Capitalism: Adam Smith, America, and Wealth Redistribution

[Bruce Gourley]

Thanks to recent decades of capitalistic redistribution of wealth to the rich in the United States at the expense of the poor, the top one percent of Americans (in terms of wealth) own between 35% and 50% of the nation's wealth (the specific percentage is hard to pin down, because different analysis measure wealth in differing manners), which (regardless of the exact number) is more than the combined wealth of the bottom 95% of Americans (the 95% figure was true in 1995; the gap today is even greater).

Defenders of the rich try to turn the 95% stat on its head by pointing out that the top 1% richest Americans pay more taxes than the bottom 90-95% of Americans (here's one link). What defenders of the rich fail to talk about is that the top 1% own more than 95% of America's wealth, and hence they are merely paying their fair share of taxes (or at least in the ballpark, because the richest 1% of Americans get lots of tax breaks that no one else does).

Another way of breaking down the enormous wealth gap in America is this: while the top 1% own as much as 50% of America's wealth, the bottom 40% of Americans in terms of wealth, own a whopping .2% of the nation's wealth.

So, what is the relevance of 1% of Americans basically owning America?

The United States wealth gap is now equivalent to that of Third World, undeveloped countries (see wealth gap comparisons, broken down nationally and even at the U.S. state level compared to the world's other nations, based on US Census and CIA world factbook wealth stats).

How did capitalism turn America into the economic equivalent of a Third World nation, in terms of wealth distribution?

Adam Smith, the 18th century father of modern economics (free markets and capitalism), believer in profits, and opponent of socialism, warned us that if not closely regulated by government, free markets would ultimately ruin nations.

Of the inherent problem of a great wealth gap between rich and poor he said: "Servants, labourers, and workmen of different kinds, make up the far greater part of every political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed and lodged."

Smith wrote that "the oppression of the poor must establish the monopoly of the rich", that profit is "always highest in the countries which are going fastest to ruin". He held up the then-global superpower Netherlands, a nation ruled by large business interests, as an exploitative and unsustainable economic model.

Of business owners he said, "Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour ... Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent in regard to the pernicious effects of their own gains. They complain only of those of other people."

He also said: "The proposal of any new law or regulation of commerce which comes from merchants and manufacturers should always be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined with the most suspicious attention."

For Smith, the idea that the private sector offered greater fiscal responsibility was outrageous: "The government of an exclusive company of merchants is, perhaps, the worst of all governments for any country whatever."

(Yet even Smith may have been astonished that capitalistic wealth redistribution has relegated 21st century American to Third World status in terms of wealth distribution.)

In short, the father of capitalism was also one of its most ardent critics. Adam Smith understood that the love of money expressed in inequitable wealth redistribution, unregulated free markets, and the pursuit of exorbitant profits, would ruin nations. The inability (or unwillingness) of many of today's capitalists to criticize free markets (and the intensity with which many resist government regulation of free markets) is a betrayal of Smith, evidences a lack of historical understanding of free markets, and - according to Smith - is yet more evidence of the inherent dangers in wealth accumulated in the hands of a few. That many Christians today place their faith in the wealth redistribution system of unregulated (or nearly unregulated) free markets is even more disturbing.

(Smith's Wealth of Nations is available online. The volume is searchable; feel free to look up the quotes above.)

[Dave Roberts]

This one is going to take a bit of pondering. Adam Smith seems to be often cited by the laisse-faire ecomonists as teaching something entirely different from what you have quoted. Most interesting....

[Bruce Gourley]

This one is going to take a bit of pondering. Adam Smith seems to be often cited by the laisse-faire ecomonists as teaching something entirely different from what you have quoted. Most interesting....

Here is one brief online essay analysis of how laissez-faire devotees have misappropriated Adam Smith; it is part of a broader discussion of Smith's evolving views of political economy (i.e., the later Smith, Wealth of Nations and later, was much more critical and more restrictive of free markets than the early Smith, Theory of Moral Sentiments). Also see this volume.

[Tim Dahl]

pft...

The rich don't own America.

China does.

Tim

[KeithE]

Great posts Bruce. I was aware of the growing inequality in our nation (no where near a fair deal in terms of effort expended) and have pointed this out for several years herein. I appreciate the DATA you show.

But I was unaware of Adam Smith's promotion of government intervention when unbridled capitalism starts to "ruin nations" (an example is Tim Dahl's point about China owning us). Thanks.

Waiting on the likes of Jonathan and ET to chime in. They just may be stunned.

[William Thornton]

William is in a bit of a funk today but still game to take on the army of straw men marshalled by Our Fearless Forum Leader...

The Adam Smith brigade of straw men...looks formidable, but wait, the guy was an 18th century moral philosopher who at least could be said to favor limited government. If he visited the US of the 21st century and viewed the vast, comparably wealthy middle and lower classes he would be astonished. Heck, let's dig up that icon of leftist intellectuals, JFK, and let him speak on taxation if we are going to hear from dead folks. BTW, I daresay that NO ONE here (aside from Jonathan) has read all of "...Wealth of Nations." But, hey, soundbites are fine.

