Is Wealth Redistribution A Good Thing?

[ignl]

Quote from trade2live:

I have never heard one very succesful person attribute their own success even partly to some kind of luck , most wealthy individuals attribute their success to "hard work"and "smarts", in short they believe they deserve credit for about 100% of their extraordinary success, which is human nature after all, you tend to think what goes well in your life is a byproduct of who you are and then what goes wrong you tend to blame others for it. This
also undepins the american dream and the myth of the self made man which in turns justifies social inequality ( "yes it's an inequal society but every one has a chance to make it ")

In fact if you dig just a little you will find, the vast majority of affluent and wealthy people got where they are

- thanks to the fact they were already wealthy

-thanks to the fact they were born in a family that encouraged
education and reading


- thanks to the fact their family could afford higher education for their children

-thanks in large part to connections (from their family)


-thanks to luck : being the right man at the right time, getting hired at the right place, etc.



So yes I believe redistribution is not only necessary but virtuous.
And particularly in today's economy I find it inappropriate even disgusting that some ultra wealthy people ( we know at least of one in this industry) cry foul over "redistribution" when it's just bringing some social justice to this world. Redistribution doesnt mean socialism and it has to be done in a way that doesn' t harm entrepreneurs and small businesses. Unfortunately the current system doesn't allow for that.

Poker is also game of luck and actually with pretty small edge (even AK against 72 is about 2:1) but somehow some people win consistently. Same with life. Good ones are lucky. I think if you look really closely you would see that a lot of those people failed a lot of times before getting lucky at the right place at the right time. This is traders board Im sure you could find a lot of stories about failing from people who are now very successful traders But this is just remark about luck part, I totally understand why you think its not fair that some are very rich and some are poor.

 

[oldtime]

Quote from ignl:

I think this question raises lots of heated debates because people argue with different perspectives. First we need to agree on what we want to agree. Is it moral to redistribute wealth? Or is wealth redistribution helps people better their lives from economical point of view? These are different questions and I think a lot of times one person answers first and another answers second one and they disagree. Usually first one feels that its not fair because rich people can easily become even more rich and poor people can't climb the ladder because they are poor (poor skills, poor mentality, poor work ethics everything is poor), and another one argue that to better our lives we need to create wealth not redistribute it with bad side effects to economy like destroying initiative and interfering in free market.
So before asking I think we need agree which question we are discussing. My opinion on first one is that its basically impossible to answer since it involves morality and morale is different from person to person. Yeah for someone it might be outrageous when someone has billions and others barely survives yet for others its OK since the one who created something is right to claim all benefits and it would not be moral to punish him for his hard work. This is impossible to agree as it goes deep in personal core values and beliefs (like religion etc). This kind of disagreements ends up in wars (or fights) and thats why we have free speech
Second question about economical sense can be discussed, but in my opinion we still should ask what we want: should we still move forward and create more and more things that makes our lives even easier than it is now or its already enough and its better aim at more equality, less stress, less divided society and less poverty. If we want more development and innovation then redistribution makes no sense whatsoever as we want create wealth and reward innovation. I think this is right path as eventually even poor people will have better lives. Now to have a tv, a car, washing machine, microwave etc you don't need to be rich. Comparing with 200 years ago even very poor American probably lives much better that 99% of people at that time. And even if you want to do redistribution anyway its very hard to implement right - you do it in too much force and you completely destroy any initiative with all economical effects and put too much power to too few and we all know how it always ends. On the other hand you do it with normal force - rich people still has resources and skills to avoid it and redistribution won't serve its purpose, but someone who is climbing up the ladder will find it too hard. Classes of rich vs poor will form. I think western world is in this path right now and I believe our potential for growth is much bigger so I would do much less redistribution and aim at max growth right now.

yes, I would have to agree with that. It's just like trading. Timing is everything.

I was brought up in a hardcore right wing family. At one time I found myself newly married in the low rent Canal District of San Rafael, CA. We became friends with the couple downstairs who were democrats from PA. She said, (and it was the first time I ever heard somebody say something or think like this), "The rich get richer and the poor get poorer."

But I noticed (and it use to drive me crazy), my wife would take her grocery money and buy the smallest cheapest item that only lasted us a week, while the rich guy would load his shopping cart up with the "Family Size" which was cheaper and would last him for a month.

