An example of why the wealth gap will continue to widen

No second cousin twice removed in South Africa.

 

You don't have to have a relative or a ready-made connection.

A while back a buddy wanted a small MP3 player with specific features. He found a manufacturer who made such a device, but no good retailer. So, he contacted the manufacturer and worked out a deal. Before I knew what was happening, my buddy and I were importing and selling these and other MP3 players. Some we sold through e-bay to other countries - Canada, Ausrtalia, Spain, England, even Hong Kong. We expanded, selling various other devices and making pretty good money for a side business.

Our real lives got busy, so we sold out and brokr up the business, but it was a nice way to make a few grand a month spending money. We did that with no connections or privilege.

 

I just want to point something out here.

If we are to take your theory as being correct then we would expect that those who invested despite the uncertainty would be more successful thus meaning the market would correct itself.

If however you are asserting that people are not investing due to uncertainty you are in fact embracing the precautionary motive for liquidity. This would be a Keynesian assertion, at the very least it strays into behavioural economics.

So are you asserting that govt. intervention is validating Keynesian economics?

If so then you are left with several options.

First off if govt. intervention is just the 'left' (which it isn't) then you have to alter your theories to take into account the fact that there is a left.

Are the left born that way? If so then they must be included in your model.

If they become that way due to experience then you have to ask what experiences cause people to become that way. You then have to take these factors into account. Is there any feedback? Are these factors self-reinforcing? If so, is it a near Marxist result or is it something else?

 

Thanks for sharing, SiliconMagician.

 

Why 42%, why not 41% or 43%?

The theoretical man is paying American taxes. If we raise the American taxes too high, he may decide to move to the Grand Cayman Islands (no income tax). Then, instead of getting 25% of his income, we get none of it.

 

Some years ago I did a bit of work for a fellow from Guam. He was an owner of several hotels on the island but was living in California with wife and family. He had found that those glass bricks made excellent building material in Guam because even after a hurricane, they could be picked up and put back together and weren't easily destroyed like wood. It was also easier for unskilled labor to rebuild homes with them. In Guam, a glass brick sold for $3 and he could buy them in China for $.25. In order to fund the purchase of the bricks from China, he shipped over a boatload of manure which he bought in the US for $50k and sold in China for $250k. He rolled that into 100,000 glass bricks and sold those in Guam for nearly $3 million.

He essentially created millions in wealth with a minimal investment. It's not the money, however, that is wealth, but the bricks that he brought to Guam and the manure that he brought to China. He was paid for his efforts and thousands of people are better off.

The government, on the other hand, would continuously rebuild the ruined homes using wood materials, usually months after the disaster, and leave thousands homeless. Eventually they might catch on to the brick idea (after being approved up an endless chain of bureaucrats) in which case it would spend years building test models and then a factory for making bricks funded by millions on loan guarantees that would eventually go bankrupt. And then everyone would point to the capitalist because the people on the island are still poor.

 

Then we pass laws that tax offshore income for US citizens.

 

Then he gives up his citizenship and becomes a productive citizen of a nation which does not assert jurisdiction over his productivity.

 

Nice fantasy. Won't happen though.

 

More American Expatriates Give Up Citizenship (NY Times)

 

I can see what you are saying, but I don't think that was the best proof. 500 people out of 5 mil, and that is of those already living abroad? Income tax, when incorporating sales tax, is double taxation already. Really, those people living abroad are triple taxed. And that is not factoring in fiat currency and the hidden tax inherent with it. However, I think the most interesting aspect of your example is the fact your friend no doubt had no qualms paying tariffs to bring the manure into China, and therefore, tariffs does not mean global trade will suffer.

 

500 people? Who cares? Good riddance to the parasites.

 

You were proven wrong. Don't try and move the goalposts.

P.S. - Your reference to parasites is the epitome of irony.

 

500 out of 5 million or more hardly anything to raise an eyebrow too.

 

That was just what the article recorded. People have been leaving the US for more productive nations since the the Carter Administration.

 

Mathematically an income gap will always widen as incomes grow.

Lets consider two people:

One earns $1,000 per year, the other earns $10 per year. There is a $990 income gap.

The economy grows and both get a 30% raise.

One now earns $1,300 the other earns $13. The income gap is now $1,287. Both saw the same percentage increase in income, but according to many people, the guy with the low income is somehow worse off even though he earns more.

 

You were proven wrong. Now you're trying to move the goalposts.

 

The top has seen 300% increase, the middle class 20%, the working poor 0%. The problem is fiat currency and an ever devaluing dollar. The poor and middle class are paid based upon time, where as the top is paid based upon investment. One can invest with a phone call or click of a button, the bottom only have so much time. Fiat currency naturally tilts the playing field to the tops favor. Workers can pick up a 2nd job, maybe a 3rd. There is no limit to investments as far as time is concerned.

 

if you say so. The rest of say 500 people are negligible.

 

2008 - 235
2009 - 743

That's a 216% increase in one year. Hardly negligible. Anyway, you were wrong and still refuse to admit it. Typical you.

 

Still negligible. When hundreds of thousands start doing it then we can discuss it as a true problem.

 

Personally, I don't care if the rich get even richer as long as the other people don't get poorer. Unfortunately, in America today, the rich are getting richer AT THE EXPENSE of the poor and middle classes. That, to me, is the issue at hand.

 

Just tell him it's the amount of people dying in your health care system a year. I bet it'll get his attention.

 

How are the richer getting richer at the expense of the poor and middle class?

 

You're kidding right?