Comments on: You can’t blame legislation for inequality http://blogs.reuters.com/felix-salmon/2012/06/12/you-cant-blame-legislation-for-inequality/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: EconomistDuNort http://blogs.reuters.com/felix-salmon/2012/06/12/you-cant-blame-legislation-for-inequality/comment-page-1/#comment-40111 Wed, 13 Jun 2012 22:03:41 +0000 http://blogs.reuters.com/felix-salmon/?p=14948#comment-40111 Wow, what a terrible review. It amounts to:

“Krugman and Noah’s books don’t answer some question they didn’t seek to answer, but that I want answered, so they stink.”

More Salmonian arrogant idiocy.

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By: krimsonpage http://blogs.reuters.com/felix-salmon/2012/06/12/you-cant-blame-legislation-for-inequality/comment-page-1/#comment-40106 Wed, 13 Jun 2012 20:09:56 +0000 http://blogs.reuters.com/felix-salmon/?p=14948#comment-40106 Please change the article title. It should be “The Great Diveregence – On union busting legislation and its effects on US inquality”.

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By: Anonymous http://blogs.reuters.com/felix-salmon/2012/06/12/you-cant-blame-legislation-for-inequality/comment-page-1/#comment-40068 Wed, 13 Jun 2012 11:15:27 +0000 http://blogs.reuters.com/felix-salmon/?p=14948#comment-40068 In the NYT today, I review the new books from Paul Krugman and Tim Noah. Short version: these are both really smart people, whom you should pay attention to.

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By: Foppe http://blogs.reuters.com/felix-salmon/2012/06/12/you-cant-blame-legislation-for-inequality/comment-page-1/#comment-40066 Wed, 13 Jun 2012 07:14:50 +0000 http://blogs.reuters.com/felix-salmon/?p=14948#comment-40066 I’m with richclayton. Your fourth paragraph makes extremely little sense to me; the absence of collective bargaining is something with a constant effect on your bargaining position, making any and all attempts to enlarge the divergence bigger easier.
Furthermore, where did the public unions go in this story of yours? (And how do you quantify the effect their example pay set during some period or other?)

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2012/06/12/you-cant-blame-legislation-for-inequality/comment-page-1/#comment-40062 Wed, 13 Jun 2012 01:21:58 +0000 http://blogs.reuters.com/felix-salmon/?p=14948#comment-40062 Inequality can be fixed by laws, mainly the tax laws, but it probably won’t happen soon. It’s not that we need laws that say companies must pay people a certain percentage of their revenue or profits, but there are more effective and efficient ways to accomplish this goal, if the nation really cares about such things (which it should).

Corporations are virtual machines that were originally designed to act as vehicles for ventures that are too large for individuals to finance. However, over time and under tremendous social pressures, they have been transformed into a tool for executives to extract wealth from society. The corporation, founded for a specific purpose, to sell a product or service, instead becomes optimized to create profits, and specifically, after-tax profits. For the most part, they have excelled at this task. And as part of their design, they have manipulated governments to minimize their taxes, because what matters to the executives most is after-tax income. Not whether or not their employees earn enough to be part of their ecosystem that buys their products. Nor if their business can be sustained without extracting rents from the communities they help comprise. These details are insignificant to their goals of maximizing profits, and more importantly, executive compensation.

The tax laws not only enable this kind of attitude, but reinforce it. There are no penalties for hoarding profits, which effectively removes capital from circulation. There are penalties, though, in the form of double taxation, for distributing profits to shareholders, profits that otherwise might be re-invested. There are incentives for minimizing spending on research and development, building modernization, employee training and health care, and all those things that create jobs.

So here I go again saying we need a tax system that strongly discourages hoarding and rewards investment. Money that is kept out of circulation effectively reduces income for some other part of society. When we have a tax system that gives businesses no choice but to invest or distribute profits, then there will be more of those profits invested in things that create jobs, or pay people more, and the income inequality will start to disappear.

We can’t create a precise model for the economy so that income is distributed more broadly, but we can devise a system that gives the economy less options for preventing a wide distribution. And that is something legislation can accomplish.

