Income Inequality in the US

I issue a challenge to you, please locate and post information as to why those C.E.O's should have their personal assets seized? Majority of them did not break any laws, merely lead companies with bad business practices. The companies merely road the gravy train of easy money along with every idiot who thought they could buy a $300,000 house on a $30,000 salary. Companies were idiots for making all these bad and unsecured loans but, it was the end consumer who was applying to these loans.

Most of those companies were actually following mandates from as far back as the Carter Administration. Bill Clinton in the 90's made a compromise with the Republican congress at the time exchanging tax cuts for the laws that would forbid banks from refusing to offer loans to lower income people. In the end, Gingrich got his tax cuts and Clinton looked like he was helping the poor get homes.

End result, this was coming for a long long time. Bad Government policy, Human Greed (both corporate and consumer) and consumer idiocy all combined into a maelstrom of fuckery.

Now, income inequality in the states is neither the fault of the Republicans or Democrats alone. Policies such as NAFTA encourage companies to outsource manufacturing to other countries such as India, China, etc. Now most people would immediately jump on the bandwagon and attack corporations for outsourcing but, the person who is really to blame is you. Yes, you the consumer. Why? Because you shop at companies that outsource, you buy products that were imported from other countries. You have an Iphone, Ipod or Ipad? Congrats, you encouraged Steve Jobs to continue to use cheap labor of 20year old Chinese or Korean workers rather than telling Jobs you refuse to purchase their products or use their services until they employ workers from the U.S. So NAFTA and consumer habits encourage companies to outsource which leads to underemployment or unemployment of U.S. workers.

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Another reason is, it is far easier for you to save money when you have more expendable income. a $20,000 income has a harder time saving money than someone with a 200,000 income.

Lets draw an example.

A RothIRA with a starting contribution of $100 adding in $100 per year from the ages of 24 to 65 at 8% return with a marginal tax rate of 25% will result in 32k with 18k being taxable.

Now, compare that to a 200,000k income opening a Roth at 24 years old with a contribution of $100 and adding $5,000 (the maximum legal limit according to U.S. law) at 8% return will result in 1.5 million by the time of retirement.

End result? the more money you have the easier it is to save money.

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Third is a lack of access to higher education. The current access to such "easy money" for education has actually caused colleges and universities to be less efficient in their operations which has had the side effect of raising the cost of tuition among others (such as cost of non-education staff) so your tuition is paying these universities to hire "staff" who will never see a student except for grad students.

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In my opinion we need to fix the inefficiency in the education industry either by market forces (the consumer going to a community college for two years and finishing their degree at Prestige U) or by government regulation of the industry to maximize efficiency (for you market socialists out there). Once everybody has an easier access to education without crushing debt they won't climb out from under for 20 years then our economy will improve.

Yes, I realize that under the letter of the law, they haven't exactly committed crimes, so to speak, or at very best, were treading on the gray zone.

But there certainly has been malpractice, or irresponsibility.

The best example is are the bonuses for CEO's and other bank workers.
Yes, these have been reduced over the last year or two, but banks have been still payed out substantial sums for it, often with money from the relief funds.

In the last April, Goldman Sachs has earmarked around $5 billion dollars for staff pay and bonuses, days after it was accused of fraud by US SEC.
Guardian.co.uk article

And they aren't the only one.
This site, for all it's worth offers some raw data on what banks spent the bailout funds in 2009:

http://www.aflcio.org/corporatewatch/paywatch/retirementsecurity/index.cfm

Far from trying to fix up the companies to ensure their future.

It can be argued of course, the the bonuses grantee that at least some of the banks workers receive their pay amid the crisis. Which all well and good, only that the same money could be invested into keeping the company afloat. If the banks fails, then employees will have no more money anyway, being out of job, and the taxpayer money is lost.

Now, is it, in the light of current law, legal?
Well, I believe it is. But the fundamental question, is whenever the law the relates to this subject, is just in itself?