The "laissez faire" brigade of straw men...a phantom brigade, it seems. NO ONE on this forum is a laissez faire advocate. While we're at it, which relgious/socialist/leftists here will be the first to condemn Bill Clinton for NAFTA?

And those evil rich! The miscreants! How dare they accumulate wealth when only paying almost all the taxes. 'Let them earn it, let them create the jobs that generate the wealth, let them take the risks, let them acquire the skills necessary to accumulate wealth' the socialists say, 'and we will take it away and give it to the non-achievers, the lazy, illegal immigrants, and the rest.' One mod/lib commentator stated that the health care monstrosity itself will be a $200 billion annual wealth transfer to the poor. Happy yet? 'From each according to his ability, to each according to his need' eh?

I recommend our fearless leader travel to Nepal and compare that with Alabama (a comparison made in one of his links, a breathless and staggering absurdity) and see if Nepalese would rather trade places with Alabamians. Or to Mexico, which is compared in the link to Georgia. So, dang, why did all those Mexicans relocate to Georgia to take landscaping jobs and buy used vehicles and drive 1500 miles back home to sell them? Why does every Latino-oriented ma and pa store prominently advertise wire money transfers? And what's with all these people arriving at my church looking for a handout while owning vehicles, cell phones, and having expensive personal habits. I can smell a smoker from afar and cigarettes, pack a day habit, I understand to cost about $1500 a year, a sum greater than ANNUAL per capita income in Nepal. I won't get to the flat screen TVs (no joke) some of these people have in their homes. And what makes all these people line up at Wal-Mart each month on the day they have hundreds of dollars of my taxes loaded onto their debit cards? Sure, we're looking like a Third World country...

...but hey, I do understand demagoguery. Let 'er rip!

[Jonathan]

Great posts Bruce. I was aware of the growing inequality in our nation (no where near a fair deal in terms of effort expended) and have pointed this out for several years herein. I appreciate the DATA you show.

But I was unaware of Adam Smith's promotion of government intervention when unbridled capitalism starts to "ruin nations" (an example is Tim Dahl's point about China owning us). Thanks.

Waiting on the likes of Jonathan and ET to chime in. They just may be stunned.

Having actually read "An Inquiry into the Nature and Causes of the Wealth of Nations" (as opposed to doing web searches and looking to Wikipedia like some here are obviously doing), I'm quite familiar with the fact that Smith did not advocate for completely unfettered markets nor a completely unbridled capitalism. And, if one were to actually search the posts of either ET or myself, one would find that we have also not so advocated. So why does Bruce insist that this is our argument? Don't know...and increasingly don't care.

The reason that I haven't commented in this thread (until now) is that I'm waiting for Bruce to propose a solution to the "problem" that he identifies. Unfortunately, as William has aptly demonstrated, there doesn't seem to much of a real argument in Bruce's posts on this topic.

[William Thornton]

I take Jonathan's word that he has actually read Adam Smith's lengthy tome and commend him for it.

My earlier statement to the contrary has been edited.

[Jonathan]

I take Jonathan's word that he has actually read Adam Smith's lengthy tome and commend him for it.

My earlier statement to the contrary has been edited.

The paperback version that I was assigned way back during my freshman year econ class was less than 600 pages long. My econ professor, like my western civ professor with de Tocqueville) was adamant about us being exposed to what these writers actually said as opposed to relying on what others wrote about them. Made for a lot of reading in college but I now consider it profitable (no pun intended).

[Bruce Gourley]

OK, it sounds like we all agree with Adam Smith that free markets must have government regulation and oversight in order to prevent capitalism from destroying a given nation. In addition, William offers (and Jonathan concurs) a pretty good apology for wealth redistribution to the rich and America's equivalent status to Third World nations in terms of the wealth gap (essence of apology: America's poor are better off than other nation's poor).

In many cases, William is certainly right (we don't have starving masses in America, for example). On the other hand, hunger is now so predominant than half of all U.S. children now receive food stamps at some point during their childhood, tens of thousands die annually because they cannot afford health insurance/medical care, and most bankruptcies in America are a result of the inability of Americans to afford health insurance and/or medical care (the later, even if they have health insurance).

Why? Because wealth redistribution has placed almost all of America's wealth in the hands of a tiny percentage of the population, leaving the remaining 90% plus to daily struggle with issues including hunger, lack of money for health insurance / medical care, and constantly facing the prospect of bankruptcy or even death if their insurance company refuses to honor its promise of coverage. At this point, the politician's solution is to toss a few pennies to the poorest of the poor, relative to big business-friendly policies that allow yet more of the great bulk of the nation's wealth to be redistributed to the richest of the rich.

Even Alan Greenspan recognizes that the magnitude of America's redistribution of wealth to the richest few is a very serious problem. He states,, "The income gap between the rich and the rest of the US population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself."

Greenspan's warnings echo Adam Smith's words about the excesses of non-regulated or too lightly-regulated free markets.

Jonathan asks: what is the solution to this so-called "problem?" Smith's answer is simple, as I've already noted: government should do what it takes to make certain that free markets do not allow the bulk of wealth to be redistributed to the few, leaving the masses struggling for daily existence.

