Occupy George
occupygeorge.com
occupygeorge.com
Suffragette-defaced penny : http://www.bbc.co.uk/ahistoryoftheworld/objects/iVUVhaKVREWj...
If they're mad about being unemployed, marching sure isn't going to fix their situation. If they're mad about government corruption, what exactly would they like done? If they're mad about the economy in general, isn't Wall Street the worst place to be protesting? I feel like the traders on Wall Street would be the first people to want an economic bounce back. Do they just hate rich people? Hmm.
I've held back on criticizing this movement, but after all this time, I still can't figure out exactly what they want. It's seeming more and more to me, as just a way to waste peoples' times, and our tax dollars.
But being honest there is nothing they can do about those two.
That being said, one of the large issues in play is that people feel slighted by rising income inequality, which they perceive to have arisen out of a sort of government-industry feedback loop. Certainly this is what the printed dollar bills seem to be about.
With regard to your comments about the utility of the protest: I don't think it's a waste in any regard. If you feel something about government (in this country), you have several options: wait for an election and vote, write to your congresspeople, protest, etc. I agree that it's frustratingly difficult to figure out what the movement wants, but (even unaligned) protest is a perfectly legitimate way to express (even general) displeasure with your (perhaps even falsely perceived) current government.
But maybe they just want to say 'we're angry about this rising income inequality and we want someone to do something about it.' I think that's a valid stance to have, and opinion to express. It then falls on the government to either:
1. Do something about income inequality. 2. Explain why they can't or shouldn't or won't.
Failing that either of these things occur, it may inspire someone to run for office with the platform of performing (1) or (2) above. Any of these outcomes seem like a 'successful' outcome of the protest.
Not necessarily; there are times when it's more fit to just walk out into the street, meet others who are as displeased as you are, and try to figure out what to do about it on the spot.
Another way to look at it is this: The grievances of the protesters cannot be fixed by individual action. They require a change of the rules, i.e. political action. When such grievances become large enough, you (i.e. the people) use progressively stronger methods to try to tell politicians that you're serious about it.
If the political system is flexible and effective enough to react and address the grievances, then the movement succeeds, e.g. the civil rights movement in the US in the 1960s.
If the political system is too rigid and unable or unwilling to react, and the grievances remain, then the state will ultimately fail, e.g. East Germany in the 1980s.
It complains about the fact that the mistakes of the financial industry are being paid by the whole of society.
It raises more questions than it attempts to solve, but has some basic tenets in favor of restoring the regulations of financial markets that have been lost in the last 20 years.
Here's a random link I pulled that attempts to explain some issues: http://blog.pfaw.org/content/the-media-way-occupy-wall-stree...
It seems interesting to note that, from what I've heard from people working in the media industry, there's a directive to paint the OWS as having no purpose, however many of the critiques that are being leveled towards it are just as valid, if not more, again the Tea Party movement, yet such comments were never made in mainstream media. It's also worth noting that there were some very powerful interests funding the Tea Party. Finally, many people within OWS have concrete propostitions, such as restoring the Glass-Steagall Act, changing the capital gains tax, introducing the Tobin Tax, etc. Of course, that would actually imply knowing a thing or two about political science, so most people can't be bothered to research that.
You said it. The Tea Party is/was essentially a media fabrication. There's obviously a lot of middle class dissatisfaction out there to be mobilized and the right wing tried to co-opt it for their agenda.
OWS, on the other hand, is an actual grass roots movement. Furthermore, when I listen to NPR (of all media outlets) continually doing their very best to interview every fumbling 22-year old and make the entire movement look stupid it makes me think that OWS has some very powerful people genuinely worried.
Thanksgiving with my entire Republican family is going to be a blast this year.
i think it's important to respect the passion of this movement, whether you agree with it or not, because it's real, because it comes from real causes, and because it won't go away until it's addressed
It would be a mistake, IMO, to use this to dismiss the reasons why people have chosen this time to protest.
If you look at the people and signs at a #Occupy protest, you will find a familiar theme: income disparity and unemployment. People are running scared in an economy where social mobility has been utterly destroyed, unemployment runs at an all-time high, and the gap between rich and poor continues to widen unabated.
Some people have chosen to blame corporations, some people pin it on banks, some are angry at the government. In the end though, the theme is the same. OWS protesters clearly have no clue how to fix it, but they are correct that something is fundamentally broken, and it would be a mistake to sweep this all away because the protesters can't put together a solid fix.
There are, of course, also the piggy-back causes. Environmentalists, educational reformers, health care reformers, and all manners of all side-issue protesters are out in force at the #occupy protests, and that really does hurt the main message.
Edit: Clearly people disagree. I'd appreciate some responses to go with the downvotes; I'd enjoy some discussion, rather than silencing.
1) Do you believe it right that the financial sector was, and is still being, bailed out?
2) If not, how do you describe the system producing that result, if not "fundamentally broken"?
2) Because bail-outs aren't a fundamental property of "the system".
What non-fundamental properties of the system do you think should change to halt now, and prevent in the future, bailouts and related actions (e.g. corporate subsidies)?
2) "Too busy fighting over local minima/maxima to ever escape them and make core changes, but as a result at least mostly harmless except as a drag force on productivity." We could argue all day about core changes that might fix the system, but we'll never agree on precisely which core changes to make, so they'll never happen. And that still probably works better than the case where the wrong core changes occur.
(And a meta-level comment about search heuristics comes about as close to a political comment as I'd like to get.)
I guess I'll leave it at that.
1. Campaign finance reform. Debate the details, but you can't debate that there should be some.
2. Vastly greater oversight/transparency, if not an outright ban of the current lobbying system.
I'd argue that the unprecedented unemployment rate represents a clear systemic dysfunction. These aren't temporary job losses due to the natural boom-bust cycle, a very large portion of these jobs are simply never coming back. Whose fault that is is hard to say, but I don't think it's at all cynical to doubt that the unemployment rates will abate on their own.
It's also no secret that wages have been stagnant (if not outright dropping) for the past two decades. None of the trends indicate a cyclical nature, so it's not hard to suggest that these are systemic issues that won't correct themselves.
The quality of life of the average American is dropping precipitously. In a singular case we can point to any number of causes - lack of education, lack of self-discipline, substance abuse, etc etc. When multiplied a couple hundred million times over, it suggests systemic failure.
In other words, "broken", though of course we can argue about the meaning of "brokenness" till the cows come home.