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By: crocodilechuck http://blogs.reuters.com/felix-salmon/2012/06/12/you-cant-blame-legislation-for-inequality/comment-page-1/#comment-40059 Wed, 13 Jun 2012 00:51:49 +0000 http://blogs.reuters.com/felix-salmon/?p=14948#comment-40059 @Doly @ 8:23 pm: “I’m with Felix on this one: I don’t think inequality is something you can easily fix with changes on laws. Laws are only effective when they don’t fight against other strong incentives. People that think that laws would make a big difference probably don’t see clearly the forces that are maintaining inequality.”

Nice try in justifying the 1%’s control of wealth and upwards redistribution. Here’s a law who’s ‘deregulation’ has had an enormous impact on this: USURY

http://findarticles.com/p/articles/mi_m6 528/is_1_53/ai_n25019601/

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By: Doly http://blogs.reuters.com/felix-salmon/2012/06/12/you-cant-blame-legislation-for-inequality/comment-page-1/#comment-40057 Wed, 13 Jun 2012 00:23:22 +0000 http://blogs.reuters.com/felix-salmon/?p=14948#comment-40057 I’m with Felix on this one: I don’t think inequality is something you can easily fix with changes on laws. Laws are only effective when they don’t fight against other strong incentives. People that think that laws would make a big difference probably don’t see clearly the forces that are maintaining inequality.

Inequality is usually the result of very competitive societies. When people compete, there are always winners and losers, and the winners usually take over at least part of the wealth of the losers. This creates more inequality. But instead of blaming excessive competition, losers are told to stand up again and compete harder than ever for the hope of winning this time.

To reduce inequality in America, for starters you would probably have to reduce the cult of competition, and recognize that while a bit of competition can be very beneficial, an excess leads to massive inequality, which leads to general unhappiness. But collaboration is often seen as “socialist”, which for many is about the same thing as evil.

But a change of attitude isn’t going to happen in the middle of a recession/depression, because when almost everybody are worrying about their own situation the urge to compete is stronger than ever. Even traditionally less competitive countries are getting more competitive now.

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By: Curmudgeon http://blogs.reuters.com/felix-salmon/2012/06/12/you-cant-blame-legislation-for-inequality/comment-page-1/#comment-40056 Tue, 12 Jun 2012 22:59:45 +0000 http://blogs.reuters.com/felix-salmon/?p=14948#comment-40056 I think it’s not legislation nearly as much as it is that much of the world is catching up in skills, and you would expect wages to become more equal as skills do. Germany is at least partly a bogus comparison, because it’s clear that what has happened in the US is getting ready to happen in Europe.

As with an equalizing function, there are parts (financial services, executive management in general) that are not yet equalizing. Give it a few decades; I bet they will too. The trend is neither smooth nor fair. While society doesn’t think well in longer timeframes, that’s usually how dramatic shifts occur.

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By: rowedj http://blogs.reuters.com/felix-salmon/2012/06/12/you-cant-blame-legislation-for-inequality/comment-page-1/#comment-40055 Tue, 12 Jun 2012 21:23:00 +0000 http://blogs.reuters.com/felix-salmon/?p=14948#comment-40055 I’m surprised Noah didn’t cite Bruce Western’s and Jake Rosenfeld’s “Unions, Norms, and the Rise in U.S. Wage Inequality” as it gives more support to his argument. They find that 1/5 to 1/3 of the increase in wage inequality results from the decline of unions 1973-2007.

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By: richclayton http://blogs.reuters.com/felix-salmon/2012/06/12/you-cant-blame-legislation-for-inequality/comment-page-1/#comment-40054 Tue, 12 Jun 2012 21:10:33 +0000 http://blogs.reuters.com/felix-salmon/?p=14948#comment-40054 Ummm… felix? German unions weren’t “invited” into the boardroom by friendly capitalists. A Social Democratic government passed a law requiring that employee representatives get half the seats on the supervisory board.

About Taft-Hartley: if you don’t think that increasing union density in the US would reduce inequality (which seems to me to be a very peculiar thing to believe), ok. But if you do think it would reduce inequality, are you saying that repealing TH wouldn’t boost density? Without TH, you would have card-check recognition. You would have legal sit-down strikes. You would have legal secondary boycotts. Without TH there would be no right to work states. So I find it very hard to believe that repealing TH would not lead to a substantial increase in union density. I also find it hard to believe that repealing TH would not lead to a substantial decline in inequality, since the growing gap between production worker compensation and productivity seems, inevitably, to be a the primary soucre of increasing inequality.

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