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The real cause of income inequality in the US?

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Nov 20 in Banking by TheOtherTink (17,366 points)

This interesting article from the NY Times points out where I have long suspected much of the skewed wealth distribution in the US comes from: the outrageous salaries and costs associated with healthcare, finance and the legal professions.

https://www.nytimes.com/2017/11/17/upshot/income-inequality-united-states.html

3 Answers

Marianne Nov 21
Rooster Nov 21

Geez! I guess this should not surprise me! The three that you mentioned, Tink? That's always been my thoughts but your article proved it. Especially healthcare and legal professions! What have we done?

TheOtherTink Rooster Nov 21

Well, Rooster, over 90% of the members of Congress are lawyers, so maybe at least the legal salaries and fees are not too surprising.  :angry:

Virginia Nov 21

O'Tink, my plodding computer is unable to open your link, but as you know the topic is of much interest to me! I am most familiar with healthcare outrageous costs, as that was my own profession and I ran into the "paywall" that always took precedence over health, at least in the later years. But yes, I think healthcare is a huge avenue for transfer of wealth upwards.

As far as finances, have you seen all the current brouhaha over the Paradise Papers? The article I saw made a big deal out of nailing Queen Elizabeth II, because she has $12 million invested offshore, the Cayman Islands and the Bahamas. And one example there is a rent-to-own company "that gouges poor people with sky-high interest rates."

http://www.sltrib.com/news/nation-world/2017/11/06/paradise-papers-leaked-documents-reveal-financial-habits-of-the-queen-and-trump-officials/

Reminds me of Upton Sinclair, selling shacks to meat-packing employees and then forcing them out, just to re-sell to another family, in his 1906 novel THE JUNGLE? And it's all perfectly legal...here is a quote from the above article..."Offshore funds are often used to escape high taxes and their use is not necessarily illegal, though when they are being used by the same people who set those tax rates, it tends to raise eyebrows." 

Over-simplifying you could say all those practices led to the Great Depression, finally mobs out in the streets until FDR convinced the wealthy to go along with the New Deal, thereby saving capitalism - but now we seem to just dismantle the New Deal and do the same stuff all over again?

(Sigh) ... long answer...

Virginia, capitalism has existed since ancient times, and has been responsible for the vast majority of improvements in human standards of living, especially since the Industrial Revolution. It is quite true that it has also led to unfair monopolies and concentrations of power and wealth that had to be adjusted from time to time, as in the administrations of both Roosevelts.

But in instances where capitalism wasn't saved, as in the communist revolutions in Russia and China, what happened in the long run?  Capitalism returned in both cases, when the internal contradictions of communist theory and the even greater evils of communist practice could no longer be ignored.

Virginia Virginia Nov 25

O'Tink, contained here is a point you and I have discussed before, in fact your comments help me define my own thinking here...and that is, I think you are saying capitalism has proven itself the best economic system available.

Well (at least for the moment) ima not buy that...I think we humankind are capable of better. One of the people I study to form my own opinions would differ with that, he feels there is no evidence that we can evolve (which I see as a basic question). I think we humankind are innately good and beautiful, and we can aspire to better than anything we now have. I think Karl Marx was somewhat correct about capitalism, although clearly he missed a whole lot!

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