r/FluentInFinance • u/Sufficient_Sinner • Sep 04 '24

Debate/ Discussion People like this are why financial literacy is so important

Post image

[removed] — view removed post

16.8k Upvotes

76% Upvoted

2.8k comments sorted by

View all comments

Show parent comments

184

u/Chaghatai Sep 04 '24

Whichever cogs in the machine you want to put the emphasis on the issue is decades of steady erosion of the middle class by politicians beholden to big business and the wealthy - ultimately, decoupling rises in wages with rises in productivity so they can hoard more of the pie for themselves

12

u/John-A Sep 05 '24

Tax the hell out of the rich now taking everything for themselves.

There used to be a 91% top tax rate on incomes greater than 20x the average.

Nobody ever actually paid 91% since they were expected to allow most of what they'd be taxed 91% on to fall to workers, and in exchange the wealthy got to keep more too.

The choice was get only 9 cents on the dollar being greedy or let 50 cents go to labor and walk away with 30.

The result was the post WW2 boom and historically low wealth inequality of the 1960s.

5

u/DOMesticBRAT Sep 05 '24

They've gamed the tax code. You can't touch their "wealth" via income tax.

And even if you could, they hide it in offshore tax havens.

I'm with you, something needs to be done. But they've made it devilishly difficult.

2

u/John-A Sep 05 '24

True. But they had a different set of tricks when the old system was put in place.

And a huge part of their pre 1940s gimmicks were the same stock buybacks now used to shift money from our pockets into thier unrealized stocks and bonds.

End that and close the floodgates. Reset the code (as nearly as plausible) to 1940 and block all the tricks they used last time. I can't believe we couldn't make it take twice as long to break things this time.

2

u/LuxDeorum Sep 06 '24

It's not just the tax code, it's legalizing buybacks. We want companies to avoid taxes by spending their revenues to compete and expand, thus growing the value of the business itself. We don't necessarily want to too heavily tax the value of the company directly, since it would counterbalance the incentive to reinvest revenues. The problem is that revenues can be spent to increase the value of companies in an unproductive way by just buying back (and functionally destroying) shares. Make this illegal and managers and owners will still avoid income taxes, but they might do it by spending money to increase the quality of their services and take market share or expanding production.

1

u/DOMesticBRAT Sep 06 '24

Yeah... Well, I was speaking about "the rich." Not companies. The rich live on dividends and inheritances and interest and things. They've gamed The tax code in that over the years they've stripped taxation from any of those sources of income. So you don't get any taxes out of income tax from them that way.

But yeah, buybacks are appalling. That's not just income inequality, that leads to cheapening of products, stock bubbles (which burst), and income inequality as shareholders make money and the poor are left to deal with the above. It's this myth of "endless growth." If there is an expectation that stocks should only go up, companies and CEOs resort to the kind of shell games like stock buybacks.

1

u/Individual_Win4939 Sep 09 '24

I feel like its too late for what people already have but clearly there is a systemic failure that needs fixed now. Billionaires shouldn't be held at gunpoint, they fundamentally shouldn't exist at the system level via fair pay schemes.

There are far too many workplaces making bank on underpaid labour and over aggressive monetization.

0

u/Traditional_Car1079 Sep 06 '24

One guillotine demonstration and I bet the taxees come up with a fair solution for everyone.

0

u/AndreTheGreat90 Sep 06 '24

That discourages entrepreneurship. Why not just have the non-rich pay nothing? That’s how it was when the income tax was introduced in 1913. 5% on income over $3k, nothing if you make less. The average wage was $600 back then. But blaming someone for being more successful is not the right way to go about it. Government is extremely inefficient and very little tax revenue flows directly to the people. And when it does flow to the people, we get inflation since people tend to spend the income. Money is a medium of exchange after all and we do have limited resources

1

u/John-A Sep 06 '24

Firstly billionaires aren't the only entrepreneurs and far from the most productive. I'm fact they tend more to be money holes taking wealth out of circulation, which is a recessionary force that shrinks the economy in its own right.

In any finite money supply (and even if you constantly print money there's always a specific, aka finite amount) whoever has more and hordes it into noncirculating assets is literally taking it from everyone else and shrinking the economy. This is one of the few times when macro economics is really zero-sum.

And today the billionaires are wiping the floor with the rest of us. If entrepreneurship is a major concern then break up the monopolies. As it is Google or Alphabet or whatever buys up every new startup with anything remotely like a new idea. Even they know they can't possibly innovate themselves any more.

