
Study Suggests Inequality Can Be Fixed with Wealth Redistribution, Not Tax Cuts - lnguyen
https://motherboard.vice.com/en_us/article/xwge9a/math-suggests-inequality-can-be-fixed-with-wealth-redistribution-not-tax-cuts
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billytetrud
This has been known literally for centuries. Its called the second fundamental
theorem of welfare economics. I wrote about it in the "Soluctions to Sub-
optimal Pareto Optimums" section of my article here:
[https://governology.wordpress.com/2016/09/04/the-role-of-
gov...](https://governology.wordpress.com/2016/09/04/the-role-of-government-
part-2/)

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munk-a
No, I just talked with some centrist and right wing congressmen. They know
that the only true solution is trickle down economics, we're just not
trickling hard enough right now.

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kelnos
> Good luck convincing Trump about any of it, though.

s/Trump/conservatives/

Conservatives (even poor conservatives) seem to be against wealth
redistribution of this nature and try to label it as "welfare" and "handouts",
which they find distasteful, even when it's the healthiest thing for the
economy as a whole. They can't seem to get past the idea that "hard work =
wealth", and that giving people breaks is morally bankrupt. They seem to think
that all this is a zero-sum game, and that giving aid to the lowest-income
people will necessarily take something away from them.

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jjuel
Which I don't get because they seem to be in favor of "handouts" (tax cuts,
bailouts, etc.) for the richest of the rich thinking that will drive the
economy.

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kelnos
Agreed. People conveniently forget that a producer-only economy doesn't work.
If consumers don't have the financial ability to consume, you're screwed.

~~~
uoaei
The reason our economy is working now is because of the huge amount of
speculation that fuels the investment sector. Wealth creation is no longer
predicated on how much stuff is being sold, just on how much people bet will
be sold.

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ge96
I am in poverty myself. But when I see this I view it as punishment to those
who figured out how to "succeed in life" with regard to acquiring wealth.

I realize some things like the tax loopholes of avoiding paying taxes but even
so the concept of taxing more when you make more seems like punishment. But I
understand too, how much does a person need/what about others that are in
need.

But then again maybe if they have so much wealth that you can't compete/ever
hope to catch up/get on their level.

Just seems to me if it's easier to be poor/not get taxed much then why try to
get out of it. Believe me I'm still trying my life sucks, uncertainty fear
etc...

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rosser
The vast majority of the "rich" are beneficiaries of generational wealth. They
didn't "figure out how to succeed"; they were _literally handed everything
they have_ , without ever having to earn a damned thing.

If your definition of "success" is "being born to the right parents", you're
advocating an even _more_ unequal society than the one we already have. That
is straight-up feudal.

EDIT: phrasing.

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jerkstate
Do you have a reference for that assertion? According to some quick searches,
it seems like that was true in the 70s and earlier, but in the recent decade
the majority of millionaires and billionaires are now self-made. Of course,
that googling is confirmation bias, so I'm interested in data from the other
perspective.

[http://www.thomasjstanley.com/2014/05/america-where-
milliona...](http://www.thomasjstanley.com/2014/05/america-where-millionaires-
are-self-made/)

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rosser
My information also comes from Piketty. I appreciate that my confirmation bias
is possibly (probably) also in play. The campaign to smear his work, and muddy
the waters around his conclusions, probably makes anything short of re-
analyzing all of the primary sources one's self an exercise in appealing to
authorities whose positions support one's own.

~~~
tooltalk
I haven't read the Piketty's. Can you cite specific chapters or data?

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moduspol
Well, at least we know now, thanks to math. Who knew it was this simple?

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kbd
For those who missed it, the original title was "Math Suggests..."

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sbuttgereit
So when exactly do you accept "inequality"? When do you stop in your efforts?

So you take the money of those that have it, no matter how they came by it,
and give it to those that don't, regardless of any individual virtue or merit.
But you haven't solved inequality. People that live in the cities arguably
have access to greater resources (opportunity/leisure/health care/etc) than
those that live in rural areas. Perhaps we force some people to live in work
in places that they might not otherwise choose to in order to create greater
equality? Or do we say we accept the inequality of the urban vs. the rural?
The list goes on and the measures to achieve an egalitarian outcome become
more draconian. Certainly, with a sufficient use of physical force (or the
threat thereof) you can achieve all sorts of "equality"... and all the
proponents of such egalitarian proposals here are suggesting is that using
brute force against those that wouldn't voluntarily play along is OK. Nothing
more intellectually sophisticated than saying, "don't agree, we'll take it."

But in all of this, once you accept that force is a legitimate means to
enforce "equality" in this way, you have a hard time keeping those that have
appointed themselves lord protectors of the poor (or other victim class) from
becoming the new elite.

Oh well, here's to the pursuit of egalitarianism!
[http://www.seasite.niu.edu/khmer/ledgerwood/Khmer_Rouge.htm](http://www.seasite.niu.edu/khmer/ledgerwood/Khmer_Rouge.htm)

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frgtpsswrdlame
Oh come on, Khmer Rouge comparisons for progressive taxation? Step off the
rhetoric.

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kmicklas
Study Suggests Malnutrition Can Be Fixed With Food, Not Crop Hoarding

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willitpamp573
I like how it's a foregone conclusion that inequality is a "problem" that
needs to be "fixed".

