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The 5 Faces Of Income Inequality

Tyler Durden's picture




 

Submitted by Lance Roberts of STA Wealth Management,

Since Easter is a time of family, compassion, forgiveness and resurrection, I thought this would be a good weekend to think about the income inequality/wealth gap which will be part of the mid-term election debate. There are many questions that must be answered from not only “how” to solve the issue, but also “should” it be?

There is no historical evidence that wealth redistribution leads to stronger economic outcomes as it discourages “hard work.” However, there is also little argument that the current state of crony capitalism and corporate greed has gotten more than just a bit out of hand.

To start our thought process in this week’s things to ponder here is a study on the wealth inequality gap in America by Politizane:

 

1) Thomas Piketty, Whither The Bottom 90% by Scott Winship via Forbes

"Piketty’s book lays his cards on the table from the start. He titles it to evoke Marx and begins with an epigraph quoting the Declaration of the Rights of Man and the Citizen to the effect that all inequality should be viewed as suspect. He poses the question in which he is interested as whether capitalism is fundamentally self-correcting in a way that prevents inequality from getting out of control or whether it will produce ever-rising inequality. While he allows that his answer is “imperfect and incomplete,” his modesty goes out the door before that paragraph ends. Piketty’s thesis, in his own words:

 

'When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.'"

2) The War On Poverty Is Grounded In Paternalism by Scott Beaulier via Real Clear Markets

“The plight of the poor is about a lot more than getting a better education or finding a job. It's about repairing the damage that has been done to their lives on a multitude of margins--broken families, stress and depression, fear of crime, drug use, etc. And, the plight varies from person to person and community to community. Like the broader effort to alleviate world poverty that I mentioned earlier, our War on Poverty has layered one bad idea on top of another in the hope something will stick. Yet, the problem persists, and there are few promising signs we are even headed in the right direction.”

3) Baseball And Income Inequality by Nick Colas via ZeroHedge

The United States already has the highest level of income inequality of any advanced country (according to the CIA’s World Factbook), but particular cities within the country display a considerably higher level than the national average.  And among cities with Major League Baseball teams, the inequality that exists regarding ticket prices directly correlates with the level of inequality in those urban areas.”

4) The Mismeasure Of Inequality by Kip Hagopian and Lee Ohanian via The Hoover Institution

“Perhaps the most important question left out of almost every discussion about income inequality is, “Why should we care about it?”

 

Many of those who worry about high income inequality argue that it is an indicator of social injustice that must be remedied through redistribution of income (or wealth). Unfortunately, those who make this claim have not provided any generally accepted criteria for determining when an economic system is unjust. Nor have they provided a convincing argument that such injustice is widespread in the U.S. (In considering this issue, it is worth noting that Greece, Spain, and Italy all have substantially lower income inequality than the U.S. The same is true for Afghanistan, Pakistan, and Bangladesh.)

 

Measuring inequality using the Gini coefficient. There are at least five methodologies used to measure income inequality. The most commonly used is the Gini coefficient (also called the Gini index) developed by Italian statistician Corrado Gini. The Gini coefficient is a method of measuring the statistical dispersion of (among other things) income, consumption, and wealth. The figure of merit for the Gini coefficient for income inequality ranges from zero to 1.0, where zero represents total equality (all persons have identical incomes) and 1.0 represents total inequality (one person has all of the income). By this measure, the U.S. has substantially higher income inequality than almost all other industrialized nations. In 2010, the Census Bureau reported that the U.S. Gini coefficient was .469, while the average Gini coefficient for the 27 European Union nations was .31.

5) A Guide To Statistics On Historical Trends In Inequality via Center On Budget And Policy Priorities

“Data from a variety of sources contribute to this broad picture of strong growth and shared prosperity for the early postwar period, followed by slower growth and growing inequality since the 1970s.  Within these broad trends, however, different data tell slightly different parts of the story (and no single source of data is better for all purposes than the others). 

 

This guide consists of four sections. The first describes the commonly used sources and statistics on income and discusses their relative strengths and limitations in understanding trends in income and inequality. The second provides an overview of the trends revealed in those key data sources. The third and fourth sections supply additional information on wealth, which complements the income data as a measure of how the most well-off Americans are doing, and poverty, which measures how the least well-off Americans are doing.”