[Jonathan]

I'll skip the usual Gourlian attempt to take my words and make them say something that I didn't (apology for making the US a 3rd world equivalent?) and go straight to what appears to be a solution:

Jonathan asks: what is the solution to this so-called "problem?" Smith's answer is simple, as I've already noted: government should do what it takes to make certain that free markets do not allow the bulk of wealth to be redistributed to the few, leaving the masses struggling for daily existence.

Did Smith really state that "government should do what it takes" to achieve the above?

[ET]

Not to mention who gets the Godlike power of deciding how much each of us has the right to earn.

[Bruce Gourley]

I'll skip the usual Gourlian attempt to take my words and make them say something that I didn't (apology for making the US a 3rd world equivalent?) and go straight to what appears to be a solution:

Jonathan asks: what is the solution to this so-called "problem?" Smith's answer is simple, as I've already noted: government should do what it takes to make certain that free markets do not allow the bulk of wealth to be redistributed to the few, leaving the masses struggling for daily existence.

Did Smith really state that "government should do what it takes" to achieve the above?

OK, I'll take the bait: are you saying you see no reason to offer an excuse for the US being the equivalent of a Third World nation in regards to wealth distribution? Perhaps you're just fine with the decline of America in this regard?

In the past you've spoken favorably, I think, of Greenspan. How do you respond to his assessment that our capitalistic-induced 3rd World wealth gap is leading America down the road to destruction?

As to Smith, (as you know) I've summarized his solution for not allowing capitalism to ruin nations. He did not believe capitalism should be allowed to ruin nations, and his solution was to take measures necessary to avoid such a fate. But you already know this, because you've read Smith. Perhaps you would prefer to allow capitalism to ruin America, as Greenspan warns could happen?

[Jonathan]

I'll skip the usual Gourlian attempt to take my words and make them say something that I didn't (apology for making the US a 3rd world equivalent?) and go straight to what appears to be a solution:

Jonathan asks: what is the solution to this so-called "problem?" Smith's answer is simple, as I've already noted: government should do what it takes to make certain that free markets do not allow the bulk of wealth to be redistributed to the few, leaving the masses struggling for daily existence.

Did Smith really state that "government should do what it takes" to achieve the above?

OK, I'll take the bait: are you saying you see no reason to offer an excuse for the US being the equivalent of a Third World nation in regards to wealth distribution? Perhaps you're just fine with the decline of America in this regard?

I won't take the bait. I reject your assertion that the US is the equivalent of a Third World Nation in regards to wealth distribution. Please point out to me a single Third World nation that has, for a meaningful period, had a free market.

In the past you've spoken favorably, I think, of Greenspan. How do you respond to his assessment that our capitalistic-induced 3rd World wealth gap is leading America down the road to destruction?

I'm not sure I've spoken favorably of any Fed chair (maybe Volker?) in recent memory...one reason is that they, especially the case with Greenspan, strive to be as opaque as possible in their testimony with the implicit goal of wanting to avoid moving markets with their words (i.e. to have immediate deniability that they're actions are responsible for anything negative). Greenspan lost a lot of credibility with me once he left office and then started speaking out very clearly about what had gone wrong. So, do I agree with this his assessment about wealth gaps? Well, yes and no. First of all, I don't agree that the gap is solely "capitalistic-induced".

The root concept of the nanny-state programs is to get folks on aid and keep them dependents of the state. The best (worst?) example of this is the social security system. An amount equal to 12.4% of each paycheck goes into a Washington black hole. It does not go into a savings account or other investment; it cannot grow into a balance that can be inherited by the next generation; and many of the poor (especially poor minorities) do not live long enough to receive as much from the system in retirement that they paid into it during their working years. If you're concerned about the wealth gap, then surely you would favor letting the poor build up private wealth starting with that 12.4%, right?

As to Smith, (as you know) I've summarized his solution for not allowing capitalism to ruin nations. He did not believe capitalism should be allowed to ruin nations, and his solution was to take measures necessary to avoid such a fate. But you already know this, because you've read Smith. Perhaps you would prefer to allow capitalism to ruin America, as Greenspan warns could happen?

To restate, I asked you what your solution was for the problem that you argue exists (as a result of capitalism). Your response is that the solution is "to take measures to avoid such a fate [the ruination of a nation]". Ummm....that's like saying "my solution is a solution".

Let's try again. What measures do you prefer? Which measures do you think Smith preferred?

[Bruce Gourley]

OK, I'll take the bait: are you saying you see no reason to offer an excuse for the US being the equivalent of a Third World nation in regards to wealth distribution? Perhaps you're just fine with the decline of America in this regard?

I won't take the bait. I reject your assertion that the US is the equivalent of a Third World Nation in regards to wealth distribution. Please point out to me a single Third World nation that has, for a meaningful period, had a free market.

Er, Jonathan, that is the very point: because American capitalism has betrayed the vision of Adam Smith (who advocated regulation to prevent too much wealth redistribution to the rich) ... the excesses of American capitalism have brought us down to a level of wealth distribution equal to that of the non-capitalistic Third World.

