Capitalism and Wealth Distribution - How do you see it?

#1
volinbham

volinbham

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#1
We have a couple threads looking at taxation and capitalism. We have at least 2 analogies floating around:

1. the GPA analogy
2. the mountain analogy (lower income people are the base for the rich to stand on).

My 2 cents:

The capitalistic system offers the best chance to move people up in standard of living.

It does create/perpetuate differences in wealth among participants but those differences are not static in magnitude or individual person (people can move between levels)

Having capital or access to capital makes accumulation of more capital easier but is not a necessary precondition for accumulation of wealth.

Most importantly, the system allows for upward movement of all in the system collectively. To use the mountain analogy - the base of the mountain can rise higher under a capitalistic society relative to other economic systems. (also - a mountain is the wrong shape since income/wealth categories are small in terms of numbers of individuals at both ends of the spectrum).

The multiplier effect of wealth accumulation and consumption is a critical component. Constraining capital investment or consumption via excessive taxation at the top reduces the access to capital for all in the system.

Excessive redistribution of wealth via taxation does not redistribute capital - it does very little to help the lower end rise to the top. In other words, it may create a flattening of wealth distribution but it thwarts an individuals ability to move between wealth categories.
 
#2
#2
My 2 cents:

Once again, it's all about common sense, Redistrubition of wealth (i.e. Socialism) sounds like a great idea, but if you study history at all then you realize the countries who have or had socialism instead of capitalism tend to see only a select few reap the benefits... but the rest of the citizens become so reliant on government they think it's for the best. Sound familiar?

It's usally only about power for a select few.
 
#3
#3
volsforever27 said:
My 2 cents:

Once again, it's all about common sense, Redistrubition of wealth (i.e. Socialism) sounds like a great idea, but if you study history at all then you realize the countries who have or had socialism instead of capitalism tend to see only a select few reap the benefits... but the rest of the citizens become so reliant on government they think it's for the best. Sound familiar?

It's usally only about power for a selcet few.
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It also basically does away with the middle class. There are the select few in power (the haves) and then there is everyone else (the have nots)
 
#5
#5
As clarification, the title term "wealth distribution" deals with the fact that different people in a capitalistic system have different amounts of wealth. It is not redistribution in the form of taxation.
 
#7
#7
volinbham said:
We have a couple threads looking at taxation and capitalism. We have at least 2 analogies floating around:

1. the GPA analogy
2. the mountain analogy (lower income people are the base for the rich to stand on).

My 2 cents:

The capitalistic system offers the best chance to move people up in standard of living.

It does create/perpetuate differences in wealth among participants but those differences are not static in magnitude or individual person (people can move between levels)

Having capital or access to capital makes accumulation of more capital easier but is not a necessary precondition for accumulation of wealth.

Most importantly, the system allows for upward movement of all in the system collectively. To use the mountain analogy - the base of the mountain can rise higher under a capitalistic society relative to other economic systems. (also - a mountain is the wrong shape since income/wealth categories are small in terms of numbers of individuals at both ends of the spectrum).

The multiplier effect of wealth accumulation and consumption is a critical component. Constraining capital investment or consumption via excessive taxation at the top reduces the access to capital for all in the system.

Excessive redistribution of wealth via taxation does not redistribute capital - it does very little to help the lower end rise to the top. In other words, it may create a flattening of wealth distribution but it thwarts an individuals ability to move between wealth categories.
Click to expand...

I appreciate your sound response and taking time to cut to the truth.

A mountain is probably technically not the right shape - but it is some type of pyramid shape that can get fatter or narrower with time. It's not a skyscraper, but it's also not a pancake.

The devil is in the details as far as what constitutes "excessive." You and I seem to agree that the current allocations are about right. Others might disagree.

I believe in capitalism. It's not perfect, but it's the best system for man's flawed existence. I also believe in democracy to ensure the opportunity to allow for upward movement and prevent an oligopoly.
 
#8
#8
volinbham said:
With any taxation there is redistribution of wealth - some is necessary no?
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Well as it was intended by the framers taxes were suppose to be used for the necessary government functions.
 