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jernfrost
Because it is. Ask yourself what is the point of any society? Capitalism is
not a goal unto itself, it is a tool to reach another goal.

Now different societies might decide on different goals. Let me use an
exaggeration to clarify my point. If one man in a country is fantastically
rich while everybody else is dirt poor, then that society is a failure.

My assumption would be that most societies would decide that happiness and
well being for as broad set of people is that is the goal of society.

en massing piles of wealth with nobody to spend it on is rather pointless.

Of course some inequality is fine, but that is not the point. The point is
that ever increasing inequality is a problem.

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closeparen
That society is still a failure if you remove the rich guy.

Attack poverty, not success. Redistribution is probably the best way to do
that in many cases, but calling the problem “inequality” suggests we can fix
it by dragging everyone down to the same level instead of lifting others up.

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hexane360
This ignores that wealth is relative. Your argument can also be used to argue
that the U.S. has solved poverty, because poor people today can afford to eat,
which wasn't true x years ago. It's not just about the absolute purchasing
power, it's also about the relative social status and power. Not being in
poverty doesn't mean much if you still don't hold any social or political
power.

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unit91
> Not being in poverty doesn't mean much if you still don't hold any social or
> political power.

Really? So if you can't have power, why bother not being poor? Having been
below the poverty line and risen above it, this seems very bizarre to me, to
say the least.

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hexane360
Maybe my wording was imprecise. Not being in poverty is better than being in
poverty. Still, that's not the entire story.

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CyberDildonics
I don't think solving inequality in a purely mathematical way was the problem.
Maybe the author should have spent him time doing something more valuable,
like pretending to squish a far away person's head between his fingers by
squinting one eye.

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beingmyself2
Right, let's start by redistributing the wealth held by people in silicon
valley making more than 50k a year. Think of all the people we could lift out
of poverty if all us tech folks just gave up our wealth! I'm sure we could do
without that second helping of avocado toast each day. The solution is
obviously to steal from the wealthy and give it to the poor.

~~~
jernfrost
It is mind boggling how many Americans think wealth redistribution is this
crazy impossible thing, which will mean massive downgrades in ones economic
well being.

We've done this shit in Europe for a long time. I live in Norway and make
about 90K or so in the tech business. I pay roughly 34% in income tax. How is
that so bad.

Americans tend to grossly exaggerate by talking about marginal tax rate rather
than their actual effective tax rate.

Of course the rates might not be hugely different, but that is partly because
most Europeans pay a lot more taxes in other areas. Sales tax in Norway is
25%. Alcohol and cigarettes have very high taxes and so does cars with big
engines. Car taxes could be 200-300% at its worst. However electric cars have
no taxes, so there is a way out ;-)

Honestly though, I don't think wealth distribution purely through taxes is the
way to go. That is not how we created equality in Norway. A lot has to do with
the corporatist model where big employer and employee unions set wages in big
national bargains. This combined with public education with very even quality,
levels the playing field.

Education in America is extremely uneven in the US and that creates a very
uneven playing field. In the US education is sort of monopolized. People can't
go to schools other than their local school district unless of course they pay
a private school. That means poor people are locked out of good schools. In
Norway I can send my kids to any school. However I send them to one of the
closest schools because academic quality of schools is not that different from
each other.

Richer schools can't bid for better teachers etc. In fact schools in poorer
neighborhoods are more likely to get more money to compensate for their
relative disadvantage.

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ameister14
>Honestly though, I don't think wealth distribution purely through taxes is
the way to go. That is not how we created equality in Norway. A lot has to do
with the corporatist model where big employer and employee unions set wages in
big national bargains. This combined with public education with very even
quality, levels the playing field.

Being incredibly resource rich in comparison to your population numbers helps
- that's most of the underpinning for the welfare economy of Norway, if I'm
not mistaken, not income taxes or taxes on cigarettes.

Totally agree as far as education is concerned, though.

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DiffEq
Communism has been tried already and has resulted in failed states and
miserable people....the most recent example is Valenzuela...why is this so
hard to see?

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XR0CSWV3h3kZWg
Venezuela did far more than wealth redistribution.

[https://en.wikipedia.org/wiki/Shortages_in_Venezuela#Potenti...](https://en.wikipedia.org/wiki/Shortages_in_Venezuela#Potential_causes)

[https://en.wikipedia.org/wiki/Economic_policy_of_the_Hugo_Ch...](https://en.wikipedia.org/wiki/Economic_policy_of_the_Hugo_Ch%C3%A1vez_administration#Price_controls)

Price fixing, printing money and corruption are far different than wealth
redistribution.

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jopsen
We won't see wealth redistribution with Trump, not even minimum wage hikes.

So I guess the take away is: buy gold.

Because after the next crash, the Fed won't be able to bail out the economy by
lowering the interest rate. Am I wrong?

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KGIII
If it reaches the point where the USD isn't a viable trade mechanism, your
gold isn't going to help you. Someone is just going to take your food and
water. They won't bother with the gold. I guess you could melt it into
bullets.

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jopsen
I wasn't suggesting an end-of-world scenario.

Merely that no investments are going to hold their value.

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KGIII
If your investments hold no value then everyone else will have come down in a
similar proportion - assuming you're diversified.

So, you might have a lower total number but your value will still be pretty
similar, as will your buying power.

Right? I may be missing something, but that's kinda what I recall from econ.
To be clear, that was 1982 that I last took an econ class.