Whatever your position is on income inequality or the “great wealth divide,” there is little argument that it currently exists.  As I stated at the beginning, the question is whether something should be done about it.  Raising taxes on “the rich,” forced redistribution, increases in social welfare, etc. all have potentially negative economic consequences which affects everyone.

There is clearly no easy solution. However, for the upcoming mid-term elections this debate will waged to swing votes in favor of those who want to remain in political office on both sides of the aisle.  This is ironic considering that the majority of those individuals are currently in the top wealth brackets in the U.S. Maybe we should just start there?

 

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Sat, 04/19/2014 - 20:45 | 4676396 SWCroaker
SWCroaker's picture

"There is no easy solution".

Wrong.   To quote G. Edward Griffith,

WE MUST NOT BE LIKE CATS
One of the most profound differences between dogs and cats is that cats focus on effects while dogs focus on causes. If you toss a pebble at a cat, it will look at the pebble. If you toss it at a dog, it will look at you.

In this respect, too many people are like cats. They are preoccupied with the details of their loss of security, freedom, and privacy, and they flutter like wing-clipped pigeons, complaining about this and that without knowing why these things are happening.

 

He was talking about the loss of personal freedoms, but the same goes for "why do I feel so poor"; we all need to stop bitching about the itch, and start working on the base issue. Our system of laws and governance creates, supports and promotes inequality.   There is no level playing field, and that is the problem.

Wealth obtained thru diligence, genius, hard work, hell, even just plain luck, is something to be celebrated.

Wealth obtained because the government plays favorites, churns the gut.

Sat, 04/19/2014 - 21:07 | 4676424 I Write Code
I Write Code's picture

The cat may look at the pebble at first, but then it will work upstream until it's staring at you, and then it walks away.  The dog will just sit there slobbering.

Sat, 04/19/2014 - 21:20 | 4676440 linniepar
linniepar's picture

The great reset is required to cleanse this perversion. While I've explored other options i am not sure what the "best" path is...

Sat, 04/19/2014 - 21:52 | 4676474 Escrava Isaura
Escrava Isaura's picture

I find this link to be the Magnus Opus [best path, SoberOne]

 

Paul Buchheit’s proposal for a “wealth tax” is, of course, redistributive and does not address the REAL problem that the majority of Americans lack personal ownership of wealth-creating, income-producing physical capital assets. The 99 percent are essentially propertyless,  capital-less or under-capitalized serf dependent on jobs for income, while the rich are rich because they are wealthy capital asset owners.

This reality is not addressed by Buchheit or other pundits, nor it is a subject focused on by our national media. Yet until we address concentrated ownership and devise and implement policies and set new rules and regulations regarding ownership concentration there will be no remedy to widening economic inequality.

We must reform the system of wealth finance and tax reform to empower EVERY American citizen to accumulate over time a viable, diversified income-producing capital estate acquired with insured, interest-free capital credit loans repayable out of the FUTURE earnings of the investments. We must incentivize through tax reform corporations to finance their future growth by issuing and selling new full-voting, full dividend payout stock to American citizens using capital credit to purchase the stock.  Such incentives must encourage corporations to pay out all their profits as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing new full dividend payout shares for broad-based citizen ownership

As a substitute for inheritance and gift taxes, a transfer tax should be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.

The Federal Reserve needs to stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.

The end result is that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on our only legitimate social monopoly –– the State –– and whatever elite controls the coercive powers of government.

Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, Monetary Justice at http://capitalhomestead.org/page/monetary-justice, and the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.

 

Sat, 04/19/2014 - 21:54 | 4676476 MonsterBox
MonsterBox's picture

War.  The script calls for moar war, 1940's style.

Sat, 04/19/2014 - 23:25 | 4676593 Notsobadwlad
Notsobadwlad's picture

But maybe this time the proper first targets should be Basel, The City of London and Wall Street.

Sun, 04/20/2014 - 07:51 | 4676853 economics9698
economics9698's picture

Gold standard, 100% fractional reserve banking, private issue of currency, problem solved.

Sat, 04/19/2014 - 23:02 | 4676568 Notsobadwlad
Notsobadwlad's picture

I sort of agree and sort of do not. The greatest inequality is the ability of one class to create money out of nothing and at no risk to themselves and all other classes must pay the first class for the privilege of using the money.

