What causes the rich to abuse the poor?

[Carlan]

RIght, the rich man did it, he got off his duff and did it no way is he waiting around to win it,he did it…no worries, that’s it he did it , he earned the right.

 

[St_Francis]

Well, for that matter, we would need to define the poor and the rich.

Do we mostly think that the poor are those who have no income or so low an income that they cannot maintain themselves? What about when we put welfare into the mix?

Whom do we consider “the rich”? Bill Gates, George Soros, the Koch Brothers?

In which case, what about all those in between? The working poor, the lower middle class, the upper middle class, the professionals?

I guess I am wondering mostly about who are “the rich”, but in terms of “abusing,” I think we have to look at more than just the mega-rich and the extremely poor. ISTM that the main problem occurs when employers, of whatever strata, take advantage of the desperation of those in need in the area of employment, which would kind of preclude the *very *poor, who are not able or willing to work.

 

[St_Francis]

The poor are not poor because of the rich…that is a false premise. The poor in this country are primarily those with illness, drug and alcohol abusers, criminals who have been unsuccessful, the ill educated who are unemployable. There are just as many reasons that people are rich but none of the reasons are because they abuse the poor.

Agreed - what is the “profit” in abusing the poor? They have nothing a rich person would want.

I must disagree with you two to some extent. First, I would suggest that those being abused are not the very poor but those on the edge between very poor and working poor.

For example, in the 1970s and early 1980s I heard about a state with a couple of industries: one normally seasonal and the other fairly stable year-round but having its ups and downs. This state had politicians who did a great deal for the poor in terms if safety-net stuff, and very little in terms of education.

In effect, the state refused to educate the people enough so that they could rise out of poverty through education, at the same time that the state lured the people into stability through welfare.

Thus the “rich” had a stable pool of people from whom to hire when they needed help. The rich did not want the people to rise out of their need, nor did they want the poor to move away.

There are other examples of “abusing,” which I am assuming means taking advantage of. ETA: such as barriers to entry into business.

 

[Bubba_Switzler]

OK, I see what you are saying.

I’m going to assume, then, that nobody has an issue with my framing of the questions. Anyone is welcome to challenge my framing but I’m now going to move forward to the substantive debate.

How would you define Laissez Faire Economics (LFE)? I mean, I have an idea of what I think, but it is certainly by no means official.

ETA: I guess that your previous explanation, free market anarchy with government restrictions to prevent physical abuses or fraud, is either how you define it, or is insufficient.

Well, for that matter, we would need to define the poor and the rich.

Do we mostly think that the poor are those who have no income or so low an income that they cannot maintain themselves? What about when we put welfare into the mix?

Whom do we consider “the rich”? Bill Gates, George Soros, the Koch Brothers?

In which case, what about all those in between? The working poor, the lower middle class, the upper middle class, the professionals?

I guess I am wondering mostly about who are “the rich”, but in terms of “abusing,” I think we have to look at more than just the mega-rich and the extremely poor.

Those are all good questions and quite appropriate to debating the subject of this thread. I would add that we also need to define “abuse”.

So, to summarize:

1. What is Laissez Faire Economics (LFE)?
2. Who are the rich and the poor?
3. When is one person or class of people abusing another?

I actually don’t think the second question is as important as you might think. While we are nominally concerned here with the abuse of the poor by the rich I should hope that nobody would be ok with the reverse or with the abuse of any person or group by another. We could say, then, that one should not abuse another and leave it at that.

In answer to the first, I think the Wikipedia description (that I linked to in the first post) is perfectly adequate as a starting point. But we can do better by incorporating the third question: The LFE view is that there is a relatively particular meaning to abuse, essentially violence, theft, and fraud. Government is doing quite well if it can prevent these abuses by one person or class of people against another. (Historially, not only have governments failed to prevent such abuse, they have often been the primary tools of such abuse.)

ISTM that the main problem occurs when employers, of whatever strata, take advantage of the desperation of those in need in the area of employment, which would kind of preclude the *very *poor, who are not able or willing to work.

Yes, I think this brings us to the main point of dispute. To state it more generally, if I haggle with you in a trade (be it goods or labor) am I abusing you? Does the poverty of one party to a trade negotiation turn an otherwise fair trade into an abusive one? Obviously LFE answers both negatively.

