I never really understood the complaint. Rich people spend massive amounts of money to send their kid to a school. That massive, completely unnecessary investment is then reinvested across the students attending the school, who come from all different backgrounds.
This is, in effect, one of the most common ways wealth is redistributed in the US. Why is it so bad? Maybe we should limit it, but the actual practice itself is probably more good than bad.
> Because the government could simply tax those with wealth more and use taxation as a means of redistribution.
I don't think the word "simply" applies when you are suggesting the government take money from billionaires with their armies of lobbyists and redistribute the money to the masses.
So because billionares will try to fight legislation to keep them from trying to make things more equal, instead we should have them just voluntarily give their money to universities, as if that somehow isn't even more susceptible to being spent the way they want rather than to make things more equal? I admit I'm biased in favor of using taxes instead of university donations to redistribute wealth, but even for a position I disagree with, this seems like a fairly weak argument.
Using taxes would be (IMO) ideal, but that just isn't politically feasible in the US. I'm not sure I'm convinced that university donations from the wealthy is anywhere near as good when it comes to wealth distribution, but it's pointless to say "doing this with taxes is better" if we don't have those taxes and can't have those taxes.
> So because billionares will try to fight legislation
They don't "try". They succeed. Time and time again. Maybe at some point they'll stop succeeding, but I'm not going to hold my breath.
I just don't see a reason to pick a fight if the status quo is "everybody wins".
Billionaires get to send their kids to good schools and everyone else at the school gets their education subsidized by those billionaires voluntarily.
The only difference I can see with using taxes is that the billionaires' kids don't get to pick their school, and the government now has to waste time and effort collecting and auditing those tax dollars.
I don't see a gain that's worth the effort. They can still donate money to the school or its employees if they want to influence the school's policy, or maybe just make some phone calls to accomplish the same.
I'm sympathetic to the idea that billionaires have a lot of advantages that we should try to even out, but this feels like picking a fight for the sake of it. There are better things to try to fix in the world.
> I just don't see a reason to pick a fight if the status quo is "everybody wins".
> Billionaires get to send their kids to good schools and everyone else at the school gets their education subsidized by those billionaires voluntarily.
That's not "everybody though"; most people _don't_ attend elite institutions like that, and every spot that goes to a billionaires' kid means one less spot for a kid without wealthy parents able to work the system like that. The argument being made is that having taxes instead and using them for public goods that are accessible to a much wider swath of the population would be worth doing instead; I tend to think that the answer to this question is yes, it's worth the effort, but even I'm skeptical that "it's all going to suck anyways" or "anyone who doesn't go to an elite school is irrelevant to the question of how individual wealth can improve society as a whole" are the best counter-arguments to my point of view.
>> the government could simply tax those with wealth more...Like most western countries do
Not sure where you're getting your data, but, looking at Europe as a proxy for "western countries" not including the US, in 1990, 12 countries in Europe had a wealth tax, while, as of 2019, only 3 did. Weather taxes were generally considered a failure.
This is like shooting yourself in the foot. Billionaires will just move their wealth elsewhere. The only things this would accomplish are weaken the US economy and the dollar.
The PPP adjusted median income is highest in the US (not counting Iceland/Luxembourg for obvious reasons).
And as a follow up, how stable is the government in your example countries? The US has the worlds oldest document-based government. The rest of the “western countries” have constantly collapsing systems/borders with the exception of France who has historically done exceptionally well in this regard.
TL;DR - Why should we take notes on wealth redistribution from other societies which are less successful?
I think it's worth pointing out that income inequality is much worse in the US; the Wikipedia page you referenced reflects this somewhat: "2020 average wage in the United States was $53,383, while the 2020 median wage was $34,612."
If you define 'better economic conditions' as meaning more wealth in total, sure, the US is at or near the top. But however, if you're interested in knowing how most people are doing, the reality is that many of our European friends are better off than we are.
The one example I'm personally aware of is Switzerland, which has a wealth tax and relatively low overall taxation. People they tend to live longer lives than we do, they have more disposable income, great infrastructure, a pristine natural environment, local manufacturing, and they have hundreds of years of political stability.
