Give Yourself a Raise

Beyond Saving's picture

 http://www.businessinsider.com/tyrel-oates-letter-to-wells-fargo-ceo-2014-10


Give yourself a raise.


 


Some idiot who works for Wells Fargo decided to send an e-mail to the CEO and CCd 200,000 fellow employees. I'll ignore the fact that such a move is an incredibly bad decision if you have any desire for advancement, it also is a demonstrable example of extreme ignorance. If he wants a raise, it has been perfectly within his power to give it to himself. Wells Fargo is profitable now, it hasn't been the whole 7 years he has worked for them. He had an opportunity to share in the great profits the company is currently generating, he decided not to.


 


Suppose for example that he decided to purchase a modest amount of Wells Fargo stock each quarter since he has been employed. Say $500, that is $125/month, certainly a reasonable amount of money for someone who makes $15/hour to come up with. Using actual stock prices, today he would be the owner of roughly 485 shares. (The exact number would vary depending on the actual timing of the purchases).


 


Those shares would be worth $24,735 and he would have invested $14,000 of his own money. There is his $10,000. Additionally, over that period of time he would have received quarterly checks for dividends which based on actual dividends paid, would have been approximately $1600. Last month, he would have received a dividend check of $170. He essentially gave himself a $1660 a year raise for the last 7 years he worked.


Now a saavy investor who didn't have some emergency requiring the cash flow would have the dividends automatically reinvested in more stock. If he had done that, he misses out on the $1600 in cash he would have received, but would own 529 shares of stock worth $27,000. His dividends would be $185 a quarter ($740/year). He would get that money regardless of whether he decided to continue to work for Wells Fargo or not. He would be one of the evil owners reaping the rewards of the current high profits.


 


A really saavy investor would also take advantage of price dips. During his time at Wells Fargo, the stock was once all the way down to $8 a share when it looked like it might be one of the banks going under. If he believed in the company, it would have been pretty smart to tighten the belt for a few months and maybe invest double that quarter. A mere extra $500 taking advantage of the crash would have resulted in owning 599 shares today, worth $30,500 and getting a dividend of $210/quarter.


 


None of this was guaranteed. Wells Fargo could have gone out of business- it very nearly did. In which case he would lose his money. Owning a company is risky and Well Fargo stock could crash and the dividends stop coming tomorrow. Why should Oates reap the benefits during profitable times when he decided not to invest during the unprofitable times? He had the option to invest in the company and as we can see in hindsight, it would have been a profitable option. If he started investing today, would he see similar benefits 7 years from now? No one knows and the people who buy stock today are taking that risk and will enjoy the benefits or suffer the losses. If you want to enjoy the potential upside, that is the cost.


 


And who does Oates think owns Wells Fargo? No doubt, he has the liberal illusion that Wells Fargo is owned by a bunch of greedy bazillionaires and them just giving him a $10,000 raise is only harming the super rich. In reality, the vast majority of Wells Fargo (almost 80%) is owned by 401k funds. The people who would lose money through lower dividends and lower stock prices are for the most part, middle class Americans who set aside their funds in 401k's every month. Quite likely the same people who read this ignorant e-mail and think "yeah, stick it to THE MAN" completely oblivious to the fact that through their 401k, they most likely are "The Man".


 


If you want a raise, don't ask for charity or benevolence. Take control of your own life, have a little discipline, delay gratification and put your money to work for you. One of the good things about our current system is that anyone can own a company and enjoy the benefits or suffer the pitfalls. You could own a tiny piece of a megacorporation or a large piece (or entirety) of a small company. If Oates has set aside a little bit of money and invested, the $27,000 he would have would certainly be sufficient to start a wide variety of small businesses if he didn't want to work the corporate world until retirement.


 


The options are there, the only one responsible for him not taking advantage of them is him.  


 


As it turns out, Wells Fargo has been a good bet the last 30 years. Consider an alternate universe, let's suppose that Oates was older, say 55 and he had started working for Wells Fargo in 1984. Going back to 2007, we don't have to factor in inflation because wages have been stagnant. But going back that far, we do have to realize that he probably couldn't have invested $500 a quarter. So subtracting 4%/year from his investment (a rate higher than the experienced inflation rate), means he would have started in 1984 investing $195 a quarter ($65/month). I'm too lazy to calculate it quarterly, so I just used the share price on October 1st of each year and assume an annual purchase. Dividends are pulled from actual numbers and I accounted for the 5 stock splits that occurred during that time period.


 


We will assume that Oates during this time never got a promotion, whether through choice or the idiots in charge never realized what a brilliant worker he is. After all, they are greedy SOBs. So Oates does his time, slaving away at a dead end job for "The Man" for 30 years. He does however have the foresight to put away a little cash but fails to really pay attention to what is accumulating. He sets up the dividends to automatically buy more stock. 30 years later, 55 year old Oates sees a news story about the huge profits Wells Fargo made last quarter. Oates goes into a rage.


"Fuck them" He says, "I've worked here 30 years and only get pennies on my raises. Those rich assholes keep screwing me over."