 

[edwest2]

Oh brother.

who.int/topics/poverty/en/

gfmag.com/component/content/article/119-economic-data/12529-the-worlds-richest-and-poorest-countries.html#axzz2bopRLsjw

nytimes.com/2013/06/11/science/rich-states-poor-states-personal-income-disparity.html

Peace,
Ed

 

[SamH]

In effect, the state refused to educate the people enough so that they could rise out of poverty through education, at the same time that the state lured the people into stability through welfare.

Thus the “rich” had a stable pool of people from whom to hire when they needed help. The rich did not want the people to rise out of their need, nor did they want the poor to move away.

There are other examples of “abusing,” which I am assuming means taking advantage of. ETA: such as barriers to entry into business.

Who hires uneducated poor people? Isn’t it the lack of education that prevents millions from working? Hasn’t that been drilled into the American public’s head for decades? If poor uneducated people were the goal of rich people why do so few rich people move to Ethiopia?

I’m far from rich but uneducated people are the last thing we are looking for in an employee.

 

[manualman]

How do the rich abuse the poor in a true Laissez Faire system? Obvious!

1. Monopolies. History proves that in industries with significant cost barriers to entry, the players tend to collude and raise prices rather than compete freely. Regulation is necessary to mitigate this tendency (Sherman anti-trust act, for example).
2. Predatory lending. The poor tend to be unsophisticated in economics and are easily lured into VERY bad lending deals. Regulation is necessary to prevent this (more is needed in the USA, IMO).
3. Exploitation. The rich and powerful can functionally steal from the poor via lopsided transactions resulting from ignorance on the part of the poor. Manhattan island was famously bought from the Indians for a few beads and hatchets (IIRC). Classic example.
4. Addictions. Modern advertising is hardly the first wave of people enriching themselves by getting their target market addicted to a product. Tobacco, alcohol, drugs, you name it. Personally, I’m rather glad Phillip Morris can’t play TV commercials and rent Marlboro billboards anymore. Laissez Faire advocates must be horrified. The peddlers make millions and the taxpayer gets stuck treating the sick, broken and destroyed people resulting.
5. Government Swindles. I’m personally sick and tired of the way the rich get government handouts. Seems like most pro sports team owners (millionaires) have conned taxpayers into buying them new stadiums. Most new large factory announcements come along with tax breaks or free public infrastructure at taxpayer expense that a little guy entrepenuer just getting started would never get. These are DIRECT transfers of wealth from the taxpayers (many are poorer) to the rich. (And don’t start with “the poor don’t pay taxes” since we all know that only applies to federal income tax, not sales taxes, SSA, property tax, state income tax, etc).
6. Abrogation of indirect costs. Anybody who has ever visited an old mill town knows this story. Who wins and who loses when the coal mine owner skimps on safety equipment and uses marginal mining techniques? When the gold mine dumps millions of tons of toxic mine tailings outside the shaft during operations and when the gold runs out what do they do? Declare bankruptcy and walk away. The locals (poor) are stuck with the poisoned soil and water while the mine owner lives it up in Monte Carlo. Same goes for all the old factories now shutdown and abandoned waiting for the government (taxpayers) to clean up the toxic mess.

And I’m an amateur thinking about this for 15 minutes. You really think there aren’t 100 more not listed here???

 

[estesbob]

And pay for the yacht out of their wealth.

A Yacht built by people who are not poor because they help build yachts. A Yacht staffed by a crew who are not poor because they crew yachts, A yacht that uses fuels produced and delivered by people who are not poor because they produce and deliver fuel to yachts. A Yacht supplied by people who are not poor because they sale supplies to yachts. A yacht that berths at a marina staffed by people who are not poor because the provide berthage for yachts.

 

[Bubba_Switzler]

How do the rich abuse the poor in a true Laissez Faire system? Obvious!

