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Why is wealth inequality bad?

Cowboy0108
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5/14/2015 9:35:05 PM
Posted: 1 year ago
I have spent many hours trying to find the answer to this question from an unbiased source. Most sources on the topic are very liberal, and I want an unbiased view.

The thing I notice is that the U.S has a Gini coefficient of .41. This is higher than nearly any other developed nation, yet we have the world's strongest economy and a high quality of life for even our most poor members(when compared to developing nations that is).

I see how the poorest people having more money can increase demand and thus increase GDP, but doesn't the investments made by the rich also increase aggregate demand (Y=C+I+G+(X-M); where C would increase if the poor have more money and I would increase if the wealthy had more money.)

Furthermore, is it really beneficial for our economy overall if we just tax the rich more and redistribute the income to the poor. I do not think that that is a long term solution to the problem, and I do not like the concept of the poor being constantly supported by the wealthy through utterly involuntary means(on both a philosophical and economical perspective).
Otokage
Posts: 2,360
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5/15/2015 8:46:30 AM
Posted: 1 year ago
At 5/14/2015 9:35:05 PM, Cowboy0108 wrote:
I have spent many hours trying to find the answer to this question from an unbiased source. Most sources on the topic are very liberal, and I want an unbiased view.

The thing I notice is that the U.S has a Gini coefficient of .41. This is higher than nearly any other developed nation, yet we have the world's strongest economy and a high quality of life for even our most poor members(when compared to developing nations that is).

Not sure what you mean by strongest economy (GDP? or GDP per capita?) about the highest quality of life for poor people, US is probably not even in the top 10 (over it goes every north europe country, and probably some more european countries).

I see how the poorest people having more money can increase demand and thus increase GDP, but doesn't the investments made by the rich also increase aggregate demand (Y=C+I+G+(X-M); where C would increase if the poor have more money and I would increase if the wealthy had more money.)

Well but by ending inequality, you both reduce povery and increase GDP. Isn't that great? Moreover, rich people can bribe politicans, while middle-class people could hardly do it. Also rich people have more resources to commit tax fraud and take their money out of the country to "tax haven" countries. In fact, this is a regular practice among very rich people, but it is extremely uncommon in middle-class people. So on average, having middle-class is more profitable to the state than having a rich-class.

Furthermore, is it really beneficial for our economy overall if we just tax the rich more and redistribute the income to the poor. I do not think that that is a long term solution to the problem, and I do not like the concept of the poor being constantly supported by the wealthy through utterly involuntary means(on both a philosophical and economical perspective).

It would be nice to analyze why those people are poor in the first place. Money does not pop in existence out of nothing. If someone is getting rich, then necesarily someone is getting poor at the same time.
Cowboy0108
Posts: 420
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5/15/2015 9:25:34 AM
Posted: 1 year ago
Well but by ending inequality, you both reduce povery and increase GDP. Isn't that great? Moreover, rich people can bribe politicans, while middle-class people could hardly do it. Also rich people have more resources to commit tax fraud and take their money out of the country to "tax haven" countries. In fact, this is a regular practice among very rich people, but it is extremely uncommon in middle-class people. So on average, having middle-class is more profitable to the state than having a rich-class.
But is this not a flaw in our tax system. I am a huge advocate of the FairTax policy partly because the wealthy will not have to put their money in the tax havens, and they can instead put their money in US banks and stocks which will allow the economy to expand.
lannan13
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5/15/2015 2:24:51 PM
Posted: 1 year ago
At 5/15/2015 10:56:26 AM, Greyparrot wrote:
People are not equal.

People are not created equal neither.
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Topics I want to debate. (http://tinyurl.com...)
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darkkermit
Posts: 11,204
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5/15/2015 2:30:34 PM
Posted: 1 year ago
At 5/14/2015 9:35:05 PM, Cowboy0108 wrote:
I have spent many hours trying to find the answer to this question from an unbiased source. Most sources on the topic are very liberal, and I want an unbiased view.

The thing I notice is that the U.S has a Gini coefficient of .41. This is higher than nearly any other developed nation, yet we have the world's strongest economy and a high quality of life for even our most poor members(when compared to developing nations that is).