So he tells his boss to take this job and shove it. Oates goes home and logs into his Charles Schwab account. How much money does Oates have? Slightly over $475,000. He is also drawing an income of $12,400 a year from dividends alone. While he was still only taking around 7% out of his paycheck, his net worth and dividend payments have been growing exponentially. Rich? I don't think so, but it is certainly enough for the freedom that Oates has a myriad of options. He could invest in his own business, he could quit working full time and get a part time job while maintaining his current lifestyle, or he could continue working. Maybe draw a little on his dividends to enjoy. Or he could start drawing out money, either manually or annuitize it through a company with a guarantee. $475,000 would be enough to draw approximately $30,000 a year for 50 years. Not a spectacular retirement, but more than Social Security and remember, Oates is only 55.  


 


This is assuming that Oates maintained a perfect track record of regular investments and completely ignored the lump of money growing. This isn't very realistic, we are all human and often cashing in investments becomes appealing when life happens. You know, that is what happened to Oates. At, 31 he met the love of his life. What dya know, she got preggers and Oates really needed that thousand dollars he intended to invest. No worries though, he worked out his budget and got back to his regular investments the next year.


 


But then, 6 years later, his now wife wanted a house. Move into a better school district for their child you know. Well, there is $48,000 sitting in stock. It won't hurt to cash a little in right? Why if we just cashed $18,000 out for a down payment the remaining mortgage would be far less than our current rent. It's 1996, interest rates are at all time lows, real estate is a GREAT investment, everyone knows it will go up forever... So our hero cashes in $18,000 worth of stock to buy his queen the house of her dreams, white picket fence and all.


But then, 6 years later, our hero Oates doesn't have the perfect romance anymore. The marriage goes down hill and Oates finds himself with a lawyer headed for divorce. The bitch takes half of his $95,000 worth of stock.


Then, 6 years later his daughter wants to go to college. Oates doesn't want his child to have to work a crappy $12/hour job for the greedy pricks who own Wells Fargo, so he dips into his stock again to pay for college. $40,000 out the door.


6 years later, 55 year old Oates gets remarried (some people don't learn the first time) and decides he doesn't want to work anymore. He was to spend time with his grandkids and maybe travel the country a bit. 30 years of toiling in the corporate world has worn on his. Does Oates have enough money to quit?


Well all the temptations to dip into the stock funds cost him quite dearly, but still, he paid for a lot of big life expenses with cash that most Americans can't. His house is paid off, he owns 2,329 shares of Wells Fargo stock worth just shy of $120,000. His dividend last month was $815. $3,260 a year off of dividends means the dividends are contributing more to the investment than the money from his paycheck. Oates probably isn't retiring at 55. But he does have options. Could he gamble $30-40,000 on opening a business? Sure. Could he go work a lower paying job and start drawing some cash? Yep. He could draw approximately $7,500 a year from an annuity. Considering that his Social Security benefit is only projected to by $19,000 a year, that extra would definitely help. And again, that is assuming he cashes out now.


If he works another 10 years, who knows what he will have? Even if he stops investing from his paycheck and just lets the dividends build, it is quite likely that his investment will double over the next 10 years and he will be in a position where his annuity will double his social security or more. 


 


That is the power of investment over the long term. A small sacrifice today, living without cable or without a smart phone and allowing your money to work for you can yield huge dividends in the future. Not touching it is ideal, but if you invest regularly, dipping into it for major life costs or emergencies isn't going to devastate you. It is just too bad that Oates didn't get a job for a company that has done really well, like Walmart.


Speaking of Social Security. What if we really lived in bizzaro world where Beyond Saving's candidates actually won an occasional election. Suppose that these politicians decided in the 80's that people should get to keep their own money and save for themselves. What would Oates fate look like if instead of his payroll taxes going to the "Trust Fund" where it is blown before it is received, he got to keep it himself?


 


He would have a choice of blowing it like politicians except he actually gets to enjoy the hookers and cocaine. Or he could be responsible. What if Oates invested every penny he pays is SS taxes for 30 years in nothing but Wells Fargo stock? Even after all the events above, cashing out for a house- taking a year off due to the immediate need of taking care of a new baby, giving the ex-wife half because apparently she never contributed a penny of her own, paying for his daughters college and weathering the financial crises- Oates would have 10,137 shares of stock worth $517,000 and be collecting dividends of $14,200 a year.


 


Despite never making more than $15/hour, at age 55, Oates would have the option of retiring by drawing $32,000 a year from his stocks until he is 105 years old. If he had managed to avoid touching it, especially if he managed to avoid getting divorced or was allowed to keep his assets in the divorce, he would have $1,161,000 and would be making $31,600 in dividends a year. He could retire and live his current lifestyle without even touching the principle. That is the power of investment, and that is how much social security robs our youth.  



If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X

Beyond Saving's picture

 Well that formatting got

 Well that formatting got really messed up during the cut & paste.

