Wealth Distribution in the USA

A better way for who? The overwhelming majority of people? Yes - Obviously.Is there a better way for those with the most power and influence? Well that is a more contentious question. Many - Including myself - Would argue that such disparities in wealth are ultimately to the detriment of all in society including those at the very top. However it could be argued that those at the very top of the Western wealth chain barely exist in the same societies as the rest of us these days anyway. With globalisation comes a global elite with no real societal ties to anywhere in particular.Whatever I think most of those with the most power and infleunce seem to think it in their interests and those of everybody else that such disparities in wealth continue and even widen. How exactly they come to this conclusion however I don't really understand....

I would make two points (one phrased as a question and one not)1) When did this extreme level of economic disparity begin? Was it always such or are there specific historical governmental policy decisions we can attribute the current situation to?2) Right wingers like to point out statistics such as the top 10% pay 70% of total taxes. But think about this for a moment. If a single individual were given all the wealth of the nation they would pay 100% of the nations tax. Would this be a symptom of a tax system loaded against the wealthy? Or simply a result of wealth being too concentrated? I would suggest the latter.......

Let's say that the CEO of this company receives a salary that runs into the millions.Let's also - For the sake of argument - Say that the CEO in this specific case has offered little in the way of entrepreneurial innovation or game-changing insight. The company has simply carried on as-is during his time at the helm. His rewards reflect his position rather than any great success.In terms of wealth creation who would be missed more - The CEO or the number of workers whose combined salaries equate to his executive salary?Do you think the above scenario is extreme or unusual? I think at the heart of the left-right debate lies the issue of who creates wealth. On the right the tacit assumption is that those with the most money must be the best at creating wealth. Thus they should be provided with the resources to do that (i.e. more wealth). Whilst at the more extreme end of the left is the tacit assumption that wealth itself creates wealth and that it therefore makes no difference who holds that wealth.Of course the answer lies somewhere in the middle. Some of the wealthiest in society are wealthy because they are innovative and entrepreneurial in the manner that capitalism is supposed to promote. Ways that can have widespread transformative and beneficial effects. But many of the wealthiest are neither of these things and are just wealthy because they are well placed or have worked out how to game the financial system for their own benefit despite lacking any other great entrepreneurial talent. And it is also true to an extent that wealth alone will create wealth. It is a fuck of a lot easier to make a lot of money if you are Paris Hilton than if you are born the son of a janitor no matter how talented you may be.So I would suggest that what we need is a form of capitalism and taxation that promotes entrepreneurism, innovation and a level of risk but which recognises the difference between these things and simply being wealthy.Because those who are simply wealthy without having any great talent as wealth creators are simply siphoning off resources and opportunites from those who are potentially capable of utilising that wealth to greater effect.Those such as the not-so-unusual CEO in our little scenario....

Wiki has a page on minimum wage studies and economic thinking on the issue past and present. Those interested enough can peruse the various studies, revisions, meta-analyses etc. for themselves. But the two extracts below I think sum up the shifting thinking on this issue. So I don't thionk it is nearly so clear cut as you seem to be implying.

The economic benefit to a company of employing someone must be deemed by that company to be higher than the cost of employing them. Otherwise why bother employing them - Right?Things like the minimum wage are designed to makes wages at the bottom end better reflect the economic benefit that those doing such jobs bring to a company rather than relying simply on how little people at the bottom are prepared to sell their labour for if left to pure market forces. Do you disagree that this is the aim? Do you think that aim wrong-headed? So you read the linked to page and you don't think that there is anything at all contentious about your position that an increase in minimum wage necessarily results in increased unemployment of low skilled workers?