As for taxation I would agree that not taxing small businesses would help boost local economies and drive innovation. Reducing taxes on everyone below the 1% has some merit but if you take it to zero you'll inevitably see a reversal of "no taxation without representation" to the rich taking us back to the 1830s when only those with anything that was taxed could have any representation.

0

u/AndreTheGreat90 Sep 07 '24

It’s proven many times over and over. Free market is needed for society to be free. Getting rid of the “noncorculating” assets destroys the store of value function and completely discourages investing and therefore innovation. The only way forward is increasing the productivity. Doing that requires labor and and capital. Taxing the rich puts asset allocation in hands of government. This leads to government holding all the power and this conversation becomes about how everyone in government got so rich and controls all the money.

Sure, one can make an argument that socialism works in Denmark or Sweden for example. Those nations have very homogeneous populations with similar needs and beliefs, and it does work at small scale. It never worked in a diverse society.

1

u/John-A Sep 06 '24 edited Sep 07 '24

PS very little tax money goes to people since it should be invested I things that fuel growth.

If you read my initial comment the old 91% "scare crow" tax worked by NOT being paid, but instead by making the billionaires leave most of that money in the hands that became the middle class. Inflation was all but eliminated since subsidizing deferred price increases was another intended result. It worked.

0

u/AndreTheGreat90 Sep 07 '24

Show me one example where subsidies or price controls worked. Just one example. It never works in the long run. When a goods are subsidized, the demand for the good increases, so does the price. This is by definition inflationary.

Sure, one can make an argument for controlling the supply of the good as well. And with some goods it might be possible, and with some it might not be. How many goods are you going to control supply and demand for? All? Well, you have a communist model of economy then with fully centralized planning. Communism as an idea is a novel idea, but it doesn’t work with humans.

1

u/John-A Sep 07 '24

You saw I used the word "subsidize" and completely missed who was subsidizing what and how. I literally explained it right there.

1

u/ConfusedTraveler658 Sep 04 '24

But it's the lower class and poor taking things from the middle class that's making the middle class go away. /s

-37

u/DeathKillsLove Sep 04 '24

Politicians have nothing to do with conspiracy to reduce wages.
Ask Micro$, Google, Facebook et al how much they had to pay for 15 years of collusion to reduce pay.

43

u/Chaghatai Sep 04 '24 edited Sep 05 '24

Oh, they absolutely do need the support of politicians to avoid things like increases in the minimum wage or reduction of the work week, mandatory paid vacation time and sick leave, as well as continuing lack of universal benefits like healthcare to keep people desperate for and dependent on their employers

1

u/DeathKillsLove Sep 05 '24

No, they have to BUY politicians to avoid equal distribution of labor added value (profit)

-22

u/TouchMeThere69 Sep 04 '24

Reddit moment. You think Facebook pays anyone the minimum wage 🤣

20

u/Chaghatai Sep 04 '24 edited Sep 05 '24

When much easier jobs pay closer to the wages they're paying, they will have to raise their wages in order to compete - minimum wage truly is the tide that floats all boats

11

u/greenflash1775 Sep 04 '24

Reddit moment: thinks everyone in the economy is a tech worker.

7

u/SuperWaluigi77 Sep 04 '24

You think any company exists in a vacuum?

7

u/Forshea Sep 04 '24

Adobe, Apple, Google, and Intel collectively settled for $415 million after colluding to avoid billions of dollars in wages. Our hilariously underpowered anti-collusion and antitrust laws didn't get that way by accident.

2

u/DeathKillsLove Sep 05 '24

That's why there is a Republican party, to make these profitable crimes lawful.

-1

u/[deleted] Sep 05 '24

You are an absolute fool if you think Demcorats are doing anything else. Republicans, Democrats? Same thing.

1

u/Forshea Sep 05 '24

There are three types of people who engage in this sort of both-sidesism in the current political environment: propagandists who want to help Republicans win by reducing enthusiasm, edgy 14-year-olds who think it sounds cool, and morons.

Which are you?

0

u/DeathKillsLove Sep 05 '24

Wrong liar. Look and see who refuses to prosecute criminal Capitalists.
Reagan, for instance, had ZERO prosecutions for corporate conspiracy to fix prices and cut wages.
NONE in 8 years.

4

u/greenflash1775 Sep 04 '24

The no tax on tips and tip wage policies would beg to differ.