While it’s true our income inequality is larger, the fact still remains that the median American makes more money than the median European (or any other comparable region).
Ask yourself: Is it better for everyone to be richer and have high inequality? Or is it better for everyone to be poorer but more equal?
EDIT: Switzerland is a good point. They are a prosperous and highly educated society! It’s just tough to compare in my mind because the US or EU is hundreds of times larger.
Let's look at France then. They have lower numbers on paper when you look at things like per capita GDP, but they live longer lives, work about half the hours we do, take a full month of vacation, have access to free higher education and healthcare, etc. The estimates for their overall wellbeing are very similar to ours [0].
At to income distribution - in France the lowest quintile controls 8% of incomes [1], while in the US that number is less than 3% [2]. In fact, the second quintile in the US controls only 8%, which means that for the bottom 40% of income earners, one is very likely to be better off living in France.
Income inequality does indeed matter when you have many millions of people living in abject poverty, and it is a very relevant thing to consider when comparing economies.
There’s a lot of great things about the French economy. There’s also plenty of areas where they lag behind the US.
The French labor force participation rate is ~74% compared to ~62% in America.
The French homeless rate is 3x the US rate.
France just defaulted on its national pension obligations a few months ago.
What policy exactly should we copy from France? If we’re still arguing about wealth redistribution policies I want a clearly articulated example of a superior system. I don’t see where it is in France but please lmk if I’m missing something.
Sure, I’m not suggesting we copy any one policy, but the assumption that people in the US are better off than everyone else and that it is somehow because we don’t tax wealth is kind of silly.
By some measures many European nations are better off economically than we are. And many of these countries have wealth taxes.
We’d also be remiss to overlook that the US had a tremendous advantage in not having our infrastructure destroyed in the middle of the 20th century.
Glad we could find common ground! I’m not claiming that life in America is inherently better…just pointing out that things are pretty fucking good all considered.
I’m not in favor of a wealth tax though I frankly still don’t see any evidence that it improves society. Our edge as a nation comes from our insane technological and economic output. Squeezing the private sector too hard can drive away that innovation.
At some point in the future our economic machine eventually falters and we’ll loose reserve currency status. That’ll mean a massive drop in US living standards across the board…so I hope it happens way after we’re dead.
> just pointing out that things are pretty fucking good all considered.
That might be true, but we can do a lot better in terms of eliminating poverty.
> I’m not in favor of a wealth tax though I frankly still don’t see any evidence that it improves society.
Blindly throwing money at things probably doesn't help. I daresay there are plenty of great initiatives the government could support with better spending. If money becomes the bottleneck, that's where the wealth tax comes in.
> Our edge as a nation comes from our insane technological and economic output. Squeezing the private sector too hard can drive away that innovation.
I don't think we have been squeezing the private sector hard enough. I value the notion of innovation enough that I don't support widespread nationalization of companies, but there's plenty of waste going on. Government contractors are a great example. Our unbridled capitalism has resulted in massive corporations focusing on making obscene amounts of profit. Insurance companies, credit companies, data brokers, FAANG (although some of what Google does is quite innovative), etc.. I imagine there's a disproportionate amount of innovation considering all the profit.
Comparing absolute numbers for income is a bit of a fool's errands, even when you use PPP.
The philosopher John Rawls has a famous thought experiment of choosing a form of social and economic organization without knowing where you personally might end up on whatever heirarchy it generates or contains. Rawls' point was that in such circumstances, most even semi-rational people will choose the one that makes it the most likely that they will not end up in a non-disadvantaged position, which is the fundamental concept behind an egalitarian to oppurtunity and inequality.
Given that, faced with a choice between:
1) a society that carries out substantive income/wealth redistribution so that few people (if anyone) has issues with a broad set of "basic" needs
2) a society that offers limited substantive income/wealth redistribution in the name of "high rewards for high achievement" or something similar
most people in Rawls thought experiment will choose the former.
You only choose (2) when you have reason to believe you will be a high achiever, which in a truly meritocratic society, you cannot know in advance.
So, the US is a society in which median (PPP) income is highest, but low income redistribution ensures that large numbers of people struggle to enjoy the things that US society considers "normal". By contrast, social democratic societies in Europe have lower median (PPP) income, but higher income redistribution means that far fewer people face such struggles.