I see how the poorest people having more money can increase demand and thus increase GDP, but doesn't the investments made by the rich also increase aggregate demand (Y=C+I+G+(X-M); where C would increase if the poor have more money and I would increase if the wealthy had more money.)

Furthermore, is it really beneficial for our economy overall if we just tax the rich more and redistribute the income to the poor. I do not think that that is a long term solution to the problem, and I do not like the concept of the poor being constantly supported by the wealthy through utterly involuntary means(on both a philosophical and economical perspective).

a) People view their happiness relative to others. So a person is more likely to feel worse if others around him or her earn a lot more.
b) Negative health effect. Disease spread from the poor and trickle its way up to the rich
c) Social stratification and isolation. Inequal incomes means your choose of friends is narrowed based on how much money you can spend. Example, rich friends are more likely to spend their time doing things that cost a lot of money (E.g ski rersort) so you'll be out ofthe loop.

I really can't believe you searched for hours and couldn't find anything. All you need to do is look up a wikipedia article:

http://en.wikipedia.org...
Open borders debate:
http://www.debate.org...
Cowboy0108
Posts: 420
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5/15/2015 2:38:51 PM
Posted: 1 year ago
At 5/15/2015 2:30:34 PM, darkkermit wrote:
At 5/14/2015 9:35:05 PM, Cowboy0108 wrote:
I have spent many hours trying to find the answer to this question from an unbiased source. Most sources on the topic are very liberal, and I want an unbiased view.

The thing I notice is that the U.S has a Gini coefficient of .41. This is higher than nearly any other developed nation, yet we have the world's strongest economy and a high quality of life for even our most poor members(when compared to developing nations that is).

I see how the poorest people having more money can increase demand and thus increase GDP, but doesn't the investments made by the rich also increase aggregate demand (Y=C+I+G+(X-M); where C would increase if the poor have more money and I would increase if the wealthy had more money.)

Furthermore, is it really beneficial for our economy overall if we just tax the rich more and redistribute the income to the poor. I do not think that that is a long term solution to the problem, and I do not like the concept of the poor being constantly supported by the wealthy through utterly involuntary means(on both a philosophical and economical perspective).

a) People view their happiness relative to others. So a person is more likely to feel worse if others around him or her earn a lot more.
b) Negative health effect. Disease spread from the poor and trickle its way up to the rich
c) Social stratification and isolation. Inequal incomes means your choose of friends is narrowed based on how much money you can spend. Example, rich friends are more likely to spend their time doing things that cost a lot of money (E.g ski rersort) so you'll be out ofthe loop.

I really can't believe you searched for hours and couldn't find anything. All you need to do is look up a wikipedia article:

http://en.wikipedia.org...

But all of these are social and emotional effects of inequality. I could care less about how people feel. I want to know aggregate economic effects. i.e. economic growth, real GDP growth, tax revenue, etc.
Otokage
Posts: 2,360
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5/15/2015 4:43:11 PM
Posted: 1 year ago
At 5/15/2015 9:25:34 AM, Cowboy0108 wrote:
Well but by ending inequality, you both reduce povery and increase GDP. Isn't that great? Moreover, rich people can bribe politicans, while middle-class people could hardly do it. Also rich people have more resources to commit tax fraud and take their money out of the country to "tax haven" countries. In fact, this is a regular practice among very rich people, but it is extremely uncommon in middle-class people. So on average, having middle-class is more profitable to the state than having a rich-class.
But is this not a flaw in our tax system. I am a huge advocate of the FairTax policy partly because the wealthy will not have to put their money in the tax havens, and they can instead put their money in US banks and stocks which will allow the economy to expand.

What do you mean this is not a flaw of your system? Do you have any idea of how many billions ie Google has already stole from your country? :/ If they alone gave the money of taxes back to the US, you guys would be out of the economical crysis overnight...
Cowboy0108
Posts: 420
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5/15/2015 4:44:48 PM
Posted: 1 year ago
At 5/15/2015 4:43:11 PM, Otokage wrote:
At 5/15/2015 9:25:34 AM, Cowboy0108 wrote:
Well but by ending inequality, you both reduce povery and increase GDP. Isn't that great? Moreover, rich people can bribe politicans, while middle-class people could hardly do it. Also rich people have more resources to commit tax fraud and take their money out of the country to "tax haven" countries. In fact, this is a regular practice among very rich people, but it is extremely uncommon in middle-class people. So on average, having middle-class is more profitable to the state than having a rich-class.
But is this not a flaw in our tax system. I am a huge advocate of the FairTax policy partly because the wealthy will not have to put their money in the tax havens, and they can instead put their money in US banks and stocks which will allow the economy to expand.

