How Is Wealth Concentrated Into The Hands Of A Few?

Discussion in 'Politics' started by g5000, Mar 22, 2012.

  1. g5000
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    g5000 Diamond Member

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    This topic will have a little bit for everyone.

    We live in a complicated world and we cannot solve our problems with incessant parroting of pundits' bumper sticker inanities. This is going to take some heavy lifting. So bear with me, and don't form your response until you have read to the end.

    We hear a lot lately about the increasing concentration of wealth with most people seeming to be found in one of two groups. One group believes the concentration of wealth is almost always a bad thing and the solution to the problem is to increase taxes on the rich. The other group does not see anything wrong with the concentration of wealth. The former seems to believe when wealth has been concentrated, it is usually by evil means and thus should be taxed heavily. The latter seems to believe wealth is rarely accumulated by wrongdoing and should be taxed lightly, as it is well deserved.

    Perhaps if we look at the means by which wealth may be concentrated into the hands of a few we may see the folly within both polarized positions. For it is the processes by which wealth is transferred which is flawed in some cases.

    1. Invention, Innovation. If you invent a better mousetrap, the world will beat a path to your door. Steve Jobs, Bill Gates, Steve Wozniak, Henry Ford, Thomas Edison, and so forth. You get the idea. This is the stuff that makes America great and is the most honest means by which people get very, very, very rich.

    2. Excess Speculation. To compress and simplify an example I used in another topic even further, imagine every food product in the world as a single item, an apple. And imagine every food producer in the world as a single person, Farmer Jones. And imagine every supermarket outlet in the world as a single person, Grocer Smith. For many years, Farmer Jones sells his apples to Grocer Smith for a nickel apiece. Then one day, Speculator Adams approaches Farmer Jones and offers to buy his apples for seven cents apiece. His mother not having raised any fools, Jones sells all of his apples to Adams.

    Now Grocer Smith has to go to Adams for his apples. Adams can charge whatever he likes for his apples since he has "cornered the market".

    This causes the price we pay for apples to skyrocket. Since we need apples to survive, this has a ripple effect.

    The defenders of speculators do not want to interfere with this process, but they seem to be forgetting something.

    When our government borrows money from banks, conservatives point out that every dollar the government borrows is one less dollar available in the private market, and this is a bad thing.

    Well, every extra dollar we have to spend on our necessities is one less dollar we will spend elsewhere. Those extra dollars will be concentrated into Adams' hands, while we put off purchases of other items. And that means less demand for those other items, and that means less commerce, which leads to unemployment. So wealth is transferred and concentrated into the hands of a few, the speculators, at the expense of the mass of others engaged in commerce, while still others are thrown into poverty because they are unemployed.

    3. Fraud. Make a bunch of loans to people you know will never be able to pay them back, then sell the loans by means of complicated financial derivatives to idiot investors who manage 401k funds, pension funds, and city treasuries. Do this on a MASSIVE scale. All the wealth of every working person in America will be transferred into your pockets. And then when all your toxic loans blow up, the investors to whom you sold them lose money while you fly to the Bahamas in your private jet to golf. And the taxpayers will be involuntarily put on the hook.

    4. Entrepreneurship. Open a business with a successful business model. Parlay into a chain of stores across the nation. Laugh all the way to the bank. Or, provide venture capital to someone with an idea for a better mousetrap. Rake in the capital gains.




    Some of these methods are immoral or criminal, while others are the kind of behavior we want to reward.

    In this context, it is nonsensical to “tax the rich more” out of some misplaced belief that all concentration of wealth is the cause of misery.

    If a thief was allowed to come into your house at will and take what he likes with the blessings of the police, how would taxing everyone on your street more solve this problem?

    It clearly wouldn't.

    Hopefully, this helps all of you realize that if there is an unhealthy imbalance of wealth, it is foolish to punish everyone who happens to have wealth. The reason the imbalance exists is because of legislative tilting of the field and lack of enforcement of the law in the criminals' favor.

    Therefore, raising taxes on the just and unjust alike will do nothing to eliminate the imbalance. Rather, it will actually incentivize the thieves to steal even more from your pocket to offset their taxes.

    Unfortunately, the means by which today's thieves steal money from your pocket are so complex that most Americans are incapable or unwilling to discover these causes. They swallow and parrot whatever their favorite media pundits tell them, without realizing their idols are just as ignorant as they. In many cases, the methods by which they are robbed are so subtle that most Americans are not even aware they are being robbed. If they are aware, the criminals are so far removed from the robbed that the victims can only feel a sense of anger with no idea toward whom to properly direct it. So they settle their sights on whatever favorite target their idols aim them. The Jews, blacks, Democrats, etc.

    It is time to wake up. Stop throwing the wrong people into the ovens. All of you. It isn't “the rich”. It isn't blacks who bought houses through the CRA.

    You want some names?

    Here is a list of names of people who belong in prison that can be provided to every Senator and Congressman:

    1. Daniel Sparks and Tom Montag: Goldman Sachs. Constructed the fraudulent Timberwolf billion dollar toxic mortgage security and sold it to investors, then profited by betting against it. Deliberately stuffed the security with mortgages they knew were toxic so they could be on its failure while also profiting from its sale it to investors.

