In a nutshell: the top 20% of the populace controls 85% of the US's wealth.
1. Increasing wealth concentration = increasing concentration of political power => democracy undermined. US is excellent example - the populace can vote, but only for candidates preselected by funders in the top 20%; populace can advocate, but top 20% has much better access, influence (due to both campaign funding and 'revolving door' jobs when leaving office), and in some cases actually writes the legislation (bank bailout being a major example).
When that happens, you get capture of the government and regulators, financial excess & crisis, and symptoms of banana republic:
2. 'As long as each generation is relatively wealthier than the prior one, I don't care about the spread within that generation.'
That's held true for decades, but is not guaranteed to continue forever. Problem of induction: no amount of confirming observations can prove a theory true, while one single refuting observation can disprove it. Eg, even if all strata of every generation has always been relatively wealthier than the previous generation, that is no guarantee the same thing will continue indefinitely in the future.
Highly concentrated wealth also skews some economic statistics, masking the plight of the lower and middle class. The latter can even be in decline while the top 20% are making out like bandits by outsourcing chunks of our wealth-creating 'making things' industries to higher-profit-margin manufacturing centers, and that wouldn't show up on some stats based on averages.
The workers get laid off while the CEOs, boards, 'pay consultants', and shareholders pocket the increased profits. And when the top 20% controls 85% of the wealth, guess who those shareholders are. Bottom 80% is increasingly locked out of the wealth that can be generated from ownership, and forced to subsist as wage slaves.
There are arguments that is what is beginning to happen now.
3. 'This continual improvement in wealth amongst my own family is proof enough that the very rich aren't impinging on what really matters, which is improving living standards for the majority of people.'
Your standard for 'proof' is pretty low. That's a single data point anecdote. C'mon now.
4. Extremely high wealth concentration has historically been associated with revolutions and other unrest. The French Revolution comes to mind. I'll let the amateur historians here argue over causality, but it's really not a road we want to go down.
For anyone who believes in the adaptive, corrective power of free markets and democratic government, increasingly extreme wealth concentration should be a concern, since it can and does undermine exactly that.
PS - I'm not implying wealth redistribution is the solution, since that's just a poor kluge that addresses the symptoms rather than the underlying problem/s. But I do think the reasons for this accelerated wealth concentration need to be clearly understood, and in some cases neutralized - unpunished financial fraud that led to the crisis, CEO pay based on board & pay consultant connections, free trade with countries that allow effective slave labor, among others.
I'm in agreement with some of your points, but not others.
The most important thing to stop the concentration of wealth taking over the government is to limit the government powers. If the government is a smaller part of peoples lives, and the economy, then capture of the government by a relatively small minority must then have a limited affect on the greater population. Power always concentrates in the hands of a few - that's always been the way. In a free society the checks and balances are there so that even if a group manages to capture power for a short time, it should balance out over the longer term. As long as there is free association, free speech and free and open voting, then these things can be corrected.
I agree that capture of the economic benefits of a company by the executive at the expense of the workers (ie, company is bankrupted) isn't a good outcome, but the fact still remains that most companies are still operating and employing people. Not every company is an Enron, the majority of the population is still employed.
Yes, using one family is a bad data point, point taken. But then just about everyone I know is better off than their parents, if you take total measures of wellbeing into account (not just monetary measures).
As for other discussions such as outsourcing - it's beside the point. You give me the French revolution, I give you England with no revolution, and just as much disparity. The 'revolutions' were a giant waste of time and lives at any rate, and were as much to do with lack of control over destiny as much as relative wealth. In any democracy a revolution isn't going to happen while the polling booths are still taken seriously. Someone might lose their political head but not their actual head.
The problem with arguing against wealth disparity is that you can only end up arguing for wealth distribution, which generally ends up making things worse for everyone overall. And most people make the mistake of introducing the 'fixed pie' idea of wealth into their thinking at some stage.
Again it comes down to 'it's the worst system around, except for all the others that have been tried'.
'The most important thing to stop the concentration of wealth taking over the government is to limit the government powers.'
Completely agree. Power corrupts, and absolute power corrupts absolutely. The best way to defend against that is to distribute and decentralize power as much as possible. The original intent of the Constitution. A nice fringe benefit is that that also creates more agile, adaptive organizations, as the military and most modern businesses can attest.
Unfortunately, the reality is that the US government is massive and top-heavy and growing, and it doesn't seem anyone is able to change that. I personally don't think the politicians are even in control of the government anymore, rather the massive defense, security, and other beauracracies, combined with corporate pigs suckling at their teats and funding the entire political process are.
'In any democracy a revolution isn't going to happen while the polling booths are still taken seriously. Someone might lose their political head but not their actual head.'
I didn't mean to imply a revolution would happen in America, I don't think that will be the case either, at least not a full scale violent one. But lots of people are nevertheless pissed off and feel like they're getting screwed. I don't know where that will lead.
'The problem with arguing against wealth disparity is that you can only end up arguing for wealth distribution,'
Not necessarily. Things looked better in this regard 30 years ago. Something changed. Or either it's the nature of the system. Either way it's worth understanding and devising more sophisticated solutions than wealth redistribution.
'And most people make the mistake of introducing the 'fixed pie' idea of wealth into their thinking at some stage.'
True, it's rather unfortunate that even in this day and age so many don't understand how wealth is created and steady economic growth achieved.
> "Extremely high wealth concentration has historically been associated with revolutions and other unrest."
The truest statement of all. American history books would glorify the American Revolution as a battle against tyranny for freedom, but above anything it was a battle against extreme economic exploitation.