What do you mean this is not a flaw of your system? Do you have any idea of how many billions ie Google has already stole from your country? :/ If they alone gave the money of taxes back to the US, you guys would be out of the economical crysis overnight...
I said "is this not a flaw of the system" it is a question suggesting that the system is flawed.
Otokage
Posts: 2,360
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5/15/2015 4:45:50 PM
Posted: 1 year ago
At 5/15/2015 4:44:48 PM, Cowboy0108 wrote:
At 5/15/2015 4:43:11 PM, Otokage wrote:
At 5/15/2015 9:25:34 AM, Cowboy0108 wrote:
Well but by ending inequality, you both reduce povery and increase GDP. Isn't that great? Moreover, rich people can bribe politicans, while middle-class people could hardly do it. Also rich people have more resources to commit tax fraud and take their money out of the country to "tax haven" countries. In fact, this is a regular practice among very rich people, but it is extremely uncommon in middle-class people. So on average, having middle-class is more profitable to the state than having a rich-class.
But is this not a flaw in our tax system. I am a huge advocate of the FairTax policy partly because the wealthy will not have to put their money in the tax havens, and they can instead put their money in US banks and stocks which will allow the economy to expand.

What do you mean this is not a flaw of your system? Do you have any idea of how many billions ie Google has already stole from your country? :/ If they alone gave the money of taxes back to the US, you guys would be out of the economical crysis overnight...
I said "is this not a flaw of the system" it is a question suggesting that the system is flawed.

Oh I see. Ok then :) sorry!
Cowboy0108
Posts: 420
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5/15/2015 4:47:16 PM
Posted: 1 year ago
At 5/15/2015 4:45:50 PM, Otokage wrote:
At 5/15/2015 4:44:48 PM, Cowboy0108 wrote:
At 5/15/2015 4:43:11 PM, Otokage wrote:
At 5/15/2015 9:25:34 AM, Cowboy0108 wrote:
Well but by ending inequality, you both reduce povery and increase GDP. Isn't that great? Moreover, rich people can bribe politicans, while middle-class people could hardly do it. Also rich people have more resources to commit tax fraud and take their money out of the country to "tax haven" countries. In fact, this is a regular practice among very rich people, but it is extremely uncommon in middle-class people. So on average, having middle-class is more profitable to the state than having a rich-class.
But is this not a flaw in our tax system. I am a huge advocate of the FairTax policy partly because the wealthy will not have to put their money in the tax havens, and they can instead put their money in US banks and stocks which will allow the economy to expand.

What do you mean this is not a flaw of your system? Do you have any idea of how many billions ie Google has already stole from your country? :/ If they alone gave the money of taxes back to the US, you guys would be out of the economical crysis overnight...
I said "is this not a flaw of the system" it is a question suggesting that the system is flawed.

Oh I see. Ok then :) sorry!

you're fine
Diqiucun_Cunmin
Posts: 2,710
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5/16/2015 10:21:28 AM
Posted: 1 year ago
http://www.debate.org...
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Benshapiro
Posts: 3,966
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5/17/2015 11:33:32 AM
Posted: 1 year ago
The further the divide between the rich and poor, the harder it is for the poor to reach a different socioeconomic status. This is referred to a decrease in upward mobility and is caused by increasing inequality.

Competition for limited resources (housing, good schools & neighborhoods) becomes a monopoly for those with money - not necessarily personhood or ability.

I believe it's also linked to increases in criminal activity as some sort of class warfare
blackkid
Posts: 29
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5/18/2015 11:48:17 AM
Posted: 1 year ago
The main problem with wealth disparity isn't that it exists fiscally but it's psychological effects on humans. Behavioral Economics would point to the problems with things like "wealthy suicides" from just struggling to constantly not suffer from FOMO problems. Fundamentally there is a [i]baseline[/i] for monetary wealth and beyond that baseline money means very, very little and it "switches" over to social issues and concerns such as keeping up or maintaining a specific type of image or prestige.

