Monday, March 4, 2013

you've actually got to redistribute the wealth, not just the income

Regular commenter Brett says
I wonder how the actual revenue math would work out in terms of what you'd need for taxation, if you replaced the patchwork of welfare spending with universal single-payer and a basic stipend for every adult. About 76.3% of the US's 313 million people is above the age of 18, so a $25,000 stipend for every adult would lead to an annual cost of $5.97 trillion.
In a somewhat similar vein, a commenter on this Derek Thompson post says
The compensation for GM CEO Dan Akerson was $9 million for 2012. The total number of GM employees worldwide is two hundred thousand. So if we took his entire salary and stock compensation and gave it to the employees, it would be about $45 per employee.
Another commenter makes the fair point that the CEO of GM is, in the absurd world of CEOs, rather poorly paid. And I would also point out that there are hedge fund guys and assorted figures who make hundreds of millions in a year. But, yeah: the general point is a fair one. Taking income alone won't solve it. I imagine you've all seen the video with the graphical representation of the wealth distribution in this country. I think you've got to take the wealth, not just the income. Just as a practical matter.

Of course, that's the sort of thing that would put the wealthy into full-fledged revolt. But I also think that, eventually, the majority of people will revolt against a situation as extreme as it looks likely to become. It just isn't likely to become anything like the socialist revolution of my preference. It's more likely to just be an ugly, violent spectacle. The question is not whether this situation will eventually change. The social contract, which is what really keeps people from coming into your house and taking what you have-- not the police-- can only withstand so much. The question is whether it changes for the better. It seems likely, though, that however change comes, we won't be ready for it.

Either way, understand: I am not calling for class war. I am describing an already-existing class war. The charts in that Derek Thompson post? That video on wealth distribution? That's class war.

10 comments:

Brett said...

It's not impossible, but you'd need far, far greater overall taxation in order to make it work. The US government took in about $2.46 trillion in 2012, so you'd have to more than double that if you didn't want to deficit spend the whole thing far into the future (or you'd have to do a less generous stipend).

Other countries do it. The US's taxation revenue as a percentage of GDP is 26.9%. Sweden and Denmark (both prosperous societies that marry pro-market policies with strong welfare support) are at 47.9% and 49% respectively. Other countries, like that favorite of libertarians Singapore, would likely be up there as well if it wasn't for the way they set up their health care and retirement systems (like Singapore's forced savings set-up, which makes it look like their government spending burden is far smaller). Even the British are at 39%.

Brett said...

To add-

If the US had the Swedish level of taxation, we'd have $7.59 trillion in taxation revenue a year. That's easily enough to fund the stipend plus a whole ton of discretionary spending (such as the military budget).

BigSaxmo said...

The US spending/gdp ratio wasn't even close to 26.9%, let alone revenue/gdp. Where are you getting your numbers, Brett?

Bartman said...

I keep coming back to the example of the Walmart heirs, who we read are worth some $85-90 billions. Why do they need to extract so much money from a long chain of poorly paid product makers and "associates'?

Brett said...

@BigSaxmo
The US spending/gdp ratio wasn't even close to 26.9%, let alone revenue/gdp. Where are you getting your numbers, Brett?

I'm looking at overall taxation as a percentage of GDP, not government spending. The spending percentage is higher.

Paul Sherrard said...

You can't just take one CEO as an example of income injustice, though. The CEO isn't really representative of the 0.01%. He's their agent. The whole "hey redistributing the CEO's salary doesn't fix anything" routine is a sideshow.

The real problem is what is, in effect, a parasitic rentier class. Same as it ever was. If you took the profit that's currently given to them by all the GMs and Apples and Nabiscos of the world and distributed it to the people generally, the effect would be tremendous. That's obvious from all available data.

Brett said...

Are you talking about the CEOs, or the companies in general? Because you ultimately do need to pay enough to get CEOs, and the latter would destroy the profit being distributed in the first place.

Paul Sherrard said...

"Are you talking about the CEOs, or the companies in general?"

I'm talking about the dividend-drawing class. The ones to whom all the wealth accrues. You don't "destroy the profit" if you take it away from them, you just take it away from them.

BigSaxmo said...

"I'm looking at overall taxation as a percentage of GDP, not government spending. The spending percentage is higher."

Dickipedia has GDP at 15.85 trillion. Total revenue at 2.45 trillion, total expenditures at 3.54 trillion. That puts spending as a percentage of GDP at 22.3%, and revenue significantly lower as a percentage of GDP.

I know that answering direct questions isn't in style on Freddie's blog, but I'll ask again- where did you get your numbers? I'm assuming total taxation is meant to include state taxes as well, but what is your source?

Skye said...

"But I also think that, eventually, the majority of people will revolt against a situation as extreme as it looks likely to become. It just isn't likely to become anything like the socialist revolution of my preference. It's more likely to just be an ugly, violent spectacle. The question is not whether this situation will eventually change. The social contract, which is what really keeps people from coming into your house and taking what you have-- not the police-- can only withstand so much."

Quite right. And (as anyone who has taken the 'food stamp challenge' knows) your ingrained respect for property is quickly eroded by seeing bankers steal taxpayer money to build waterfront condos while you are malnourished and hopping from shelter to shelter.

I'm flabbergasted how many rich people don't understand this. Or maybe they do, but think their private security teams will protect them when the people have had enough.