 

[oldtime]

Quote from ignl:

Poker is also game of luck and actually with pretty small edge (even AK against 72 is about 2:1) but somehow some people win consistently. Same with life. Good ones are lucky. I think if you look really closely you would see that a lot of those people failed a lot of times before getting lucky at the right place at the right time. This is traders board Im sure you could find a lot of stories about failing from people who are now very successful traders But this is just remark about luck part, I totally understand why you think its not fair that some are very rich and some are poor.

??? where did I ever say "It's not fair"?

You're the one with a complex

just for your info

I consider anyone in the top 50% earners as rich

and anyone in the bottom 50% of earners as poor

aint no "middle class" in my analysis.

hard for many to embrace, if you make 50k you are rich

if you make 49k you are poor

I like to keep everything nice and clean

at anyrate, I like to play the game, but I don't want to play it against any opponent that is hungry

I'll get your money from you sooner or later

but I want to start fair and square from a level playing field, where I have no advantage from past success

 

[ignl]

Quote from oldtime:

??? where did I ever say "It's not fair"?

You're the one with a complex

just for your info

I consider anyone in the top 50% earners as rich

and anyone in the bottom 50% of earners as poor

aint no "middle class" in my analysis.

hard for many to embrace, if you make 50k you are rich

if you make 49k you are poor

I like to keep everything nice and clean

at anyrate, I like to play the game, but I don't want to play it against any opponent that is hungry

I'll get your money from you sooner or later

but I want to start fair and square from a level playing field, where I have no advantage from past success

Yes you didn't say that it was answer to trade2live and I don't agree with him, but understand his position. As for same playing field I would put it again to morality discussion (and as I said in previous comment I don't want to argue about that as it is different for each person). I don't think it has any important impact on wealth creation and economical growth (basically more efficient production so we have more products and services, and innovation so we have new things that better out lives). I think biggest mistake of some people who propose wealth redistribution is that they view at it as zero sum game - i gain you loose. But economy is not like that. Everyone gains something. I might have some stones and bring it to the village then some guy buys it from me and make those stones into cubes and sell them to the third guy who builds a house and suddenly our primitive village lives not in caves but in stone houses - everyone wins as we improved our lives (i know its primitive example but hope its useful ). This chain goes on and on. Think about oil industry which was non existent not so far ago and how much it improved our lives - cars, planes, ships, roads even buble gum Redistribution would not had helped for that industry in any way only slowing its development substantially. Why wait lets build more and more stuff and even poor people live much better. Lets not cloud about numbers, money etc. For example 49K somewhere in Cambodia would mean very rich. Not because thats a lot of money, but because for that money they could buy stuff we take for granted and that would make them rich comparing to their fellows who have nothing.

Quote from oldtime:

well zdreg, that is the thing I don't understand. It's 100% guaranteed that when the government takes money from me they are going to spend it. So how does that hurt the economy? They overpay their workers for unproductive work that neither you or I want or need, and then those workers spend it, and it comes right back to me (minus the government vigorish.)

bad for me, but not sure why it is bad for the world in general.

I think its not exact, but related to guy's 3rd question: http://www.youtube.com/watch?v=rQLBitV69Cc I really like Milton Friedman and his logic. He was unbeatable in economics argument imho

 

[oldtime]

Quote from ignl:

Yes you didn't say that it was answer to trade2live and I don't agree with him, but understand his position. As for same playing field I would put it again to morality discussion (and as I said in previous comment I don't want to argue about that as it is different for each person). I don't think it has any important impact on wealth creation and economical growth (basically more efficient production so we have more products and services, and innovation so we have new things that better out lives). I think biggest mistake of some people who propose wealth redistribution is that they view at it as zero sum game - i gain you loose. But economy is not like that. Everyone gains something. I might have some stones and bring it to the village then some guy buys it from me and make those stones into cubes and sell them to the third guy who builds a house and suddenly our primitive village lives not in caves but in stone houses - everyone wins as we improved our lives (i know its primitive example but hope its useful ). This chain goes on and on. Think about oil industry which was non existent not so far ago and how much it improved our lives - cars, planes, ships, roads even buble gum Redistribution would not had helped for that industry in any way only slowing its development substantially. Why wait lets build more and more stuff and even poor people live much better. Lets not cloud about numbers, money etc. For example 49K somewhere in Cambodia would mean very rich. Not because thats a lot of money, but because for that money they could buy stuff we take for granted and that would make them rich comparing to their fellows who have nothing.