#9
#9
TennNC said:
I appreciate your sound response and taking time to cut to the truth.

A mountain is probably technically not the right shape - but it is some type of pyramid shape that can get fatter or narrower with time. It's not a skyscraper, but it's also not a pancake.

The devil is in the details as far as what constitutes "excessive." You and I seem to agree that the current allocations are about right. Others might disagree.

I believe in capitalism. It's not perfect, but it's the best system for man's flawed existence. I also believe in democracy to ensure the opportunity to allow for upward movement and prevent an oligopoly.
Click to expand...

This is going to sound like a smartass question, but it's legit... why don't more liberals agree with you?

I'm not coming from an argumentative standpoint, I really don't understand.
 
#10
#10
To me the core issue is a distinction is that many on the left seem to favor using taxation to make wealth distribution more equal while many on the right see such strategies as reducing wealth creation for all.

I just don't see the logic in making the rich less rich simply because they are rich. This appears to be the driving force behind calls to raise marginal rates and the capital gains rate. It is an artificial means to shrink the income gap between the top and bottom.
 
#11
#11
volinbham said:
To me the core issue is a distinction is that many on the left seem to favor using taxation to make wealth distribution more equal while many on the right see such strategies as reducing wealth creation for all.

I just don't see the logic in making the rich less rich simply because they are rich. This appears to be the driving force behind calls to raise marginal rates and the capital gains rate. It is an artificial means to shrink the income gap between the top and bottom.
Click to expand...

Easy money is the government's favorite kind....in that respect it is no different than the rest of us!

My perfect solution: stop payroll taxes and make all elections on April 16.
 
#12
#12
If you all will check out my posts in TTTWND, I'm thinking of starting a small business of my own. The taxes for small businesses are incredible. I refuse to be taxed due to an ideology.

Being jealous of someone being rich and punishing them will never put more money im my pocket. It will simply mean more power for politicians with said ideology.
 
#14
#14
Lexvol said:
Easy money is the government's favorite kind....in that respect it is no different than the rest of us!

My perfect solution: stop payroll taxes and make all elections on April 16.
Click to expand...

That would be interesting.
 
#15
#15
volsforever27 said:
If you all will check out my posts in TTTWND, I'm thinking of starting a small business of my own. The taxes for small businesses are incredible. I refuse to be taxed due to an ideology.

Being jealous of someone being rich and punishing them will never put more money im my pocket. It will simply mena more power for politicians with said ideology.
Click to expand...

My advice is find a good accountant - preferably one who can also speak to business structure (e.g S-Corp, etc.).
 
#18
#18
volsforever27 said:
This has probably been covered before, but is the income tax legal?
Click to expand...

From what little I have read of the founding fathers and their attitude towards government, it's function and taxes I think it would be safe to say they would consider it double taxation. Does that help?
 
#21
#21
volsforever27 said:
This is going to sound like a smartass question, but it's legit... why don't more liberals agree with you?

I'm not coming from an argumentative standpoint, I really don't understand.
Click to expand...

It's not that I don't believe in capitalism, it's that I don't trust corporations in the least. It's the whole "power corrupts, absolute power corrupts absolutely" thing.
 
#22
#22
volsforever27 said:
why don't more liberals agree with you?
Click to expand...

I don't have any evidence that more "liberals" don't. I'd guess that if someone really hated capitalism, they'd try to move to another country or get off the grid and become invisible.
 
#24
#24
TennNC said:
I don't have any evidence that more "liberals" don't. I'd guess that if someone really hated capitalism, they'd try to move to another country or get off the grid and become invisible.
Click to expand...

Do you realize how many Democratic politicans put down capitalism? It's not like I'm coming out of left field with this.
 
#25
#25
emainvol said:
It's not that I don't believe in capitalism, it's that I don't trust corporations in the least. It's the whole "power corrupts, absolute power corrupts absolutely" thing.
Click to expand...

I get it, and it's not perfect, but it's by far the best system.
 
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