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The Forum > Article Comments > Piketty split - why soaking the rich won't help anyone > Comments

Piketty split - why soaking the rich won't help anyone : Comments

By Graham Young, published 7/7/2014

It's not Joe Hockey's 'leaners' Australians need to fear, it's the new breed of economic 'levellers' who believe that to make an economy work better you just need to dial down levels of inequality.

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The inequality argument is not really about economics. It is possible to have an economically prosperous society with large inequality. What inequality does is create political instability when those who no longer have opportunity because opportunity requires resources rebel against the continued oppression of those who corral the resources.

History has shown over and over again that societies where a small number of individuals monopolies resources become unstable.

That is not to say that having equality of resources is the answer. It is having true equality of opportunity. If accessing opportunity requires significant resources, it is not equality of opportunity. A good example is the changes to higher education proposed by the current Australian government, which will price a university education out of reach of many Australians.
Posted by Agronomist, Monday, 7 July 2014 1:07:11 PM
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The only levelling that needs to happen is in the banking industry. They create money from nothing as debt to = growth + inflation of $98 billion pa in Aust. This is the main reason why the planet is so poor and has so much debt.

Private banks should only loan out money that already exists. Govt Banks should create the new money growth + inflation so our taxes become far less.

I was wrong about the growth of the World Derivative Market Graham. It is now $1500 trillion or $214,000 every person on this planet. Why then is half this planet so poor ?
Posted by Arjay, Monday, 7 July 2014 2:46:33 PM
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Graham, very brave of you to speak truth on this forum. You knew the envious would be out in force.

Agronomist I hope you are right. With any luck the 30% of university students who could not make change for a bus ticket can be sent off to sell burgers before wasting a lot of our money & their time playing twiddle winks in university.

This envy is sickening. The Rineharts of this world had no need to ever do anything but enjoy their inheritance. Instead many of them risk huge fortunes developing new projects, employing thousands at extremely high wages, paying immense royalties, & generating the export earnings that pay for everyone's cell phones, Ipads, & laptops. Of course they do it for their own satisfaction, but we all benefit hugely.

Yes we could all have a larger share of it, if left in the ground. A huge share of nothing is just that. Or we can all live better wealthier lives thanks to these risk taking investors.

If the greedy envious don't stop screaming, & trying to rob investors of a fair result, that is just what will happen. In fact it is happening now, as we speak. They are going where they are welcomed with open arms. I wonder how long it will take for the greedy, envious white trash of the south Pacific to realise what they have cost themselves?
Posted by Hasbeen, Monday, 7 July 2014 3:03:41 PM
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Talk of envy makes the assumption that this is all about consumer goods. Most of us here in Australia have enough of them to lead decent lives. In fact, in graphs of happiness vs. GDP, happiness stops rising sharply with GDP at the level of the more prosperous Latin American countries.

http://inesad.edu.bo/developmentroast/2013/01/development-goals-wealth-versus-happiness/

Furthermore, most of us recognize that completely eliminating inequality is neither possible nor desirable. The problem is the extent of it.

I don't care at all if Graham has more consumer trinkets than I do, but I care a great deal if the people who have the wealth can use it to buy my government. There are numerous examples where our government has done things that are clearly against the public interest, but very much in the interests of powerful lobby groups, for example, years of foot-dragging on tobacco and asbestos, long after the dangers were well established, and continued foot-dragging on junk food marketing to children, watering down of consumer protection against financial planners, and encouragement of very high population growth, despite the negative effects on the environment and quality of life, combined with the lack of evidence of any significant per capita economic benefit.

The US provides a good counterexample to Graham's idea that making rich people richer benefits everyone else. The US has had decent economic growth over the past 40 years, even in per capita terms, but the majority of American men are earning lower real wages than in 1979, and even most of the top 20% have only gotten a few crumbs.

http://www.stateofworkingamerica.org/chart/swa-wages-figure-4c-change-real-hourly-wages/

These graphs show how the ratio of CEO pay to average pay has exploded since 1965, and how productivity gains have far outstripped wages.

http://www.stateofworkingamerica.org/chart/swa-wages-figure-4-ceo-worker-compensation/

http://www.stateofworkingamerica.org/chart/swa-wages-figure-4u-change-total-economy/

This graph shows inflation adjusted US household incomes for the top 1% and the rest since 1979

http://lanekenworthy.net/2010/07/20/the-best-inequality-graph-updated/

The Americans have certainly had more inequality, so why isn't the average American better off?
Posted by Divergence, Monday, 7 July 2014 4:08:34 PM
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I quite like the recent essay by Nick Hanauer titled The Pitchforks Are Coming For Us Plutocrats. It gives a much more interesting perspective on this topic.
Posted by Daffy Duck, Monday, 7 July 2014 6:41:30 PM
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The total turnover pa of the share market, currencies and derivatives in Australia is $135 trillion = $ 135,000,000,000,000.Just a 0.1% tax or $1 in $1000 tax, will raise $135 billion which could pay off our debt in less than 6 yrs.Cannot the super rich afford a 0.1% tax ?

We don't need the GST which targets workers and the middle class but a small turnover tax on all transactions just like credit cards and we get almost everyone.
Posted by Arjay, Monday, 7 July 2014 7:20:52 PM
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