A New American Dream

[Ahh The Simple Name]

I have completed two out of three installments of a series called "A New American Dream".

I would be so grateful for any feedback, good or bad, as well as any questionsl

The first installment is here: http://www.ahhthesimplelife.com/a-ne...-dream-part-i/
second here: http://www.ahhthesimplelife.com/a-ne...dream-part-ii/

Thanks,
Carol

[befree]

Well, that was a frustrating and depressing read. There was a lot in there I don't agree with, but my bottom line is this: throwing money at a problem doesn't solve the problem. Simple re-distribution of wealth won't ultimately achieve social equality.

[bUU]

In investing discussions, a trendy topic is the fact that the term "index investing" is vague. This is because what people refer to as "index investing" is really "market capitalization-based index investing". What critical to understand, in that discussion, is that all the strengths of index investing, touted by its proponents, are the strengths of index investing - not the strengths of market capitalization-based index investing. There are other means of indexing that seem to do quite well or better than market capitalization-based index investing.

Discussions about "re-distribution of wealth" are similar. The reality is that every economic transaction is a re-distribution of wealth, and every part of our economic system that affects how much wealth is transferred from one entity to another is re-distribution of wealth in action. What Ahh The Simple Name's article talks about, when it reminds us that, "It's the inequality, stupid!" is that currently some of those economic transactions - specifically those between low-wage and lower-middle-class workers and their employers, are biased against the workers, leaving those workers earning less than what their work is actually worth to the economy, and therefore leaving those workers, now (for many of them) and later (for all of them) grossly subject to society's largess for economic survival, reflecting the impact of a institutionalized power imbalance between employee and employer. Effectively, what a system subjected to such institutional inequality drives is re-distribution of wealth from low-wage and lower-middle-class workers and from society itself to (and for the benefit of) their employers, those employers' investors and/or creditors, and/or customers. That specific re-distribution is condemnable specifically because it represents an unfair imbalance as well as harms society itself.

Ridding society of that re-distribution of wealth would require a lot more very heavy-handed government regulation and intervention in business. Businesses that cannot operate without exploiting imbalances that unfairly re-distribute wealth from their workers, from the business' suppliers, and from society to the business, its investors, creditors and/or customers would be prohibited from operating. What we buy at the market would be forced to reflect what those commodities are actually worth, fully reflective of what it takes to bring them to market, acknowledging fair minimums for compensation of workers and suppliers. There would be inflation, without a doubt, because we wouldn't be able to hide the injustice of the economy in the human costs inflicted on workers or passed down to future generations as substantially higher debt.

Our society has chosen a less draconian means of re-establishing balance, letting the commercial economy operate comparatively free of such intervention as described above, and making up for the injustice, recognizing the rational assumption that the greatest opportunity to address the injustices inherent in a flawed system isn't from trying to extract blood from a stone, but rather assessing rent (taxes) for what are conceptually the most lucrative storefronts on the virtual Main Street of the economic system.

It's not a perfect system: A perfect system would be as I outlined earlier, and those complaining most about the current system would hate a perfect system far more: It wouldn't allow them even the modicum of exploitation and abuse that fosters inequality that they capitalize on to enhance their own situation in the current system. It's necessarily a compromise.

[Gregg]

IMO, inflation is the most successful form of redistribution. Current FED policy is obviously working to keep that in check. Curious?

[stuboyle]

IMO, inflation is the most successful form of redistribution. Current FED policy is obviously working to keep that in check. Curious?

Obviously, there has been a large distribution of wealth from savers to debtors to help keep some of the debtors afloat. Had the Fed not cut rates you would have had an even greater level of housing defaults when all the Option ARMS with teaser rates reset to higher rates.

[Ahh The Simple Name]

Here is my final post in the three-part series: http://www.ahhthesimplelife.com/a-ne...ream-part-iii/
Any feedback? I'm not an economist, but I do think my suggestions make sense.