Plutocrats

[Tunnelcat]

I was channel surfing the other night and stumbled across this on CSPAN. The author was giving a presentation on her new book and taking questions from the audience. It actually sucked me in enough to watch for the last half hour.

Here's an short synopsis and introduction, and frankly, I think it's a little scary. Thoughts?

"Plutocrats, the Rise of the New Global Super-Rich and the Fall of Everyone Else"

[Sergeant Thorne]

"Plutocrat" was a terrible idea. I can't take a political term seriously when it starts with "Pluto". Plus it just rolls off TC's virtual tongue far too easily.

[Tunnelcat]

I didn't coin the word, so don't blame me. I'd rather use the term "glorified thief".

[Top Gun]

"Plutocrat" was a terrible idea. I can't take a political term seriously when it starts with "Pluto". Plus it just rolls off TC's virtual tongue far too easily.

He was a god of death/wealth before he was a goofy cartoon dog, you know.

[CUDA]

I didn't coin the word, so don't blame me. I'd rather use the term "glorified thief".

why don't you be honest and call them what they really are. Politicians.. Democrat and Republican

[callmeslick]

because it doesn't refer, CUDA, in any way to politicians. Politicians are simply tools for a class which wishes to keep that gap widening. To blame politicians is akin to blaming the hammer when a carpenter screws up work on your house. Yes, there is a worldwide move towards plutocracy, and the role that politicians play in it can be reversed, but only if the 'rest of us' pulls together and demands it. As it stands now, the 'rest of us' group is distracted by 'culture wars', liberal/conservative finger pointing and a host of other drivel, and ignoring the elephant in the room. Of course, CUDA, as you know, I've been warning about this for nigh onto a decade now, I just didn't write a book......

[Spidey]

The problem isn’t that some people are getting super rich, the problem is some people are getting poorer, at least in this country…most of the countries that article mentioned are still on the way up. (standard of living)

Before I can find a problem with the super rich, I need to actually see the correlation between being super rich, and causing poverty.

And I don’t buy the old idea that someone has something, because they took it from someone else, or the old finite pie concept. I need to see real evidence that someone having a large amount of wealth actually keeps someone else from getting their share.*

Much of the evidence I have seen over the years is, when someone in the modern era acquires great wealth, most other people benefit as well…IE: Microsoft. So you need to look at these things on a case by case basis.

I have been watching way too many shows lately (Mankind, The Men who made America) to come to any kind of conclusion that the rich, haven’t helped everyone in the net effect.

*Except in cases where families took all of the resources for themselves.

Resources = Land, Mineral Rights etc.

[callmeslick]

The problem isn’t that some people are getting super rich, the problem is some people are getting poorer, at least in this country…most of the countries that article mentioned are still on the way up. (standard of living)

Before I can find a problem with the super rich, I need to actually see the correlation between being super rich, and causing poverty.

the two go hand in hand, as follows: Very seldom are actual assets created from thin air. Thus, one can view assets and resources as close to a fixed pool. If one group is accumulating far more of those assets and resources, it has to be at someone else's expense. It is sort of akin to when the TV talking heads say that $1 trillion in capital was lost on the Stock Markets in a given day. No, it wasn't. A trillion dollars of wealth simply changed hands,
from those that bought in at highs, to those that had purchased at lows.

And I don’t buy the old idea that someone has something, because they took it from someone else, or the old finite pie concept. I need to see real evidence that someone having a large amount of wealth actually keeps someone else from getting their share.*

Much of the evidence I have seen over the years is, when someone in the modern era acquires great wealth, most other people benefit as well…IE: Microsoft. So you need to look at these things on a case by case basis.

let's run with the Microsoft analogy.....when that corporation generated wealth, it wasn't in a vacuum. Other industries, and tons of workers took the hit, by way of obsolescence of competitors and old-school technology, and jobs lost to vastly increased productivity. See my comment above regarding the bizarre notion of 'wealth creation'. Globally, 'wealth' is not absolutely fixed, but functionally pretty static.

I have been watching way too many shows lately (Mankind, The Men who made America) to come to any kind of conclusion that the rich, haven’t helped everyone in the net effect.

*Except in cases where families took all of the resources for themselves.

Resources = Land, Mineral Rights etc.

money buys resources....or, at least, smart money does. Old money always has.

[Pandora]

I am with Spidey here. I am very much sympathetic to the idea of limiting the gap. It is clear (to me) that economies are the healthiest the higher the buying power across all strata of society.