All favoritism and corruption comes from this one inequality. There is no such thing as a fair and honest banker who puts his clients interests on at least an equal footing with his own.

The ability to create money allows the purchase of governments, media, laws etc. and even if each person had their own chunk of valuable and productive assets, those that have the ability to create and distribute money would once again own all of the property within a generation or two... simply by creating sufficient money to buy all assets and create all laws to favor them.

Sun, 04/20/2014 - 15:34 | 4676666 NihilistZero
NihilistZero's picture

As long as this inequality exists the working class' only tool for redress is government.  Outside of violent revolution the only way to recover the stolen wealth is .gov redistribution.  This was the mechanism by which the theft occurred in the first place.  This is the only thing that can preserve the oligarchs as well.  The world economy is burdened with EPIC overcapacity.  Without a raise in the disposable income of the working class it WILL implode.

To further your point about money creation I can share that my wealthiest customer does not know the meaning of inflation.  A kind and hard working real estate professional with her own escrow company is unaware that, while she is hard working and deserving, much of her millions in wealth has been gained through the theft of working people's purchasing power.

One woman's appreciation is another's inflation it would seem...

Sun, 04/20/2014 - 12:36 | 4677363 dizzyfingers
dizzyfingers's picture

Notsobadwlad

Yes! Unfortunately, apparently hardly anyone knows/realizes this. The ones that do are the ones in the position to make sure this continues.

Sun, 04/20/2014 - 08:27 | 4676874 Itinerant
Itinerant's picture

You are on the right track.

First of, the article conflates wealth and income. Only about one half of income comes from current employment, the rest from gains/dividends to capital or transfer payments. That includes pensions, welfare recipients, and fat cats. So the first thing we must unlearn is to think about things in terms of rich people and poor people, and to start thinking in terms of social and economic forces. Income inequality breaks down to more than a single issue.

Second, the article claims

There is no historical evidence that wealth redistribution leads to stronger economic outcomes as it discourages “hard work.”

There is ample evidence that most of the hard work has been done historically by slaves but few would conclude that a prosperous society is one with many slaves. There is also ample evidence that restructuring of wealth in a society leads to economic resurgence, starting with periodic debt-forgiveness in bronze age societies (the economy flourished when everyone was returned to cultivating their own ancestral lands). Prosperous societies are almost never those where a few people own all the land and live in luxury while the rest of the society is disposessed -- this is simply disingenous. It is unthinkable that you can have on the one hand political democracy and on the other a completely hierachical economic system in which a few rich people are the only ones that have anything to say about everything that there is.

Third, it is all about the rules of the game. 85 people own more wealth than the bottom half of the population. It is idiotic to say that they created this through their own hard work, as though one of the individuals can replace the work of 42 milliion individuals, or as if we could not replace one of these wealth-holders with someone else. Obviously the infrastructure and capital (both tangible and intangible, such as knowledge, skill, organization) that we have (inherited) was not created by a handful of people. It makes no sense to give a handful of people stewardship of all the planet's capital or almost all the income that accrues to possession of assets, oftentimes assets that have been in place since creation and need to be defended by society at large. How these things play out has everything to do with the rules of the game: laws, incentives, taxes, etc. which are unevenly applied or which favor debt-financing instead of equity, short-term capital destruction or long-term sustainable development, speculation or investment, credentialism or basic research, what types of assets are better entrusted to public (roadways, electrical grid) or private ownership (tooth brushes, tools, houses), etc. And yes, it's complicated, especially  in a complex society such as our own.

Sat, 04/19/2014 - 21:21 | 4676443 FieldingMellish
FieldingMellish's picture

My cat stares at me for hours, pebble or no pebble. I think she works for the NSA.

Sun, 04/20/2014 - 12:25 | 4677345 dizzyfingers
dizzyfingers's picture

FieldingMellish

 You have an unusual cat.  All of mine (over 30 years) have slept most of the days and nights, about 2 minutes per day of attention to me.  

Sat, 04/19/2014 - 23:22 | 4676586 Notsobadwlad
Notsobadwlad's picture

I do not think G. Edwar Griffith knew cats well. I had a cat and a roommate after college who used to chase each other around our rented house. Ultimately it would end with the cat hiding behind the piano and my roommate getting a beer.