FWIW, I'm the "4%". I'm definitely not doing badly at all for myself, even in this economy. In fact, my quality of life has never been higher. Despite this, it would be a mistake for me to dismiss the problems this country faces, or to jump to conclusions about those affected. It is perpetually disappointing to me how judgmental the wealthy and successful can be, using their singular case of triumph over the system as a wide brush with which to paint all those who have failed to beat it.
The current recession is not as bad as the great depression, and I'm very, very glad that in the US, we pursued incremental, evolutionary fixes to the breakage then, than much of the radical transformation that happened elsewhere, and turned out to be far, far worse than the 'broken' in the US.
I mean, if something is genuinely fundamentally broken, you should throw it out and completely remake it, no? Terrible idea, as far as I'm concerned, with regards to the US economy.
Other than that, I think your original comment was as good, although I still think the whole thing ought to be flagged as a political discussion that doesn't belong here.
The fact that I hear Obama's "$1B war chest" being trumpeted and that Tim Pawlenty drops out of the Republican race solely for lack of funding reinforces what I've felt for a very long time - that campaign finance is the elephant in the room in terms of the issues that are bringing this country down.
The root, to me, is corporate money and influence in Washington to such a degree that it effectively shuts out democracy. I lay fault for that systemic problem at the door of "the 1%" and the politicians they influence.
I don't think this is a good idea, but I think if you actually restricted the vote to the so-called "1%" you might even get better government. There's no conspiracy by rich people to ruin the country for everyone else.
I see another layer to the onion. Inside of your problem is a deeper one, which is that so much power is concentrated in such a small place.
While we might wish for our government officials to be better, at the end of the day they're people just like us. In giving them so much power, we're also expect them to exhibit a super-human degree of self control. When the possible rewards to them for "selling out" are so high; when any one act of selling out may not have much impact; and when in many cases, the morality is fuzzy and it's not clear that what they're doing is selling out at all; I think it's too much to expect that they'll keep to the straight-and-narrow.
It seems to me that these cries about "too much corporate money" contain an unspoken assumption of a need for greater governmental oversight. But if you see my point about the danger of the concentration of power in Washington, then it should be obvious that vesting the government with greater oversight powers is just adding fuel to the fire.
Lawrence Lessig has spoken rather extensively about campaign finance reform in this vein. His latest campaign is for the Fair Elections Now Act, which would encourage small donation-powered campaigns. He's also often argued for a constitutional convention that would address these concerns without needing to stay within the current legal boundaries...that seems to have fizzled a bit, though, I assume because it's so hard to pull off.
It will be extremely hard to accomplish though because historically money and power have always been bedfellows.
The real problem is the people are complacent, most of what western governments legislate is in the interests of lobbyists, but people only care about lawmaking when they are personally poor or if it concerns foreign policy (TERRORISM).
I have always thought a jury system for legislation might be a good idea, get the sponsor of a bill to stand in front of 12 randomly picked citizens and have them explain what the bill will do, and most importantly, why they are trying to pass the bill.
Now, as a filter, introduced in addition to umpteen other ways to prevent legislation from passing, it sounds potentially helpful. Anything that makes legislation fail by default without an exceptionally good reason to pass would improve matters.
The selection process for its members is not at all democratic which leaves a bad taste in many people's mouths. But the general concept of an elected body whose members serve over several terms of government can be helpful to limit overtly populist or ill-thought-out legislation.
We are where we are because business (those who desire money) and politicians (those who desire power) have overlearned the system.
There is no reason why they couldn't overlearn the jury check as well, I can't think of a simple solution.
Perhaps we are doomed to cycles of people being complacent, which lets tyranny flourish only to be ended violently?.
99% of TARP has been repaid already. That's more than you can say about regular people paying back their credit card debts due to limitless spending.
Blame the government for that, not Wall Street. Also how much of Apple's 70 billion or so in cash flows through to the economy?
Furthermore, TARP being repaid is not an inherently good thing. Who cares whether we got the bailout money back if the system is still completely broken? We're still in a situation where those banks can do whatever they want, and when things collapse the government will have no choice but to bail them out again because the alternatives are unacceptable. Now that the banks don't owe the government TARP money it has even less leverage than it might have had before.
You say Banks, which part of the Banks? You can't lump the whole Banking system into one group and blame it all. Also the top 1% encompasses much more than these 'greed fuelled' bankers on Wall Street.
The paper argued that certain things - like the cost of housing (due to rising prices) and health care - were the cause of middle-class debt loads, and that consumption on frivolous items was actually down from the 1970s.
This is a plausible argument. The cost of housing, health care, and education has certainly skyrocketed. What Warren doesn't mention, though, is that all of these areas are heavily regulated and subsidized by the federal government - unlike all the areas where middle-class consumption has declined.
You might be able to persuade me that people are in fact spending responsibly, but you'll have a harder time persuading me that the solution to their problems is more regulations, or that the appropriate target of these protestors is anywhere outside Washington DC.
That would be you.
We loaned citibank $25bn with TARP. They paid that back. You seem to think that thats the end of the story. Thanks for telling us what we should read.
Turns out we also guaranteed losses on $300bn of assets, added an additional $20bn, and a further credit line of $45bn.
From were I'm standing, that should mean we own citibank. If my company was in that situation, you think investors would offer me a loan? You think that's gonna be the deal you get next time your company is in trouble?
We should own it, dismantle it, break it up. Do that for every big bank down the line.
But forget the $350bn. You think that if your business needs $25bn or it goes under tomorrow, that one of these rich people will just loan you $25bn and let you pay it back when you can? LOL. In my world, $25bn bought citibank outright, and we overpaid. Instead we got 36%. Joke.
Two sets of rules. One for them. One for us.
1) growing income disparity (http://www.slate.com/articles/news_and_politics/the_great_di...)
2) regulatory capture by financial institutions (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=892925)
3) the use of public funds to subsidize risky investment (http://www.thenation.com/article/153929/aig-bailout-scandal)
4) apparent double standards for the rich (you certainly face more jail time for robbing a bank than for ruining one)
I think that most people can agree that these are significant problems. It's actually amazing how little has changed since the 2007 mortgage crash.
Since the beginning, many groups with different goals have been attracted onto the OWS movement, and the message has been scattered. My bet is that the movement will peter out due to lack of focus and won't have a lasting impact on politics or policy.
Meanwhile, the mortgage industry is still partying it up on your dime: http://www.nytimes.com/2011/10/16/business/fannie-mae-and-fr...
Hence your failure to understand OWS. Wall Street's job is to make money. Period. If it happens that it is effective to make money by repeatedly crashing and booming the stock market, then that is exactly what they will do.