I'm not sure I've spoken favorably of any Fed chair (maybe Volker?) in recent memory...one reason is that they, especially the case with Greenspan, strive to be as opaque as possible in their testimony with the implicit goal of wanting to avoid moving markets with their words (i.e. to have immediate deniability that they're actions are responsible for anything negative). Greenspan lost a lot of credibility with me once he left office and then started speaking out very clearly about what had gone wrong. So, do I agree with this his assessment about wealth gaps? Well, yes and no. First of all, I don't agree that the gap is solely "capitalistic-induced".

The root concept of the nanny-state programs is to get folks on aid and keep them dependents of the state. The best (worst?) example of this is the social security system. An amount equal to 12.4% of each paycheck goes into a Washington black hole. It does not go into a savings account or other investment; it cannot grow into a balance that can be inherited by the next generation; and many of the poor (especially poor minorities) do not live long enough to receive as much from the system in retirement that they paid into it during their working years. If you're concerned about the wealth gap, then surely you would favor letting the poor build up private wealth starting with that 12.4%, right?

The worst example of the nanny state is the government shoveling my money and yours to large corporations and the richest of Americans (subsidies, special tax breaks, the like). The worst idea for providing for the poor in our midst is to tie their retirement to stock and investments of private corporations, which can be wiped out at any time. Security, not risk, is the operable concept.

And what answer did Adam Smith offer to prevent the excesses of capitalism? Regulations and government oversight in appropriate measure to prevent too great of a redistribution of wealth to the wealthy in order to preserve the health of the nation and citizenry at large.

[KeithE]

Is it time for me to re-introduce that 100:1 concept within any company intending on receiveing government work? No more than a 100:1 range from top paid, to bottom paid personnel in any one entity (must be certified by paper or electronically at ORCA just like OSHA, ADA, Enviro compliance, EEO, etc.)

So if the CEO demands to pay minimum wage ($7.25/hr = $15,080/Year) o keep costs down, s(he) will have to limit her/his pay to $1.5M/year. If s(he) wants more s(he) will have to drag the bottom up. S(he) now has a motivation to raise the bottom instead of expoliting people. Actually I'd like to see 20:1 (but I'll settle for 100:1 to include bonuses).

That would be one approach to fulfill Adam Smith's vision.

[ET]

Smith wrote that "the oppression of the poor must establish the monopoly of the rich",

You lifted that quote out of context and gave it a completely different meaning. "Chapter 9: Of the profits of stocks" is chiefly addressed toward interest rates, not some general philosophy of the rich oppressing the poor. However, in the sentence preceding the one from which you get this quote, Smith takes issue with trade restrictions that reduce competition. He speaks of the effect of regulatory/cultural limits to (foreign) competition and how "the rich" (monopolies or big business) can benefit with larger profits by limiting such competition.

You'll get no argument from me that business will attempt to use regulations to help their bottom line by restricting competition. I've stated that issue several times in various threads.

Secondly, there is no such thing as "America's wealth". Human beings own wealth. What you are doing in making this argument is taking the individual production/wealth of citizens and adding it all together and then complaining that those individuals who didn't produce much didn't get their "fair share". "America's wealth" is nothing more than "lofty poetic nonsense", as one economist said. Talking about why "the rich" own so much wealth is like asking why bees "own" so much honey compared to other critters. They own it because they produced it in some form or fashion. Income in a free society is mostly determined by one's ability and willingness to produce goods and services for which the other guy will offer something in exchange, usually money.

All it takes in this country to be in the top 1% of income earners is an adjusted gross income of $400,000. Bill Gates, Michael Jordan, Tom Hanks, Albert Puhjols, Tiger Woods, John Grisham, Sandra Bullock, Rick Warren, Carrie Underwood, Fred Smith of FedEx here in my hometown of Memphis, Peyton Manning, Larry Ellison and a few other CEOs who went from rags-to-riches. Just about any player in professional sports, Rush Limbaugh, lawyers, doctors, entrepreneurs, writers, singers. Not to mention the couples who reach $400,000 with two incomes. Even the President of the United States makes a salary of $400,000. Toss in some investment income or income from some other source and the President can easily make the AGI necessary to be in the top 1%.

By what means have these people oppressed the poor to obtain their wealth? Does the President of the United States get rich off the poor? Jonathan asks the important question, however. What does anyone propose to do about this "disparity" in wealth? What will be the consequences of those actions? Will those actions broaden the freedoms we enjoy in this country or will we have to give up some freedoms in order for government to tightly control the distribution of wealth?

Lastly, much of this debate takes place with static thinking. There is much income mobility in this country. People make and lose fortunes all the time. I can guarantee you that there were folks that were in the top 1% of income earners 10 years ago that aren't in there now, just as there are those that occupy that lofty plateau now that weren't there 10 years ago. I read one article a while back that stated that the "churn rate" for that top income bracket was 40 or 50%.

So while Bruce may talk about the top 1% "owning" America, the ownership of America is changing all the time. It is not the portent of doom that you make it out to be.