One day I watched my cast sitting in the dining room window. My roommate's car pulled into the driveway. He regularly went to the gym after work and was wearing his sweats as he came up the walk.

My cat ran around the corner to the front door and waited behind the door as it opened. As my roommate passed through the doorway and turned to close the door, my cat jumped up and planted both sets of claws into his sweatpant covered thigh and then took off around the corner to hide behind the piano... followed closely by my screaming roommate.

Cats only focus on effects? lol.

... while I would like to see such things as equal protection under the law be real in practise and not simply an Obama-like lie, I cannot see it happening until one sector of people no longer has monopoly control of money creation and distribution, while the rest of the people must pay for the privilege of using the money. That is a systemic inequality that trumps everything else as long as money is required to get the things we need and want.

Sun, 04/20/2014 - 13:40 | 4677491 dizzyfingers
dizzyfingers's picture

Notsobadwlad

That's a fascinating story of kitty and your roommate.

When we got a puppy three years ago I watched our 6 y/o cat intensely to see how she would react and adjust.

First, utter disgust. She looked at us as if we we had brought in a pile of shit then left the living room for several weeks. She would sometimes pass by that room (where the pup had a "playpen") but she never looked in his direction or entered the room.

After several weeks I noticed she was in the living room but had detoured via the long way in order to hide herself beneath furniture until she reached the sofa, from under which she could watch the pup without his (or our) realizing she was watching him. I began to watch her at this, and could see that she was observing him intensely, always silent and hidden from his unobservant view.

Weeks passed. One day when hubby was playing with pup, he tossed a toy which pup rushed to get. Before pup could reach the toy, "out of nowhere" appeared kitty who sat beside the toy. Pup executed a skidding stop and ran back to hubby. Kitty then walked away without glancing around, having tested her power.

A few days later hubby again was playing with pup, tossing a toy for him to chase. When the toy landed, pup rushed toward the toy inches from a chair where, unseen by any of us, Kitty was waiting and rushed out to chase the terrorized pup around the living room and kitchen, teaching him to fear her while never touching him at all. She had been observing and planning the right time to teach her dominance lesson to the new baby. Now, three years later, kitty still dominates the dog. She likes him, invites him to admire her and play with her by lying on the floor and rolling around, mewing in a friendly way, while he stands out of reach, interested and wanting to play and be friends but wary and afraid to get too close.

She's definitely knows she has him where she wants him to be. She can keep him from joining us on the sofa in the evening by sitting with us herself; he never dares jump up if she's there. Likewise, if she's lying in a room enjoying the sun by herself, he'll never enter the room unless we go with him.

It's a little sad because he is without doubt afraid of her, but it's fascinating too, because kitty didn't need us to insure she would be safe forever with the dog. What's the lesson I gleaned? I think cats take care of themselves by paying attention, being observant, figuring out what it is they're seeing, planning and acting accordingly, as the story of your cat and the roommate suggest.

Sun, 04/20/2014 - 09:46 | 4677013 Redneck Hippy
Redneck Hippy's picture

My wife tried to give our cat a bath.  The cat responded by taking a crap in one of her shoes.  I think we have to be more like cats and start taking it out on those responsible.

Sat, 04/19/2014 - 20:55 | 4676405 LetThemEatRand
LetThemEatRand's picture

This author has no soul, which explains his inability to understand why the Lord/serf model is not desirable.  But putting aside his inability to give a shit about his fellow man and the inherent injustice in a system which rewards not labor or productivity but avarice and ruthlessness, he should be concerned that his fellow man will eventually rise up and take back what was stolen from them (even if it was stolen fair and square according to this author). 

Sat, 04/19/2014 - 21:01 | 4676412 PhineasGage
PhineasGage's picture

What is your solution, Rand? Socialism? A system where we REALLY make sure the people "organizing" our economies are good people? Like, REALLY good people? 

The notion I gather that you accept- that the lives of hundreds of millions of people can be ordered by a few- is hard for me to accept, because I know the difficulty of making the best decisions for my own wellbeing, much less what would be involved in making decisions for a SINGLE other individualistic, unique actor with his own goals and desires. 