Well, it turns out that it is extremely effective to make money by repeatedly crashing and booming the stock market.
If it happens that it is legal to pay government officials to pass laws covering your losses, and if it can be done for a reasonable cost, then they will do that too.
Well, it turns out that yes, this can be done for a very reasonable cost!
I find it amazing that any person on HN - HACKER news - is unable to imagine of hundreds of different ways to hack the government-economic system for fun and profit, or once having imagined them, to imagine that people with the necessary money would then not do so.
Our economy has been rooted.
As a non-US-er, we sometimes look down on the US for having a gun obsession, but there's no way anything OWS does would escalate to the point of seriously grabbing everyone's attention like, say, building an army, storming a building and forcibly arresting a CEO. They say OWS is inspired by the Arab Spring[1][2], but that would be a pretty tame example compared to the revolutions in Egypt and Libya. The people in OWS are upset, but not desperate, and I'm not sure this can lead to any sort of radical change unless the 1% agree voluntarily, which is obviously unlikely. It's very hard to think of a non-violent way to actually incite some change.
"The USA should invade the USA and win the hearts and minds of the population by building roads, bridges and putting locals to work." - Paul Myers
As a postscript, the amount of copycat protests are also slightly embarrassing. It's great to show solidarity, but for instance I don't think there needs to be one for my town. It's just awkward and trivialises the situation, since our economic problems are negligible compared to the US.
________
1. https://secure.wikimedia.org/wikipedia/en/wiki/Arab_Spring
Bam.
I amazes me that when 500,000 people marched in London on the 26th of March, people were dumb enough to ignore the messages being sent, and instead focus on some superficial property damage.
The two crashes of the past decade were painful exactly because "they" expressly failed to make money. They caused a lot of pain to a lot of 1%ers. If you think the financial sector likes, and purposefully causes, crashes, well, you're wrong.
> Our economy has been rooted.
Thing is, the box was left with numerous unpatched known vulnerabilities for the better part of half a century. Whenever it got sluggish, the sys admins eagerly added memory and processors, not bothering to consider what might be wrong. And when the box finally collapsed the sysadmins are more than happy that all the anger is directed at the hackers.
This would be a reasonable analogy if the hackers (bankers) hadn't spent the last decade paying the sysadmins (congress) to remove the safeties and add vulnerabilities.
Indeed you say this as if in the computer world, the idea of hackers just paying a sysadmin for access would be unimaginable. Certainly it appears that you haven't thought of it.
Yes, what has happened essentially amounts to corruption. How do you usually approach corruption, by going after the corrupted officials or the people paying the bribes? Both, especially at this scale, but no-one expects corruption to go away while there are corruptible officials.
> Certainly it appears that you haven't thought of it.
It might appear so, but appearances can be deceptive. By all means, lets have a debate based on what the other side appears to think.
You responded with a statement that the bankers did not do so, and that in fact the politicians had caused the damage, and then blamed the bankers. A direct contradiction of my assertion.
You are now claiming that "of course the analogy is flawed". No sir. The analogy was effective. It was the logical conclusion that you made using the analogy that was wrong, and you now admit so.
I stand by my analogy. Our economic system has been rooted.
How to fix it? How can we do that, when the people writing the laws are the ones who would be jailed by them?
It seems to me that it was mutual, sort of a ouroboros snake swallowing its tail. Just as we could say that bankers offered promises to politicians in order to secure favorable regulations, so did the politicians offer favorable regulation in order to secure their own re-election. As far as I can see, they're two sides of the same coin.
That being the case, it doesn't make sense to demand that the politicians wield great power in order to exercise greater control over the bankers. We know that the politicians are corrupt, so why would we give them more power?
This trader is not intentionally causing crashes, but is increasing systemic risk of crashes. 'Purposefully' causing crashes is not necessary for actually causing crashes.
The problem is both the sysadms and the hackers. I don't think, though, that the anger is directed 100% at the hackers, though the location of the protest, apart from the actual message you see on the signs if you bother to examine them, may suggest otherwise.
I try not to draw too many conclusions from signs or any individual expression of opinion. But I do note that the protesters marched to the home of the J.P. Morgan CEO as well as the J.P. Morgan headquarters, even though J.P. Morgan didn't bet the house on sub-prime mortgages and didn't need bail-out. That's location and action indicating anger focused on Wall Street.
http://online.wsj.com/article/SB1000142405297020349970457662...
http://en.wikipedia.org/wiki/Black_Wednesday
George Soros made $1bn in a day. The UK Gvt lost 3.3bn UKP.
Some people believe that Norman Lamont rose to the highest office of economics in the united kingdom without the knowledge of how currency markets work, and that he could not possibly have known that his actions would be to hand George Soros, and others, 3.3bn UKP. But let us pretend that this was incompetence so that we can answer your point.
Did George Soros purposefully crash the value of the UKP? Yes.
I use this example, rather than other more recent examples like [1], because it highlights the role of government in the transfer of wealth from the poor to the rich. In short, if the government were to say to the common man "We must give this rich person one trillion dollars and you and your children will pay for it", there would be revolution.
But if the government says "Look! The stock market has crashed! We must give one trillion dollars to the banks so that the financial system does not collapse, so that children and dogs do not roam the streets, oh dear God we must give one trillion dollars to the banks now!" And nobody complains.
Better yet, give one trillion dollars in a highly recognizable bill, lets call it TARP. Make sure that all of that money is paid back. Then, when someone says "But we gave you all that money", the rich can claim "TARP? No! We paid all that back! Look!".
But also give several trillion more in completely one-off, non publicized, totally forgettable transactions. For example, give citibanks $25bn in TARP funds - and also give them $275 in non-TARP funds. Then have them pay the $25bn back. Amazingly, if you ask the average american about citibank, they will say "Yes, they got $25bn! Bastards". "No! They gave that $25bn back! Look it up!" "Oh you are right!" And that will be the end of it. Fox News will tell you almost daily, "Look who paid back their TARP funds! TARP has made a profit!". TARP is the hand they want you to look at, while they make your future vanish with the other.
You have to admit, its really impressive.
[1] http://www.npr.org/2011/05/02/135846486/how-some-made-millions-betting-against-the-marketI am not an economist[1]. Boom and bust cycles - I have read - happen as a natural result of millions of people making informed choices in their own self interest.
Simplistically: Cost of X perks up a bit. People buy in, seeing a trend. Price perks up a bit more. And so on. Rational actors see a bubble - X is valued now way above what it is actually worth. These guys are also paid to make money for their investors - fail to get in the market for X and you'll simply be fired and replaced with a guy who will.
