Trickle down doesn't "work", because "work" has been defined a certain way. Define "work" another way, and it does "work". It also presumes that the government somehow has first dibs on what people earn, which is absurd.
It does not work and increasing inequality is could be called "trickle up".
Unfortunately in our system, the wealthiest people have the most power, and they are incentivized to maintain a system that makes them wealthier. The wealthier they get, the more power they have over the system. We only have to look back as far as the 2017 TCJA to see how this dynamic plays out in real time.
If the system as designed is concentrating wealth in the hands of a few individuals (who themselves helped set up the system), how can we say it's not working as intended? It seems to be working out very well for them.
This implies that wealth is zero sum. It isn't. Creating wealth, which is what businesses do, is not "concentrating" it.
If a business achieves a 10x leap in productivity and lowers prices for its customers, has it created wealth for others? Yes.
If that business is owned by a single person, has that person's wealth relative to the rest of society increased? Also yes.
Creating wealth is not concentrating it.
Businesses which, remember, add a tremendous amount of value to the society - value which is much greater than the wealth their founders receive.
No billionaires implies no founders. No founders implies no businesses. No businesses implies a poor, stagnant society where every body suffers. Kind of like all the communist experiments of the last century.
> No businesses implies a poor, stagnant society where every body suffers. Kind of like all the communist experiments of the last century.
This is just not a fair characterization; for example the Soviet Union was hardly stagnant -- in the span of 30 years they went from an agrarian society to being the first nation on Earth to launch a satellite and the first man into space.
A nation of small businesses sounds attractive to many people, and it's been tried more than once, but it just doesn't work. You're never going to have chip fabs, automaking, steel smelting, oil refining, ship building, turbine making, etc., without big business.
The Soviet Union has been described as a third world economy with a first world military. The US is a first world economy and a first world military. Thanks to the free market.
BTW, you can buy Soviet built cars. The only people who buy them are collectors who take a perverse pride in their awfulness.
I'm sorry, but we're going to have to agree to disagree there, because I'm just not buying that.
> The US is a first world economy and a first world military.
Depends on who you ask. There's a meme going around right now of a split screen "billionaire space race" with a chyron reading "Millions of Americans facing eviction". Tie that to the story today "Full-time minimum wage workers can't afford rent anywhere in the US" and I really have to wonder what "first world economy" really means. I mean, just today the US government started issuing checks to families with children in order to reduce child poverty... how is that even a thing in a first world economy where billionaires are racing to space? Seems broken to me.
I've asked people who lived in the former Soviet Bloc. I also know that the USSR build a wall to keep people in, and the US builds a wall to keep people out. People are also trying to swim away from Cuba.
I don't think you can wish that away.
> it's entirely possible to have big businesses without having billionaires
The two have always gone together.
I mean, as you say the US is the #1 economic and military power in the world, and they have been imposing crippling economic sanctions on Cuba for 60 years. You really can't evaluate the situation fairly without including that relevant bit of information.
> The two have always gone together.
Under capitalism, yes, because that's how capitalism works. But one is not a necessary condition of the other. I've already given an example to disprove your assertion.
"At the end of this year I will grade each student individual performance in private but officially you will all receive the same grade, the average of the entire class grades instead, so it is fair for everybody."
They loved it. At the end of the year some work got A grades, some B and some F. But on the average they all received a very honorable B+.
However, next year, with the exact same algorithm, all students received the same grade: Fail.
A society where people are not rewarded each according to his merit is a society where people are not trying their hardest to improve. If you prevent billionaires you also prevent your best performers, your middle class, your millionaires, your small businesses and such. The end result is a uniformly poor society where the most vulnerable hurt the most. Just like communism.
Anyway, you seem to be under the impression that capitalism is a system that rewards merit, and communism is a system that doesn't. That's just not true. Capitalism is a system that rewards ownership, not merit. You're essentially saying that everyone who is rich deserves what they have, and as I look around at the pantheon of the wealthiest individuals in the world, I'm not seeing a lot of merit. Where are all the Nobel prize winners? Where are all the billionaire scientists?
Rewards based on ownership are the opposite of rewards based on merit -- you are required to show zero merit under a capitalist society to reap rewards, just a piece of paper declaring your ownership in an asset, ownership which is enforced by the state through violence. How does this lead to a meritorious society? To me it seems it would lead to a society where people don't strive for merit but for ownership of assets.