(P.S. Do not assume this to be a denial that there may be things in our system that need reform, but only as a broad rejection of Bruce's definition of capitalism as a "wealth redistribution scheme from the poor to the rich".)

[Jonathan]

Well done, ET. I'm looking to get my copy of Smith back from someone who borrowed it (if Bruce wanted to read it for himself, the entire text is printed on a number of websites). In the meantime, I'm planning on reading P.J. O'Rourke's book on "Nations". My guess is that he'll have a good take on how folks like Bruce try to use Smith.

[KeithE]

What does anyone propose to do about this "disparity" in wealth? What will be the consequences of those actions? Will those actions broaden the freedoms we enjoy in this country or will we have to give up some freedoms in order for government to tightly control the distribution of wealth?

I've suggested two ways the disparity in wealth can be addressed. They will both take some time to reach a state of more equitable distribution of wealth. But they are a start.

1) 100:1 proposal given above. Wealth will be slowly redistributed from those taking advantage of their high positions to pay themselves exhorbitive salaries or give themsleves high bonuses (or use the Board of Directors to do so in a backscratching fashion - I'll pay you 100,000's dollars for occassional BoD meetings as long as you approve my $1M+ salaries + $100,000's bonuses and stock options).

2) Have leftover estates revert to government ownership (or disposal via sale) and limit $$'s given to "junior" w/o taxation while "senior" is alive. Remember THE funding principle of this country is that we are supposedly "Dedicated to", is that "ALL MEN (and women) ARE CREATED EQUAL".

These do not detract from anyone's freedom (unless you say the rich's "freedom" to become absurdly rich is threatened), and enhances freedom of those stuck in poverty to pursue the moderately good life. The estate reversion enhances our government's bottom line and motivates junior to be responsible for their own lifes.

ET (or Jonathan) please describe how anyone's "freedom" is affected by either of these proposals. "Freedom" is a rallying catchphrase to promote when an approach has nothing else to say for it.

I know these are shockers of proposals to many (not only rabid RW types), but all revolutions start out that way. And government is not in the least tightly controlling anything that is working well (at least). Motivation (that key catchphrase of capitalism) is not affected but instead enhanced.

[David Flick]

.
.I am really enjoying this thread. I have no training (formal or otherwise) in economics, but I'm learning rapidly by reading these exchanges. Here's a Golden Spur to participants of both sides of this debate. Keep it going,fellows.

[Bruce Gourley]

Smith wrote that "the oppression of the poor must establish the monopoly of the rich",

You lifted that quote out of context and gave it a completely different meaning. "Chapter 9: Of the profits of stocks" is chiefly addressed toward interest rates, not some general philosophy of the rich oppressing the poor. However, in the sentence preceding the one from which you get this quote, Smith takes issue with trade restrictions that reduce competition. He speaks of the effect of regulatory/cultural limits to (foreign) competition and how "the rich" (monopolies or big business) can benefit with larger profits by limiting such competition.

You'll get no argument from me that business will attempt to use regulations to help their bottom line by restricting competition. I've stated that issue several times in various threads.

Secondly, there is no such thing as "America's wealth". Human beings own wealth. What you are doing in making this argument is taking the individual production/wealth of citizens and adding it all together and then complaining that those individuals who didn't produce much didn't get their "fair share". "America's wealth" is nothing more than "lofty poetic nonsense", as one economist said. Talking about why "the rich" own so much wealth is like asking why bees "own" so much honey compared to other critters. They own it because they produced it in some form or fashion. Income in a free society is mostly determined by one's ability and willingness to produce goods and services for which the other guy will offer something in exchange, usually money.

All it takes in this country to be in the top 1% of income earners is an adjusted gross income of $400,000. Bill Gates, Michael Jordan, Tom Hanks, Albert Puhjols, Tiger Woods, John Grisham, Sandra Bullock, Rick Warren, Carrie Underwood, Fred Smith of FedEx here in my hometown of Memphis, Peyton Manning, Larry Ellison and a few other CEOs who went from rags-to-riches. Just about any player in professional sports, Rush Limbaugh, lawyers, doctors, entrepreneurs, writers, singers. Not to mention the couples who reach $400,000 with two incomes. Even the President of the United States makes a salary of $400,000. Toss in some investment income or income from some other source and the President can easily make the AGI necessary to be in the top 1%.

By what means have these people oppressed the poor to obtain their wealth? Does the President of the United States get rich off the poor? Jonathan asks the important question, however. What does anyone propose to do about this "disparity" in wealth? What will be the consequences of those actions? Will those actions broaden the freedoms we enjoy in this country or will we have to give up some freedoms in order for government to tightly control the distribution of wealth?

Lastly, much of this debate takes place with static thinking. There is much income mobility in this country. People make and lose fortunes all the time. I can guarantee you that there were folks that were in the top 1% of income earners 10 years ago that aren't in there now, just as there are those that occupy that lofty plateau now that weren't there 10 years ago. I read one article a while back that stated that the "churn rate" for that top income bracket was 40 or 50%.

So while Bruce may talk about the top 1% "owning" America, the ownership of America is changing all the time. It is not the portent of doom that you make it out to be.