Multiply that by millions and you get booms and busts.
How does one cause a boom and bust cycle, absent a grand cabal of Rich Guys and their cronies? How would _they_ do it?
[1] Would it be lame to say IANAE or has that kind of thing cycled back to cool, yet?
I think this article summarizes the point of the "Occupation" well.
30 years ago, you could probably see the hand of Moscow in this.
Last year, the involvement of the christian right and at least some members of the republican party was very clear when looking at the Tea Party.
OWS appears to be something else.
If you're not mad you're not paying attention.
So let's do a thought experiment: suppose that you can choose to go back in time. You can enjoy the 1% level of income at any point in history prior to, say, 1950. What era will you choose? Do you want to go to 1950, or some point in antiquity, or stay with your current income in the present?
Remember, even in 1950, there are no antibiotics, for practical purposes, civil rights are only slightly better than medieval levels, and so on. You won't have access to instant communications, and only through difficulty, to the greatest works of art, music, and literature. And so forth.
So, if you don't want to go back to those times -- even at the top of the economic heap -- can we really say that today's poor are finding their plight worse and worse?
These wealth numbers are presented as household income. But this increasing disparity closely tracks the rise since the 70s of single-parent households. Divorce, and more recently the trend to have children without being married at all (in certain demographics, this is now the norm), mean that people are deciding on their own to arrange themselves into units having less earning power.
Even when single-parent households aren't the explanation, the idea of "sortative mating" amplifies differences in income. People tend pair off with similar people. Thus, well-educated people (who tend to have higher income potential) marry each other; uneducated people also tend to marry. So if two people, each with income potential of 2X, marry; while two others, each with income potential of 1X, also marry, then the resulting differential across households is 2X. The sortative effect has, in this example, doubled the apparent difference between people.
Neither of these effects can be attributed to corporate behavior in any way.
Obviously, some of the difference simply reflects the difference in productivity between different people. We tend to dislike thinking of things in these terms, but people doing certain kinds of jobs are far more productive than people in other jobs. In particular, the skills we've learned in wielding technology, or medicine, etc., benefit people to a much greater degree than, say, an individual McDonald's worker or miner or the like. And the fact that one is producing more leads to being able to demand greater income.
We also err in considering people (or households) as being high-income or low-income, as if this were a static condition. In fact, at least in America, there is pretty good opportunity for income mobility. I don't have stats at my fingertips, but a really large portion of those in the top quintile have spent time near the bottom. It's a mistake to believe that someone is just "a rich person" or just "a poor person", since there's significant migration between those groups (at least relative to much of the rest of the world).
You'll note that the rise in income inequality seems correlated with the rise in the power of the federal government (as opposed to the state and local authorities). I assume you've heard Lord Acton's Dictum: "Power corrupts. Absolute power corrupts absolutely." Well, he said another interesting thing. He said (sorry that I don't have the actual text here) that democracy tends to concentrate power into the hands of an elite few, and that the only known solution is a strong federalist system, in which the central government is kept weak by power residing in the hands of the states. Thus, it seems that the rise of a strong central government that we've seen over the past, say, 3/4 century, may be related to the rise of a privileged oligopoly. If so, it's clear that looking for a solution by giving that central government additional power is the opposite of the best answer.
Income inequality really took off in the 80s so it is more correlated with the rise of the conservative movement ushered in by Reagan. Reagan started the trend of deficit-financed tax cuts for the wealthy that continues today.
As far as the power of the federal government, it doesn't matter, the federal government is a wholly owned subsidiary of Wall Street at this point. Both Democrats and Republicans go begging hat in hand and do the bidding of their true masters in Wall Street.
This just doesn't make sense. The discussion is about inequality of income. Taxation doesn't change my taxable income. It takes away part of my income (and gives much of that slice to someone else).
The tax cuts you're complaining about are assessed after the income level has already been determined. That is, the salary number on my pay stub is significantly higher than many other Americans. Even if the marginal rate were cranked up to 90%, the fact remains that my taxable income is much higher than many others.
Both Democrats and Republicans go begging hat in hand and do the bidding of their true masters in Wall Street.
The bankers aren't angels, no argument from me here. But you're painting an absurdly one-sided picture. Why do you think it is that the bankers need the bureaucrats to "do their bidding"? It's because those politicians really do hold the power! It's true that the bankers are corrupting our democratic process by looking for favors. But it's equally true that the politicians are corrupting our democratic process by selling favors.
And from what I've been able to read from these Occupiers (and I grant that this is just my impression, and I may be wrong), it seems like the ire is directed at those bankers, and that they are looking for the government to help redress the problem. But the government is part of the problem. In particular, they're using their regulatory power as a weapon, hurting us by granting favors to privileged parties. Why would we want to increase the power of that weapon -- ask them to do even more regulating -- when that power is what's enabling the mischief? The only sane answer is to take away their weapon.
We are living in your vision of the world. And it is awful. Corporations and banks have totally corrupted our democracy, so yes, Washington D.C. is useless. But the bankers are the source of the problems. They are a blood sucking squid on humanity's face.
When all the banks failed a few years ago it was a great opportunity to break them apart, too big to fail should be too big to exist. But instead we were all told, by both Democrats and Republicans, that if we didn't save them it would supposedly plunge us into the worst economy since the great depression. So tax payers gave them the free money and propped them up but we still got the worst economy since the great depression. And NOT A SINGLE BANKER WAS FIRED OR PROSECUTED, even though there has been tons of documentation of fraud. The government is in their back pocket, they do as they want.
[1] http://thinkprogress.org/yglesias/2011/07/08/263588/the-cons... The peak is for census jobs
Sigh. We just got the biggest increase in entitlement programs in more than two generations. The government claims it's cutting spending, but actually it won't be any smaller, they've only decelerate slightly. In the meantime, the regulatory state is thriving. I challenge you to name an industry that one could safely enter without needing to learn myriad details of what the government demands of businesses in that industry. This is not an age of deregulation, and GWB was no friend of small government nor of the free market.
NOT A SINGLE BANKER WAS FIRED OR PROSECUTED, ... The government is in their back pocket, they do as they want.
The banking meltdown was due to the banking industry taking some unconscionable risks, but it was also due to the regulators themselves pushing the banking industry to take risks. Industry is also in the back pocket of the government, as business leaders vie for the advantages that government bequeaths. Yet how many politicians and bureaucrats have been held accountable for the debacle?
We are living in your vision of the world.