Look, all I'm arguing for is proportionality. No one is ever going to convince me that the 1% have so much merit that they deserve more wealth than billions of people.
> The end result is a uniformly poor society where the most vulnerable hurt the most. Just like communism.
The end result of capitalism is a society where 1% of the population own 95% of the wealth. Not uniformly poor, I'll give you that. It's quite lopsided and tilted. But one thing's for sure, the most vulnerable are still hurt the most under our capitalist society. Like I said in another post, the USA is sending out child tax credits to reduce childhood poverty this week. Poor children are some of the most vulnerable people in our society, and they are hurting so bad the government has to step in. Capitalism is doing nothing for them. And anyway, It's not like there aren't plenty of uniformly poor capitalist countries around today. Just look at Haiti for an example how of how bad it can get.
That's right.
> The end result of capitalism is a society where 1% of the population own 95% of the wealth.
That hasn't happened yet in 250 years of free markets. But the communist countries all achieved that in short order.
> Capitalism is doing nothing for them.
And yet people with nothing march literally thousands of miles to try to get into the US. Why aren't they marching to communist countries?
How? What's the mechanism? The key component of capitalism is that ownership dictates who gets rewards. It doesn't matter how meritorious you are -- if you don't have ownership you get nothing. That's how the whole thing works.
> That hasn't happened yet in 250 years of free markets. But the communist countries all achieved that in short order.
The whole point of communism is that ownership is communal, so it doesn't make sense to compare ownership between the two and say one is better at ownership. But just look at the trendlines in our system and tell me how things are going to get better under capitalist dynamics. The rich are going to get richer and the poor are going to get poorer. The end stage of capitalism is inevitable unless anti-free market dynamics are introduced.
> And yet people with nothing march literally thousands of miles to try to get into the US. Why aren't they marching to communist countries?
And what happens when they get here? Are they suddenly wealthy and prosperous in our capitalist utopia? Or are they some of the poorest and most marginalized people in our country? America's #1 export is propaganda. That people fall for the propaganda is not an endorsement of capitalism.
Tell that to the recent graduate getting multi hundred of thousand offers (with stock!) from FAANG companies.
Tell that to the entrepreneur owning 100% of his brand new company after filling a few forms and paying a small fee. Because that new company is worth exactly 0.
Ownership by itself gets you nothing. Making that property worth something is everything. And that’s why self made billionaires deserve their rewards.
> That people fall for the propaganda
It is funny to pretend to care about a category of people but then refuse them the right to think for themselves. Classical leftist: "We need to save the poor! From themselves…"
Compensation for labor is not exclusive to a capitalist system. You can receive compensation for labor irrespective of the ownership structure of a corporation. But since you've brought stock into it, that would prove my point -- it doesn't matter how meritorious the individual employee is, their total reward is based on their ownership. It may be that the corporation decides to give the employee more stock if they demonstrate merit, but that just reinforces the point that ownership is the fundamental determiner of compensation.
> Tell that to the entrepreneur owning 100% of his brand new company after filling a few forms and paying a small fee. Because that new company is worth exactly 0.
Okay, but under a capitalist system if that company grows the owner gets 100% of the gains. If someone else (employees) help the owner grow the company, they don't share in that at all (beyond the compensation they received for their labor).
> Making that property worth something is everything. And that’s why self made billionaires deserve their rewards.
I've yet to see an example of a self-made billionaire, sorry. Behind every billionaire is a legion of employees doing the actual value creation. And that's why no one deserves a billion dollars.
> It is funny to pretend to care about a category of people but then refuse them the right to think for themselves. Classical leftist: "We need to save the poor! From themselves…"
You don't know anything about me. Kindly keep your personal jabs to yourself.
> a legion of employees
In a newly created company? With what money?!
The 1% own 80% of all stocks, so I disagree ownership is extremely easy to acquire. Acquiring ownership of valuable assets requires capital, and capitalists own most of that.
> In a newly created company? With what money?!
I said behind every billionaire, not a newly created company. i.e. there's no such thing as a self-made billionaire. I'd love to see an example, but so far no one has been able to show me one.