Sat, 04/19/2014 - 21:14 | 4676432 Oscar Mayer
Oscar Mayer's picture

Capitalism and The Welfare State are a symbiotic pair, one could not exist without the other.  You want to get rid of the welfare state, get rid of capitalism.  Free the markets from corporate tyranny and restore Free Enterprise as the rightful and just economic system.

Sat, 04/19/2014 - 21:05 | 4676415 Yen Cross
Yen Cross's picture

  JFC -Rand?   Did you visit "His Holyness", on your recent sabatical?

 You've made some of the most articulate and understanding comments I've seen from anyone<> in a long time.

   Well Done,

   P.S. I know your're not a "Socialist", and the idiot calling you out is 1/3 your age. ;-)

Sat, 04/19/2014 - 21:09 | 4676426 LetThemEatRand
LetThemEatRand's picture

Thanks, man (for the laugh as well as the compliment!)

Sat, 04/19/2014 - 22:41 | 4676538 samsara
samsara's picture

" ...system which rewards not labor or productivity but avarice and ruthlessness"

I agree.  Social Memes

"He who dies with the most toys wins"

Look at how Gordon Gekko was the poster boy back a decade ago. He symbolize a mindset and era.

Money being the only metric that is promoted.  The weak ethical constitutions of the majority of people in the financial and everyother field.  "Gotta do what ya gotta do to get ahead"

To "GET AHEAD"    

NOT to live a good life, NOT to raise mature responsible children, NOT to be a good citizen to your community.  NOT....

ya gotta GET AHEAD regardless who you step on to do it.

Sat, 04/19/2014 - 21:17 | 4676422 nmewn
nmewn's picture

I always thought taxation was simply a means to run a government, not to redistribute anyones income.

No wonder the rents too damned high ;-)

Sat, 04/19/2014 - 23:09 | 4676580 Totentänzerlied
Totentänzerlied's picture

Understanding why the master-slave dichotomy is undesirable (to some) does not help at all in understanding why it exists, why it has existed for so long, and why it will exist for the possibly foreseeable future, in other words why it was and is historically necessary.

Generally quite the opposite occurs, and you wind up with people violently chasing after categorically impossible phantoms.

The real problem for you is, no matter how times people try to destroy what you hate, most everyone fails to learn from their failure. Instead they spend their time inventing a veritable religion which, of course, is always already co-opted. And to be clear, this is absolutely not limited to just what you call ("crony"-)capitalism.

How ironic that it took the most strident historical materialists so long to realize it.

Sun, 04/20/2014 - 13:07 | 4677414 brucyy
brucyy's picture

While i agree with the ideas you convey , i'm not so sure about the "soul" thing.  Nor do i think one needs to give a shit about his fellow men in order to make a system fair. The current system is broken because it reflects who we are , in our very nature. I can assure you those in charge of all central planning , mass murdering and financial destruction are equaly human as you and i , and the worse thing is , they are usually the best at convaincing others and themselves they are doing the good , morally right , human thing to do. you want to shake the top rich of a few billions bucks, i have no objections. But reality is a complicated machine with near infinite variables , and i believe we must trust the long and incredibly tough process of mass evolution , learning and adaptation as a species rather than one's idea of soul and morality at a given time.

Sat, 04/19/2014 - 20:55 | 4676408 Oscar Mayer
Oscar Mayer's picture

Well, if you have a hankering for fixing the system then the first thing I would do is restore the Senate to the states' legislators.  That'll fix half the congressional bribery and time will fix the other half.  As for fixing the income disparity, I would put 150% tariff on all goods shipped into this country by corporations that exported U.S. industries offshore.  If they raise their prices to compensate, then raise the tariff another 150%.  Next, I would release all of the patents and copyrights held by those corporations to the public domain and let entrepreneurs have at them. But, that's just me....

Sat, 04/19/2014 - 21:11 | 4676428 I Write Code
I Write Code's picture

Y'know, I'm not sure if it is or isn't a problem when the super-rich get super-richer, or not, IF everyone else is doing well too, but they're not - WE'RE not.  Put three more zeroes on my income statement and I'm sure my attitude would change.

That is, the problem isn't distribution, it's the destruction of the middle class.  I have no idea what the US society is going to look like with the middle class cut down by 50% to 80% in both size and real income.  Probably a long spiral down.