Rawls would maintain that a rational person with a belief in justice would always pick (1), and that only irrationality or some (unfounded) conviction of one's own certainty of outsize success would lead someone to pick (2).
> By contrast, social democratic societies in Europe have lower median (PPP) income, but higher income redistribution means that far fewer people face such struggles.
The idea that EU citizens do not face poverty is simply false. The EU sheltered homelessness rate is very close to the US, both under 0.2% which is phenomenal honestly…
Poverty rate statistics are quite tricky to decipher. But all the data I can find says that there isn’t an outsized difference between the regions. Rates in US states vary as much as EU member countries with plenty of states from both regions exceeding or below US/EU averages.
I’m not trying to be a blind patriot stereotype or even claim that the US is “better” than other portions of the world.
My only point is that objectively speaking, living standards in America are PHENOMENAL. We should not “redistribute wealth like other western nations” because I can’t think of any G20 nations that have a clearly preferable economic system.
Also to your point about Rawls, if you go too far with redistribution you remove the incentive for people to do difficult or unpleasant work. We’ve witnessed this countless times over the past century in all the failed socialist/communist societies. In a less extreme example we just witnessed France default on its pension obligations!
Nobody is going to work for free. The US spends more money than any other nation on social welfare programs. It’s inefficient and unsustainable. How can we honestly consider expanding wealth distribution programs when we can’t even afford what we have now?
If you can think of a particular nation’s system we should emulate I’d love to hear the argument with an open mind. I honest to god cannot think of any.
How about Denmark? Seems like a smooth running country. Hardly any national debt. Free healthcare and education for all. Consistently rated as one of the happiest countries on earth.
Do you think that Delaware or Wyoming's economic systems are substantively different from those of the USA as a whole? Obviously, the specific industries/service sectors of these states are quite different from one another, and from other states, but they represent applications of "the American way" to very small populations (1M and 600k respectively, massively smaller than Denmark).
The Danish way of things is clearly an entirely adequate model for populations of up to 5M or so. Claims about culture, geography are red herrings (they are almost always overstated, and sometimes just outright lied about).
Whether it can scale to, say, 40M larger (as in our biggest states) is a valid question, but given the much greatest similarity between Denmark and Germany than Denmark and anywhere in the USA, despite Germany's 84M population, I'd suggest the burden of proof there is on those who say it can't scale.
Of course, the Nordic social democracies do have their own problems, and there's no shortage of people from those nations who will fill your ear with complaints. Some of them deserve to be listened to, but if you think that society is better when modelled around collective self-improvement, broad social interdependence, and a general sense of shared responsibility for everyone's welfare, they are mostly noise.
"sheltered homelessness" is an important metric, but it's not the one I would to differentiate between levels of income/wealth redistribution, precisely because it affects such a small part of the population.
the metric(s) I would use need to be ones that are meaningful (and meaningfully different) for more substantial parts of the population.
So, some suggestions could be:
* medical care induced bankruptcy
* personal bankruptcy in general
* percentage of income spent on housing costs
* disposable income after housing, health care, education and transportation costs
* some measure of "timely" access to medical care
* inter-generational economic mobility
There are certainly issues within the EU with any and all of these (worse in some places than in others), but overall my understanding is that the US generally does worse on all of them.
I am originally from the UK, and I would argue that while there are aspects of quality of life here in the USA that are vastly better than the UK or the EU, most of those things are primarily the domain of those who make median or above median income. I certainly don't think that the economic system in the USA is better than those found in the EU, even though there are some metrics where you might make that case. But mostly what the USA has a lot of that the EU has much less of is economic churn - businesses constantly starting and almost all of them failing, followed by more businesses starting etc. This gives the impression of very prosperous, active economy, but I would question whether we really do much better out of this model than the EU does with their much less entrepeneurial systems.
> if you go too far with redistribution you remove the incentive for people to do difficult or unpleasant work
The people who earn the most in our system are not the people who do difficult or unpleasant work, and it just seems preposterous to me to suggest that there is a link here.
> In a less extreme example we just witnessed France default on its pension obligations!