1. Monopolies. History proves that in industries with significant cost barriers to entry, the players tend to collude and raise prices rather than compete freely. Regulation is necessary to mitigate this tendency (Sherman anti-trust act, for example).
2. Predatory lending. The poor tend to be unsophisticated in economics and are easily lured into VERY bad lending deals. Regulation is necessary to prevent this (more is needed in the USA, IMO).
3. Exploitation. The rich and powerful can functionally steal from the poor via lopsided transactions resulting from ignorance on the part of the poor. Manhattan island was famously bought from the Indians for a few beads and hatchets (IIRC). Classic example.
4. Addictions. Modern advertising is hardly the first wave of people enriching themselves by getting their target market addicted to a product. Tobacco, alcohol, drugs, you name it. Personally, I’m rather glad Phillip Morris can’t play TV commercials and rent Marlboro billboards anymore. Laissez Faire advocates must be horrified. The peddlers make millions and the taxpayer gets stuck treating the sick, broken and destroyed people resulting.
5. Government Swindles. I’m personally sick and tired of the way the rich get government handouts. Seems like most pro sports team owners (millionaires) have conned taxpayers into buying them new stadiums. Most new large factory announcements come along with tax breaks or free public infrastructure at taxpayer expense that a little guy entrepenuer just getting started would never get. These are DIRECT transfers of wealth from the taxpayers (many are poorer) to the rich. (And don’t start with “the poor don’t pay taxes” since we all know that only applies to federal income tax, not sales taxes, SSA, property tax, state income tax, etc).
6. Abrogation of indirect costs. Anybody who has ever visited an old mill town knows this story. Who wins and who loses when the coal mine owner skimps on safety equipment and uses marginal mining techniques? When the gold mine dumps millions of tons of toxic mine tailings outside the shaft during operations and when the gold runs out what do they do? Declare bankruptcy and walk away. The locals (poor) are stuck with the poisoned soil and water while the mine owner lives it up in Monte Carlo. Same goes for all the old factories now shutdown and abandoned waiting for the government (taxpayers) to clean up the toxic mess.

And I’m an amateur thinking about this for 15 minutes. You really think there aren’t 100 more not listed here???

Thanks for the laundry list of complaints against LFE. I suppose it’s just as well that we deal with these. You can start down the the additional 100 if you find these are not working out for you.

Firstly, let’s note the general pattern of much of this: A social problem is identified and the nearest rich person is identified as the culprit. It’s important to avoid the lazy path of blaming a class of people for a general problem. Nobody disputes that the world is full of problems nor that the rich are, by definition, the best resourced for solving problems. But that, in and of itself, does not define abuse.

So, let’s run down your list:

1. Monopolies. Historically corporations were charters granted by kings for a monopoly. And throughout history government has been the focal point of monopolistic grabs. It was not do-gooder distributists who first opposed such monopolies but free market advocates. Even where the goernment attempts to regulate competition it usually ends up protecting favored companies from “unfair” competition by unvafored companies.
2. Predatory lending, exploitation, addiciton. These are not examples of the rich abusing the poor but of the knowledable and disciplined taking advantage of the ignorant and undisciplined. The question is not, though, whether we want to help the ignorant and undisciplined but whether government regulation is a effective means for doing so. Sadly, the nanny state seems to have only encouraged ignorance and vice.
3. Government Swindles. This is not an indictment of LFE. Empowering government to regulate the economy invites exactly this abuse.
4. Abrogation of indirect costs. This is a complex subject. In some cases LFE is perfectly consistent with regulation. In other cases, as with government swindles, the government is the essential partner. It’s worth noting that when communism collapsed the ecological damages were revealed to the world. By contrast, the capitalist nations had much cleaner track records. In other words, more government, more polution.

More generally, it’s important to understand why LFE tends to have less abuse than heavily regulated economies: 1) there is more wealth to address problems, and 2) there is less concentration of power (in government) to invite abuse.

Although I mentioned in my second post why it is important to compare LFE to a real alternative, I suppose I should also have added that it’s equally important to compare outcomes to outcomes and not outcomes to intentions. The intent of much economic regulation is, nominally at least, benevolent. But in practice, big govenment becomes captive to powerful interests which leads to real abuses, some of which you have kindly cited for us.

 

[manualman]

Although I mentioned in my second post why it is important to compare LFE to a real alternative, I suppose I should also have added that it’s equally important to compare outcomes to outcomes and not outcomes to intentions.