Vastet's picture

You make some good points,

You make some good points, and for doing this the way he did the guy is a fool. Yet he makes good points himself. Sadly he doesn't make them to the right audience, or with sufficient data to be particularly convincing.

But when 85 people control as much wealth as 3.5 billion, there's a significant problem brewing. The biggest companies and wealthiest individuals will be the ones most affected when it comes to a head, and they would be wise to nip as much of the problem in the bud as they can. Especially since greater wealth equality has a greater effect on a nations economic health than anything else, even corruption (the lack thereof). Greater equality equates to more economic and social stability. Everyone is better off, including the rich.

Proud Canadian, Enlightened Atheist, Gaming God.

Beyond Saving's picture

Vastet wrote: But when 85

Vastet wrote:
But when 85 people control as much wealth as 3.5 billion, there's a significant problem brewing.

There have been times in history where wealth was much more centralized and it didn't become a significant problem. Why would it be now? The trio of Rockefeller, Carnegie and Vanderbilt had enough that they could have bought those 85 people and asked for change. Additionally, they had that wealth at a time when governments didn't have significant spending. They literally had more money than the government. Today, when it comes to who controls the most money, no person holds a candle to governments. Even the largest corporations are well behind- Exxon Mobil has gross revenues of around $500 billion. The US federal government alone spent $3.77 trillion. When it comes to concerns over who is controlling wealth, private for profit enterprise isn't even in the conversation in any modern first world economy.

 

Vastet wrote:

The biggest companies and wealthiest individuals will be the ones most affected when it comes to a head, and they would be wise to nip as much of the problem in the bud as they can.

Of course. Those who have ownership stakes on companies are the ones that experience the benefits and pitfalls of the economy most directly. In the story above, Oates would have seen 80% of his investment value disappear overnight during the banking crash. That is why it is foolish to worry about things like Bill Gates being worth over $80 billion. It is all on paper, and he only has $80 billion if he actually sold all his stock. The problem is that as a practical matter, he could never find enough buyers without selling under market value. And if Gates did start making a huge move out of Microsoft, it would likely start a panic and his net worth would drop dramatically. While average people make and spend a significant portion of their net worth every year, billionaires don't. The actual amounts of money that they directly control insofar as deciding what to spend it on is extremely small compared to their net worth.

Vastet wrote:
 

Especially since greater wealth equality has a greater effect on a nations economic health than anything else, even corruption (the lack thereof). Greater equality equates to more economic and social stability. Everyone is better off, including the rich.

So is repeated ad nauseum throughout news reports everywhere. Yet despite their frantic attempts to do so, I've yet to see anyone demonstrate even a correlation of relative income equality and broad economic growth. The Gini coefficient is often pointed to as if it is some kind of indicator of economic health, but then why are countries that are undeniably improving and well off economically often experiencing an increasing gini while those that are getting worse are becoming more equal?

The US, Canada, UK, Germany, Australia, New Zealand, Japan all have high gini coefficients. Countries with low ginis include Greece, France, Ireland and Italy- none of which have been particularly healthy economically (or socially for that matter). Certainly within the US, the gini coefficient went down during our recession, and it increased during the 90's and is increasing now. Times when our economy is undeniably better for everyone. 

Even the countries that have low gini coefficients and healthy economies like Norway, Sweden and Finland have much higher gini coefficients today than they did in the 80's when they were economically irrelevant to most of the world. 

My opinion is that relative (in)equality is a completely useless measure. It doesn't convey any useful information, it bears no direct relation to any other economic indicators and it doesn't indicate a problem or lack of a problem. 

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X

Vastet's picture

Beyond Saving wrote:There

Beyond Saving wrote:
There have been times in history where wealth was much more centralized and it didn't become a significant problem.

I am unaware of any such time or scenario. But I very highly doubt that 3 people had more wealth than 3.5 billion people and nothing bad happened.

Beyond Saving wrote:
Exxon Mobil has gross revenues of around $500 billion. The US federal government alone spent $3.77 trillion.

This is a misleading statement, as the US government has been slowly going bankrupt over the spending that is greater than income.
The US government is also required to provide services that no corporation is required to. No company builds and maintains roads or provides security against foreign and domestic threats for 400 million people, and that's the tip of the ice berg.
In fact, Exxon Mobil made infinitely more profits than the US government, as the US government hasn't made any profits at all in more than a decade.

Beyond Saving wrote:
Of course. Those who have ownership stakes on companies are the ones that experience the benefits and pitfalls of the economy most directly. In the story above, Oates would have seen 80% of his investment value disappear overnight during the banking crash. That is why it is foolish to worry about things like Bill Gates being worth over $80 billion. It is all on paper, and he only has $80 billion if he actually sold all his stock. The problem is that as a practical matter, he could never find enough buyers without selling under market value. And if Gates did start making a huge move out of Microsoft, it would likely start a panic and his net worth would drop dramatically. While average people make and spend a significant portion of their net worth every year, billionaires don't. The actual amounts of money that they directly control insofar as deciding what to spend it on is extremely small compared to their net worth.