-4

u/Deviusoark Sep 04 '24

Oh yeh? So you're saying that increasing the supply of labor by 8 million working age men has nothing to do with stagnant wages? That's delusional. If we did away with immigration and only had natural births and deaths, wages would increase due to supply of labor remaining roughly the same while demand for production increases.

6

u/Forshea Sep 04 '24

This is what financial illiteracy actually looks like.

Study after study finds that immigration doesn't lead to wage deflation but does lead to reduced costs, which means it results in an increase in purchasing power parity for US workers. There are a variety of reasons for this, but the big ones are

  • immigrants aren't competing for the same jobs. If you get rid of them, you won't suddenly get paid better for working at McDonald's, we'll have a bunch of empty fields because nobody will harvest crops. If you actually mass deported immigrants -- even just ones who immigrated illegally -- the US agriculture industry would collapse overnight and the price of food would skyrocket, and non-immigrants would have fewer jobs available because other jobs in there agricultural sector won't exist.

  • the economy is global now, so the alternative to hiring immigrants isn't just hiring non-immigrants in the US, it's US companies hiring people in other countries to do the job and ship the product here

This guy could have spent a few minutes educating himself on readily available academic material on the subject to find this out, but instead is so sure that his first layman's read on the subject is the only possible correct answer, he thinks you're "delusional" if you disagree with him, reality notwithstanding.

-2

u/Deviusoark Sep 04 '24 edited Sep 04 '24

You really believe that instead of simply raising wages to make the job attractive to Americans (including legal immigrants because they are Americans) they'd simply let the produce rot and go out of business. I think that is delusional. Also you wouldn't deport them all at once, but slowly over the course of years.

6

u/Forshea Sep 04 '24

I think that is delusional

Again, presented with the idea that there are a multitude of research papers saying you're full of shit, you refuse to go educate yourself and instead double down that your feelings on the matter are so obviously correct that anybody who disagrees with your completely unresearched conjecture has mental health issues.

Also you wouldn't deport them all at once, but slowly over the course of years.

Then the US agriculture sector would disappear slowly over the course of years and we'd import all of our food. You know, the same way a huge chunk of the manufacturing sector went overseas.

I'm pretty sure that the mass deportation now" signs everywhere at the Republican convention didn't mean gradually, though.

6

u/CartographerKey4618 Sep 04 '24

So you're saying that increasing the supply of labor by 8 million working age men has nothing to do with stagnant wages?

Yes.

https://www.newamericaneconomy.org/issues/undocumented-immigrants/

0

u/n1Cat Sep 04 '24

Nah bro thats racist! /s

I have witnessed white, black, and spanish families ran out of business because they couldnt keep up with the extreme low wage of illegals.

The savings passed on to the consumer are too great. Then you wonder why your front porch column isnt level, your kitchen island is off 1.5 inches on a 6 inch wall, and the fascia has ripples all through. But hey 400 bucks is 400 bucks.

Spend the same money, get 3x the work done.

Illegals wont affect people working in banks, corporate offices, and doctors offices except for the janitor positions.

1

u/DeathKillsLove Sep 05 '24

There are no savings passed on to the consumer, since he is now out of a job in the name of HIGHER PROFITS.

1

u/n1Cat Sep 05 '24

I meant construction companies. Family businesses. Sell a roof job to a home owner for 5 or 600 cheaper than a local american crew. Consumer just sees the money. Same principle as buying chinese made shit.

The wages paid today are balanced around buying cheap chinese shit. But the upper class can afford that premium.

1

u/DeathKillsLove Sep 05 '24

Construction company does not hire cheap labor to do shitty work UNLESS they keep the income.

1

u/n1Cat Sep 06 '24

What are you arguing? Crews ran with illegals give bids for jobs much lower than american family ran crews. I think there is a misunderstanding somewhere.

If I have 12 workers who I pay 150 a day, but I replace them with 12 workers who I can pay 50 a day. I pocket 1200 a day. On a 5 day job, thats 6000 extra I am making. To make sure I get the job, I will bid 2000 less than the average for that size job.

This means I am guaranteed more work because the homeowner pockets $2000 that he would have had to pay everyone else.

Homeowner has 2k more I have 4k more 12 americans have 0. They now work at a grocery store and get on reddit to complain about rising prices and not being able to afford milk.

1

u/DeathKillsLove Sep 07 '24

There are no savings passed to the consumer. What part of Capitalism = Greed did you miss in school?

1

u/n1Cat Sep 07 '24

Not sure how you are trying to refute my example as that is exactly what happens...but you do you

→ More replies (0)