That's the real issue behind income distribution, not who has what, but what it does to the society.

Sun, 04/20/2014 - 12:21 | 4677330 dizzyfingers
dizzyfingers's picture

I Write Code

 Exactly!  

Sat, 04/19/2014 - 21:11 | 4676429 Walt D.
Walt D.'s picture

More of the same Marxist Class warfare claptrap meme. It avoids the issue that it is government policy that is creating the inequality in the first place. The real problem is the people joining the workforce are poor - there is no longer any upward mobility. The economy is not creating enough jobs to accomodate new entrants to the workforce and immigrants. These people add to the ranks of the poor. Inequality will increase simply because we are adding to the ranks of the poor. The fact that we are niot adding jobs in the private sector is very heavily influenced by the increase in government regulations. There is a direct relationship betwenn the number of people unemployed and the number of pages of Federal Regulations. The Marxist claptrap meme is just an excuse to tax the upper middle class and redistribute it to cronies, bundlers and other special interests. Needless to say, if you are poor none of this money will be distributed to you.

Sat, 04/19/2014 - 23:07 | 4676576 Nexus789
Nexus789's picture

Who 'owns' the State and directs its policies? It does not operate in a vacum and it is certainly not 'owned' the majority.

Sat, 04/19/2014 - 21:16 | 4676438 I Write Code
I Write Code's picture

As per what Walt D. says, redistribution is another topic.

If there's a problem, what *do* we do about it?  The problem with redistribution is it will never be done honestly, and even if done perfectly it would be guaranteed to piss off about 90% who think they deserve more.  Again, that's why it's best not to get in the situation in the first place, though preventing it is almost as hard as fixing it.  How prevent it?  I dunno, ...

Sat, 04/19/2014 - 21:56 | 4676479 Seek_Truth
Seek_Truth's picture

Now listen, you rich people, weep and wail because of the misery that is coming on you. Your wealth has rotted, and moths have eaten your clothes. Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. You have hoarded wealth in the last days. Look! The wages you failed to pay the workers who mowed your fields are crying out against you. The cries of the harvesters have reached the ears of the Lord Almighty. You have lived on earth in luxury and self-indulgence. You have fattened yourselves in the day of slaughter.[a]

-James 5:1-6

Sat, 04/19/2014 - 22:00 | 4676483 whoisonfirst
whoisonfirst's picture

What stands in the way of poor entrepreneurs from starting their own business in the USA? Overreaching regulation, fees and licensing. All designed to keep the upstarts from starting at all. Make taxes flat so you can send them in on a post card. Make $60,000? Send us 15 percent and you're done.  It doesn't help that our schools are focused on churning out cogs for the machine instead of entrepreneurs.

 

The United States, with an economic freedom score of 75.5, is the 12th freest economy in the 2014 Index. Its score is half a point lower than last year, primarily due to deterioration in property rights, fiscal freedom, and business freedom. The U.S. is ranked 2nd out of three countries in the North America region, and although its score remains well above the world and regional averages, it is no longer one of the top 10 freest economies.

http://www.heritage.org/index/country/unitedstates

Sun, 04/20/2014 - 00:16 | 4676649 Ballin D
Ballin D's picture

Flat tax is a regressive tax - bad idea.

Sun, 04/20/2014 - 01:49 | 4676720 Buckaroo Banzai
Buckaroo Banzai's picture

Wrong. ANY income tax-- flat or progressive, small or large-- is tantamount to slavery. When someone else has first claim on the fruits of your labor, you are a slave.

The income tax MUST be abolished.

Sun, 04/20/2014 - 14:40 | 4677607 dizzyfingers
dizzyfingers's picture

Buckaroo Banzai Absolutely!

Sat, 04/19/2014 - 22:18 | 4676499 Yen Cross
Yen Cross's picture

     Last time I looked { Zero Hedge} wasn't a coffee shop for spent Silicone Valley clowns ?

Sat, 04/19/2014 - 23:32 | 4676599 tony bonn
tony bonn's picture

yes something should be done about income inequality when those having outsized large positions have obtained their income, not through work, but from largesse from the state, crony capitalism, and rentier thefts. this condition exists in the usa, and hence something should be done about the robber barrons and their parasitic existences.

financialization is a huge culprit, especially bankster proprietary speculation in oil where 50 usd per barrel goes to the big oil companies due to speculation, and extracting oil costs about 18 usd per barrel. who is getting fucked and who is getting lubed in that? and it all relates directly to income inequality through rents rather than labor.