Well I work for a multinational company of considerable size and complexity and I'm telling you that if were to go to the IT director and request an additional network engineer the estimated cost of hiring that network engineer Vs the cost to the company of not doing so would very very much be what the final decision was based on.It might well be largley finger in the air stuff but unless someone is making the assessment (rightly or wrongly) that the employee in question will add rather than subtract value from the company then they won't be hired. Unless companies are in the business of hiring people for reasons of social good or somesuch they are hiring people on the basis that they wll make more money from their labour than it costs to employ them. How can any company aim to be profitable otherwise?Your position seems to depend on the idea that no assessment of an employees economic benefit to a company can be made. I would suggest that in most businesses everytime a new employee is hired someone has made the assessment (correct or otherwise) that hiring them would be of economic benefit to the company in question. Well if you had actually read the link you would appreciate that whilst your position may well be nothing more than a truism if simple theoretical models of supply and demand are assumed to be true the empirical evidence on these matters suggest that things are not so simple and very far from clear cut.Is your insistence that a raise of minimum wage will necessarily result in an increase in unemployment based on a theoretical "law" or on empirical evidence? Your answer seems to be based on some rather simplistic and outdated models and assumptions rather than on the empirical evidence available. Here is another quote from the same link you don't seem to have read:

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Several researchers have conducted statistical meta-analyses of the employment effects of the minimum wage. In 1995, Card and Krueger analyzed 14 earlier time-series studies on minimum wages and concluded that there was clear evidence of publication bias (in favor of studies that found a statistically significant negative employment effect). They point out that later studies, which had more data and lower standard errors, did not show the expected increase in t-statistic (almost all the studies had a t-statistic of about two, just above the level of statistical significance at the .05 level).[52] Though a serious methodological indictment, opponents of the minimum wage largely ignored this issue; as Thomas C. Leonard noted, "The silence is fairly deafening."[53]

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In 2005, T.D. Stanley showed that Card and Krueger's results could signify either publication bias or the absence of a minimum wage effect. However, using a different methodology, Stanley concludes that there is evidence of publication bias, and that correction of this bias shows no relationship between the minimum wage and unemployment.[54] In 2008, Hristos Doucouliagos and T.D. Stanley conducted a similar meta-analysis of 64 U.S. studies on dis-employment effects and concluded that Card and Krueger's initial claim of publication bias is still correct. Moreover, they concluded, "Once this publication selection is corrected, little or no evidence of a negative association between minimum wages and employment remains."

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LinkDo you continue to maintain that an increase in minimum wage necessarily results in increased unemployment of low skilled workers?

I'll walk you through the sort of analysis that is required to justify a new network engineer position - Sure.It’s a construction and leasing company. So it’s all about the estimates. A business case for an additional network engineer would include an estimate in days per year of delays to primary, secondary and tertiary projects caused by having insufficient network staff resource in place. Delays to primary construction projects can run into the millions so, for obvious reasons, we wouldn’t have a single network engineer here or there as a dependency on such projects. But a single day per year accumulated across all secondary projects and 5 days per year on tertiary implementations would be a reasonable estimate for a network implementation engineer. Estimating a figure for the cost of such delays would be down to the construction and leasing departments. Construction has a whole sub-section called ‘Estimating’ whose entire purpose to is to estimate the impact of time and materials changes to projects.On the operational, as opposed to the new-business, front the obvious quantifiable for a network engineer is in-business-hours network downtime. A business case for a new network engineer would absolutely include an estimate in hours per year for main and satellite site network downtime as well as site link failures caused by having insufficient resource to adequately maintain network equipment, security and configuration. The IT director has done his own finger-waving to estimate the costs of such outages. If I was writing the business case I would also state that delays to daily change requests (digital marketing requests for changes to web security and suchlike) have a difficult to quantify yet persistent and accumulating cost to the business.Finally, if I were writing the business case, I would end with something like the following: With inadequate network staff resource the ability of the infrastructure team to undertake full site failover disaster recovery is significantly compromised. In the event of such disaster recovery measures being necessary lack of adequate network staff resource will have an impact on the time taken for key infrastructure to be brought back into an operational state and thus on business continuity. The impact, and thus cost, of this could be of major significance to both the UK and wider global operations.Why that last bit? Because this is the sort of shit that will get the IT director’s attention. Because one of the reasons the company employs him is to take responsibility for assembling a team of people who are capable of making sure that economically disastrous IT problems don’t occur.Does that answer your question?
Do you still think businesses go round hiring people without making any assessment at all of whether those positions will provide any economic benefit or not? There are two sides to this. How much is the worker willing to sell their labour for and how much is the employer able to pay that worker whilst still remaining sufficiently profitable.A minimum wage needs to lie above the wage desperate workers will otherwise sell their labout for but below the limit that makes low skilled workers unprofitable to employ. As long as it lies in that range why would it have any effect on unemployment?

