I see posts here that talk about "freedom to fail" and such things, as though our current form of capitalism was a meritocracy. This is fallacious. It ignores the fact that wealth gives a person the power to do things in their interests that are against the interests of others. The effect is greater and greater accumulation of wealth in fewer and fewer hands. And the effect of that is that the "financial minority" (not in terms of numbers but in terms of wealth) have their choices circumscribed by others. The distribution of wealth in America  currently falls into a pattern normative to a third world dictatorship. If this was about free speech or gun ownership, those who believe that our system is a meritocracy would be outraged.

I am NOT advocating centralized government confiscation and redistribution of wealth.
The inequity in our society worsens because there is inadequate regulation of the marketplace, and because we have a private financial system (Federal Reserve) instead of a public one, something that many of our forefathers warned against. The game is stacked so that the rich get richer and the rest of us live in a country shaped to meet their needs,  whether it is conducive to ours or not.

For anyone who is not having a knee jerk reaction against what I'm saying, kindly read the link.

Oh - and counter to what has been elsewhere asserted, I am not a Russian or an Eastern European. I have lived in the US for 45 years, since I was a 10, served in the US armed forces for over 30 years, and am professionally employed in an anti-terrorist capacity. I have given at the office, so to speak, where the defense of the Constitution is concerned, so be aware of this before you throw insults at me for my point of view. If you cannot debate it intelligently with facts and figures, not opinions, a prioris and dogmatic virtually religious belief in your pet economic theory, I will ignore your posts

Cheers

Gregory

-- Modified on 10/29/2008 4:26:38 PM

The financial minority (in terms of wealth) can change their position.

The stories are legion, and I have recounted many I know. Vietnamese boat people within 20 years have 12 million in real estate. Cambodian, Korean, Mexican, etc.

Mexican immigrant handyman, fifteen years - owns multiple houses.

The entire San Gabriel valley east of LA is filled with thousand of thousands of people who came here without a dime not too long ago and are doing so well it would blow your socks off.

The secret - don't tell anyone - a little tin box.

My first house was purchased with small change, literally.  Every night into a piggy bank. Once a month into the bank.  

I don't have cable TV. Anyone who does cannot complain. Cancel cable. watch antenna.  Or read a book - OH NO. NO TV.  Take the $100 per month and save it.

I live comfortably, spend on luxuries  - like hobby.  I do very, very well on a salary not too much larger than teachers in L.A.

I agree any hard working immegrant can come to this country and get ahead.  My partner's mother came here 45 years ago from Germany and now owns 75 mm in real estate.

This is a country of opportunity for people willing to work. The dems and the libs hate that, they want a womb to tomb society.

The entire article's analysis is 'geared' around analyzing how big each group's slice of the pie is. It doesn’t provide any perspective about HOW BIG THE TOTAL PIE IS. The acceleration of increasing size of the top 1%’s wealth and CEO pay really ‘took off’ in the 90’s. This era is also touted by nearly everyone as being the greatest period of economic expansion, where ‘everyone’ did exceptionally well (of course the very poor will always do badly). If your slice of the pie got a little smaller (percentage-wise) but size of the entire pie dramatically increases in size then is it possible that one might claim, no harm no foul since everyone's slice is bigger than before. The dynamics of wealth distribution certainly has optimization points and optimization factors, but then it matters what your trying to optimize.

-- Modified on 10/29/2008 6:12:54 PM

sure, from dirt poor to middle class. It is a free country. But, as long as the 1% manage our businesses to make profits for themselves and investors without regard to the national interest, we will continue to see the means of production being sold off, jobs going away. Folks are getting paid tens of millions of dollars to close plants and fire workers. Industries necessary to our national security no longer exist in meaningful form within our borders.  Here's an example I saw first hand - military contractors making huge profits on supplies, and on weapons systems that we don't need an / or will never work, while being too cheap to provide adequate vehicle or body armor to troops. Visited a VA hospital lately?

You may indeed come here with nothing and become even a millionaire. But the 1% that control the most important assets in this country manage the economy to make themselves richer at the expense of everyone else. I'm not talking "class warfare" between folks on minimum wage and families bringing in %500k here. I'm talking about the 1% that now control 1/4th of the wealth in the country, and the decisive bit of it as well, who are a closed club, basically own the political parties, and are causing our economy to be further skewed. You cannot argue with the numbers - wealth distribution in the US today falls into the pattern of a typical 3rd world dictatorship, and it's getting more lopsided all the time.

The pie did get bigger for a while. Now all bets are off. Things seemed to work for  while because the super rich needed the middle class in order to make themselves richer. Therefor we got a nice share of the scraps. However, the super rich no longer need nearly as much of the middle class in order to produce wealth for themselves. SO, the middle class is shrinking. And wealth distribution has become increasingly lopsided in favor of the 1% who now control 25% of the equity in our country.

and for what it's worth, I've been working since age 15 without the benefit of any family or government assistance and although my net worth in none of anyone's business, I would hardly describe myself as middle class.

FWIW I've also been homeless in my adult life. America, love it or hate it. It is the land of opportunity. Or least it always has been, after this election it remains to be seen if people like me and Joe the Plumber can still make something of themselves while carrying the weight of all of Obama's entitlement programs on our backs.

I haven't seen anything convincing that makes me tend to agree with these recent opinions.

Making judgments based solely on the relative sizes of the slices without any hard, factual analysis of how the 'share' sizes affect the dynamics of total wealth, GDP, inflation, incomes, standard of living, etc. is just based on what makes one feel good. You were the one that said you wanted more than just unsupported opinions.