However, I'd like to see a negative correlation between wealth of the super-rich and poverty in the lower classes before believing that it is the rich people's fault. And even then, its not that clear (correlation != causation, etc).

[callmeslick]

but, Pandora, the correlation IS evident. I laid out the framework for it, used Spidey's own example of it working the way I stated it.
What I don't see out of you two is ANY shred of evidence that it works other than how I explained it. You merely say, 'this is how I think it works'. You are both very wrong, economics doesn't work that way. Ever.

[Pandora]

You merely say, 'this is how I think it works'. You are both very wrong, economics doesn't work that way. Ever.

You are misunderstanding me. I am not saying at all how anything it works. I just say that before I have hard evidence I reserve judgement about any state of affairs.

I am a lefty at heart, so I am very sympathetic to your view, and it would be my spontaneous assumption as well. But I also know that this is, in part, a knee jerk reaction of mine. I am very wary of confirmation bias. I believe that people should be very careful with accepting beliefs, even - or especially - when they fit their prior assumptions. This is when we are most likely to not look at all the evidence.

So, all I am saying is that, if it is so clear cut, then it should be no problem to find hard evidence for it. Lets see some data.

[Spidey]

the two go hand in hand, as follows: Very seldom are actual assets created from thin air. Thus, one can view assets and resources as close to a fixed pool. If one group is accumulating far more of those assets and resources, it has to be at someone else's expense.

You just kicked the entire concept of “value added” productivity right in the nuts.

What is wealth…Wealth is a tangible product, unlike money, which is just currency, backed by a promise…so what is the point of wealth in the first place…to enhance ones quality of life.

In my business…

At the top, someone digs stuff out of the ground and processes it into something else…Value Added.

Next someone takes that product refines and modifies it further…Value Added.

This then continues until I purchase the products, and again use them to Add Value to something else…Value Added.

The result…Quality of life increased. IE: wealth

Your premise totally demeans the value of labor, and if it were true it would be impossible to increase the GDP by a few percent every year, and we would all still be wearing bear skins, and living in huts.

[callmeslick]

the two go hand in hand, as follows: Very seldom are actual assets created from thin air. Thus, one can view assets and resources as close to a fixed pool. If one group is accumulating far more of those assets and resources, it has to be at someone else's expense.

You just kicked the entire concept of “value added” productivity right in the nuts.

I suppose I did.....value added in one place, is value reduced for someone or someplace else.

In my business…

At the top, someone digs stuff out of the ground and processes it into something else…Value Added.

Next someone takes that product refines and modifies it further…Value Added.

This then continues until I purchase the products, and again use them to Add Value to something else…Value Added.

The result…Quality of life increased. IE: wealth

only if someone, or many others value the product enough to part with some of their wealth to obtain it. As I stated, you aren't operating in a vacuum,
you are simply participating in processes that lead to the exchange of wealth.

Your premise totally demeans the value of labor, and if it were true it would be impossible to increase the GDP by a few percent every year, and we would all still be wearing bear skins, and living in huts.

no, what you see is the utilization and acquisition of assets and resources which were previously NOT UTILIZED. In other words, to use your example, the stuff in the ground has been there all along, until someone dug it up. Progress can be seen as the ongoing learning curve by which mankind utilizes resources in new and useful(for mankind) ways. When men were far fewer, and living in huts, etc, resources were largely untapped, and for the most part even unknown as to their inherent usefulness(had cave men struck oil, who would have cared?). Sorry to disabuse your theory, but labor only creates wealth if it is used to create something someone else with assets wishes to acquire. In other words, you could work like a freaking dog, 20 hours per day, 7 days per week making whale-oil lamps, and very little wealth is coming your way. It isn't some sort of blind equation without accounting for the exchange of wealth amongst members of the society. Thus, my explanation holds, and always will. Ask a real economist, they will enlighten you far better than my feeble efforts.

[Tunnelcat]

I didn't coin the word, so don't blame me. I'd rather use the term "glorified thief".

why don't you be honest and call them what they really are. Politicians.. Democrat and Republican

Oh no. Not all Plutocrats are politicians and not all politicians are plutocrats.But plutocrats who ARE politicians are the most dangerous kind of animal, because they wield power no one else possibly can and influence policy that affects everyone, but especially themselves. And yes, I realize that there are both Republican and Democratic Plutocrats CUDA. Our political system is rife with them. That's why Europe and the U.S., and even China, are both suffering from increasing income inequality. I wasn't pointing to one political party, although the Republican Party's platform directly favors those who are rich.