Sat, 04/19/2014 - 23:51 | 4676622 Caviar Emptor
Caviar Emptor's picture

The inevitable outcome in crony capitalism is one guy has all the marbles and everyone else doesn't.

It is in the works right now, a self-reinforcing cycle whereby fewer and fewer get richer and more powerful. Forget about the 1%, it's really the .001%. And soon it'll be the 10exp(-6)ers. Like a good banana republic.

Sun, 04/20/2014 - 00:01 | 4676631 litemine
litemine's picture

A great start would be  a Punishment to these who abuse positions of Trust. Those who are fraudulant with Investment and Banking actions for self Profit.

Politicians, Bankers and any Government Agency.   I believe that profits are made and protected from NSA actions.

Lets re Introduce the NOOSE. All Ill gotten gains whether in country or abroad. Lets get the Money back in the workers hands and stop the Financial Rape by Banksters. Mend ties will Countries that the CIA have done severe damage to.. Get the IMF/CFR/ and the American Mercinary Army home to their families and thank them for being great puppets promicing them never to let this happen again.

Lets say we're sorry.............

Sun, 04/20/2014 - 00:27 | 4676659 xxxxx
xxxxx's picture

LOW TAXES FOR THE RICH IS wealth redistribution from the poor. BY THE TIME PEOPLE WAKE UP THE RICH WILL HAVE EVERYTHING.

Sun, 04/20/2014 - 01:33 | 4676712 Which is worse ...
Which is worse - bankers or terrorists's picture

It's difficult to implement your noose idea when those who control the laws also would end up in the noose. Unless you are talking about a revolution, which is probably not achievable in our NDA driven planet.

 

So what is your plan?

Sun, 04/20/2014 - 01:33 | 4676713 Which is worse ...
Which is worse - bankers or terrorists's picture

It's difficult to implement your noose idea when those who control the laws also would end up in the noose. Unless you are talking about a revolution, which is probably not achievable in our NDA driven planet.

 

So what is your plan?

Sun, 04/20/2014 - 00:28 | 4676660 mumbo_jumbo
mumbo_jumbo's picture

"There is clearly no easy solution"

 

sure there is and a very simple one. bring back market based capitalism, and get ride of the crony capitalism and TBTF banks that we have now.  require people who make bad bets pay for the loses. and bring back the rule of law.

problem solved.

 

 

Sun, 04/20/2014 - 13:59 | 4677041 Oscar Mayer
Oscar Mayer's picture

Capitalism is and has always been crony, it cannot exist in any other condition.  What you're advocating is the reduction of government slavery and the expansion of corporate slavery.  Sociopathic Capitalism needs to go.  We need the restoration of our once Free Enterprise, Free Market system.

Sun, 04/20/2014 - 01:25 | 4676708 mark mchugh
mark mchugh's picture

Lance has a fundamental misunderstanding of wealth re-distribution.  Obviously he hasn't figured out that there's a direct corelation between income equality and deficit spending.

Public debt becomes private wealth.  That's wealth redistribution and it is that process that makes most of the rich rich in the first place.  What's most disgusting is the excuses concocted to facilitate the process:  We're protecting you from terrorists, aliens and the bogeyman (Lockheed Martin, Booz Allen: cha ching!)  We're feeding the needy (Walmart, Pepsi: cha ching!) We're providing healthcare (Unitedhealth, Wellpoint: cha ching!)

Why can't guys like Lance understand that side of wealth redistribution equation?  The only get incensed when it is suggested that the ill-gotten gains be returned.

Sun, 04/20/2014 - 02:24 | 4676734 John_Coltrane
John_Coltrane's picture

Now we need a discussion of inequality in cognitive and analytical ability, athletic talent, work ethic etc.  What shall we DO ABOUT IT?  Can we modify the Gaussian IQ curve to a delta function through "progressive" policies oriented to "fairness"?  I'll start the discussion by proposing we do nothing.  We've already tried the war on poverty resulting in more poverty, the war on drugs resulting in more drug abuse etc. and just plain old war.   Getting rid of the income tax and the FED is much more important that fixing normal human inequalities because it would eliminate both the welfare state and the banking and insurance cartels.  The same applies to hair brained schemes involving human ability to control planetary or local climate.  Control freaks and statists (OK, quite redundant) need to butt out and leave competent individuals to solve their own problems.