(P.S. Do not assume this to be a denial that there may be things in our system that need reform, but only as a broad rejection of Bruce's definition of capitalism as a "wealth redistribution scheme from the poor to the rich".)

While we both agree that capitalism must be regulated (perhaps you prefer lighter regulation than I or Smith or Greenspan), you are misstating the context of the Adam Smith quote. He is talking about nations (China is his illustration, in particular) where the rich mistreat and rob the poor in order to redistribute wealth to themselves from the poor and thus increase their profit margins:

"In a country, too, where, though the rich, or the owners of large capitals, enjoy a good deal of security, the poor, or the owners of small capitals, enjoy scarce any, but are liable, under the pretense of justice, to be pillaged and plundered at any time by the inferior mandarins, the quantity of stock employed in all the difference branches of business transacted within it, can never equal to what the nature and extent of that business might admit. In every different branch, the oppression of the poor must establish the monopoly of the rich, who, by engrossing the whole trade to themselves, will be able to make very large profits."

As to the "wealth of a nation," yes, human beings (oftentimes through corporations) own the wealth, and 1% of the richest Americans (the very class Smith declares who use the system they command in order to "pillage and plunder" the poor to hoard as much money as possible*) own 35-50% of the cumulative riches in America ... and this wealth gap is the equivalent of Third World countries, even as it continues to grow. This, in short, is a major problem, recognized by Adam Smith of old and Alan Greenspan today, both of whom declare that this excess of capitalism is the road to national doom.

* Smith's imagery of the richest of the rich pillaging and plundering the poor is harsh, admittedly. I readily admit in America that not all of the richest 1% of Americans hoard their wealth; at least a few, such as Gates, are using a portion of their fortunes to try and help their fellow Americans. But Smith's basic contention that the richest of the rich are playing from a stacked deck that inherently redistributes wealth from the poor to the wealthiest, is just as notable today as it was 300 years ago.

[Jonathan]

1) 100:1 proposal given above. Wealth will be slowly redistributed from those taking advantage of their high positions to pay themselves exhorbitive salaries or give themsleves high bonuses (or use the Board of Directors to do so in a backscratching fashion - I'll pay you 100,000's dollars for occassional BoD meetings as long as you approve my $1M+ salaries + $100,000's bonuses and stock options).

1st problem is constitutional. The federal goverment does not have the power to impose salary caps on private businesses. 2nd problem comes from the fact that markets are increasingly global. Since very few companies have to maintain USA HQ's, if the federal government did gain constitutional power to determine wage caps, any number of other nations would capitalize on our government's stupidity and make themselves better places to locate...then you'd see the fastest drain of talent (followed by capital) in history. Try making up that revenue on service industry jobs.

No matter how badly a Statist wants to control the flow of wealth, the producers of wealth are, by nature and definition, significantly faster and more nimble.

2) Have leftover estates revert to government ownership (or disposal via sale) and limit $$'s given to "junior" w/o taxation while "senior" is alive. Remember THE funding principle of this country is that we are supposedly "Dedicated to", is that "ALL MEN (and women) ARE CREATED EQUAL".

While it is probably the case that you do not subscribe the "originalist" thinking, you would be well served to look at what was meant by "all men are created equal". It referred to equality under the law, not equality of bank accounts, or jump shots, or singing ability, or ability to grow/maintain muscle mass, or ability to lose and keep weight off, etc... But it might be that you see Harrison Bergeron as a prescription for the Utopian society rather than a cautionary tale.

If a government mandated that all wealth be confiscated upon the owner's death...you would see producers quickly liquidate their holdings and move to a nation with a free market (there are some intelligent government officials around the globe...the brightest among them would figure out how to provide safety for these folks while dramatically increasing the tax revenue that follows producers.

What is most amazing (almost Orwellian) about your post, KeithE, is that you propose to dramatically limit financial freedom while denying any limitation of freedom.

Are you really an advisor to Robert Gibbs?

[KeithE]

1) 100:1 proposal given above. Wealth will be slowly redistributed from those taking advantage of their high positions to pay themselves exhorbitive salaries or give themsleves high bonuses (or use the Board of Directors to do so in a backscratching fashion - I'll pay you 100,000's dollars for occassional BoD meetings as long as you approve my $1M+ salaries + $100,000's bonuses and stock options).

1st problem is constitutional. The federal goverment does not have the power to impose salary caps on private businesses.

The federal government has hundreds of powers/roles that are not in expressly in the Constitution, a fact I know ET decries, but could not live effectively without. 1st "problem" is regularly circumvented.

2nd problem comes from the fact that markets are increasingly global. Since very few companies have to maintain USA HQ's, if the federal government did gain constitutional power to determine wage caps, any number of other nations would capitalize on our government's stupidity and make themselves better places to locate...then you'd see the fastest drain of talent (followed by capital) in history. Try making up that revenue on service industry jobs.

The corporations are now flocking to offshore tax havens but they still must abide by US regulations (OSHA, EEO, EPA, ADA, Min Wage laws, ...) to receive US government contracts. What's one more regulation? 2nd "problem" is no problem at all.