An example of the rich taking advantage of the middle class shows up on TV everyday. I'm seeing ads now trying to sell long term annuities. With interest rates at an all time low, a person would have to be a fool to turn over their hard earned money at sub-basement interest rates. The only reason these are being offered is to entice people out of their retirement money, so that the rich Wall Street players can go and gamble it away in the markets.

[Spidey]

No, I can prove you (slick) wrong without even having to sell anything.

If I dug up those minerals and used them to create something for personal use, I would still be doing the process of Value Adding, and therefore increasing my personal wealth.

The left has been perpetuating this “Fixed Pie” myth for years, If you want to criticize others for things like belief in god, don’t you think it’s about time to disavowal your own dusty crusty mythology?

[callmeslick]

No, I can prove you (slick) wrong without even having to sell anything.

If I dug up those minerals and used them to create something for personal use, I would still be doing the process of Value Adding, and therefore increasing my personal wealth.

no you wouldn't. Presuming that you weren't digging up minerals on someone else's property, you had that wealth from the get-go. You convert them, via your labor, to something else, you can increase your personal wealth, but only if you sold them to someone else. In other words, it is the ability to obtain the wealth of another that gives them inherent value.

The left has been perpetuating this “Fixed Pie” myth for years, If you want to criticize others for things like belief in god, don’t you think it’s about time to disavowal your own dusty crusty mythology?

It isn't a mythology, it's called Macro Economics, and they teach it in colleges everywhere. Value added ideas aren't mythology, either, they are simply not factual.

[Spidey]

No, it’s the ability to raise quality of life that gives it inherent value.

Value Added is a myth, now that’s rich, no pun intended.

So let me see if I understand you correctly, the money you earn on the stock market every year comes at someone else’s expense?

[callmeslick]

So let me see if I understand you correctly, the money you earn on the stock market every year comes at someone else’s expense?

of course it does. Hell, the idea that a stock 'makes money' beyond dividends is simply naive. The rise in valuation is only pertinent at the point wherein I choose to sell the stock. Until that point, and from the point at which I acquired the shares, I own sheets of paper sitting in my broker's safe.
Now, dividends are another matter. They reflect the profits the various concerns obtain from SELLING STUFF to other people. In other words, I am getting a cut of the money others part with to obtain the products or services provided by the corporations I own a part of.

[Spidey]

The city of Philadelphia is changing the way it taxes private property in the next few years, they are no longer going to tax on the value of the “Brick and Mortar” but the market value instead.

They are going to use area market values for now, with actual assessment values in the future, so if the city determines that your house is worth 100 grand that’s the value it will be taxed on, notwithstanding the fact that you can’t even give it away at this time. (just a turn of phrase)

The city considers it “inherent value”.

If I go out and buy some stone and build a fireplace in my house, the house has more “inherent value” (more than the stone) now, even if I can’t sell it, it still has more value, and I now have more wealth, created by my labor.

Things do not need to be sold to have inherent value.

[callmeslick]

comparing a taxation scheme to actual economic definitions is sort of a stretch, Spidey.

[Spidey]

The taxation scheme is only secondary to my main point, that you can create wealth with labor, regardless of whether you intend or can sell the result.

You can’t deny the fact that I can increase the value of my home by using labor and a few cheap raw materials to increase its value.

Someone buying it is irrelevant. I'm still worth more as a result...period.

[callmeslick]

The taxation scheme is only secondary to my main point, that you can create wealth with labor, regardless of whether you intend or can sell the result.

you keep saying it, but providing thus far exactly ZERO examples of wealth created outside of the exchange of money or resources.

You can’t deny the fact that I can increase the value of my home by using labor and a few cheap raw materials to increase its value.

sure, I can. In fact, that sort of dimwitted thinking is what led to the last economic crash. Folks thought they had additional wealth because their home values(all on paper) were rising rapidly, and their investment values(all on paper) had gone up. They borrowed against this supposedly created wealth,
and found out the ugly reality: if no one wants to buy it, it isn't worth a damn thing.

Someone buying it is irrelevant. I'm still worth more as a result...period.

not until you sell it. Sorry.

[Spidey]

Sorry, but there is a huge difference between inflated market values, and actually improving the house.