Well the more wealth you have the less of a percentage you can spend, realistically. A lottery winner might blow everything on foolish products and services, but someone who spent years growing their fortune is exceptionally unlikely to frivolously throw it all away.
Anyone with a billion dollar figure as their net worth could buy everything I've ever bought without it even totalling 0.0000001% of his or her fortune.
Bill Gates might not be quite as high as 80B realistically, but he's still way above the vast majority. Even 1B puts him above hundreds of thousands of people.
The driving point is inapplicable to any single individual anyway. It's a numbers game where a few hundred people control about 90% of all the wealth on Earth. Bill Gates alone is largely irrelevant. But a thousand Bill Gates' is a severe discrepancy, and it will be righted in the not too distant future.

Beyond Saving wrote:
So is repeated ad nauseum throughout news reports everywhere. Yet despite their frantic attempts to do so, I've yet to see anyone demonstrate even a correlation of relative income equality and broad economic growth. The Gini coefficient is often pointed to as if it is some kind of indicator of economic health, but then why are countries that are undeniably improving and well off economically often experiencing an increasing gini while those that are getting worse are becoming more equal?

And what countries are actually becoming more equal? Canada isn't, nor the US or UK or France or Mexico or Brazil or Germany or any other country to my knowledge. The wealth discrepancy is growing globally.

Quality of life can increase even under slave ownership conditions, so that isn't an effective argument. It has never increased continually in such a disparate scenario as we see today. Inevitably the poor run out of resources to maintain their existence, and the middle class rises up just before or after they fall into the same situation, which largely solves the problem. At least for awhile.

Relative inequality by itself isn't a problem. It is an unavoidable situation that some will have more than others. Even the craziest communists know this, even if they refuse to admit it.
It is the degree of separation that is the problem, not the inequality by itself. Not only is there a vast difference between rich and poor, but the difference is constantly growing. The middle class is under significant stress already, with much of it having been eroded into the poor. People who could easily afford a house in the 70's are today living in townhouses and apartments, and going to food banks to have enough to eat. I shudder to think how bad things will be in another 40 years, should things continue as they have been.

Proud Canadian, Enlightened Atheist, Gaming God.

digitalbeachbum's picture

http://finance.yahoo.com/news

Beyond Saving's picture

Vastet wrote:Beyond Saving

Vastet wrote:
Beyond Saving wrote:
There have been times in history where wealth was much more centralized and it didn't become a significant problem.
I am unaware of any such time or scenario. But I very highly doubt that 3 people had more wealth than 3.5 billion people and nothing bad happened.

America, late 1800's early 1900's. Rockefeller alone was worth 10% of gross national product- which with inflation is almost $400 billion in todays dollars. For someone to be worth 10% today they would have to be worth $1.7 trillion. In terms of "control", he had more theoretical economic leverage than any human to have ever lived in history, including emperors. At the time, the US accounted for 20% of the entire worlds production (we are about 2% higher today). So Rockefeller alone owned 2% of the worlds production. Not more than 3.5 billion people, since the population was under 2 billion, but more than even many 1st world countries produced in a year. Carnegie was only slightly poorer than Rockefeller. There is no question that the group of men who congregated in Newport, Rhode Island were vastly more wealthy than anyone today.

The thing with economic leverage, is that it isn't as powerful as people pretend as Rockefeller found out when his company was broken up by the government.

As far as control over finances, I think the crown for that has to go to JP Morgan. Although he didn't have massive personal wealth himself (at least compared to his contemporaries- he was very rich), JP Morgan probably had more control over where investment took place than anyone before or since through his contacts and the respect that his contemporaries had for his opinions. When JP asked for money, the rich gave it to him and he engineered the financing for many of the largest mergers at a time of gigantic mergers.

 

Vastet wrote:

Beyond Saving wrote:
Exxon Mobil has gross revenues of around $500 billion. The US federal government alone spent $3.77 trillion.
This is a misleading statement, as the US government has been slowly going bankrupt over the spending that is greater than income. The US government is also required to provide services that no corporation is required to. No company builds and maintains roads or provides security against foreign and domestic threats for 400 million people, and that's the tip of the ice berg. In fact, Exxon Mobil made infinitely more profits than the US government, as the US government hasn't made any profits at all in more than a decade.

Profits are completely irrelevent if you are talking about controlling economies. An entity can have a huge effect on an economy without making a cent in profit. The governments today control far more wealth than any profit seeking enterprise. So if your concern is a limited number of people controlling a large amount of wealth, it should focus on the limited people who actually do control massive amounts of wealth. What the government spends to maintain roads is far less than what it does with the explicitly stated purpose of controlling the economy. Whether it is good, bad, or indifferent- if your goal in life is to control massive amounts of wealth, you are far better off running for political office in the US than trying to start a mega-corporation. Bill Gates doesn't even control Microsoft, he only owns 4.5% of it. Only a handful of billionaires actually maintain effective control over their corporations, and often that control only remains because the majority of shareholders consent to let them keep it. There have been cases of billionaires losing their companies- Steve Jobs for example.