-- Modified on 10/29/2008 6:48:35 PM

A couple of replies fall into the trap many people fall into when trying to analyze this issue.

It is possible for all parts of the economic system to experience gains but for the entire system to develop more and more serious trouble until we see something like the current situation. In order for our system to work there must be a relatively equitable distribution of wealth. Attempts to correct maldistribution are not attempts to undermine the fabric of capitalism, they are attempts to keep the system working.

Are the people at the top doing well now? Appropriate regulation and redistribution of wealth protects them as much as anyone else. In fact, it protects them more since they have more to lose. They, like all of us, have periods of incredible hubris during which they feel like they cannot make a mistake. Unfortunately for the rest of us, when those at the top do this they tend to bring the whole system crashing down and that's why we need safeguards in place to prevent this.

Some of the safeguards which we have in place to prevent concentration of wealth at the top are progressive taxation, unemployment insurance, the minimum wage, Social Security, Pell Grants, etc. Instead of screeching about how unfair these programs are, those at the top should be supporting them because they are integral to the proper functioning of the system that enables those at the top to enjoy such enormous wealth.

Those people who argue against redistribution based on Horatio Alger stories are missing the point. It doesn't matter one bit if it's easy or hard for people to improve their lot in life. What matters, in this case, is whether the people at the top have accumulated too much wealth. It's kind of easy to see now that they had. Too bad they proved to be such poor stewards. Maybe some of it should have been redistributed to those who would use it more responsibly, huh?

If someone makes more money, it is not required that someone (or someones) make less money elsewhere. Wealth and capital creation goes on every day.

model and there is nothing wrong with that but it's not for us. That's all. Let me explain but first I like to thank you for your service to our country.

A fundamental difference between the American working class and their European counterparts is that we look at our predictments differently and will vote accordingly. The European will vote based on their current economic condition and the expectation they are regulated to a certain socio-economic class.

The American on the other hand assumes upward mobility. Thus the American will base their decision on the goals and objectives for their future. JOe the Plumber assumes that through industry and thrift he will rise and better himself and his family.

The McCain campaign if they were smart would feed on this American dream of expectations. This dream of upward mobility also resonates among the Asian and Hispanic communities.

By the way, the Army is an excellent example of this dream of upward mobility. We all start in boot camp the same and those who work hard and smarter will rise to the top, well except for officers of course. ha! ha!



-- Modified on 10/29/2008 8:15:26 PM

soon. Capitalists don't relinquish power easily.

Actually, yes it is.  The only reason money has value is scarcity, or more specifically, relative scarcity.  The economy as currently implemented suffers from an important problem: money can literally be grown on trees (well.. grown and then printed with pretty green and orange and yellow ink).

Everytime more money appears out of nowhere, the value of each unit (i.e., a dollar) becomes less.  That's called inflation.

The only source of NEW value is raw materials - but the US ceased being a manufacturing powerhouse decades ago.  What we sell now is money itself (ok, and some information) and that's not a very strong bargaining position - further weakening the currency.

Wealth and capital creation may go on every day, but that doesn't mean any of that money will ever appear in the hands of the non-rich.

It doesn't really matter how big the total pie is.  When cost of living is measured relative to the average GDP, which is skewed high because of the top 1% of wage earners, you're still going to see more people struggle - even though their income is still technically higher than 90% of the people on the planet.

More succinctly - the gap between the rich and poor has gotten wider in the US in the past 7-10 years and is one of the worst in the world.

http://www.worldwatch.org/node/82
http://www.csmonitor.com/2007/0730/p15s02-wmgn.html
http://www.iht.com/articles/2007/03/29/business/income.4.php

I could probably find better links but I'm lazy. Those link to relatively decent references.

A rich-poor gap isn't necessarily a bad thing - it's what drives opportunity.  There's a threshold, though, where it threatens to destabilize not only an economy, but a social structure.

Thank you for responding - it's nice to see that someone gets the fact that we're not talking class warfare here.....

Some ideas include doing away with the federal reserve, which is privately owned and not answerable to our elected representatives, requiring that every publicly traded business be governed by a board that is composed of 1/3rd each investors, managers, and workers, not allowing means of production and jobs that are critical to the national interest to be eliminated or outsourced.

The point is that our economy has changed, and the super rich no longer need the middle and working class as much as they used to in order to create more wealth for themselves, so far less is "trickling down". The statistics on wealth distribution trends over the last twenty years speak for themselves. The idea that a rising tide lifts all boats only applies when the big boats need the little boats around and are willing to share some of their wealth with them in exchange for services...

the election has everyone's attention now, and after that it will be the partisan bickering as usual. We need to build a critical mass of people who understand what is happening in our economic system, who will discuss it intelligently and propose solutions with enough vigor to be heard. It's hard for Americans to realize it or believe it is true, but a society with too much inequity of distribution will either become a functional dictatorship or break down. Decades of analysis has been done on this as a analytical tool for understanding the dynamics within foreign countries of interest. Financial analysts in the intelligence business are noting our own trends with growing worry.

you will invariably be perpetually depressed.

BTW, the study ended in 2001 so the past 7 years weren’t included.

I totally agree that there is a threshold beyond which the system is counterproductive. My main point above (as of yet unaddressed by anyone here) is that the study didn’t include ANY variables that could be used to attempt to determine the threshold.

I'm non-rich, but my wealth has been increasing at more than two to three times the rate of inflation (even this year beause I SAVE each month). Speaking of inflation, your own cited measure for the terrible things going on weakening the dollar, it has been only slight higher than historical averages and substantially less than periods of very high inflation.