[Sergeant Thorne]

A thought occurred to me the other day, and I haven't finished with it yet, but I wondered if perhaps there is something taking place in the likes of large, public corporations which leaves nothing for the middle-class to feed off of. A verse came to mind, regarding a concept in the old testament. The Israelites were commanded (If memory serves accurately), not to go over a field again after the initial harvesting. The purpose was to leave what was missed for poor people to gather. Roughly stated my thought, which came before recollecting the verse, I believe, is that there are aspects of large corporations in our country basically devoted to leaving nothing in the field, to use an analogy.

I'm interested in your argument, Spidey and callmeslick... gonna have to give it some thought...

[Spidey]

I’m not prepared to compare modern business to biblical scripture, I don’t personally believe any business should “leave the crumbs for poor people” I think a company should pay people what they are worth, and be a good community citizen as well.

I really can’t see what you are saying here Thorn, if “corporations” are keeping everything for themselves, then how do you explain them selling me everything I need to run my small business?

[Jeff250]

callmeslick, I don't understand your reservations. Wealth isn't just money--it's anything people value. Dollars are just a good way of quantifying wealth, and it allows us to make comparisons like Joe has more wealth than Moe, even if they own completely different stuff.

With that said, Spidey's example of repairing a house is a good example of wealth creation. With a few hundred dollars worth of paint, you might increase the value of your house by thousands. In other words, by painting the house, you've become wealthier than you were when all you had was the paint and the unpainted house. People who do home restoration for a living understand this.

Another example is writing a book. You can turn your time and virtually no raw resources into something of immense value. Writing software is similar. People who create intellectual property for a living understand this. And what if you're in charge of ten thousand software developers? If you're Bill Gates/Steve Jobs/Eric Schmidt (pick the one you hate the least), you could be guiding developers in a way that creates astronomical amounts of wealth.

[callmeslick]

but Jeff, as I pointed out, it doesn't occur in a vacuum. The idea that much wealth is 'created' whatsoever is a fallacy. Wealth, however one chooses to define it, beyond the romantic notion of the wealth of love,happiness and/or family, is a relatively static thing. The examples you cite are either created from others choosing to part with some of their wealth to purchase goods and services or the perceived notion that something is more valuable. The latter is merely one's perception up to the point where money/resources/wealth changes hands.

[Sergeant Thorne]

What is wealth? I think that's the big question, and the answer should settle the dispute.

Let's look at the dictionary definition, to start off...

Wealth [welth]
noun
1.
a great quantity or store of money, valuable possessions, property, or other riches: the wealth of a city.
...

It seems that since money is used to purchase goods and services, wealth is inescapably tied to labor in addition to property, in the big picture. Labor is basically time, for all practical purposes. Property cannot be created, but it can be made more valuable by the addition of labor. So it seems that real wealth is a three-part equation. You need demand (which is variable), labor (previous investment of time--education/practice multiplied by time spent), and property. When you take $10,000 worth of property and by adding labor come out with $10,000,000, aren't you creating wealth? Or do you higher-ups accept labor and demand as a given?

[callmeslick]

look at it this way, Thorne:
My house is valued at $375,000. I build, with my own labor and materials, a deck and nice rock garden in the back. I think I've added value to the house, but, the only true valuation that matters to my personal wealth is if I decide to sell it. Should the market sink by then, and I only get $325,000
for house with nifty deck and garden, what value was added?
Labor has value, but only in terms of the wages paid to the laborers(which entails transfer of wealth from employers) and production value of goods or services produced by the labor(which entails transfer of wealth from purchasers). Nothing is created without that ying and yang of purchase and receipt.
And yes, that whole equation gets tied up with supply and demand.

[Herculosis]

I agree with Slick's statement that the "value" from a $$ perspective is only known when a transaction takes place. However, in his own last example, the real "value" (by his way of thinking) of the added deck and garden is the difference it made in the final sale price. Put a different way, imagine that there's a house right next to his that's identical in every way, other than the added deck and garden, and then say that BOTH houses are sold at the same time. The difference in price would tell you how much the deck and garden were "worth". Just because the sale price of the house is less that it's appraised value was before the improvements were made, that doesn't mean they weren't worth anything. The sale price would have been lower without them. That is, of course, Slick wasn't particulary good at (or tasteful in) building them. I can think of a couple examples of things people have added to their homes that ultimately devalued them $$-wise.

I see value differently, though. For most people, the reason they'd add that deck and garden is to enhance their own personal enjoyment of the property. In fact, many would trade lots more $$ to someone ELSE to build that FOR them so that they could experience that enjoyment.

Labor is a HUGE part of value. And, as Jeff points out, often it's the MAJOR part of the value of something. The intelligent property examples were great ones. As a small business owner with 25 great employees that create this sort of "vitual" assets (software), I can tell you firsthand that the fixed pie idea is total crap.