2) Have leftover estates revert to government ownership (or disposal via sale) and limit $$'s given to "junior" w/o taxation while "senior" is alive. Remember THE funding principle of this country is that we are supposedly "Dedicated to", is that "ALL MEN (and women) ARE CREATED EQUAL".

While it is probably the case that you do not subscribe the "originalist" thinking, you would be well served to look at what was meant by "all men are created equal". It referred to equality under the law, not equality of bank accounts, or jump shots, or singing ability, or ability to grow/maintain muscle mass, or ability to lose and keep weight off, etc...

It refers to an equal playing field and equal opportunity as well as equality under the law. Bank accounts should be what the individuals make of it THEMSELVES. Jump shots. etc are partially God given talent and partly what they make of that talent. No one is suggesting removing muscle mass or leg spring to some common level.

If a government mandated that all wealth be confiscated upon the owner's death...

There you go again with the "confiscation" language. Junior has already received more than a fair share. Junior's inheritance money really is not his/hers to be "confiscated". Returning what junior feels entitled to, evens the field to a degree.

you would see producers quickly liquidate their holdings and move to a nation with a free market (there are some intelligent government officials around the globe...the brightest among them would figure out how to provide safety for these folks while dramatically increasing the tax revenue that follows producers.

A nation with a free market - not would inlcude the USA whether or not estates were returned. Your hero prototype Ayn Rand "producers" would move or stay depending on where most profit is made. They might shuffle as much to junior's way while they are alive and they may train junior to carry on the business. But returning estates would lead to some government revenue (much needed right now and probably well into the future to reduce deficits) and work in the direction of the founding fathers intent " Dedication the proposition that 'all men are created equal'". I will remind you, "dedication" means primary focus, above secondary purposes, such as :

form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity

.

What is most amazing (almost Orwellian) about your post, KeithE, is that you propose to dramatically limit financial freedom while denying any limitation of freedom.

The freedoms mentioned in the Constitution, does not include "financial freedom" you espouse especially when it curtails that financial conditions of many other human beings. The Constitutional freedoms (speech, bear arms,religion, pursuit of happiness) are not advanced or retarded based on the estate returning proposal.

Face it Jonathan, you favor the rich (and some self-claimed principles). I want to see an even of an opportunity playiing field as prossible and the poor and a Natinal Champion chaamber sting to relate who have little choice).

[KeithE]

1) 100:1 proposal given above. Wealth will be slowly redistributed from those taking advantage of their high positions to pay themselves exhorbitive salaries or give themsleves high bonuses (or use the Board of Directors to do so in a backscratching fashion - I'll pay you 100,000's dollars for occassional BoD meetings as long as you approve my $1M+ salaries + $100,000's bonuses and stock options).

1st problem is constitutional. The federal goverment does not have the power to impose salary caps on private businesses.

The federal government has hundreds of powers/roles that are not in expressly in the Constitution, a fact I know ET decries, but could not live effectively without. 1st "problem" is regularly circumvented.

2nd problem comes from the fact that markets are increasingly global. Since very few companies have to maintain USA HQ's, if the federal government did gain constitutional power to determine wage caps, any number of other nations would capitalize on our government's stupidity and make themselves better places to locate...then you'd see the fastest drain of talent (followed by capital) in history. Try making up that revenue on service industry jobs.

The corporations are now flocking to offshore tax havens but they still must abide by US regulations (OSHA, EEO, EPA, ADA, Min Wage laws, ...) to receive US government contracts. What's one more regulation? 2nd "problem" is no problem at all.

2) Have leftover estates revert to government ownership (or disposal via sale) and limit $$'s given to "junior" w/o taxation while "senior" is alive. Remember THE funding principle of this country is that we are supposedly "Dedicated to", is that "ALL MEN (and women) ARE CREATED EQUAL".

While it is probably the case that you do not subscribe the "originalist" thinking, you would be well served to look at what was meant by "all men are created equal". It referred to equality under the law, not equality of bank accounts, or jump shots, or singing ability, or ability to grow/maintain muscle mass, or ability to lose and keep weight off, etc...

It refers to an equal playing field and equal opportunity as well as equality under the law. Bank accounts should be what the individuals make of it THEMSELVES. Jump shots. etc are partially God given talent and partly what they make of that talent. No one is suggesting removing muscle mass or leg spring to some common level.

If a government mandated that all wealth be confiscated upon the owner's death...

There you go again with the "confiscation" language. Junior has already received more than a fair share. Junior's inheritance money really is not his/hers to be "confiscated". Returning what junior feels entitled to, evens the field to a degree.

you would see producers quickly liquidate their holdings and move to a nation with a free market (there are some intelligent government officials around the globe...the brightest among them would figure out how to provide safety for these folks while dramatically increasing the tax revenue that follows producers.

A nation with a free market - not would inlcude the USA whether or not estates were returned. Your hero prototype Ayn Rand "producers" would move or stay depending on where most profit is made. They might shuffle as much to junior's way while they are alive and they may train junior to carry on the business. But returning estates would lead to some government revenue (much needed right now and probably well into the future to reduce deficits) and work in the direction of the founding fathers intent " Dedication the proposition that 'all men are created equal'". I will remind you, "dedication" means primary focus, above secondary purposes, such as :

form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity

.