Just like the French Revolution... just like the Russian Revolution... just like the Chinese Civil War...
The rich are digging their own graves. No amount of economic power will hold back a sea of desperate, furious peasants who have nothing left to lose and every desire to see your head on a stick. I'm not looking forward to that mess.
above anything it was a battle against extreme economic exploitation.
The Crown's North American subjects were the richest, most lightly taxed group of polities on Earth, the Crown's British subjects the second richest, most heavily taxed.
The American Revolution could more accurately be called the War of American secession; substantially the same people were on top in NA at the beginning and the end. The American Revolution was a different creature to the French and British.
Oh please, get a fucking grip on reality for fuck sake. Those populations starved for years under insanely despotic regimes.
Today even poor people have too much to eat (look at obesity rates) and leave tvs behind when they loose their house cause it isn't worth taking with them. Your computer would have been worth fighting a war over 200 years ago.
To suggest that we are anything close to a "sea of desperate, furious peasants who have nothing left to lose and desire to see your head on a stick" while the peasents have access to better food, medical care, running water, communications, transportation and entertainment that the Sun King ever dreamed of shows how crazy that argument is.
They have access to Big Macs, they are one of the cheapest foods ever. Do you think anybody would have cared about that cake remark (which she never said) if they really had eaten cake instead?
> But I do think the reasons for this accelerated wealth concentration need to be clearly understood, and in some cases neutralized - unpunished financial fraud that led to the crisis,
I'd agree, but the good folks in MA just re-elected Barney Frank.
Govt caused the housing crisis and the credit crunch, so if you're arguing that govt will fix it, you get to explain why things will be different this time.
'Govt caused the housing crisis and the credit crunch'
An assertion without proof. If you want to have this conversation, you have to prove or at least support that assertion first. It's a GOP talking point, not an axiom.
Securitization was encourage by govt action. The monopoly on bond rating was also govt action. The bond insurance that was used to turn risky assets into safe ones that banks could hold to meet their capital requirements was yet another govt creation. (Govt wanted regulated institutions to hold such securities to increase the demand and thus stimulate the supply.)
Govt also "encourage" banks to make housing loans that they wouldn't have made otherwise by making such loans a condition of doing other things.
And then there's "encouraging" banks to hold fannie and freddie stock by giving it special treatment for the purposes of capital reserve. That pretty much guaranteed that any problems at fannie and freddie would poison the banking sector.
And let's not forget that fannie and freddie were lying about the loans in their portfolio and in the market in general. Everyone was doing their risk analysis based on fannie and freddie's numbers, which were wrong.
Then there's the small matter that fannie and freddie set a govt guaranteed price level.
The housing market is subject to govt action at so many points that it's absurd to argue that govt action is not responsible.
As far as parties go, I didn't mention Dems or the GOP.
If I had, I'd have pointed out that dems were more active in this, but that repubs were happy to help "encourage" home ownership.
First, some data:
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
http://www.good.is/post/americans-are-horribly-misinformed-a...
In a nutshell: the top 20% of the populace controls 85% of the US's wealth.
1. Increasing wealth concentration = increasing concentration of political power => democracy undermined. US is excellent example - the populace can vote, but only for candidates preselected by funders in the top 20%; populace can advocate, but top 20% has much better access, influence (due to both campaign funding and 'revolving door' jobs when leaving office), and in some cases actually writes the legislation (bank bailout being a major example).
When that happens, you get capture of the government and regulators, financial excess & crisis, and symptoms of banana republic:
http://www.theatlantic.com/magazine/archive/2009/05/the-quie...
2. 'As long as each generation is relatively wealthier than the prior one, I don't care about the spread within that generation.'
That's held true for decades, but is not guaranteed to continue forever. Problem of induction: no amount of confirming observations can prove a theory true, while one single refuting observation can disprove it. Eg, even if all strata of every generation has always been relatively wealthier than the previous generation, that is no guarantee the same thing will continue indefinitely in the future.
Highly concentrated wealth also skews some economic statistics, masking the plight of the lower and middle class. The latter can even be in decline while the top 20% are making out like bandits by outsourcing chunks of our wealth-creating 'making things' industries to higher-profit-margin manufacturing centers, and that wouldn't show up on some stats based on averages.
The workers get laid off while the CEOs, boards, 'pay consultants', and shareholders pocket the increased profits. And when the top 20% controls 85% of the wealth, guess who those shareholders are. Bottom 80% is increasingly locked out of the wealth that can be generated from ownership, and forced to subsist as wage slaves.
There are arguments that is what is beginning to happen now.
3. 'This continual improvement in wealth amongst my own family is proof enough that the very rich aren't impinging on what really matters, which is improving living standards for the majority of people.'
Your standard for 'proof' is pretty low. That's a single data point anecdote. C'mon now.
4. Extremely high wealth concentration has historically been associated with revolutions and other unrest. The French Revolution comes to mind. I'll let the amateur historians here argue over causality, but it's really not a road we want to go down.
For anyone who believes in the adaptive, corrective power of free markets and democratic government, increasingly extreme wealth concentration should be a concern, since it can and does undermine exactly that.
PS - I'm not implying wealth redistribution is the solution, since that's just a poor kluge that addresses the symptoms rather than the underlying problem/s. But I do think the reasons for this accelerated wealth concentration need to be clearly understood, and in some cases neutralized - unpunished financial fraud that led to the crisis, CEO pay based on board & pay consultant connections, free trade with countries that allow effective slave labor, among others.