 

Quote:

It's a numbers game where a few hundred people control about 90% of all the wealth on Earth. Bill Gates alone is largely irrelevant. But a thousand Bill Gates' is a severe discrepancy, and it will be righted in the not too distant future.

What terrible damage can a thousand Bill Gates' do? Why do we need to be so obsessively worried about it other than some moral notion that equality is better?

 

Vastet wrote:
And what countries are actually becoming more equal? Canada isn't, nor the US or UK or France or Mexico or Brazil or Germany or any other country to my knowledge. The wealth discrepancy is growing globally.

Mexico actually is getting more equal, it still remains one of the least equal countries in the world. But so have Belgium, Chile, France, Greece, Ireland, Spain and Turkey have all seen "improvements" in their gini score.

 

Vastet wrote:

Quality of life can increase even under slave ownership conditions, so that isn't an effective argument. It has never increased continually in such a disparate scenario as we see today.

Is the goal equality or quality of life? Or something else? My goal is freedom, but that necessarily means a poorer quality of life for some people. What is your goal?

 

Quote:

Inevitably the poor run out of resources to maintain their existence, and the middle class rises up just before or after they fall into the same situation, which largely solves the problem. At least for awhile.

How do the poor run out of resources? Where is that happening? The poor aren't getting poorer in real terms (as far as what they can/can't purchase) in most 1st world countries. They just aren't getting rich as quickly as everyone else. Brian can buy more stuff today without a job than someone in his same situation (or even someone with a job) in the 1970's when we were far more equal.

 

Quote:

Relative inequality by itself isn't a problem. It is an unavoidable situation that some will have more than others. Even the craziest communists know this, even if they refuse to admit it. It is the degree of separation that is the problem, not the inequality by itself. Not only is there a vast difference between rich and poor, but the difference is constantly growing.

Except it isn't "constantly growing". It shrunk during the recession. Besides that, what amount of separation is bad and why? How do I know if the gap is too big? Is it a set percentage? The rate of growth? How do I know if it is a problem or just natural? These are the questions that noone complaining about the wealth gap can answer with specifics. They retreat to ambiguity, a sign that your position isn't well researched. Which I expect in internet conversations, but you see the same ambiguity in scholarly articles on the subject. They have yet to find any positive evidence that the relative wealth gap is a problem or a solid indicator of a problem.

 

Quote:

The middle class is under significant stress already, with much of it having been eroded into the poor. People who could easily afford a house in the 70's are today living in townhouses and apartments, and going to food banks to have enough to eat. I shudder to think how bad things will be in another 40 years, should things continue as they have been.

Then why is home ownership dramatically higher today, even after the housing burst, than it was in the 70's? Why is the distribution among the top four quintiles moving towards the higher end while only the bottem quintile remaining the same?  (The 70's home ownership was 64-65%, today it ranges 68-69%)

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X

Vastet's picture

Beyond Saving wrote:America,

Beyond Saving wrote:
America, late 1800's early 1900's. Rockefeller alone was worth 10% of gross national product- which with inflation is almost $400 billion in todays dollars.~snip~

gdp doesn't equal gwp. The numbers I've laid out are global, in a global economy. And I'm discussing more than simple discrepancy, despite it being the focal point of my argument. One person could conceivably control 100% of the Earths wealth without an economic and political catastrophe on the way. But not when the majority of the population is hungry and without a place to stay, which is exactly where we are heading.

Rockefeller didn't own 90% of the global economy. Not even close. He might have been absurdly rich, but he didn't have control over the Earths resources in anything like the capacity the richest today do. The middle class was much better situated in those times than they are now.

Beyond Saving wrote:
Profits are completely irrelevent if you are talking about controlling economies.

You're the one who brought it up, I simply pointed out that your information was misleading and mistaken, that the US government does NOT make more money than Exxon Mobile.

As for the government having a greater impact and more control, the government is supposedly a democracy, thus all that control is in the hands of the people. The US government is the voice of 400 million odd people. Exxon Mobile maybe speaks for a few thousand. The power is where it should be.

Beyond Saving wrote:
What terrible damage can a thousand Bill Gates' do? Why do we need to be so obsessively worried about it other than some moral notion that equality is better?

You're missing the point. I'm not against people being rich. I'm against people being SO rich that everyone else suffers. A thousand Bill Gates hoard so much resources that everyone else can't afford a reasonable living.

I denounce equality as a foolish and impossible pipe dream. The average person doesn't need or even have use for a billion dollars. I don't want absolute equality. I simply won't lie down while a very few people who do very little work grasp at all the wealth they can, at the expense of everyone else.

Beyond Saving wrote:
Mexico actually is getting more equal, it still remains one of the least equal countries in the world. But so have Belgium, Chile, France, Greece, Ireland, Spain and Turkey have all seen "improvements" in their gini score.