The core problem with wealth disparity is simply that so long as people fall below that baseline stress induced by not having enough resources (read as: cash and equivalents) is guaranteed regardless of a person's actual cost of living.
Cowboy0108
Posts: 420
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5/18/2015 12:00:20 PM
Posted: 1 year ago
So it seems to me that the negative effects are all social effects as opposed to aggregate economic effects.
blackkid
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5/18/2015 9:54:20 PM
Posted: 1 year ago
At 5/18/2015 12:00:20 PM, Cowboy0108 wrote:
So it seems to me that the negative effects are all social effects as opposed to aggregate economic effects.

To separate Economics from Social Health is a grave mistake. You cannot state that one doesn't effect the other to the point where you can distinctly tell them apart; I'd almost argue that ECON is merely a measuring tool for social health and wealth as it's rare an entity has a strong economic position if it's culturally decrepit.
Fly
Posts: 2,049
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5/18/2015 10:40:48 PM
Posted: 1 year ago
At 5/18/2015 12:00:20 PM, Cowboy0108 wrote:
So it seems to me that the negative effects are all social effects as opposed to aggregate economic effects.

I'm surprised no one has mentioned crime yet. Wealth inequality spurs crime, although other variables can alter that general trend. For the most part, crime is not a positive influence economically.

Also, wealth inequality contributes to the national debt. The poor don't have the money to give back to government, and social programs for the poor contribute to debt. The super wealthy are able to lobby the government for irresponsibly low tax rates while benefitting from massive government spending on things such as the military and prison industrial complexes-- which, by the way, is how crime does legally profit a relative few quite well.
"You don't have a right to be a jerk."
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slo1
Posts: 4,364
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5/19/2015 1:13:32 PM
Posted: 1 year ago
At 5/18/2015 12:00:20 PM, Cowboy0108 wrote:
So it seems to me that the negative effects are all social effects as opposed to aggregate economic effects.

If you consider labor as an operational expense, it is akin to having a production line of equipment running at 60% capacity versus 80% capacity. Lower cost may equal wider margin, but it is less overall profit to reinvest. If your overhead is significant then it can even = lower margin.

Couple in effects of overall demand from stagnant salaries. There is a limit to build supply and they will come... economics.
slo1
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5/19/2015 1:22:51 PM
Posted: 1 year ago
Here is a good overall study from TD Bank Group, which clearly is not a liberal organization.

excerpt
http://www.td.com...

Fundamentally, high levels of inequality can lead to a
misallocation of resources, with considerable economic
consequences. A number of studies have been done to assess
this relationship. Research done by the OECD investigated
how rising income inequality statistically impacts growth in
GDP per capita (a common metric for changes in a country"s
the standard of living)1

. The analysis shows that a 1% increase
in inequality lowers GDP growth by 0.6% to 1.1%.
They found that the impact did not matter if the inequality
came from the rich becoming richer or the poor not keeping
pace on income growth. One critical point with regards to
this relationship between inequality and economic growth
is that the income measure used is after-taxes and transfers
" in other words, the income that people actually live on.
The suggestion being that inequality can be addressed either
through more equal market income (i.e. compensation) or
addressed through income redistribution. As we will see in
the policy section, however, there are limitations to simply
addressing inequality through redistribution.

A key challenge is that a slow economic growth environment
can itself be a catalyst towards higher income inequality.
First, individuals are likely to be more supportive of
redistributive policies to reduce inequality when times are
good rather than bad. Asking individuals to share some of
their rising income is entirely different than asking individuals
to be made worse off to make someone else better off.

Second, and related, there is a greater incentive for wealthy
individuals to attempt to retain their current and past gains
when income is rising slowly in a modest economic growth
environment. If these actions become institutionalized, it
can impede social mobility, making inequality more persistent
and more corrosive.

A lack of social mobility is very damaging because it
inherently implies the creation of a permanent misalignment
of resources in the economy and the lost opportunity
for individuals to fully unlock their potential. The Gatsby
curve by Miles Corak (Chart 4) shows the positive correlation
between inequality and intergenerational social mobility
across countries. It is clear that countries with high income
inequality tend to also have high levels of intergenerational
earnings elasticity, which means the children of the rich tend

to end up rich as well while children of the poor tend not to
rise up the income distribution.