View Poll Results: What should be done to battle income inequality in the USA?

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  • Do not intervene

    47 51.09%
  • Yes, do intervene

    45 48.91%
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Thread: Income Inequality

  1. #921
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    Re: Income Inequality

    Quote Originally Posted by KevinKohler View Post
    The problem is, there is another angel to capitalism. That is to say, in every contest, there are winners, and there are losers. Once the price war you have mentioned ends, likely with the demise of the weaker of the two companies, the one left standing owns the market.

    Now, that in of itself isn't so bad, but we have a lot of market entry barriers in this country, in the name of oversight and safety. And those are good things, but they result in it being quite difficult to move in and set up shop, in order to ensure competition. Without competition, there is no capitalism, only corporatism. See the US.
    Absolutely right that competition is the lifeblood of capitalism and we don't have nearly enough of it.

    That said, it isn't really regulatory hurdles that create big barriers to entry. There is some truth to that in a handful of ultra-regulated industries like insurance where they require insurance companies to have huge amounts of money to back up their policies. That said, you do kind of need to have a lot of money if you're going to honestly offer policies that could potentially cost huge amounts of money, for example, in a natural disaster.

    But generally speaking, regulators are generally the only thing keeping the competition alive at all. In a totally de-regulated market, you pretty much always end up at a monopoly. Monopolies are so much more profitable than competitive markets that companies always find a way to make one work. For example, if you're selling widgets, maybe you pay the trucking companies not to haul your competitor's widgets. Maybe every time a small company tries to set up shop in the widget market, you just drop your prices so low that they can't compete, then you jack them back up again when the competitor goes out of business. Or, maybe you just merge with all the other big players. Antitrust regulators are constantly battling those sorts of things. IMO, the solution is much more aggressive antitrust regulation, not less regulation of other things.

  2. #922
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    Re: Income Inequality

    Quote Originally Posted by tuhaybey View Post
    Absolutely right that competition is the lifeblood of capitalism and we don't have nearly enough of it.

    That said, it isn't really regulatory hurdles that create big barriers to entry. There is some truth to that in a handful of ultra-regulated industries like insurance where they require insurance companies to have huge amounts of money to back up their policies. That said, you do kind of need to have a lot of money if you're going to honestly offer policies that could potentially cost huge amounts of money, for example, in a natural disaster.

    But generally speaking, regulators are generally the only thing keeping the competition alive at all. In a totally de-regulated market, you pretty much always end up at a monopoly. Monopolies are so much more profitable than competitive markets that companies always find a way to make one work. For example, if you're selling widgets, maybe you pay the trucking companies not to haul your competitor's widgets. Maybe every time a small company tries to set up shop in the widget market, you just drop your prices so low that they can't compete, then you jack them back up again when the competitor goes out of business. Or, maybe you just merge with all the other big players. Antitrust regulators are constantly battling those sorts of things. IMO, the solution is much more aggressive antitrust regulation, not less regulation of other things.
    Well, there are a few things i cna think of that aren't HIGHLY regulated, but most things are. Food service? Very expensive to get into, for what is, typically, a low profit margin field. Medical care? Forget it. Regulations have made it next to impossible for someone NOT worth about 3 billion to start, say, their own clinic. Auto repair? Again, pretty expensive, due to regulation. Hell, even SALES, a traditionally cut throat, lawless field, has regulations, and increasingly so.

    Wanna open a restaurant? I hope you have about 1 mil under the pillow. If you can find an EXISTING restaurant, already furbished, then you MIGHT get opened for about 500K.

    The costs of opening a healthcare facility is incalulable to me.

    A garage? Plan on going into debt to the tune of about 600K. So you can average about 70K per year.

    There's a REASON why mom and pops are a thing of the past. You franchise, or you prepare for a lifetime of calling someone else boss.

    Unless you're rolling in dough.
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

  3. #923
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    Re: Income Inequality

    Quote Originally Posted by KevinKohler View Post
    Only fewer widgets are sold if there isn't constant demand. Look at gasoline. The US government has to DICTATE what gasoline is sold for, because ultimately, not buying it isn't an option for a great many people.
    Yeah, that's right. The term for that is "inelastic demand." Certain things, people will basically pay an infinite amount for just because they don't have much choice. Insulin is the classic example.

    Quote Originally Posted by KevinKohler View Post
    Yes, but what I think you are missing is that an increase in supply does NOT always mean a decrease in demand. In the 70's, chevy produced more corvettes than they ever had before, and many forecasted that this would be a mistake, it would mean cars sitting on lots, it would be dropped prices for chevrolet's flagship car. But what happened? They sold more C3 corvettes in the late 70s, DESPITE their being seen today as the WORST corvette ever produced, than ever before, and ever SINCE.

    An increase in supply =/= a decrease in demand. So long as demand is strong, you can charge any price you want, regardless of cost to build, regardless of competition, etc.
    No, you're misunderstanding what the supply and demand represents. The supply line doesn't represent how much of something is available, it represents the cost per unit at a given quantity. For example, if it costs you $2 to make one widget and $3 to make two widgets, then the supply line would be at $2 for one widget and $1.50 for two widgets. Likewise, the demand line represents the price you would have to set to get people to buy that many of the thing. Here, lets do an example:



    With regard to the demand line, what this graph is telling us is that 40 people are each willing to pay $4 for this widget. They are really into widgets. There are 70 people who would be willing to buy one if it cost them $3, 90 people who would be interested at a price of $2, and if you dropped it all the way to $1, then 100 people would buy them.