You have no idea how wrong you are. You seem to be drawing a mental picture of the political world that follows the narrative told by the main stream media, but that's so gross an oversimplification as to be useless. The political spectrum is not one of Liberals versus Conservatives. So when you assume that, because I'm arguing against your Liberal stance, I must be a Conservative, is just plain wrong.
There are many ways to look at the political world. Taking the simplistic view is not going to help you solve any problems, any more than you'll be able to debug your software if you don't understand how the machine, your compiler, the network protocols, etc., work.
First, you should understand that the vast majority of the people in politics and in the business world are not evil. They are just people like you and I, responding to the problems and incentives in front of them, trying to make a life for themselves and their families. The size and complexity of the system makes it less clear where the line between right and wrong is, and easy to fudge for any particular action. While the structure of the system today makes it all too compelling to make the wrong choice.
Your insistence that so many of your neighbors are evil -- when they know that they're not, and just doing their best -- is going to make anyone you disagree with defensive. That'll prevent you from changing any minds, and instead just widen the political chasm that we suffer from today. I beg you, take a step back from the incrimination, and try to understand what's going on as the collective work of many individuals, each responding to situations put in front of them.
By the way you are distancing yourself from "conservatives" I'm guessing you are one of the self-proclaimed libertarians. But as far as the practical economical results it's the same crap, policies that end up making the powerful even more powerful than they are now.
I'm not assuming that you are evil, and I don't have some simplistic view of the world that you are attributing to me. But there are people that are taking advantage of the rest of us and we should be fighting it. We all live in a world flooded by propaganda coming at us from all sides so I always try to give people some leeway when arguing politics, and I try to stay informed on opinions opposed to mine. It is hard to break free from pre-concieved notions.
The liberal vs conservative (or libertarian) debate on economics has been about whether the bigger villain are big corps or big government. But I think what the new realization dawning on millions of people, especially those that thought Obama would fight against the plutocrats, is that they are both part of the same corrupt and broken system. You want to break apart big government, fine, but why don't you also want to break up the big banks and other monopolies?
This lies near the crux of the widespread belief that wealth merely lets you buy more stuff.
Currency is the formalization of power, which is intrinsically relative: you have more power when the people near you have less.
Imagine a village of 10 people, where 9 have $20k in wealth and one has $80k. This relative difference in capital allows the wealthy person to earn more than 4x more income. This means he can easily outbid everyone else for, say, the choicest cuts of meat at the deli; the best investment opportunities; the dinner with a visiting performer; the nicest house on the block; the flattering stares of the village's prettiest dame.
Let's pretend a car costs $90k, so that it's not affordable to any one person in the village. One day, a car manufacturer contacts Mr. 80k to ask him whether he thinks his village would be a good place for a marketing stunt in which everyone was given a $90k car, which they could choose to sell if they really wanted to. Since this is a small village in a big economy, it's not as though all this extra wealth will cause serious inflation. The question is, how should Mr. 80k respond?
If Mr. 80k is a homebody only interested in absolute wealth -- having more things for him to play with on his own -- then he should go for it! He'll finally have a car!
But it might be in his interest to say "no": sure, at $170k he'll still be the richest, but now the ratio of his wealth to the wealth of his friends will have gone from 4x to 1.5x. Could this have a materially negative effect on his current standard of living and his economic security?
Well for one, while he'll be able to afford better investments, there will be more people to compete with for them. If everyone has a car then Mr. 170k will no longer be able to loan out his horse and buggy in exchange for favors and status. The previously receptive dame might start to notice Mr. 170k's bald spot, and spend more time staring at a younger prospect. When the local celebrity comes to village, Mr. 170k will have to bid higher to taken them to dinner. Mr. 170k will no longer be a crucial lynchpin of local politics, so the village alderman might no longer call on him as often. And Mr $170k will no longer be treated with the same reverence while on his evening walks as he had previously received.
So while Mr. 170k could nearly double his wealth, if the marketing promotion were to happen, Mr. 80k might perceive the decline in relative status as costing him far more.
So, no: depending on the kind of rich person you are, you might prefer for other people to stay poor. Unethical and immoral? Maybe. Rational? Certainly.
Yes. More precisely, they're angry about recent economic stagnation and unemployment and are scapegoating the rich.
Economic difficulties leading to mass populist movements with a defined, minority scapegoat (especially the rich, or the bankers) is a dangerous pattern. Even in this thread you see people calling for violence. The last element--a charismatic leader--is historically all that is needed for something like this to turn very ugly, very fast.
For concrete ideas, Matt Taibbi as usual really knows what he's talking about:
http://www.rollingstone.com/politics/news/my-advice-to-the-o...
However, it's important to remember that coming up with good solutions as well as figuring out what it really is the people want is really the job of the politicians. And just because they're failing miserably at that job, doesn't mean the general population suddenly has to know all the answers. I think the general message of discontent is very clear.
I think Jerry Pournelle said it best "They don’t really know what they want, but they really don’t want more of what they’re getting."
When I saw the "Richest 400 vs Bottom 150,000,000" 50/50 split on one of the bills, my immediate thought was the following:
__Do these people consider how many jobs these top 400 people created over the last decades, and how much better off the world is because they existed?__
Yes, the US tax structure is flawed. Yes, there are some truly corrupt things going on. But depicting the situation as a "me vs you" situation rather than presenting the situation as a structural issue seems very alarming to me. I know I'm sounding like a lot of random Republican talking heads when criticizing the "class divide" issue of this movement, but why on earth would you classify a man like Bill Gates, who created tens of thousands of jobs for this economy and continues to do great deeds for humanity through his foundation, along with the truly corrupt?
Generalizations are dangerous, and I'm concerned.
As few as possible... the shareholders demand it!
Let's also assume that all of them disappeared tomorrow.
Do you believe that half the jobs in the US would go away?
Let's assume none of them were ever born.
Do you believe the US would have half the jobs it does today?
I hope you can see what I'm getting at.
That aside, take a look at who the 400 are:
http://www.forbes.com/forbes-400/
Just go down the list. Google them and their companies. Take a look at how many people they actually employ.
Some of them you might argue made significant contributions to the creation of entire industries, but many are just investors. Hedge fund managers. Bankers.
OWS isn't pissed about Bill Gates or Larry Ellison, Jeff Bezos or Michael Dell. They're not looking at the guys who started value-creating businesses and contributed directly to their success. That's not who this is about, and it never has been.
I don't think OWS's purpose or message or mantra is wrong. However, if they continue down this path of generalization and polarization for the sake of PR impact, I'm afraid they're going to become even more unfocused in their messaging.