On one hand you seem to accept that businesses can and do make meaningful economic judgements regarding the economic benefits Vs costs of filling specific positions. On the other hand you seem utterly resolute in your insistence that the economic benefit any given individual position brings to a business is entirely and obviously unquantifiable to the point that it cannot even be approximated for order of magnitude comparison purposes. This seems somewhat contradictory.On minimum wage specifically — I put it you that if the minimum wage is set at a level whereby the costs of employing a minimum wage worker are still less than the economic benefit of having those positions filled then there is no case for increased unemployment as a result of minimum wage legislation. Furthermore I would suggest that the reason empirical research on this matter shows that there hasn't been any effect on unemployment rates is because minimum wages have generally been set at a level above that which would be garnered by pure market forces but still less than that which makes employing low skilled workers non-cost-effective. But there obviously is an economic judgement that an additional network engineer is likely to provide more economic benefit to the company than the amount it costs to employ them. That was my point. It's nothing controversial.Any business that is employing people (minimum wage or otherwise) without making such judgements with reasonable competence is doomed to fail.Edited by Straggler, : No reason given.

That isn't the point being made by me. The point I am making is that minimum wage legislation will only lead to increased unemployment if it is set at a level such that the costs of hiring low skilled workers exceed the economic benefit businesses gain from hiring such workers.If the minimum wage is set at a level whereby it is still cost effective to hire these low skilled workers (albeit not as profitably as at the pure market value they would otherwise receive) then either profits will just have to take the hit or those further up the pay-chain will have to be paid less in order to maintain profits.This is why setting a minimum wage at the right level is directly relevant to the wealth distribution issue that is the topic here. I think you'll find that profits are calculated after costs and that labour, much like materials, qualifies as a cost that needs to be deducted before profit. So I think you have invented a bit of a straw man for yourself with this. And yet I have explained to you in reasonable detail the sort of estimations that are actually used to determine whether an actual company is willing to hire an actual network engineer in real life. Whether that new position qualifies as "overhead" or not (which I agree it does in the case of my company).If the cost of hiring that person were, after the sort of analysis I provided you with, obviously more than the likely economic benefit of doing so then the work he is needed for would just have to wait or just not get done. If however the economic benefit of getting that work done is deemed to be greater than the cost of hiring a new network engineer then we will be advertising for a new position.What I certainly would not do (if I want to remain employed myself) is go to the IT director and suggest that we need a new network engineer to do some work the value to the business of which is entirely unable to be even remotely ascertained. It might exceed the cost of employing that new engineer. Or it might not. We have no idea. It's impossible to say. Because (to quote you) "It would be like trying to assign a value to each of your cell's contribution to your life."This would not go into a business case for a new network engineer no matter how passionately you mistakenly believe it to be true.

Like I said I think you are arguing against a straw man with regard to much of what you think other people are saying. The fact that these others keep telling you they don't mean what you keep telling them they do is something of a clue to this. Do you agree that businesses are able to estimate the economic benefits of filling specific positions and compare these to the cost of filling those positions? Or not? If not - How can they make economic arguments about hiring and firing people for specific positions? Cost benefit analysis of exactly the sort I discussed in reasonable detail for a network engineer demonstrates that real companies employing real people do exactly what you are saying cannot be done for real positions.It's not an exact science and there is no formula. But estimating the cost of employing someone to fill a position Vs the estimated cost of the work in question not getting done if the position is left vacant is a key part of any business case for a new position. I am amazed you are disputing this. If you want to define the term "value" to suit your argument I will simply use the phrase "economic benefit" instead. The economic benefit to a company of filling a particular position is not the same as the wage paid to the employee filling tha position. Some people are very arguably paid too much and some are very arguably paid too little. Do you also agree that those $2/day workers NoNukes was talking about could be paid more without exceeding this limit?Do you think the minimum wage in the US could be raised without exceeding this limit?If the wages I asked about above are increased to a level whereby it is still cost effective to hire these low skilled workers then either profits of the companies employing these people will take the hit or those further up the pay-chain will have to be paid less in order to maintain profits. Bearing in mind the OP - Do you think that paying people at the bottom more at the expense of shareholder profits and/or executive salaries would be a good or bad outcome?Edited by Straggler, : No reason given.

