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[Forumsdwarf]

I don't really think capitalism is "fair", because for it to be fair life would have to be fair.  Capitalism can be simplified into a single rule: no force.  In every other respect it is life without rules or barriers, and life isn't fair.

Part of the appeal of government is the fact that life isn't fair.  Life outside civilization is brutal, arbitrary, and deadly.  Government can and should alleviate much of the needless suffering of a natural life.

However ... I am drawn to capitalism by my skepticism that you can hand politicians access to everyone's wallets and trust them to use that power only to help the suffering.  From what I've seen they use it mostly to help entrenched interests; academic, corporate, or union, it makes no difference; in exchange for campaign contributions and political power.

I also find excessive borrowing scandalous, so I am naturally drawn to the right, but even "right wing" politicians are big borrowers.  When it comes to the People's Credit Card all politicians are socialists.

[DJ]

What do these investors actually contribute, that money pooled by actual working people couldn't? Especially if these investors leave the management of their assets to other people, and just reap the cash. I mean, sure, they worked to get the starting investment money, so they kinda deserve it. Or, their parents worked, and it's kinda natural they get to enjoy their parents' labour. But then again, all those feudal nobles had an ancestor who worked hard to get to that social position, so I guess feudalism is fair too.

Capitalism provides decent mechanics to get things done, but the problem is that it's not a stable system when you look at distribution of wealth. Over time, the wealth will pool into the hands of a tiny percentage of the population, disproportionately to their actual productivity. To somewhat counteract that, the government needs to actively work on reducing disparity, and best way to do that is to raise money via progressive taxes to fund social programs like free education and free basic healthcare for everyone and food stamps & government housing for unemployed. This way the poor get a better shot at advancing in life.

[Leafsnail]

I don't see why debt is seen as a left wing issue.  I mean, Bush didn't exactly help the deficit much... neither did Thatcher in Britain.  It's probably because, since you won't be around when it has to be paid back, it's always easier to borrow...

And apart from anything else, the rich need poorer people to buy the things they produce.  If the distribution is too uneven, the economy simply grinds to a halt.

[Jimmy]

What do these investors actually contribute, that money pooled by actual working people couldn't? Especially if these investors leave the management of their assets to other people, and just reap the cash. I mean, sure, they worked to get the starting investment money, so they kinda deserve it. Or, their parents worked, and it's kinda natural they get to enjoy their parents' labour. But then again, all those feudal nobles had an ancestor who worked hard to get to that social position, so I guess feudalism is fair too.

Capitalism provides decent mechanics to get things done, but the problem is that it's not a stable system when you look at distribution of wealth. Over time, the wealth will pool into the hands of a tiny percentage of the population, disproportionately to their actual productivity. To somewhat counteract that, the government needs to actively work on reducing disparity, and best way to do that is to raise money via progressive taxes to fund social programs like free education and free basic healthcare for everyone and food stamps & government housing for unemployed. This way the poor get a better shot at advancing in life.

Progressively raising taxes only drives away investors and entrepreneurs. If your country is going to tax my business or personal wealth to bring me down to the common level, there's no incentive for me to strive to accumulate the wealth in the first place, or else I'd be better off moving country to somewhere with a better taxation system.

Investors contribute the money you need to start a business. Without it business grows at a slower rate, or never starts. Investors create jobs for people. In return they demand the business turn a profit and they make interest on their investment. How you run your business is your problem, they just want a return on their cash.

Your pooled money from working people is a form of investment. Happens all the time. Trouble is that many times it fails and the money's lost. Investors make it their job to know what level of risk to take in exchange for the profit they expect. This is their skill, their area of expertise. Knowing whether your idea is worth putting money into, if it will be profitable.

[Sir Pseudonymous]

The idea behind progressive taxes isn't "to bring the rich down to the level of the poor", but to move more of the burden onto those who can best support that. If you made one million dollars a year, and had to pay half of that in taxes, you're still left with almost half a million more than someone who makes minimum wage (something like 18K a year) and pays ten percent of it in taxes (and who probably works significantly harder than you, even if their actions had less impact on the world, given that minimum wage jobs tend to be grueling and degrading), and were someone else to make a few billion, and pay 90% in taxes, they're still making many millions more than you (and probably working even less, since at that point you can just pay other people to do your work for you).

[DJ]

Investment funds can do all that, using the collected money of common workers. The guy that manages investments doesn't have to actually own the money, and for the most part they don't own it in reality. And I'm not talking investor as a manager of investments, I'm talking about owner of a large amount of capital who hires an investments manager and then does nothing but reap the cash. What the hell is he contributing to the society?

[ed boy]

In the example you gave, the man is providing money. By giving people money in the short term, he is allowing them to acquire things like machinery and tools. This allows them to be more productive, increasing their output and profits. In return for this service, he take part of the resultant profits.

