Thursday, April 25, 2013

How to solve income inequality

A very fascinating video about monkeys and income inequality:

When he says it is the wall street protest he is absolutely right. When people are taken advantage of, they are going to revolt. This type of attitude was exactly what made our country independent in the first place. The 13 colonies were being treated unfairly by King George III before we became independent and we knew it. We then revolted, just as this monkey does throwing back the cucumber, because he wants a grape.

When you look at Occupy Wall Street you see people who have been working just as hard getting paid less and less and don't have the resources available to start their own businesses because they have to support themselves. This is why we called for ending the corruption in our government by overturning FEC vs. Citizens United.

When you look at the Arab Spring we see how they were being treated horribly by their governments and looked across the Mediterranean and saw how Europeans live. There is no reason they can't live like that, so they are in a revolution and I know that in the end the progressives will win, even though there are times when it doesn't seem like it.

No rational person would be content with being mistreated when the person right next to them is getting paid far more for the same work. This is a real source of income inequality in the world, compare state worker salaries and private worker salaries who work for corporations of a similar size and the comparison holds to my last two.

How do we solve it? First of all, we need to form cross-corporation unions. We need to say that we are going to set our prices at a point where we can make enough to live. This is one step towards making our economy more sustainable, but it isn't enough.

We then need to look at how much money we spend on gasoline, communications, and electricity and recognize that we can pay less if we set up corporations which won't be so greedy and treat their customers with respect. When it comes to gasoline we can move towards more competitive alternatives, like fuel cells, which will be a very important change in how our economy works. This will create competition as long as we allow competition to exist and don't allow monopolies to form on such a critical part of our economic infrastructure. When it comes to communications we need to have reasonable regulations to prevent corporations like Comcast and AT&T from forming cartels and keeping prices high. With no one else to turn to once these companies control the economy we need to make certain that there are regulations preventing price gauging which hurts economic growth.

Another important aspect to the economy is the stock market. When you look at the stock market you will find how banks and investment institutions own large shares in many different corporations. I have found Yahoo to be the most intuitive for finding which companies own large shares in other corporations. This presents the largest hurdle, because when a collection of banks own large shares of all publicly traded companies in a sector, they really do control the whole market. The easiest way to fight this is refuse to deal with companies that own these other corporations and end your bank accounts with them. Concentrated power is never a good thing, and that is why keeping your bank accounts with small locally owned credit unions helps prevent monopolies and limit the resources that big banks can get. With the major players in a market not competing to keep prices low, and paying people as little as they can, there is very little that local businesses can do to reverse the trend of how the purchasing power of the middle class has shrunk.
This is main reason that the major corporate media outlets don't push certain issues, they are all owned by the same people who have no incentive in talking about ranked voting, income inequality, or other major issues, but instead fill the time with cute 10 year old baseball teams, pundits who don't know the facts, and Justin Bieber (currently). It keeps them from talking about major issues and most international catastrophes (namely human rights abuses in North Korea, Darfur, and the Congo Wars among others). This is a serious threat to the political health of our country and other countries seeing similar concentrations of poew.The next step is for many different people to own stocks in their own name, and if enough progressive decide that instead of boycotting WalMart, Exxon, etc. they will buy the stock and vote in better people, followed by taking their earnings and investing in local companies, it will help limit the concentration of power that is so dangerous for both our economic and political cultures. It is a large shift but I think this is the way.

There will be anarchists and communists who say their way is better. The problem with the anarchists is removing the government from influencing the economy won't solve any problems in the long run. It is dangerously close to the hands off approach in the Guilded Age which saw massive monopolies, impoverished people, and if it weren't for the unions and the anti-trust legislation the Guilded Age would still be here. The communists who say that the government needs to control the economy leave the government with complete control of the economy which leads to the inefficiencies of planning boards which plagued every communist country. It also leads to a new ruling class similar to the old based on who is the leader of the party which means nothing has really changed for most people.

I favor a center approach. When it comes to competitive goods I see no reason for price controls, or anything more than a minimum wage and the right to organize to insure people will be able to be paid enough to live. When it comes to monopolistic or oligopolistic goods, I see the government needs a role in insuring that the monopoly or oligopoly that forms will not raise their prices to the point where they control everything and individuals have no power, or just control the monopolistic good (mainly oil, electricity, telecommunications) which is successfully done in many highly developed countries. This is a way to help the economy grow by circumventing the choking power that these companies have when they have no competition and no one can enter the market to create new competition. This helps people get better products for a lower price and gives people different places to work so that if unemployment gets low it will be the corporation that is competing for the most skilled workers, not the workers competing for the best jobs. This will make prices rise which will cause the aggregate demand to increase, which will reduce prices and increase GDP. Aggregate Demand on Khan Academy

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