As you yourself said, the gini score isn't everything. Mexico is not improving. Criminals are taking over, which is what happens when corrupt puppets who control all or most of the resources have too much power.
France is a global power which happens to have more equality than the US. They actually have a maximum wage now, where the government (the people) get any money an individual makes above that maximum. It is a recent change and will still take years to see real results, but they're on the right track and in 50 years they'll be one of the most robust and stable nations.
Their current biggest problems are based in immigration and attempts to force immigrants to toe the line, while those immigrants flee the war torn middle east to cultures outside their experience. There will be issues for decades, but they will inevitably be overcome.

Beyond Saving wrote:
Is the goal equality or quality of life? Or something else? My goal is freedom, but that necessarily means a poorer quality of life for some people. What is your goal?

The goal is the elimination of poverty and the wealth hoarding that causes it. Freedom doesn't mean shit without food or shelter. Freedom doesn't exist when it bears a cost unaffordable to the majority, either.

Beyond Saving wrote:
How do the poor run out of resources? Where is that happening? The poor aren't getting poorer in real terms (as far as what they can/can't purchase) in most 1st world countries. They just aren't getting rich as quickly as everyone else. Brian can buy more stuff today without a job than someone in his same situation (or even someone with a job) in the 1970's when we were far more equal.

Not true. Social services don't even provide sufficient funds to rent an apartment and buy food for a month. You need multiple roommates to have any hope. Even many people with full time jobs can't afford it, and both parties in a relationship are working more often than not as a result.

Beyond Saving wrote:
Except it isn't "constantly growing". It shrunk during the recession.

Recessions are brief hiccups which do not reverse the constant disparity growth.

Beyond Saving wrote:
Besides that, what amount of separation is bad and why? How do I know if the gap is too big?

Basic needs.

Beyond Saving wrote:
How do I know if it is a problem or just natural?

Natural things can be problems. You are implementing a false dichotomy.

Beyond Saving wrote:
These are the questions that noone complaining about the wealth gap can answer with specifics.

The figures are variable, thus specifics are impossible. The only single focus solution that mostly works overall is decreasing the discrepancy. Everything else is custom to the scenario and locale.

Beyond Saving wrote:
They have yet to find any positive evidence that the relative wealth gap is a problem or a solid indicator of a problem.

Because the wealth gap alone isn't the problem. The wealth gap in conjunction with inflation and hoarding is the problem. It just so happens that the gap is the easiest thing to fix, and would have sufficient impact to better the lives of everyone.

Beyond Saving wrote:
Then why is home ownership dramatically higher today, even after the housing burst, than it was in the 70's?

Increased population, foreign investment, and the wealthy purchasing more property than they used to adequately explains it.

Beyond Saving wrote:
Why is the distribution among the top four quintiles moving towards the higher end while only the bottem quintile remaining the same?  (The 70's home ownership was 64-65%, today it ranges 68-69%)

I need you to be more specific here. I'm seeing a few ways to read this and I can't respond based on an assumption of what you're referring to.

Proud Canadian, Enlightened Atheist, Gaming God.

Beyond Saving's picture

Vastet wrote:Beyond Saving

Vastet wrote:
Beyond Saving wrote:
America, late 1800's early 1900's. Rockefeller alone was worth 10% of gross national product- which with inflation is almost $400 billion in todays dollars.~snip~
gdp doesn't equal gwp. The numbers I've laid out are global, in a global economy. And I'm discussing more than simple discrepancy, despite it being the focal point of my argument. One person could conceivably control 100% of the Earths wealth without an economic and political catastrophe on the way.

There is no way one person could control 100% of Earth's wealth. Maybe they could declare they owned it, with a large enough army, but they certainly couldn't control it. Not in the way that someone like Rockefeller controlled oil.  

 

Vastet wrote:

But not when the majority of the population is hungry and without a place to stay, which is exactly where we are heading. Rockefeller didn't own 90% of the global economy. Not even close. He might have been absurdly rich, but he didn't have control over the Earths resources in anything like the capacity the richest today do.

He owned a far greater percentage of the wealth than anyone does today (than any 10 people today). He also had far greater control over resources, specifically oil. He DID control 88% of the US oil supply in 1890, a time when oil wasn't being drilled much anywhere else in the world, so he controlled over 75% of the worlds oil. Even OPEC doesn't control nearly that much. Exxon Mobil, the worlds largest oil company today, only accounts for 20% of the oil drilled. Their marketshare looking at gas stations only increases to 34%. Too low imo. Then when you consider that Rockefeller had direct control over the company and only a handful of partners, while Exxon is owned by millions. The largest individual owner of Exxon is Rex Tillerson, who owns 2.1 million shares... out of 4.2 BILLION shares- he owns less than 1/10th of 1% and he has more than double the next largest owner. The rich do not in any way have some great control over these corporations. They are owned by thousands upon thousands of people. If you are in any mutual fund at all you probably own part of it. Which is why I hate mutual funds, because they disconnect the owner from the companies they own and I think they are a terrible way to invest. But most people choose it because it is easier. It is only because most people take a passive to no interest in the companies they own that a relative few are able to control the direction of a company. Sometimes, small shareholders can fix that, for example Darden made huge news last week when Starboard, a hedgefund that owned 8%, appealed directly to shareholders and got enough votes to overthrow the entire board of directors. 