    2. Brian H. Stoker: Citigroup. Constructed the fraudulent Class V Funding III CDO-squared which ripped off investors for over $700 million.

    3. Fabrice Tourre: Goldman Sachs. Constructed the fraudulent Abacus 2007-ac1 CDO for which GS was fined but no one went to prison. Tourre allowed hedge fund manager John Paulson to select the toxic mortgages to be placed in the CDO so Goldman Sachs and Paulson could bet against it. Paulson believes when it comes to this kind of business, we should be supporting them and encouraging them.

    4. Angelo Mozillo: Countrywide CEO. This guy and his financial officers committed the exact same kind of crime the Enron CEO and financial officers did, and yet he walks free. Mozillo kept telling investors that Countrywide was "consitently producing quality mortgages" while his internal memos show that he was well aware his company was creating the most toxic mortgages on the planet. The SEC originally demanded a jury trial for Mozillo, but he ultimately walked away with a fine and no admission of wrongdoing. This guy is the scummiest of the scum.


    That's a good start.

    Some legislative measures needed to level the field:

    1. Outlaw naked credit default swaps.

    2. Force OTC derivatives onto public exchanges

    3. Repeal the Commodities Futures Modernization Act of 2000

    3. Repeal the Gramm–Leach–Bliley Act

    4. Start sending CDO fraudsters to prison
     
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    Last edited: Mar 22, 2012
  2. ladyliberal
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    ladyliberal Progressive Princess

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    I agree that wealth concentration is not inherently bad in that if the rich can be helped without affecting the poor either way then I certainly support that.

    I agree with you that "excessive speculation" (I would call this phenomenon "monopolistic power") is generally a bad thing and a contributor to wealth inequality.


    I have a number of problems with this. First, I don't want to punish anyone for being rich, I just want the government to tax rich people (and poor people, to a lesser extent) to direct the wealth to social goods. Second, I don't believe that legislation and crime taken together account for all wealth inequality.


    I generally like your legislative proposals (though I'm not sure about every detail-- do we need to outlaw CDSs or regulate them differently?).

    I agree that we need to crack down on fraud, though it's not clear to me the degree to which fraud and crime drive income inequality. However, I'm not sure about throwing all the people you mention in jail. For example, in your Timberwolf link no one seems to be alleging criminal conduct, so I'm not sure how you could throw people in jail.
     
  3. KissMy
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    KissMy Free Breast Exam

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    Gas Price was $1.83 when Obama took office. Then the he decides to use his administration to slow the growing production rate in order to drive up oil prices to pay back his cronie Wallstreet Banker buddies who bought him the presidency by contributing heavily to his campaign. Yes - Wallstreet Bankers own way more oil & infrastructure than the oil companies do.

    Obamas Top Contributors that Bought his Presidency.
    University of California $1,648,685
    Goldman Sachs $1,013,091
    Harvard University $878,164
    Microsoft Corp $852,167
    Google Inc $814,540
    JPMorgan Chase & Co $808,799
    Citigroup Inc $736,771
    Sidley Austin LLP $600,298
    Stanford University $595,716
    WilmerHale LLP $550,668
    Columbia University $547,852
    Skadden, Arps et al $543,539
    UBS AG $532,674
    IBM Corp $532,372
    General Electric $529,855
    US Government $513,308
    Morgan Stanley $512,232
    Latham & Watkins $503,295

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    February 10, 2009 - Secretary Salazar announces he will delay the Bush Administration 5-year plan for oil and natural gas development on the U.S. Outer Continental Shelf for six months. He begins a “listening tour” in spite of the fact that the Bush Administration had already solicited public opinion on this plan.

    September 17, 2009 - Secretary Salazar states that the Administration may not complete a new OCS lease plan until 2012.

    September 21, 2009 - The Administration’s extended public comment period on the draft proposed 2010-2015 Outer Continental Shelf plan comes to an end – yet the Administration still makes no announcement regarding the future of offshore drilling.

    January 26, 2010 - The Department of the Interior announces it will delay the Virginia offshore lease sale scheduled for November 2011.

    January 27, 2010 - President Obama mentions offshore drilling in his State of the Union address – leading many to believe he is open to expanding drilling in the OCS.

    February 1, 2010 - President Obama releases his FY 2011 budget proposal that shows revenue from new Outer Continental Shelf (OCS) leasing declining from $1.5 billion in 2009 to only $413 million in 2015. The only way revenue would decline is if less of the OCS is offered for leasing for energy production.

    February 4, 2010 - The Wall Street Journal reports that public comments collected by the Department of the Interior ran 2-to-1 in favor of the new 2010-2015 lease plan.

    March 3, 2010 - Secretary Salazar confirms that the Administration will not put a new OCS lease plan in place until 2012, which means no new drilling will take place during President Obama’s term in office.

    July, 2010 - The date new areas would be available for leasing under the original 2010-2015 lease plan if it were not for the “Obama Moratorium,” which has delayed implementation of a new lease plan until 2012.