    The supply line tells us that you can make 10 widgets for $1 each. Maybe those are just widgets you have lying around already. If you need to make 40 widgets, it'll cost you $2 each. If you need to make 70 widgets, that'll run you $3 a pop. If you need to make 140 widgets, then you're like having to pull copper wire out of other products to get enough to make widgets or something, so it costs you $4 each.

    The point where the lines cross is the point where 70 people are willing to pay $3 each and you just so happen to be able to make 70 for exactly $3 each.

    Now, it is actually a bit more complicated than that because really the demand line is "marginal cost," not "average cost." So, in reality, you actually can make a bit of profit in that scenario. But, for simplicity's sake, the explanation above is pretty close

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    Re: Income Inequality

    Quote Originally Posted by KevinKohler View Post
    Well, there are a few things i cna think of that aren't HIGHLY regulated, but most things are. Food service? Very expensive to get into, for what is, typically, a low profit margin field. Medical care? Forget it. Regulations have made it next to impossible for someone NOT worth about 3 billion to start, say, their own clinic. Auto repair? Again, pretty expensive, due to regulation. Hell, even SALES, a traditionally cut throat, lawless field, has regulations, and increasingly so.

    Wanna open a restaurant? I hope you have about 1 mil under the pillow. If you can find an EXISTING restaurant, already furbished, then you MIGHT get opened for about 500K.

    The costs of opening a healthcare facility is incalulable to me.

    A garage? Plan on going into debt to the tune of about 600K. So you can average about 70K per year.

    There's a REASON why mom and pops are a thing of the past. You franchise, or you prepare for a lifetime of calling someone else boss.

    Unless you're rolling in dough.
    Definitely lots of businesses are expensive to get started in, but I don't buy that regulations are a significant driver of those costs. Most regulations actually don't apply until you get 50 employees or 200 employees or in some cases hit certain revenue baselines and whatnot. Most small businesses are more or less de-regulated as long as they don't violate basic common law crimes like fraud and whatnot. For example, I was part of the management team at a start-up for a while. We had one and only one regulatory burden- we had to file out taxes once a year. That was kind of a pain to be sure. The CEO did it himself the first couple years and found it annoying. But then he hired an accountant for a few hundred once a year and that was that. That's it. That's the only regulatory thing we ever encountered. That's pretty typical unless you're like actually trying to do whatever it is that the regulations are there to prevent, like trying to sell unsafe products or scam your employees or something.
    Last edited by tuhaybey; 10-05-14 at 05:41 PM.

  5. #925
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    Re: Income Inequality

    Quote Originally Posted by Gimmesometruth View Post
    In case you missed it...


    Gimme demonstrates that the top 10% have provided far more value added to production over the past few decades, and then asks why gains in productivity gains haven't resulted in equally dramatic increases in lower-value income wages.


  6. #926
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    Re: Income Inequality

    Quote Originally Posted by cpwill View Post


    Gimme demonstrates that the top 10% have provided far more value added to production over the past few decades, and then asks why gains in productivity gains haven't resulted in equally dramatic increases in lower-value income wages.

    Can you give us some examples of individuals in that 10% who have provided equal value for the millions (or billions in some cases) they have extracted from the economy, and if so, why they might be drawing income several orders of magnitude above what their equivalents earned just a few years ago?

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    Re: Income Inequality

    Quote Originally Posted by tuhaybey View Post
    Anyways, do you have some kind of argument for why we shouldn't try to fix the problem with people being paid less than they're worth? Or what? It seems like you're just interested in some sort of weird allocation of blame thing or something, but I don't see why whatever all that is about would mean we shouldn't fix the economic issue, would it?
    First of all ... why would we suggest we "shouldn't try to fix the problem", when we don't even believe it is a problem?

    Secondly ... by what criteria do you measure "people being paid less than they're worth"? How do you define "worth"?

    What issue?
    We're born alone, we live alone, we die alone. Only through our love and friendship can we create the illusion for the moment that we're not alone.
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    Re: Income Inequality

    Quote Originally Posted by Ganesh View Post
    Can you give us some examples of individuals in that 10% who have provided equal value for the millions (or billions in some cases) they have extracted from the economy, and if so, why they might be drawing income several orders of magnitude above what their equivalents earned just a few years ago?
    Conversely, why shouldn't they?
    We're born alone, we live alone, we die alone. Only through our love and friendship can we create the illusion for the moment that we're not alone.
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    Re: Income Inequality

    Quote Originally Posted by GBFAN View Post
    First of all ... why would we suggest we "shouldn't try to fix the problem", when we don't even believe it is a problem?

    Secondly ... by what criteria do you measure "people being paid less than they're worth"? How do you define "worth"?

    What issue?
    Already explained exhaustively. Just page back through the thread if you missed it.

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    Re: Income Inequality

    Quote Originally Posted by tuhaybey View Post
    Absolutely right that competition is the lifeblood of capitalism and we don't have nearly enough of it.

    That said, it isn't really regulatory hurdles that create big barriers to entry.
    On what do you base this conclusion?

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