Talented individuals need the government like a fish needs a bicycle. 

Sun, 04/20/2014 - 04:01 | 4676759 DaveA
DaveA's picture

Men are and always will be unequal in their abilities, and the greatest prosperity for all is achieved when everyone produces as much as he can. But how does a society tolerate high wealth disparity without social strife?

Our ancestors solved this problem by not allowing sex outside marriage and not allowing marriage outside one's social class. Ironically, such repression allowed ordinary men much more and better sex than they get today. Even poor, gameless men could marry and have families because poor women needed husbands -- they couldn't get government jobs or EBT cards. Poverty doesn't feel so bad when you have pu**y.

Our modern feminist welfare state is a conspiracy to liberate millions of women from the confines of marriage so they can join the rotating harems of a few apex men. Eventually the men not invited to this orgy will down tools, and the whole rotten system will collapse.

Fri, 04/25/2014 - 01:52 | 4694031 MeelionDollerBogus
MeelionDollerBogus's picture

Honestly, your post deserves a -1. But... "Poverty doesn't feel so bad when you have pussy" ...

ya :)

Sun, 04/20/2014 - 06:24 | 4676813 The Abstraction...
The Abstraction of Justice's picture

The first thing to do is kill all the oligarchs.

Sun, 04/20/2014 - 07:51 | 4676849 AdvancingTime
AdvancingTime's picture

Today wage stagnation is in part contributed to the financial crisis. During the Bush-era cheaper credit papered over the problem for a while but set America up for a terrible crash. Avoiding a repeat requires fixing the structural drivers of widening inequality. This means we must raise  wages at the low end of the scale but a legislated rise in the minimum wage is not the answer.

The only way a hike in the minimum wage “works” is if it creates incentives to increase labor productivity. A mandated increase in wages does not necessarily produce those incentives, but policies that support and create small business is a move in this direction. Taxation policies often draw the most attention, but this discussion should not be about taking away and redistributing wealth but more about positioning the average person with an opportunity to earn and reach "the good life". More on this subject in the article below.

http://brucewilds.blogspot.com/2013/04/society-must-better-divide-labor....

Sun, 04/20/2014 - 11:53 | 4677265 all-priced-in
all-priced-in's picture

You want more people sitting around with their hand out wanting some "redistributed cash"  increasing the cash being redistributed will do it. 

There are always exceptions - no way to make a blanket statement about people -

But a high % of low income - no net worth people I have encountered did not get that way because they were smart & hard working.  

Make a lifetime of poor choices - drop out of high school, do drugs, get drunk all the time, have a couple kids while you are still a teenager, never learn a marketable skill - then be all shocked and surprised that your financial net worth is zero.

 

 

Sun, 04/20/2014 - 14:06 | 4677544 Oscar Mayer
Oscar Mayer's picture

"no way to make a blanket statement about people"

And yet, the entire premise of your argument is doing that....


Sun, 04/20/2014 - 17:06 | 4677852 all-priced-in
all-priced-in's picture

No not really - There will always be exceptions - a small % that doesn't fit - that is what I am referring to - plus something like cancer can destroy your finances.

 A high % - like 80+% that live their whole life as low income and end up with zero assets have made poor choices.

 

 

Mon, 04/21/2014 - 06:39 | 4678890 AdvancingTime
AdvancingTime's picture

Millionaires and Billionaires, a term often used by President Obama, screams "I have an agenda", the way he uses the term is both offensive and a simplification. Only a crazy person or someone with very little knowledge of money or wealth would think that linking, comparing, and putting the two into the same class has merit.

Over the years the value of the American dollar has dropped. Across America and the world there are millions of working class millionaires. They do not have private planes or servants, they worry about their financial survival and many work far more hours then the average American worker. While inequality is a problem "class warfare" is wrong. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/02/millionaires-and-billionaires.htm...

Do NOT follow this link or you will be banned from the site!