    December 1, 2010 - Effectively reinstated the ban on offshore drilling, placing the entire Pacific Coast, the entire Atlantic Coast, the Eastern Gulf and parts of Alaska off limits to future energy production until 2017 at the earliest.

    November 8, 2011 - Announces a new draft 2012-2017 lease plan that closes the majority of the OCS to new energy production. The draft plan prohibits new offshore drilling and only allows lease sales to occur in areas that are already open. It includes lease sales in the Western Gulf of Mexico and Alaska – leaving portions of the Arctic and the entire Atlantic and Pacific Coasts off-limits to new energy production and job creation.

    January 1, 2012 - Our US Government raised our gas taxes nation wide!!!!! They let the Ethanol Tax Cut Expire. Every gallon of regular gas contains ethanol & received a tax cut. This also decreased ethanol demand & increased gas demand. Some States also raised gas taxes on their citizens!!!!! Wow, Just WOW! - It is amazing how they just got away with raising taxes & gas prices on the poor again!!!

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    [​IMG]

    Obama is just allowing the Keystone Pipeline to be built from Cushing, Oklahoma to the Gulf of Mexico because Canada's Enbridge outsmarted him buy buying up ConocoPhillip's stake in the Seaway Pipeline. Enbridge is turning around all the pumps along the Seaway Pipeline to reverse the flow of oil. This will make it transport oil from Cushing, Oklahoma to the Gulf of Mexico the same way as the Keystone Pipeline would. Obama is making a lot of hey out of the fact that he is not stopping this portion of the pipeline. It is al political BS.

    [​IMG]
     
    Last edited: Mar 23, 2012
  4. Sweet Willy
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    It's pretty amazing that usury, the charging of interest on money, was completely left out of the OP.

    For a few thousand years, usury was punishable by death, imprisonment, exile.... if you lent money at interest, you were a step below a street whore and a step above a thief. Societies have long recognized that allowing those with wealth to gain more wealth by loaning money to people in need.... is a recipe for disaster. It ruins societies and is nearly the entire answer to how the wealth gets accumulated at the top. There are exceptions, of course, but there is a great mass of wealth sucked from the masses and stock piled at the top simply by taking advantage of people in need. How do you guys think we became so indebted as a country? Consider that in the past when the Fed has LOANED the US a billion dollars, the Treasury prints that money.... BUT NOT THE INTEREST. It doesn't exist. The entire system is designed in specific, so that we will be perpetually indebted to the elite behind the Fed. That's part of the misunderstanding of these folks who say we should pay off the debt. It can't be repaid. It is designed not to be. Slavery by usury. Borrow some money and you pay the interest forever. It's a concept at least as old as Judaism.

    For the Christians among us, refer to when Jesus drove the money changers from the temple.
     
  5. g5000
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    g5000 Diamond Member

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    That is redistribution of wealth which punishes the rich just for being rich.

    It accounts for a significant amount. It is akin to the police willfully allowing a thief to enter your house whenever he likes because the legislature has not made breaking and entering illegal. Or if they have, they have chosen not to enforce it.

    The list of frauds I provided are examples of this.




    I specified naked CDS. These need to be outright banned.

    The Timberwolf link certaingly does allege criminal conduct:
    This is akin to selling a sealed box to someone and telling them it contains a DVD player when it really has a brick in it, except there is no way for you to verify the contents and you have no choice but to take the word of the seller.
     
  6. AVG-JOE
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    AVG-JOE American Mutt Staff Member Gold Supporting Member

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    Fair and simple taxes, a budget that's balanced by law and then build an economy your kids can drive to the stars.

    :smoke: It ain't rocket science, y'all.
     
  7. Vidi
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    As opposed to laying the tax burden on the middle class and punishing them for not being rich.

    ETA: I agree with all your suggestions in the original post
     
    Last edited: Mar 23, 2012
  8. Political Junky
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    Political Junky Gold Member

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    Some rich folks came from comparatively humble beginnings. The vast majority of the super rich came from inherited money. Those people live in gated communities, join private clubs, private schools, and rarely meet ordinary folks, unless they perform a service. They hire others from those institutions, marry them etc.
    The latter group would include Romney who doesn't have a clue about relating to the lower classes. He wants to raise taxes on the middle class and reduce taxes for the rich.
     
  9. Artevelde
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    A fairly balanced OP.

    Personally I strongly believe in tax simplification: eliminating as many deductions, loopholes, special regimes and rates, etc. and there by ensuring that everybody is taxed fairly equally regardless of whether their income derives from an ordinary paycheck or from dividends, interest payments, capital gains, etc.

    Apart from that I obviously agree with combating fraud and I do believe that speculation and exotic forms of trading on the markets should be tighther regulated.
     
  10. g5000
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    g5000 Diamond Member

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    I think if we eliminate the legislative measures which unfairly tilt the field to the advantage of a few at the expense of all, then wealth distribution will find its natural balance. Implementing measures which forcibly redistribute wealth do not solve the underlying problem.
     

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