What is most amazing (almost Orwellian) about your post, KeithE, is that you propose to dramatically limit financial freedom while denying any limitation of freedom.

The freedoms mentioned in the Constitution, does not include "financial freedom" you espouse especially when it curtails that financial conditions of many other human beings. The Constitutional freedoms (speech, bear arms,religion, pursuit of happiness) are not advanced or retarded based on the estate returning proposal.

Face it Jonathan, you favor the rich (and some self-claimed principles). I want to see an even of an opportunity playiing field as prossible and the poor and a Natinal Champion chaamber sting to relate who have little choice).

[Jonathan]

1) 100:1 proposal given above. Wealth will be slowly redistributed from those taking advantage of their high positions to pay themselves exhorbitive salaries or give themsleves high bonuses (or use the Board of Directors to do so in a backscratching fashion - I'll pay you 100,000's dollars for occassional BoD meetings as long as you approve my $1M+ salaries + $100,000's bonuses and stock options).

1st problem is constitutional. The federal goverment does not have the power to impose salary caps on private businesses.

The federal government has hundreds of powers/roles that are not in expressly in the Constitution, a fact I know ET decries, but could not live effectively without. 1st "problem" is regularly circumvented.

Well, I suppose if the ends justify the means, one could just ignore the Constitutional limits on federal power. That tends to work only as long as you never have to transition power to the opposition (who, being fallen humans, will likely succumb to the same temptations but in an direction that you would definitely not favor). Unfortunately, we're moving towards rather than away this condition.

But, for now, even our current court would rule against such an amazing overreach.

2nd problem comes from the fact that markets are increasingly global. Since very few companies have to maintain USA HQ's, if the federal government did gain constitutional power to determine wage caps, any number of other nations would capitalize on our government's stupidity and make themselves better places to locate...then you'd see the fastest drain of talent (followed by capital) in history. Try making up that revenue on service industry jobs.

The corporations are now flocking to offshore tax havens but they still must abide by US regulations (OSHA, EEO, EPA, ADA, Min Wage laws, ...) to receive US government contracts. What's one more regulation? 2nd "problem" is no problem at all.

"One more regulation"? Surely you're not that naive. The only reason that there are government contracts is because the government has money to spend. The money is drying up (including the ability to borrow). If the government continues to increase tax burdens on companies (i.e. the folks who create the jobs in our economy), government revenue will continue to decline (fewer bucks for government contracts). At some point, the business case for moving all but service operations offshore. This will result in a further loss of tax revenue.

If you're proposing the destruction of our economy, this one is definitely a step in that direction.

2) Have leftover estates revert to government ownership (or disposal via sale) and limit $$'s given to "junior" w/o taxation while "senior" is alive. Remember THE funding principle of this country is that we are supposedly "Dedicated to", is that "ALL MEN (and women) ARE CREATED EQUAL".

While it is probably the case that you do not subscribe the "originalist" thinking, you would be well served to look at what was meant by "all men are created equal". It referred to equality under the law, not equality of bank accounts, or jump shots, or singing ability, or ability to grow/maintain muscle mass, or ability to lose and keep weight off, etc...

If a government mandated that all wealth be confiscated upon the owner's death...

There you go again with the "confiscation" language. Junior has already received more than a fair share. Junior's inheritance money really is not his/hers to be "confiscated". Returning what junior feels entitled to, evens the field to a degree.

Why would you, or anyone else, have the standing to determine what is a "fair share" of one's parent's estate? Your third statement implies that you believe that all wealth is actually collectively owned by all citizens of the state. Is that really where you want to live?

you would see producers quickly liquidate their holdings and move to a nation with a free market (there are some intelligent government officials around the globe...the brightest among them would figure out how to provide safety for these folks while dramatically increasing the tax revenue that follows producers.

What is most amazing (almost Orwellian) about your post, KeithE, is that you propose to dramatically limit financial freedom while denying any limitation of freedom.

The freedoms mentioned in the Constitution, does not include "financial freedom" you espouse especially when it curtails that financial conditions of many other human beings. The Constitutional freedoms (speech, bear arms,religion, pursuit of happiness) are not advanced or retarded based on the estate returning proposal.

So you believe that the only freedoms that we have are those specifically given to us in the Constitution? The purpose of the Constitution is for the enumeration and limitations on the power (i.e. freedoms) of government, not the individual.

Face it Jonathan, you favor the rich (and some self-claimed principles). I want to see an even of an opportunity playiing field as prossible and the poor and a Natinal Champion chaamber sting to relate who have little choice).

I have no idea what your second sentence means ("Natinal Champion chaamber sting to relate who have little choice"?) but I don't favor the rich. What I favor is the freedom to make the most of my own situation, that of my family, and freely that of my community. I definitely do not favor the right of the government to confiscate wealth by determining the upper limit on how much each individual needs.

What is clear is that you favor a command and control economic situation. You don't have to go too far back in history to see how dangerous and unsustainable that is.