This is not an example of what I think you're claiming it is an example of. Defaulting on pension obligations is about a failure to honor past labor contracts, not income/wealth redistribution.
> How can we honestly consider expanding wealth distribution programs when we can’t even afford what we have now?
Same way we can afford a war whenever "we decide" to fight one. Same way we can "choose" to spend more than the next 10 top military spenders combined. We are a rich country, and we could choose to place substantially more emphasis on the quality of life of all our people. But we "choose" to do otherwise.
That's a typo its supposed to be "Unsheltered Homeless".
I don't think you're understanding the broader point. Look at the economic data. The PPP median household income and PPP net wealth is much higher in the US. Yes, the income/wealth distribution curve is skewed to the right here...
But the majority of Americans are wealthier than the majority of Europeans! A random sample of both populations would yield wealthier individuals on the US side.
Equal distribution by itself is a silly goal. The goal should be increase the net income/wealth as much as possible for as many people as possible.
> I certainly don't think that the economic system in the USA is better than those found in the EU, even though there are some metrics where you might make that case. But mostly what the USA has a lot of that the EU has much less of is economic churn - businesses constantly starting and almost all of them failing, followed by more businesses starting etc. This gives the impression of very prosperous, active economy, but I would question whether we really do much better out of this model than the EU does with their much less entrepeneurial systems.
This is an insane take. The technological innovation that comes out of the US blows Europe out of the water. Where is all the European competition? Just look at the financial statements of the largest EU and US corporations. The data is plain as day!
> The people who earn the most in our system are not the people who do difficult or unpleasant work, and it just seems preposterous to me to suggest that there is a link here.
You're wrong. Any meaningful tax revenue for wealth distribution would have to come from people in the upper quintiles. These are lawyers, doctors, engineers, oil rig workers, underwater welders, etc.
You still haven't suggested any actual policy change. I'm guessing you have a nebulous idea of "take it from the billionaires". There is no way in hell we can create a wealth tax that generates a $1T+ in annual tax revenue. There aren't enough billionaires to sustain such a tax and they absolutely have the means to legally evade taxes or jet off to anywhere in the world. Also, we already have the estate tax!
> This is not an example of what I think you're claiming it is an example of. Defaulting on pension obligations is about a failure to honor past labor contracts, not income/wealth redistribution.
Dude. Its literally a government run wealth distribution scheme. It's the basis for most citizen's retirement. The government isn't paying out what they had promised.
> Same way we can afford a war whenever "we decide" to fight one. Same way we can "choose" to spend more than the next 10 top military spenders combined. We are a rich country, and we could choose to place substantially more emphasis on the quality of life of all our people. But we "choose" to do otherwise.
We cannot afford infinite wars. Our military spending is dwarfed by our spending on social programs. Go read the federal budget for fucks sake. The majority of our budget is social security, medicare/medicaid.
Go read history and international news. How can you hear about the current events in Europe and claim that economic conditions are good? The region is unstable and full of young governments. The region cannot create its own energy, which kneecaps its own heavily industrial economy. The region is entirely dependent on the US/China and is just now decoupling from Russia. Macron is ranting about the lack of European Sovereignty. Inflation is much worse in the EU. The continent will definitely stabilize, and its not the end of Europe...but they've sustained significant economic damage.
I don't give a fuck about nationality. I don't think America or Americans are superior. Europe is our most powerful ally and I wish prosperity for the entire region. I just hate this constant populist rhetoric that the US needs to adopt undefined mythical tax/spending systems to achieve some fantasy utopia.
Please name the policy changes required to solve poverty in America. You'll be a hero.
return to a much higher upper marginal tax rate (there's no evidence that the reductions which started with Reagan have benefitted most Americans in any way).
reduce military spending (American's socialism) by at least 50%.
take the money from these two actions and use it on infrastructure and social support.
> These are lawyers, doctors, engineers, oil rig workers, underwater welders,
These are not the people who earn the most in our society. They might be the top 10%, but they are not the top 5% let alone the top 1%. The way you make the most money in our society is overwhelmingly by playing games with money. And before you cite someone like Bezos ... well, I worked with him. Bezos is an exception that proves the rule (and is surrounded by people who played games with money in order to make money).