But the name is "Occupy Wall Street". They know who their opponents are. They know who screwed with their mortgages and retirements. They know who paid off the politicians. They're out there with MacBooks and iPhones, tweeting and facebook-ing. Silicon Valley isn't their problem, and they know it.
(Edit: They're not even hammering Wal-Mart, and it'd be so easy. I think that says something.)
You seem to be claiming that these people actually create jobs. That they have some magical power, or even non-magical power. Some economic something. Some accumen. Whatever. You are saying jobs were created and these people are responsible. Great. If that is the case, may I ask "Why have the stopped now?"
It turns out that jobs are actually created most by small businesses.
And please don't downplay what Gates has done. He may have been a ruthlessly competitive businessman, but he has had a larger positive impact on the world than almost anyone else alive.
Is it not, perhaps, the case that the situation was such that these jobs would have been created anyway? My complaint is this.
There are 400 rich people. There are jobs. You attribute a causal relationship.
I say, you could have killed every one of these 400 at birth, and we would still have the jobs (and to be clear I am not advocating doing that at all, I'm just making a hypothetical argument)
Now you might say that it is not these 400 individuals that matter, but that in any system with jobs, there would be 400 people at the top, and these people would have more wealth.
However, it is the "how much more wealth" that is the complaint. Not that there are 400 of them. The complaint is not that these specific 400 people are the problem. Nor that any such 400 would be the problem. The complaint is that a system that allows for the top 400 people to have such a disparate amount of wealth compared to the other 300 million is a fucked system.
To argue that without these 400 people, or any such 400 people, there would be higher unemployment is rubbish. That "we are better off because they existed".
Fuck you, frankly.
Indeed, its more likely that the richest 400 actively act to prevent individuals from gaining wealth and power that can threaten their own. As the feudal system collapsed, small businesses flourished. In order to maintain control, the ruling classes established laws requiring tradesmen to join guilds and pay fees. In the UK for example, guilds had to be recognized by the monarch.
In modern times, these guilds have been replaced by rules and regulations that have the same effect, but their justification is the same: "its in the public interest". Just as you couldn't buy cloth from a non-guild weaver in the 15th century - because it might not be good quality - so now you can't buy a car from Tesla unless Tesla pays millions of dollars for crash testing, or buys a design from an incumbent.
Similarly, patent lawyers. Accountants. That new iPhone app that records your heart rate? Want FDA approval for that? Want to be hit with a lawsuit for a covered medical device that you released without FDA approval? (because they are covered).
I'm not saying that a capitalist world run by a species that is happy to bomb its own offspring could be any different. I'm just saying don't fucking pretend that we owe them any praise. They get away with as much as they can just short of us rising up and killing them.
After the company trimmed heavily during recession and bosses got used to doing their own calendars there was no justifying hiring for these secretarial positions again. Sure, talented young out-of-college kids may have found new types of work, but not these former secretaries.
I had written up a long response trying to explain how much the large companies these people have founded have helped the American economy compete and people prosper. Then I got to your section implying that crash testing was primarily a way for incumbents to keep startups down rather than being for the public good and I realized that you were either trolling me or are so unreasonable right now that it's pointless trying to argue with you.
You would have then started talking about how economists have proved that international trade is good for jobs.
To which I would have replied that americans leading economist said that in 2005 we should all be using ARMs to buy houses.
You believe the bullshit. I don't.
You get upset when people type characters like 'f' 'u' 'c' and 'k' in sequence.
I get upset when people justify a government-economic-hierarchy that kills fucking children with bombs because of oil and tell us "we're better off for it".
Yes it is pointless trying to argue with me. Enjoy your flat earth. I must be the crazy one.
Go to a bar and tell a few people you don't know "Frankly, fuck you" and see if they get annoyed with you.
You're conflating lots of of only slightly related things. I don't remember any economists saying that taking an ARM was a good idea.
I agree that the current state of the govt. is more than a little messed up and outrage is overdue, but you're doing the cause a disservice by talking about the wrong things and generally sounding like a conspiracy theorist. Public-only campaign financing is a good thing to talk about. Talking about how crash testing for cars is used to keep the good guys down is going to get you ridiculed by the opposition, and whatever movement you're associated with will be ridiculed by association.
Which many have been able to grow or start due to Microsoft and Bill Gates.
This suffers from the pie fallacy covered in http://www.paulgraham.com/wealth.html
Also if you look at http://sociology.ucsc.edu/whorulesamerica/power/wealth.html table 3 you'll see that the distribution of wealth between 1% and 99% in 2007 (which I assume is pretty much the same today) was essentially identical to that of 2001, 1989, 1965, 1939 and 1922.
And while it is true that a 1920's person could not buy an iPad, this is of scant comfort to a homeless family in 2011.
pg: "I can remember believing, as a child, that if a few rich people had all the money, it left less for everyone else. Many people seem to continue to believe something like this well into adulthood. This fallacy is usually there in the background when you hear someone talking about how x percent of the population have y percent of the wealth. If you plan to start a startup, then whether you realize it or not, you're planning to disprove the Pie Fallacy."
Unfortunately, although it is possible to do so without taking it from others, taking it from others is still a viable way to do it. Further, its also possible to destroy wealth. And its possible for the destruction of wealth to be asymmetrical.
So is the current financial state an example of wealth creation, wealth transfer, or wealth destruction?
I'm looking at the national debt, the median house price, and the DJIA and I'm not seeing "wealth creation". What leads you choose "pie fallacy" as your answer?
Let's take a very prosperous society. Even if all people get wealthier (let's say 2x), which would mean improvement in life quality and all, and 10% of them get massively richer (let's say 20x), then we as a society still have a problem. Because it will be extremely hard for someone who is in the bottom part to get to the upper one. Because of numerous reason I could elaborate on: they will not be able to afford the same schooling, or be in the same expensive circles which creates the networking opportunities. Numerous studies show growing inequality reduces social mobility (American Dream, where are you?). Sure, a couple persons will prove that wrong, but statistics are here.
So at some point, inequality is in itself a problem, even if everyone has enough to eat and more. Because everybody should have chances at succeeding - that is, changing things, but also taking responsibilities. PG means often that being a hacker is enough and you can change a lot with that only, but I think this is not enough. CEOs, judges, bankers, politicians should come from a diverse background. And you don't get there without some equality.
And don't get me started on inheritance ;)
Obviously, forced total equality is unlikely to be good either. But from a certain point, inequality causes macro-economic imbalances that prevent natural growth of the pie.