I think its not exact, but related to guy's 3rd question: http://www.youtube.com/watch?v=rQLBitV69Cc I really like Milton Friedman and his logic. He was unbeatable in economics argument imho

I hear ya, that's why sometimes I think this whole wealth redistribution is a futile idea. Good economy, everybody gets a bigger piece of a growing pie.

Safety net is one thing. I want everybody to have food stamps. But how does it hurt me if at the end of the year you made more money than me? And how does it help us all if they take what you made and give it to me?

 

[sle]

Quote from mgabriel01:

Calling Karl Marx an economist is something of a misnomer

Well, at the time economics was still a part of the overal "social science" field and, Marx (plus Durkheim and Weber) was most certainly a founder of that field, in a sense of providing theories that can be tested using the scientific method. Well, as much as anything in social sciences could.

Quote from mgabriel01:
The Labor Theory of Value - roundly debunked over the last 100 years

Two major points (even if one agrees that a social concept can be "roundly debunked" at all):
(a) the fact that a scientific theory has been proven wrong does not make it's creator less of scientist
(b) LTV served as a foundation to a lot of economic theories that continue to thrive to this day

Not that I am a Marxist, just saying...

 

[Humpy]

Quote from sle:

(a) the fact that a scientific theory has been proven wrong does not make it's creator less of scientist
(b) LTV served as a foundation to a lot of economic theories that continue to thrive to this day

..

Sorta see your points but there are scientists and there are better scientists. imho Of course someone needs to start the ball rolling however daft his theory and others build on that foundation.

 

[Humpy]

Quote from oldtime:

??? where did I ever say "It's not fair"?

You're the one with a complex

just for your info

I consider anyone in the top 50% earners as rich

and anyone in the bottom 50% of earners as poor

aint no "middle class" in my analysis.


hard for many to embrace, if you make 50k you are rich

if you make 49k you are poor

I like to keep everything nice and clean

at anyrate, I like to play the game, but I don't want to play it against any opponent that is hungry

I'll get your money from you sooner or later

but I want to start fair and square from a level playing field, where I have no advantage from past success

I like the middle class concept. They are the backbone of every society. And have generally more qualities of principle, integrity, hard work and compassion than the other 2.


Accept all the advantages one can muster imho. You'll need them.

 

[oldtime]

Quote from Humpy:

I like the middle class concept. They are the backbone of every society. And have generally more qualities of principle, integrity, hard work and compassion than the other 2.


Accept all the advantages one can muster imho. You'll need them.

very dangerous Humpy, I've seen it in action, both the husband and wife work at the same factory, and their combined income puts them above the 50% average, yet they still claim they are just "middle class."

"Middle Class" gives the politicians and the government too much power.

We just went through it over here when they debated whether they should raise taxes on 250K plus and then decided that was middle class and raised it to 450K.

No, start thinking this way, if you are in the top 50 percentile you are rich, if you are in the bottom 50 percentile you are poor.

You will need that more in the future than you will the "Middle Class."

 

[justrading]

Quote from oldtime:

very dangerous Humpy, I've seen it in action, both the husband and wife work at the same factory, and their combined income puts them above the 50% average, yet they still claim they are just "middle class."

"Middle Class" gives the politicians and the government too much power.

We just went through it over here when they debated whether they should raise taxes on 250K plus and then decided that was middle class and raised it to 450K.

No, start thinking this way, if you are in the top 50 percentile you are rich, if you are in the bottom 50 percentile you are poor.

You will need that more in the future than you will the "Middle Class."

I've always thought of the middle class as not being defined so much by income alone as values, way of life, role in community etc.

In the same way that winning the powerball lottery or euro millions will not make a labourer a member of the upper class, relying on income alone to define middle class can be misleading.

This is a nice article that also addresses the income issue.

http://en.wikipedia.org/wiki/American_middle_class

Talking about class in the British sense opens a whole new can of worms that is not germane to this discussion, so let's not go there.