> Dude. Its literally a government run wealth distribution scheme. It's the basis for most citizen's retirement.
If I am hired for a job, and the job pays $X/year and contributes $Y/yr to a pension, with the promise that in retirement I will be paid $Z/yr, there is no possible way to construe that as a government run wealth redistribution scheme, even if I am employed by the government. Wealth redistribution schemes consist of taking money in taxes from people with more money and (in some way) giving it to or spending it on people with less.
> The technological innovation that comes out of the US blows Europe out of the water.
Certainly there is a particular kind of technological innovation that the US is very good at. But ... I would first question the extent to which this innovation is necessarily a force for good, and secondly I would point out that this prowess does not extend to micro-electronics (where Asia dominates overwhelmingly) or mechanical engineering (where Europe is generally still ahead of anything in the USA. There's a reason German designed and built equipment is still so prized). Even with pharma, its not entirely who is doing the best work (rather than the most work).
> But the majority of Americans are wealthier than the majority of Europeans! A random sample of both populations would yield wealthier individuals on the US side.
In terms of income (even adjusted for PPP), sure. But as I tried to explain, that's a silly way to measure wealth, at least if it is the only way you use. As an American, I am forced to spend more of that increased wealth on things that would be free-at-point-of-service or just cheaper in Europe. Granted, there are Americans (mostly wealthy Americans) who like things that way; I understand that, but I think it's a sub-optimal approach to social organization if egalitarianism is the goal.
> return to a much higher upper marginal tax rate (there's no evidence that the reductions which started with Reagan have benefitted most Americans in any way).
> reduce military spending (American's socialism) by at least 50%.
This is not even a remotely serious proposal. There is no scenario where both parties agree to cut the military budget in HALF! Have you looked at the actual budget numbers? We're going to have a 2023 budget deficit of $1.5T. Even if we could, in the midst of the the Ukrainian invasion and rising tension over Taiwain, cut military spending by 50%, that's only a ~$400B reduction of our annual deficit. Do you seriously expect to extract an additional >$1T from income tax in the top bracket? Basic napkin math should tell you this isn't possible.
Also lol at "America's socialism". How do you explain the fact that SS,medicare,medicaid absolutely dwarf military spending?
> take the money from these two actions and use it on infrastructure and social support.
Complete non-statement. What specifically are we going to do with you imaginary tax revenue?
> ...Wealth redistribution schemes consist of taking money in taxes from people with more money and (in some way) giving it to or spending it on people with less.
"This minimum pension (Allocation de Solidarité aux Personnes Agées in French) is the first level of the first pillar of the French pension system. The ASPA is a monthly benefit paid to low-income seniors, whether or not they are former employees. It is not a retirement pension: it is financed by the State, not by social contributions."
"The mandatory state pension is an unfunded contributory pension based on the redistribution of contributions from those working to those in retirement."
"The mandatory occupational pension is a defined contribution scheme that is mainly based on redistribution"
The French pension system is a direct transfer of wealth from workers/citizens to beneficiaries. The US equivalent is social security.
> In terms of income (even adjusted for PPP), sure. But as I tried to explain, that's a silly way to measure wealth, at least if it is the only way you use. As an American, I am forced to spend more of that increased wealth on things that would be free-at-point-of-service or just cheaper in Europe.
Your understanding is incorrect and the cost of living (including government subsidies to healthcare) is included in the OECD statistics:
"This indicator [Household Disposable Income] also takes account of social transfers in kind 'such as health or education provided for free or at reduced prices by governments and not-for-profit organisations.'"
---
I do not believe you are arguing in good faith. Your argument basically boils down to "Ignore all the economic data because it doesn't tell the whole story". If you reject the OECD data, corporate financial reports, and national statistics, the least you can do is offer some other data to compare.
> The following table represents data from OECD's "median disposable income per person" metric; disposable income deducts from gross income the value of taxes on income and wealth paid and of contributions paid by households to public social security schemes. The figures are equivalised by dividing income by the square root of household size.