Your question does raise concerns, however. Why precisely should income be tied to their individual production?

[DJ]

If somebody does no work whatsoever but takes results of other people's work, he's a parasite. Working people think it's just plain wrong that a parasite gets more wealth than people who actually work. When it gets really bad, they start building guillotines.

[ed boy]

What would you define as work, then? Does somebody have to be producing a phyiscal product or providing a service?

In the example given, the man with the money uses it in such a way that it allows others to work. Although he is taking the results of their work, when he invested they took the results of his work. They are parasiting off each other, as you would put it, in a way that ensures maximum total benefit.

There is a risk that the people who are invested in will be unsuccessful, and the investor would lost his money. I would therefore consider such investments a form of gambling.

[DJ]

In my example the man who owns the money isn't doing anything. He has people who manage his money, and they're the ones that do the actual work of risk assessment etc. Since his wealth is spread over many separate investments, there's zero risk that he'll end up losing money in the long run. To make it more clear, take Paris Hilton as an example. Just what dopes she contribute to the society to warrant all that money that she gets?

[ed boy]

although the investor has a lot better odds than in any casino, there is still the chance of loss, so I would call it gambling. But that's just me.

As for what they contribute, it is the opportunity for parasiting. Investment means that you allow people to parasite off you for a bit, so you can parasite off them for a bit. If both parties involved weren't better off, they wouldn't do it.

Let's imagine we both have itchy backs, which we can't scratch. If left to our own devices, we would have to suffer the itchiness. What I can do, however, it approach you and say "I will scratch your back if you will scratch mine". By providing you with the benefit of my work (my scratching your back), I get to benefit off your work in the future. The investing in people is just an extension of this.

[DJ]

The lord needs the peasants to work the land, the peasants need the lord to get land to work. Still doesn't make it right.

And banks and various investment funds are more than capable of providing the capital for starting businesses, and I reckon that most of those parasites actually invest into investment funds rather than directly into businesses anyway. If wealth was more equal distributed, there'd still be enough money in banks to give out credits.

[Virex]

Progressively raising taxes only drives away investors and entrepreneurs. If your country is going to tax my business or personal wealth to bring me down to the common level, there's no incentive for me to strive to accumulate the wealth in the first place, or else I'd be better off moving country to somewhere with a better taxation system.

Wait, that doesn't sound right. First you're saying people will work harder because working harder nets you more money, then you throw a fit about progressive taxes. Allow me to demonstrate the inconsistency trough an example:

Let us first define a variable called "work rate" or W, which entails the level at which you work, the value of what you do and how hard you work.
If there is a standard tax tariff of 10% and how much I make, not counting taxes is given by 1.000*W, then my net income is 900*W. To make 10 million dollars I have to attain a work rate of approximately 11 000.
Now imagine the case where the taxes are progressive so that everything I make over 1 million is taxed at 50%. So up to 1 million my income is equal to 900*W and further my income is equal to 500*W. If I now want to make 10 million dollars, I would make 1 million dollars in the lowest scale, for a W of 1 100, and the other 9 million I would make in the higher scale, which would take a work rate of 18 000, for a total required work rate of approximately 19 000, meaning you need to work at a rate of 8 000 higher to get that 10 million, or in other words an incentive to work harder then if there was no progressive tax.
This should logically mean that progressive taxes increase the incentive to work hard, because you need to work harder to get the same amount of money you would get if there was a flat tax rate. Similarly, anything that benefits people that make a lot of money would make it easier to get more money for those that are already rich, decreasing the incentive to work hard for those that already make a lot.

[ed boy]

According to economic theory, the tax level/work rate goes as such:

With the maximum level at around 40%, it is believed.

The lord needs the peasants to work the land, the peasants need the lord to get land to work. Still doesn't make it right.

And banks and various investment funds are more than capable of providing the capital for starting businesses, and I reckon that most of those parasites actually invest into investment funds rather than directly into businesses anyway. If wealth was more equal distributed, there'd still be enough money in banks to give out credits.

I'm confused. What precisely are you saying is "not right"?

People invest money into investment funds because it will increase the money they have. Doing so is logical. You cannot fault people with money investing them into the investment funds.

Similarly, the investment funds themselves cannot be faulted. They allocate the resources available in the system (the money) in such a way that everybody involved is better off.

As for the distribution of wealth being unequal, that it because people are not equal. Physical attributes and skills vary from person to person. Even if you were to give everybody the same amount ot wealth, the differneces in abilities would mean that some would end up better off than others.

[Virex]

According to economic theory, the tax level/work rate goes as such:

With the maximum level at around 40%, it is believed.

Wouldn't that depend upon things like the economic situation of the country and the work ethics of the populace?