This is the crux of our differing point of view I think. You seem to think a billionaire built their business by themselves (self made) and therefore deserve to be billionaires due to their extraordinary merit. I believe that no one has so much merit, and the success of large businesses is more due to the value created by employees.
I can understand for entrepreneurs, that the first narrative is more appealing. But even if I were to agree with you that capitalism is a system that awards compensation proportional to merit of businesses (which I don't), it still doesn't follow that a founders are reaping rewards proportional to their merit; when a business grows in value, that value is allocated to shareholders according to their ownership stake, not their individual merit.
The obvious example is Steve Jobs. He turned around two floundering companies - Apple and Pixar - into immensely valuable companies, without changing the employees. You might argue that one was luck, but two? One right after the other? and the two were totally different businesses? You've got a lot of 'splaining to do about that.
See "The Making of Steve Jobs".
https://www.amazon.com/Becoming-Steve-Jobs-Evolution-Visiona...
In fact, read any history book that focuses on one person or business, and find one that became a billionaire by blundering about.
As for them not being self-made, why didn't their makers, if they were so smart and endowed with resources, become billionaires? Are they so generous?
I am not trying to. I am just pointing out the fact that if you want to eliminate the top of the pyramid (the 1%) you will lose the rest of it too.
It is the exact same free-market mechanisms that allows both to exist. And you are not proposing anything better instead.
That's not a fact you've proven (at least not here), it's just something you believe to be true.
The fact that you don’t want to accept this (“No one is ever going to convince me”) makes it just something you have decided not to believe.
You haven't shown that one leads to the other. You're trying to use the USSR as an existence proof for your claim but the conclusion doesn't follow the premise. You have to make the connection if you want to make that claim.
You've asserted that if there are no billionaires, it follows there will be no businesses. That's a very strong claim that demands very strong proof.
Cuba can also trade with other countries.
I do enjoy your assertion that Cuban communism can only succeed if they have free trade with free market countries.
No they don't. I buy things when I get more than my money is worth. So does everyone else. It's how trade works. Businesses are not extracting wealth from me or you.
Let's say a company makes food. It costs them $2 to make and they sell it for $5. You buy it and eat it. Are you now wealthier? No. Your wealth actually decreased $5. Why would you enter this transaction if it made you less wealthy? Well because the food has some utility for you. You buy things when you get more "utility" than your money is "valued". But at the end of the transaction, you are not worth more.
On the other hand, the company's wealth increased $3. We call this increase in wealth "profit". It's the whole point of a business, and they extracted it from you. An exchange of goods and money occurred. Your wealth decreased, while their wealth increased. Is that not extracting wealth from you?
Nope. What I did with what I purchased has no relevance to the transaction. For example, I could have resold the food in my restaurant for $10.
Wealth can certainly be destroyed. The people doing the destroying are "extracting", not the people who sold it to them.
> you are confusing value and wealth
Not at all. I think you'll find it impossible to define the difference.
It's not that hard...
Value is the dollar value you assign a thing. In large part this is subjective except when it comes to money, which only works because we all agree it has the same value.
Wealth is the sum total value of all your assets, minus all your debts. If all your wealth is not in dollars, this can be subjective too depending on who is assessing the value of the assets.
Let's say we both have $10 in cash. The total wealth in our economy is $20. I exhaust $2 to make the taco, you give me $5 for the taco. My wealth is now $13, we can all agree. Your wealth depends on the value. Since it is a taco, it has no intrinsic dollar value attached to it. The amount of value you assign the taco will depend on how hungry the buyer is. But if you eat that taco the taco is gone. Forever. Your wealth is now $5, and mine is $13. $2 is now missing from the economy, but like the second law of thermodynamics it all depends on how you define the bounds of the economy, as it's likely circulating elsewhere now and potentially creating assets rather than consumable goods. But you can see in this case I didn't actually create any wealth. I created value, and it was destroyed by you, but I ended up wealthier.
If you resold the food in your restaurant for $10 all that means is someone else valued the taco more than you. The analysis is the same though.
Even you use the words interchangeably.
> if you eat that taco the taco is gone.
Of course. Nobody said that wealth cannot be destroyed.
How so? Wealth is the aggregate, the individual assets have value. What's inconsistent here?
The only perspective from which your statement makes sense is from the libertarian fantasy of government-as-parasite and individual-as-independent-producer.