[Spidey]

Work & Labor are the key, work has intrinsic value, and that value can become part of what is produced by work.

Well I’m pretty much done here, I have had this argument with people for over 30 years, and many years ago came to the conclusion that “wealth is finite” is not an economic theory, but in fact a political one.

[Tunnelcat]

Work & Labor are the key, work has intrinsic value, and that value can become part of what is produced by work.

Well I’m pretty much done here, I have had this argument with people for over 30 years, and many years ago came to the conclusion that “wealth is finite” is not an economic theory, but in fact a political one.

If work has intrinsic value, why does it have so little value in pay? If manual work can be so strenuous and hard on the body through the years, why are the rich politicians, who sit on their butts all day and lift something no heavier than a pencil, keep trying to raise the age of retirement for those workers? Why does a person, ie., a hedge fund manager, who sits at a computer all day, and which all he does for a living is move around money from place to place that's not even his own, deserve so much more in pay?

[Spidey]

Toooo many questions…

Labor is kind of a ladder.

At the bottom most of the profits from your labor go to other people.

The further up the ladder you go… the more of the fruits of your labor you get to keep for yourself.

At the very top of the ladder, people don’t have to labor at all, and only take from the fruit of others labor.

That’s one of the reasons I became self employed…to keep more of the fruits of my own labor…not so much to make a lot of money.

[callmeslick]

try that argument out on the billions of people around this planet who work for less than $1.50 per hour from puberty until death.
Nice ladder, there.......

[Sergeant Thorne]

What's your point, slick?

[Sergeant Thorne]

If work has intrinsic value, why does it have so little value in pay? If manual work can be so strenuous and hard on the body through the years, why are the rich politicians, who sit on their butts all day and lift something no heavier than a pencil, keep trying to raise the age of retirement for those workers? Why does a person, ie., a hedge fund manager, who sits at a computer all day, and which all he does for a living is move around money from place to place that's not even his own, deserve so much more in pay?

Geez, TC. That's a stubborn, dumb question. He "deserves" it because none of your manual laborers know how to do it (or if they could, not enough have decided to do it). It's actually feasibility. Entitlement has absolutely nothing to do with it. I'm not defending any particular field, but you should be working toward making a killing by lifting a pencil, not whining about people who do. That does nothing but make them smarter and you bitter...er It ain't wrong until it's dishonest or harmful. You can make money by breathing if you can figure out a way to "monetize" it, and that would not be unfair to any manual laborers! (welcome to America, come on in)

[flip]

There's only a certain amount of money in print. Everyone talks about how good the 50's were and the main reason was because the money was circulated to a much wider range than it is now. They are hoarding the money now, no doubt about that.

[Jeff250]

The examples you cite are either created from others choosing to part with some of their wealth to purchase goods and services or the perceived notion that something is more valuable. The latter is merely one's perception up to the point where money/resources/wealth changes hands.

Wealth is always perceived value, including and especially money, but that does nothing to threaten the idea that wealth can and is created. It just tells us that to create wealth, you need to create something that people value. But that's not so difficult, is it?

You say that in all of my examples, something is traded for something else, but in every example someone is taking something of less value and then turning it into something of greater value. (In the case of creating intellectual property, you might not even need to first acquire something of lesser value.)

Maybe you think that one's own time is one's own wealth, and so that's why one cannot create wealth, because it still takes at least their time? Well, OK, I don't think that that jives with most people's understanding of the word wealth. But let's say you're right and one's own time is one's own wealth. You still agree that one can waste their time, and one can use it productively, right? For that to make any sense, you have to be able to get more or less out of your time than what it's worth.

[callmeslick]

What's your point, slick?

that work has no intrinsic value beyond the same restraints of supply and demand that rule all economics. My whole point within this thread is that
the whole notion that some individuals(generally well-off individuals) 'create' wealth is complete bunk. Wealth is, largely, static. Thus, no one creates it, it merely gets divided amongst humanity. That the division is not equal is obvious, and likely quite unavoidable. This tangent about work having intrinsic value is a corollary of that idea of value added economics.

[callmeslick]

There's only a certain amount of money in print. Everyone talks about how good the 50's were and the main reason was because the money was circulated to a much wider range than it is now. They are hoarding the money now, no doubt about that.

and, do you think the fact that the Federal tax rate on all income over $150,000 was 92% might have aided that circulation?