 

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The middle class was much better situated in those times than they are now.

LMFAO, get real. This doesn't even warrant a response. Go read a fucking history book. There is a reason unions got started and became popular and it wasn't because the middle class was peachy. 

 

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Beyond Saving wrote:
What terrible damage can a thousand Bill Gates' do? Why do we need to be so obsessively worried about it other than some moral notion that equality is better?
You're missing the point. I'm not against people being rich. I'm against people being SO rich that everyone else suffers. A thousand Bill Gates hoard so much resources that everyone else can't afford a reasonable living.

What exactly is Bill Gates and co. hoarding? We already established they spend very little of their income on physical things. If Bill gates was worth $1 billion, he would probably own exactly the same number of physical things he owns now. The only thing billionaires really increase the price on is stocks- when a billionaire makes a huge purchase or sell it nudges the price a few pennies, or a lot if many others decide to follow their lead. But to say that it makes it unaffordable for others is absurd. Stock prices settle back to their natural perceived worth. There are plenty of great stocks you can buy for under $30 a share. As far as things people need to live, they aren't hoarding them. Gates doesn't have a basement full of frozen chicken... and even if he did decide to try to corner the market and buy all the chicken so Brian starves to death because he is so annoyed by all his posts, so him and Warren get together to teach evolution guy a lesson and buy all the frozen chicken they can... they would run out of money within weeks and be unable to buy anymore chickens. The price would skyrocket and then once they were unable to buy more, the price would fall. Meanwhile, Brian would just buy pork. People have attempted to corner markets, usually commodities, and it is 1. Illegal and 2. Always results in the person attempting the corner to lose virtually all of their wealth. Even in relatively small commodity markets, there is too much in the world for one person to hope to control. Even Rockefeller, with his 80% would have been screwed if he tried a corner because there are plenty of other places to drill. He only kept his monopoly status by keeping prices really low.

The reality is that Bill Gates has made things cheaper and more obtainable for the middle class and poor than anyone alive has. The PC has made so much in this world cheap that we can't hope to calculate the value. Just look at how reliant we are on the damn things.

 

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I denounce equality as a foolish and impossible pipe dream. The average person doesn't need or even have use for a billion dollars. I don't want absolute equality. I simply won't lie down while a very few people who do very little work grasp at all the wealth they can, at the expense of everyone else.

Whose expense? Pick your offending billionaire and lets discuss exactly who lost money because they made money. Billionaires are billionaires because they provided things that people willing spent their money on. You go to McDonalds and buy a McChicken because you are hungry. Who got screwed? Are you poorer? Well, in a financial sense yes, you are less $1. But in a real sense you aren't. You value that chicken more than $1, it was "worth it" to you. The same thing goes (hopefully) with anyone who gives you money for any reason. They give you money because you provided them with something that made them value their money less than whatever they gave you. The only real exception is when money is taken forcefully against anothers will, like a mugging, theft, fraud or taxes. (Granted that last people might dispute whether or not it is worth it)

 

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As you yourself said, the gini score isn't everything. Mexico is not improving. Criminals are taking over, which is what happens when corrupt puppets who control all or most of the resources have too much power. France is a global power which happens to have more equality than the US. They actually have a maximum wage now, where the government (the people) get any money an individual makes above that maximum.

The gini score is nothing. Equality is a meaningless measurement and more often than not, equality means everyone is poor, not everyone being well off. 

 

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It is a recent change and will still take years to see real results, but they're on the right track and in 50 years they'll be one of the most robust and stable nations. Their current biggest problems are based in immigration and attempts to force immigrants to toe the line, while those immigrants flee the war torn middle east to cultures outside their experience. There will be issues for decades, but they will inevitably be overcome.

You have far more faith in France than I do. France is headed towards absolute collapse. They will probably even beat the US there. 

 

 

Vastet wrote:
The goal is the elimination of poverty and the wealth hoarding that causes it. Freedom doesn't mean shit without food or shelter. Freedom doesn't exist when it bears a cost unaffordable to the majority, either.

In what way are the costs unaffordable to the majority? Brian is surviving and he doesn't work at all. Comfortable? Probably not. Food and shelter? Yes. Noone starves to death unless they are so mentally ill that they are incapable of eating without someone guiding them to the plate. We do have a problem in the US with our mentally ill, but that isn't an economic problem. Any person who is in control of their faculties is going to find plenty of food. Food is cheaper in the US than any country in the world, despite our "terrible" income gap.

Shelter, well that is something that can be influenced by the very wealthy. You can see that problem in urban areas, islands and other areas where the amount of land is limited. It can become unaffordable for average people to even consider purchasing and even rent can become unrealistically high. That isn't a problem in the US or Canada, we both have plenty of land and it is still really cheap. Until we start approaching populations of a couple billion people each, it won't be (and at those levels we have other practical problems). That isn't so much a problem with income disparity as it is with density. Go into Hong Kong and make everyone have the same income and you still have a problem with not having enough housing for everyone and need someway to decide who gets it and who doesn't. 