The companies were IMO playing on the fact that a lot of loaners did not fully understand what they were doing. But that is only the part of the problem. It was the banks that started developing such loans, and banks that loaned more money then they did have, not taking into account the possibility that not everyone would be able to repay. If a person is an idiot for taking a credit for a $300.000 house with a $30.000 salary, then what of the banks that allow it? Following simple logic, you'd think that at worst, the banks would limit the number of "risky" people that receive the loans. After all, they are a potential threat to the banks, since if they fail to pay, the bank looses the money. It makes a loss. Why then, the banks loaned thousands to people who could possibly not repay their debts? The banks are no less on an idiots for doing it.

And were their clients truly informed of the risks that were connected with their loans? And did the banks told the shareholders who purchased their stocks of the more riskier side of their on-goings?

Considering the surprise at the crisis, I don't thinks so. That comes pretty close to lying and deliberate deceit to facilitate profits, or even try to make it appear as if things aren't as bad as it seems. The man that led the Barclay's bid in purchase of Lehman Brothers admitted in BBC documentary that when they finally got a look into the Lehman Brother's accountancy books, the state of this firm was far worse then what the Lehman's management claimed. Now that, comes pretty close to a fraud. Maybe it isn't exactly, but I do think that kind of malpractices should be a punishable offense.

In my opinion, all of this points to company CEO's being at least partially-guilty of the crisis, that cost everyone untold sums of money.

If we're already punishing the other part of the problem - the people who failed to pay their loans (many of which did have their assets seized), then why can't we hold the other side of the problem accountable?

If a doctor makes a mistake, the patient (at least in most democratic countries) can fill in a lawsuit against the said doctor. And if the medical commission will confirm that there was indeed a mistake, then the doctor can be held accountable, and be fined or loose his job permit.

The bank (but not only bank, it can apply to a much wider range of businesses) CEO's have enormous impact on global economy. Their decision can affect finances of millions of people across the globe. And yet, if they made a mistake, but did not commit any frauds, they cannot be held liable. Sure, you can fine them. You can hurl accusation at them. But if the law does not openly state that such things can be considered an offense (regardless if it's a minor or major), then it will have a little impact on them. Is this justice?

In my belief, no system that allows someone to rip off people for thousands, put global economy in danger, leave only with a slap on a wrist and a fat bonus in pocket, is just.

But in the end, the law is not perfect, and too many loopholes have been made by now. But that is what legislation is for.If the law is wrong, it should be changed. And the law in this instance is wrong, or at least inadequate.

Perhaps seizing all of their assets, is too harsh of a punishment. But at the very least, the money they made on such circus of idiocy and loopholes, should be returned. Of course, I'm not saying that CEO's are "evil" by default, and not all of them had much to do with their companies malpractice. But that is what investigations are for. Sometimes, it's the CEO, sometimes the members of the board, sometimes accountancy. But it is not that the bank management lacks guilty people. You just need to find them.

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It's an interesting point, about the outsourcing of manufacture.

Yes, we've all helped business making a decision in staying in countries such as China, and using cheap labor.

But are the handful of businesses that still manufacture in Europe and USA given an equal footing in market competition?

Naturally, the fact that their a "handful" means that they will never truly match up the the majority. That is just how the system works.

But does customer, when going to a retailer, has an option of not choosing a Chinese-made CD-players, monitors, toys etc.? Not really.

You can always not buy them, but that isn't really a solution. At the very least, the retailers should put a notices as to where their equipment was assembled, similarly as to how some shops say where their vegetables were grown and collected.

Another reason why so many manufacturers moved to China, is not just the cheap labor. Exporting from China is cheap. The cheapest. Which means, that retailers, that buy products en masse, will be more likely to buy from China - they can buy more for less there, after all.

And because they buys so much, even if you sell cheap, you'll still turn a profit.
Naturally, it's partially because the labor force is so cheap. But if the yuan has the same worth as dollar, pound or euro, would retailers still consider China to be the best supplier? And would companies so readily move their production centers there?


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Lastly, I have to agree to the point about education. If more people had access to higher eduction, at least some problems could be reduced. And it's not just economy - democratic governments would be benefited by more educated electorate, for one thing. At least, that's just what I think.