Besides, what the "pie fallacy" ignores is to discuss the relationship between income and wealth and the talent required to obtain it. Think about it that way: by almost all measures in almost all areas, talent, work ethics, whatever you can think of, it is all essentially normally distributed. But if income should reflect those virtues, then we would expect income to be essentially normally distributed as well. So why do income and wealth essentially follow an exponential distribution?
Something really fishy is going on there, and it is only appropriate to challenge a status quo that leads to such an outcome.
a) Why would you assume that after a major crash the distribution is the same?
b) And the paper that you quoted says this: "So as of April 2010, it looks like the wealth distribution is even more unequal than it was in 2007."
b) You're right, my assumption was wrong. Thanks for finding that quote and sharing it.
Talking about "income disparity" at least makes marginal sense, albeit frequently with a large dose of entitlement thrown in. But the concept of "wealth disparity" makes no sense at all.
With increases in productivity, it is possible for everyone to have more; but almost all the gains have been concentrated toward the top.
PG:
> I can remember believing, as a child, that if a few rich people had all the money, it left less for everyone else.
This is provably true. Just because PG believed it as a child doesn't mean he was incorrect then. It's true by stipulation!
PG:
> In restoring your old car you have made yourself richer.
If both your time and all the physical goods needed are free. Sure.
PG's examples here are really not illustrative of the point he was trying to make, which is that the pie CAN be grown.
But WHERE is that money coming from? If you make a killing off the stock market, someone else necessarily loses.
A startup that is sold or goes public is just an abstraction for transferring money from other people to yourself.
You can ONLY get money from people who have it already. Of course, more is created all the time by the Federal Reserve, in order to inexorably inflate the currency and decrease the value of cash holdings.
The treatment of the distinction between "money" and "wealth" is a little sleight-of-hand here. If he just wants to make "wealth", stick to Open Source. There is demonstrably LESS wealth in keeping things proprietary, but demonstrably MORE money. It's all about control.
Money is specifically and ALWAYS about the withholding and control of resources. Why do you need it? Because the basic things you need to LIVE are still controlled by other people at this point in history.
It's also not true that creating new things is the same as creating more "wealth". Some things are NET DRAINS on productivity or welfare.
For example, Zynga's Skinner boxes. Or slot machines. Devices created to suck money out of people with addiction problems.
Investors want returns in money. "Wealth" is a function of R&D, which costs money. The two are orthogonal; just look at the money made by toilet paper companies. Or PepsiCo. For a sugar water company it's not too shabby to be worth $100 billion with $17.5 billion in revenue and $2 billion net income for this quarter.
Suppose I hold $100 of XYZ stock. Then the value jumps to $500. I've effectively made $400. Who has lost?
To be honest, I am growing tired of arguing against people who believe that the economy is a zero sum game, along with all the other fallacies. I can just grow wealthy on the back of betting against them, which is what I suspect others are doing.
Isn't that proving the exact opposite point?
"It's not zero-sum! To prove it, I will make money AT YOUR EXPENSE!"
In order to move the price up, you need new buyers. Eventually you run out of new people to interest in the stock, and the price tops out.
If someone buys it at the peak and holds it, at some point they will either sell it for a loss, or they will hold onto it "forever" which ties up that money for them and effectively makes it a total loss.
In addition, in order to drive the price up, people are choosing to commit money to that purpose and not others. Competitors' stocks will fall. Other types of investments won't be done.
Clearly, it's a game of hot potato where you don't want to be stuck holding the bag, so you play musical chairs and end up changing horses mid-stream.
Let's assume someone has a foreign banknote and doesn't know what it's worth (it's a one dollar bill). He sells it for 20 cents; the next person sells it for 40 cents; and so on. Whoever buys it at a dollar is making a lateral trade unless he finds a sucker.
Anyone who left money on the table is essentially profit-sharing with the next person. In order to make your profit, you had to GET the money from someone else who already had it.
When you sell your $400 stock, someone else buys it, with the express purpose of having an asset that appreciates fast enough to outpace inflation.
It's kind of like the rake in a poker game. If your buyer sells it a year later for the "same" $400, it's not breaking even, it's losing 3% or more. You could posit a theoretical stock that always went up but still was always a loss in terms of real value, because it didn't match the inflation rate.
Let's consider the case of a stock that keeps falling. It's a money-loser for one person after another, and instead of profit-sharing they are distributing loss between themselves, balancing out the profit that has already been taken out. If the freefall rate is too fast for the market reaction time, then someone ends up selling too low, and their loss pays for whoever buys it and sells it at the more stable price.
The issue that people like to muddle is the "pie fallacy" straw man. There ISN'T actually any argument about growing the pie. We all know it gets bigger. There is no dispute about that.
The issue that has popped up over and over again the last few years is that something like (I don't recall the exact nubmers) 80% of the productivity gains have gone to the top 1%, or top 10%.
http://www.google.com/search?q=wages+vs+productivity&tbm...
Your gain also depends on other people losing in another way. If everyone has their money in "safe" investments, there is no demand for your stock. So you need to convince people to put their money in riskier investments instead. And it's risky because most people lose money.
In fact, the whole ecosystem is built on Venture Capital, and most of the ventures fail. As everyone knows, the VCs get paid a fee even if the fund doesn't have a return.
And if it does have a return, there are still all the losses incurred by everyone who put their lives into their startups which ended up not working out, which is something like 9 out of 10 startups. Plus the investors' money which was lost, only made up for by someone else.
And then there is all the wealth NOT created because you can't hire the talent, since it is in a busy-loop at some giant company doing something less useful, like making Skinner boxes, waiting for stocks to vest. Or simply being paid for bodycount, so a competitor can't get them. And then the demotivation that occurs when people have tons of money and find a lot of ways to spend their time other than slaving away on hard problems.
People tend not to push themselves once they've reached a certain level of comfort. What incentive does the Mob Wars programmer have to become an expert developer, now that he's filthy rich from a simple web app?
Creating breakthrough technology depends on expertise, which depends on experience. What might PG, RTM, and TLB have created with their combined abilities in programming?
ViaWeb had some fundamentally great ideas:
> We had a structure editor for manipulating these templates, a lot like the structure editor they had in Interlisp. Instead of typing free-form text, you cut and pasted bits of code together. This meant that it was impossible to get syntax errors. It also meant that we didn't have to display the parentheses in the underlying s-expressions: we could show structure by indentation. By this means we made the language look a lot less threatening.
>We also designed Rtml so that there could be no errors at runtime: every Rtml program yielded some kind of Web page, and you could debug it by hacking it until it produced the page you meant it to.
If you restore a car and then sell it to someone that needs a car then surely there is someone else who has sold one less car. The same principle applies to crop prices when all the farmers have a bountiful year.