 

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Beyond Saving wrote:
How do the poor run out of resources? Where is that happening? The poor aren't getting poorer in real terms (as far as what they can/can't purchase) in most 1st world countries. They just aren't getting rich as quickly as everyone else. Brian can buy more stuff today without a job than someone in his same situation (or even someone with a job) in the 1970's when we were far more equal.
Not true. Social services don't even provide sufficient funds to rent an apartment and buy food for a month. You need multiple roommates to have any hope. Even many people with full time jobs can't afford it, and both parties in a relationship are working more often than not as a result.

How then is Brian still here posting? How do 40% of Americans survive everyday even though they don't work a single hour? It is done all the time. (Although, imo there is no excuse to not have any income besides you simply not wanting to work. Even if you can't find an employer, you can find someone who will give you money for something) Life isn't comfortable if you aren't working, but we don't have large numbers of people dying in the streets. Even the homeless manage to find enough cash for booze, I know, I've drank with them. And booze is more expensive than food, even the cheap stuff. 

 

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Beyond Saving wrote:
Besides that, what amount of separation is bad and why? How do I know if the gap is too big?
Basic needs.

Then obviously there isn't a problem, certainly not a large one. Everyone in the US and Canada who works has their basic needs met. The vast majority who don't work also have their basic needs met. There might be a few people living on the street who don't have their needs met and you can bet money that most of those have mental health needs that aren't being met. Even a fair amount of people on the street have food, and manage to work out some form of shelter- albeit very uncomfortable. But Bill Gates being poorer isn't going to help them, outside of him directly just giving them money. And him being rich isn't the cause of their current predicament. If Bill Gates was limited to $500,000 a year, they would be absolutely no better off. 

 

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Beyond Saving wrote:
How do I know if it is a problem or just natural?
Natural things can be problems. You are implementing a false dichotomy.

Fair enough, poorly phrased by me. How do I know if income inequality is the largest thing causing problems or if there is another source?

 

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 The figures are variable, thus specifics are impossible. The only single focus solution that mostly works overall is decreasing the discrepancy. Everything else is custom to the scenario and locale.

Fine, then case study a locality. Where, anywhere in the world, in any locality of any size has decreasing the wealth gap made things better and for which people were they made better? Since we are working with the past we have exact numbers and if you pick a first world locality, we should have very detailed and accurate information available. Right now the best off place in the US is North Dakota- their wealth gap has also increased dramatically. Their gini must be off the charts terrible. 

 

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Because the wealth gap alone isn't the problem. The wealth gap in conjunction with inflation and hoarding is the problem. It just so happens that the gap is the easiest thing to fix, and would have sufficient impact to better the lives of everyone.

How would you fix the wealth gap? It doesn't seem so easy short of literally kicking the rich out of your country. 

 

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Beyond Saving wrote:
Then why is home ownership dramatically higher today, even after the housing burst, than it was in the 70's?
Increased population, foreign investment, and the wealthy purchasing more property than they used to adequately explains it.

It is calculated by percentage of people who own homes, not by how many physical homes are owned, so all those variables are irrelevent. Indeed, that our population is larger just makes it that much more evident how much easier it is to buy a home today since not only a larger percentage but also a vastly larger number of people own homes. You fail.

 

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Beyond Saving wrote:
Why is the distribution among the top four quintiles moving towards the higher end while only the bottem quintile remaining the same?
I need you to be more specific here. I'm seeing a few ways to read this and I can't respond based on an assumption of what you're referring to.

http://www.census.gov/hhes/www/income/data/historical/families/2013/f23.xls

If you break people into income groups and maintain the same income groups accounting for nothing other than inflation, people are getting richer. IOW, rather than break them up into 20% of the actual population and looking at their average income over time, you set income brackets and look back and see what percentage of people fit in which bracket over time. Obviously, you have to adjust for inflation so you are comparing apples to apples since $10,000 40 years ago /= $10,000 today in purchasing power. But when you do adjust for inflation and look, only the top income groups are increasing. 

For example, in 1974 6.7% of people made under $15,000 in 2013 dollars. In 2013, it was 8%. We can see that it oscillates from 6.5-9.1% at its peaks in '83 and '92. (prior to the recession it was 7% the lowest was 6.1% in 2000) So that bracket increased slightly, but is also the most variable (and not so coincidentally is closely related to the unemployment rate). 

Every other income bracket (this analysis breaks it into every $15,000, shrinks noticably. So yes, the middle class is shrinking. But where are they going? 8-6.7 only = 1.3% the other classes are shrinking much faster than that... They are all getting richer. From $100,000+ the classes start growing again. The middle class isn't disappearing because they are flooding the under $15k bracket. They are getting richer. I say that is a good thing. And prior to the recession, even the increase in the bottom was non-existent. 

 

 

 

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X