Is Wealth Redistribution A Good Thing?

[justrading]

Quote from Humpy:


You hear about all those billions being printed, but not a penny of it ever seems to come my way. It's trousered higher up the food chain I suppose.

Yes, and they have been channeling it to emerging market stocks, like Thailand.

Ironic, QE is supposed to help the US economy, but that cheap money finds its way to places like Thailand, boosting markets and putting money in the pockets of locals more that your average Joe in the States. Plus of course the people who moved the money out of the States rather than invest it there.

Meanwhile, the average Joe believes the BS about it all being Obama's fault, while watching reality TV and the latest car chase when Billy Bob in Vienna, Ga. got drunk and refused to stop when signalled to by the sheriff.

All quiet on the western front.

 

[Grandluxe]

It is a good thing if you are poor.

 

[oldtime]

Quote from Grandluxe:

It is a good thing if you are poor.

yes, and I am not poor, but I once was, so is it a good way to help the poor?

I've already made my nut

but I have a kid with a Masters Degree, working on her PHD, who is married and has her own kid and still to this day qualifies for Food Stamps

she knows for the most part I only eat beans and rice

but on my Birthday she sends me some superior Beans and some superior Rice, bought with her Food Stamps

so back to my original question

Is that a good thing?

 

[justrading]

Quote from oldtime:

yes, and I am not poor, but I once was, so is it a good way to help the poor?

I've already made my nut

but I have a kid with a Masters Degree, working on her PHD, who is married and has her own kid and still to this day qualifies for Food Stamps

she knows for the most part I only eat beans and rice

but on my Birthday she sends me some superior Beans and some superior Rice, bought with her Food Stamps

so back to my original question

Is that a good thing?

No binary yes/no, only shades of grey.

Too much income inequality breeds revolution and bloodshed.

Too harsh a redistribution regime is doomed to failure, like the communist ideal.

A large middle class is good for stability and growth.

Lee Kuan Yew got it right when he prioritised home ownership and social security, not in the form of bubbles and handouts, but by affordable housing and the CPF scheme.

 

[Humpy]

If you have any sympathy for your fellow man who is not doing so well then essential.
If you are worried about civil unrest then yes essential
If you are mean and callous then No just look the other way.

 

[vicirek]

Quote from Grandluxe:

It is a good thing if you are poor.

No because poor will remain poor in these scheme as always.

It is good if you belong to the group that takes over spoils of this legalized robbery.

 

[oldtime]

Quote from justrading:

No binary yes/no, only shades of grey.

Too much income inequality breeds revolution and bloodshed.

Too harsh a redistribution regime is doomed to failure, like the communist ideal.

A large middle class is good for stability and growth.

Lee Kuan Yew got it right when he prioritised home ownership and social security, not in the form of bubbles and handouts, but by affordable housing and the CPF scheme.

yes, I agree, piezoe turned me on to some lectures by George Soros, which implies that the free market we all believe in as the ultimate judge of truth and righteousness, if left to it's own devices can actually exacerbate bubbles, because it just won't quit until it has reached the point of unsustainability.

I use to play poker every Monday night with some guys I worked with. And one guy always showed up about flat broke with the last of his paycheck. One time he showed up with a microwave oven. Another time he showed up with his TV. The first hour, we all just called no matter how outrageous his bet, until he had a decent stack, and then we all got down to playing serious poker, and he always left broke, and somebody walked away with a microwave oven (and his sales pitch was, "It works, even if the door is open.")

 

[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.

 

[oldtime]

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.

everything I have to show for myself is just the result of dumb luck.

When my wife of 31 years left me I had a complete nervous break down. It didn't help that I was in a big drawdown in my trading account.

The first thing I did was find a new girlfriend so I didn't have to sleep alone at night.

The second thing I did was just put it all long on ES, and turn the computer off.

The third thing I did was take off to Mexico with my new girlfriend and her miserable spoiled shih tzu puppy in her three cylinder metro.

The next thing I did was take my profits in ES.

I would like to tell you I sold at the top, but I let it run quite a bit against me before I finally got flat.

Then I put 50% in stocks (VFINX, the Vanguard 500 S&P index)

and 50% in Bonds (BND, the the Vanguard Total Bond market index)

and totally chilled out, I didn't read a single report, just watched Seinfeld and whatever game was on, bet on baseball in the summer, and bet the over under on hockey during the winter.

Betting the over/under is really exciting in hockey, especially late in the game when there is an open net.

 

[ignl]

Quote from oldtime:

I've been reading some of the old pre Kenynesian economic books, pre WWII. The most notable, Karl Marx, who thought wealth redistribuition was not only neccessary but also virtuous.

President Obama (who admits he doesn't know much about economics) is quoted when he was young as saying, "I believe in wealth redistribution."

Others claim it will get redistributed by the market without interfering in any way whether you like it or not.

I'm kind of Mr. Natural, and just like letting nature take care of itself. But on the other hand, even an animalistic sport like the NFL agreed that to keep the whole thing going they should give the first round pick to the worse team.

I have no conclusive opinion. I was just wondering on this weekend when the market is about closed or non moving, what others thought about redistributing wealth by means other than the natural redistribution that occurs when we take risks that either redistribute it to me, or away from me.

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.