disparities in wealth.

I’d like to be able to 1) refute their facts on wealth distribution, and 2) refute their theory that “when in-pocket income isn’t sufficient to buy production, production slows or ceases”.

8

You don’t have to refute their refute their theory until they show how it works. :slight_smile: If they show how it works, then you have to look at refuting it.

9

Excellent theory of booms and busts. Simply point to other depressions. We have them like every 10 years and they’re all in credit markets.

Also point out european depressions, since they typically have less income inequality than us… I guess.

Lol and why would that be. Why would entrepreneurs produce ahead of consumption. BWhahaha. http://mises.org/media.aspx?action=author&ID=380 only austrians can explain depressions. Just the first 10 mins on the austrian position.

Actually we had a worse depression in 1920 and the policy makers did the exact opposite of what keynes/chicago wanted them to do, and we recovered really quickly.

Actually lending too much money to poor people makes bubbles. And even if taxation of the wealthy were the way to go, the incentive structure of the state is the other way around. How are you going to stop rich folks from bribing your politicians? Its a narrow special interest vs a broad general interest. Narrow always wins.

Anyway, consider that there’s something wrong with this preposition: In order for society to be prosperous I have to attack this one group of people. Couldn’t you just not associate with them? Couldn’t you and your hippy liberal friends go have a socialist commune that didn’t bother with them? Surely there are tens of thousands of people who feel this way…

Also if you somehow excluded those asshole rich people from the political spectrum, they’d go libertarian on you and move to countries with higher levels of eco freedom or start their own libertarian country. Then America would have no entrepreneurs, and everyone would just sit around listening to Noam Chomsky and voting on how much each factory should produce. Pretty soon everyone will be buying foreign goods from the same capitalists because they can’t produce as cheaply.

So please, by all means, exclude rich people from the political realm. It will create an ancap community much faster.

Lol its probably because the whole country is portioned into government granted cartels. Medical industry, Defense industry, Banking, Tobacco… you name it, there’s an 80% chance its a government granted monopoly. Monopolies engage in profit maximizing behaviour. End of story.

You are not an apologist for big corporations. Don’t let them peg you like that. Make them apologise for the state. Why is communism a bad thing? If communism is bad, why is 40-50-60% communism a good thing? What sort of ad-hoc economics do they subscribe to if they think that half the economy should be free and the other half should be government owned?

10

Re: Stevo_dubc

Ask them if people were becoming progressively poorer during the laissez-faire policies of the 19th Century in America, and why did people not migrate out of the US during the 80s.

Indeed, wealth is power. A carpenter with a benchtop saw and some other tools can build an addition to a house in a few days, whereas in past times, people using purely manual tools would take them possibly several weeks. That’s power. A contemporary carpenter is thus much more wealthier than the carpenters of old.

What these “progressives” talk about is the power to influence government, which only begs the question. What if we didn’t have government? Where would that power be then?

Before they respond with the argument that wealthy people could have private armies, explain to them that these already exist in the form of drug gangs, and that the reason they are so powerful is not just because of their wealth but because of government, in two ways: One, it does NOT allow people to form their own protection militias to fight the gangs, and second, because of Prohibition, which entices these drug cartels to have private armies. Just how many private armies has Walmart raised? Or Ford?