Do you now accept that businesses are able to estimate the economic benefits of filling specific positions and compare these to the cost of filling those positions? Or not? If not - How can they make economic arguments about hiring and firing people for specific positions? The whole idea that there is a formula for working out exactly an individual employees contribution to profit which that employee should then receive as a wage is a fiction entirely of your own creation as far as I can tell. I haven't seen anyone suggest this but this continues to be the position you are railing against at every available opportunity. I think you are confusing the things people are saying about relative rewards and benefits with this straw man.By relative rewards and benefits I mean (to take an extreme example for purposes of illustration) the following: Imagine an employee who provides little economic benefit to a business but who is by far the best paid member of that company. Now imagine an army of workers whose work is essential to that same company but whose combined starvation wage salaries total a mere fraction of the salary paid to the single employee mentioned above. Now you could just throw up your hands and say "market forces". Or you could seek to highlight the fact that the company in question would arguably barely miss the presence of the single highly paid employee but be utterly financially fucked in the absence of the poorly paid workforce generating the profits for the company. One could further suggest that in such situations the single highly paid employee is overpaid and that the starvation wage workforce are underpaid given the relative economic benefit they provide to the company in question.It's about recognsing that sometimes market forces result in injustices such as the above and implementing things like minimum wage legislation to rebalance things somewhat.

Wiki on economic value:

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Note that economic value is not the same as market price. If a consumer is willing to buy a good, it implies that the customer places a higher value on the good than the market price. The difference between the value to the consumer and the market price is called "consumer surplus". It is easy to see situations where the actual value is considerably larger than the market price: purchase of drinking water is one example.

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The part where you first agree that these economic benefits can be estimated before contradicting yourself by relentlessly proclaiming that the economic benefit an individual employee provides to a business is some sort of mysterious unquantifiable entity that requires some sort of non-existent formula to determine. Except that when Jon talks about value he isn't talking about the market price paid for the employee's labour as a wage is he?Wiki on economic value:

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Note that economic value is not the same as market price. If a consumer is willing to buy a good, it implies that the customer places a higher value on the good than the market price. The difference between the value to the consumer and the market price is called "consumer surplus". It is easy to see situations where the actual value is considerably larger than the market price: purchase of drinking water is one example.

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When a company hires an employee they do so because they expect that employee to add more value to the business than it costs to hire them. This is what Jon is talking about. When you talk about "value" what are you talking about?More widely - What is being suggested here is that, where there are obvious and blatant discrepencies between wage received and economic benefit provided that market forces alone should not be blindly adhered to. Especially if those at the top are effectively rigging the market in their own favour at the expence of those at the bottom.

I'm pointing out that when we talk about the value an individual employee provides to a business we aren't suggesting that this is what they should be paid. You seem incapable of separating the two things ajnd this is leading to vast amounts of miscommunication.

Or you are tarring me with the same brush that you have falsely tarred numerous others with in this thread? If the cost of employment exceeds the estimated economic benefits a particular role brings to a business then there is a business case for making that position redundant. This scenario holds no problem for anything I have said in this thread. If the costs of employment outweigh the economic benefits of employment then the value assigned to that role is negative and there is a business case for making the position redundant. The position is of negative value to the business at that time. In effect the answer to you quesion is - Yes (although I think you have the terminology slightly confused) I suggest you go back and look at how the economic benefits of hiring a network engineer are estimated at my company. Estimated for both hiring new staff in times of growth and reducing staff numbers in times of contraction. I can assure you that if I mentioned "magic" in my business cases they wouldn't get very far..... Message 267Which part of your contradictory position are you failing to see as contradictory here? Not exactly. I believe that if market forces (especially in rigged markets) result in some being blatantly over-rewarded for their contribution to wealth creation and some being blatantly under-rewarded then it is up to government to tackle such discrepencies through the implementation of things like minmum wage policies.Where Adam Smith's invisible hand results in outcomes which threaten the both the stability of the economy and social cohesion I believe governments have a duty to intervene rather than simply thrown their hands in the air and proclaim that market forces shall prevail come what may.