According to that metric, public healthcare, public pensions, and subsidized education and childcare lower disposable income, while private versions of the same services don't. Additionally, cultures where adult children often live with their parents have higher incomes by that metric than those where they move out earlier.
"Information is also presented for gross household disposable income including social transfers in kind, such as health or education provided for free or at reduced prices by governments and not-for-profit organisations."
I'm not disagreeing with your wider point, and in particular I do agree there's a lot to admire about Swiss society—but want to mention they have had a few bouts of instability in the past several hundred years.
This sort of rationale would seem to suggest that you also cannot take examples of bits and pieces of the USA and compare them with the country as a whole.
The fundamental question is: do we want admissions based on merit (or not)? Saying "Yes" and then carving out an exception for the wealthy is dishonest (IMO); if the answer is "No, admission is not on merit" then we need to talk about what other considerations would be fair game.
Also, implicit in your argument is that universities getting more money is always a good thing - I take umbrage at that prior as universities should not be driven by the desire for perpetual capital growth.
Yes perhaps the unstated benefit of elite private schools is the long term relationships formed between children of legacy (i.e. generational wealth) and highly capable and hungry individuals who are getting in on merit alone.
The two problems I see with legacy admissions is that:
1.) It has never been explicitly stated as a policy. If it were an upfront "get one admission for every 10 full price admissions/tuitions you buy" that would seem fairer. That said - I can see why a private school might be hesitant to be so transparent...
2.) The schools need to grow in order to keep the percentage of new admits to legacy admits constant as every generation of graduates is likely to produce at least 2x increase in legacy admits.
Speaking as a legacy Harvard admission, I wouldn’t say you get a lot of long term relationships beteeen legacy students and merit students. Some, for sure, but there are different social circles at Harvard. Check out the Harvard social clubs sometime.
That said this is a decades old anecdote rather than data.
> every generation of graduates is likely to produce at least 2x increase in legacy admits.
If you're implying that people are having kids at the 2 per couple replacement rate, US is below that.
Also it's forgetting that each couple likely took up 2 ivy league seats during their college years, so even if mom went to Yale and Dad went to Harvard, but their 2 kids both go to Harvard, that would be consuming 2 "legacy admit" seats which is 1x the number of seats from last generation.
My hypothesis is disproven though, if it is super common that ivy leaguers very frequently marry outside the ivy league, then 1 becoming 2+ with each generation would be a problem.
> That massive, completely unnecessary investment is then reinvested across the students attending the school
You're confusing legacy and donor. My only issue with children of donors getting on the Dean's List is the donation's tax deductibility. Legacy, on the other hand, isn't linked to resource contribution.
You can do one without the other. The biggest problem in my oppinion is the lack of the mentioned redistribution for the first 18 years of the poor sob's life who lucks out since that's way more important than the extra money for the already extremely wealthy institutions.
They should be allowed to behave however they want, but whether we consider that behavior sufficient for non-profit status and tax-exempt endowments should be on the table. Donations for admission of your kids feels especially gross when talking about granting tax-advantaged status to institutions. It's a change in how we view them, to be sure, but questioning our expectations of tax-exempt non-profits seems like exactly what we want the government doing.
It’s bad because government is much more efficient at this using taxation than relying on the benevolence of rich people. Harvard educated far fewer students than U.C. Berkeley and Berkeley has 1/5 the endowment. The budgets are probably more or less in line with each other but that excess endowment amount speaks to a major inefficiency in terms of allocation of resources.
A lot of the costs in modern college programs over the last 20 to 30 years has been due to increase in administrative personnel, building up sports programs, etc.
Modern colleges appear more like resorts than educational institutions. The presidents of these colleges also make massive amounts of money, many of even public or state college, which is highly disingenuous.
> reinvested across the students attending the school
I do not know this for a fact, but I WILDLY doubt what you said here, and I cannot imagine what could possess anyone to believe this. Especially at so-called "elite" schools.
I think "legacy kid" is different from "kid of rich donor." They'll just be fewer kids of middle class alums and more kids of Middle Eastern and Asian upper classes.
This is, in effect, one of the most common ways wealth is redistributed in the US. Why is it so bad? Maybe we should limit it, but the actual practice itself is probably more good than bad.