Surely the reason that wealth has grown, is that the human population has grown - creating more needs and desires, and more workers to meet them.
Think about the creation of entirely new industries. Think of how much would be spent on cell phones today were it not for the innovation caused by RIM, Motorola and then Apple. Or cloud computing were it not for Amazon, Dropbox ect. These companies create wealth, by creating value for consumers. Banking is a little more complicated, but they provide capital to allow the aforementioned companies to grow and innovate.
I can see how reducing the cost of items or services can make more people "wealthy" - such as being able to buy a second car. But reducing costs normally means reducing wages meaning the owners get richer, and the manual jobs disappear.
"Governments don't rule the world; Goldman Sachs rules the world"
Who is the national debt owed to?
I did read another article where they interviews other traders about what he had said. While they disagreed with some of his other points they were in general agreement about that one.
It's true that day traders don't care if the market is going up or down, just like many specialists focusing on their domain doesn't care that much about the industry that employs them. Some people make money on volatility (day traders), but a lot of others make their money on trading on certainty (pension funds). Some people have a vested interest in seeing certain markets crash, e.g. if your industry struggles because of materials are getting expensive because of high demand from the building industry.
Or, since they're also advancing a political message of 'fear', maybe it will be terrorism?
You don't get anywhere by whining and moaning on the streets that life isn't fair. You certainly don't get taken seriously by anyone.
> If you hold a protest and you aren't throwing rocks it will fail.
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
I think you're really reaching there. Things are bad, but lets not kid ourselves from pretending that things are that bad. If we mindfuck ourselves into believing that the government wants to label everyone that disagrees as a terrorist, are we really any better than those that believe Obama is a Kenyan born muslim whose sole purpose in life is to invoke Sharia law on the US?
Access Denied The web resource http://occupygeorge.com/ has been deemed by your administrator to be unsafe or unsuitable for you to access. The resource has been blocked. No further action is required. Reason: The category of Hate Speech has been blocked by your System Administrator
A historical database of top incomes in several countries: http://184.168.89.58/sketch/
A nice theoretical starting point on taxation and inequality: http://arxiv.org/pdf/cond-mat/0002374 Note that the term used to express trade in the first section of the paper could also be used to model progressive/negative tax rates.
Plots of the income going to the top 0.1% above a plot of the US top marginal tax rate (a proxy for the progressivity of the tax scheme): http://visualecon.wpengine.netdna-cdn.com/wp-content/uploads...
The top 5-10% of incomes tend to follow a pareto distribution which has a very fat tail. If the share owned by the top 0.01% increases, so will the share of the top 0.1% and the top 1%. Conversely, the share of the bottom 90% will decrease. In comparison to the 1970s, the take home pay of the bottom 90% is probably 30% lower just because of these distributional effects, while the relative income of the top 0.1% has increased 5 or 6 times. The next time you see an exorbitantly high CEO salary, it might be worth wondering how it affects you. Likely, many readers here are in the top 95-99% for whom the effect is somewhat neutral.
Some argue that inequality is good for growth, and that a rising tide raises all boats, etc. But the literature regarding the correlation between GINI coefficients and long-term growth is weak and not conclusive. When I looked at the data from the income database cited above, I could see little correlation for developed and undeveloped countries. I seem to remember reading an MIT thesis to the same effect.
Perfect redistribution and equality would obviously eliminate economic incentives for growth. Near-perfect inequality, might have the same result. The very small fraction of the population in which wealth has condensed would be economically motivated, but the rest of the population that is living on the welfare state (e.g. welfare, minimum wage + EITC) would have a reduced incentive to earn more. A detailed analysis of the EITC is interesting, but peripheral to my point.
Furthermore, when inequality varies like a power law, it is easy to see that a rising tide with reduced Pareto coefficient (increased inequality) could lead to a worse outcome for the majority.
The obvious way to address inequality is through progressive or redistributive taxation. The theoretical paper linked above shows how increasing progressivity reduces inequality, but this result is also intuitive. With a 100% redistributive tax, one would have perfect equality.
Increasing income tax progressivity alters financial incentives and creates incentives for small business and corporations that target the (more affluent) majority. By contrast, flat or regressive taxes alter the economics to favour larger customers. There is a related but much more complex story for international taxation. When corporations accumulate their income in corporate tax havens and then repatriate that income during a "tax holiday", the result is a highly regressive tax system.
Many argue about addressing inequality through "job creation" and "big government projects". I don't have a story related to this, but the Canadian data I have looked at makes me a little suspicious. I guess when you inject funds at a single point in the economy (e.g. corporation) and then allow it to trickle down to employees, portions of those funds would be funnelled off at every level of the corporation and the net result may be an increase in inequality. However, if that corporation is performing a valuable social service to the public, then that may mitigate the inequality.
I guess my main point is that the story of income inequality is a complex one that is closely related to taxation. As such, it is a policy choice of the government and the people who elect them. If the "99%" feel that they are not satisfied with the deal that has been struck, then they can voice their opinion in the hope that the government will alter that deal.
Another thing I think we should consider is that as innovation drives up the productivity per person, inequality will always rise, significantly.
The value of a mostly unproductive person will remain very low, while the highly productive will go even higher, so the gap will grow. This is normal, but the problem is that people also now have the ability to destroy value in even greater amounts than before, in the way that lottery winners and subprime borrowers can destroy value. I think this is even more important to address than just taxing progressively on earnings. It doesn't even have to be a tax, it could simply be a throttle on the ability for some to move money around in a bad way.
2. ???
3. Better wealth distribution.
I have yet to see a good explanation for what happens in step 2. Raising taxes on the rich is the easy part. How exactly does that money get redistributed? Are we supposed to suddenly trust the federal government to spend its money wisely? What will they spend it on and why?
The papers you cite talk about wealth distribution as if it's obvious how it is going to happen. I'm not so sure that's the case and if the results of the recent stimulus spending in the US are any guide we need to think of some new ideas before considering this course of action.
There are also many market models, only one of which I cited above, that describe the evolution of the income distribution in response to changes in tax schemes. The models are complicated but their basic ideas are not. The redistribution changes market incentives and capitalism does its job to modify the Pareto coefficient and income inequality.
They could deposit it in a bank, but the bank will just send it to the Fed to be destroyed and replaced. (They have automated scanners that look for dirty, worn out, or defaced bills.)
So this is pointless if they want these notes to actually circulate - all they are doing is wasting money used to reprint the notes.
One of my favorites, on a $1 bill: "Taxes are revolting; why aren't you?"