In other words, you’re demanding that we cease innovations and stop trying to improve on past performance. No thanks. It’s an old canard to pretend that the only options for economics are unbridled capitalism versus Marxism. I’m not playing that game. The truth is that almost every economic system on earth has some elements of free markets and some government regulation. Attempts to use socialist and communist horrors to disprove the possibility for any positive effects of government regulation simply aren’t valid. It’s like claiming that since the Aztec religion was evil, ALL religion is evil. Bad logic.

You’re correct that we live in a world of fallen humans. Where the church has a valid say in economics comes precisely from her expertise on human nature. Secular economics, on the other hand, are vulnerable to poor understandings of human motivations and sinfulness. Because we understand human sinfulness, we must understand that economic systems must be built with as many safeguards as we can devise since the powerful are ALWAYS tempted to dominate the weak.

Laissez Faire innately argues that the rich (i.e. powerful) won’t unduly dominate the weak and no special checks are needed on them. I can’t fathom how any catholic could fall for that one! You’re correct that checks are needed on government power as well, but it’s for the SAME reason!

 

[Bubba_Switzler]

In other words, you’re demanding that we cease innovations and stop trying to improve on past performance. No thanks. It’s an old canard to pretend that the only options for economics are unbridled capitalism versus Marxism. I’m not playing that game. The truth is that almost every economic system on earth has some elements of free markets and some government regulation. Attempts to use socialist and communist horrors to disprove the possibility for any positive effects of government regulation simply aren’t valid. It’s like claiming that since the Aztec religion was evil, ALL religion is evil. Bad logic.

Sorry, but that’s just not a very serious response. You are erecting a strawman “game”. And, yes, socialist and communist horrors are entirely relevant.

You’re correct that we live in a world of fallen humans. Where the church has a valid say in economics comes precisely from her expertise on human nature. Secular economics, on the other hand, are vulnerable to poor understandings of human motivations and sinfulness. Because we understand human sinfulness, we must understand that economic systems must be built with as many safeguards as we can devise since the powerful are ALWAYS tempted to dominate the weak.

While it is certianly true that the Church as a strong understanding of human nature, it has no special knowledge of human nature. Secular does not equal a denial of sinfulness. (The problem is that the term “secular” has multiple meanings one of which is anti-religious. But the relevant meaning here is simply worldly and that certainly entails man’s sinful nature.)

Laissez Faire innately argues that the rich (i.e. powerful) won’t unduly dominate the weak and no special checks are needed on them. I can’t fathom how any catholic could fall for that one! You’re correct that checks are needed on government power as well, but it’s for the SAME reason!

Another strawman. What LFE argues is that empowering government to regulate the economy beyond the basics (violence, theft and fraud) is counter-productive and invites abuse beyond anything that would otherwise be possible.

 

[St_Francis]

Who hires uneducated poor people? Isn’t it the lack of education that prevents millions from working? Hasn’t that been drilled into the American public’s head for decades? If poor uneducated people were the goal of rich people why do so few rich people move to Ethiopia?

I’m far from rich but uneducated people are the last thing we are looking for in an employee.

As I said, this was back in the 70s and 80s. Agricultural work like setting plants and picking fruit don’t require lots of education. Many manufacturing jobs did not require lots of education.

Now many of these jobs have been outsourced: they are done in other countries. We say it’s because of the cheaper labor, but in the lower echelon jobs it’s also because the rules of welfare and the “cliffs” made it difficult for low-income people to work.

People would say those people should not be on welfare, maybe not, but when costs are rising and you want to care for your family, then your options are limited when “the rich” have conspired against you.

 

[St_Francis]

I’m going to assume, then, that nobody has an issue with my framing of the questions. Anyone is welcome to challenge my framing but I’m now going to move forward to the substantive debate.

Those are all good questions and quite appropriate to debating the subject of this thread. I would add that we also need to define “abuse”.

So, to summarize:

1. What is Laissez Faire Economics (LFE)?
2. Who are the rich and the poor?
3. When is one person or class of people abusing another?

I actually don’t think the second question is as important as you might think. While we are nominally concerned here with the abuse of the poor by the rich I should hope that nobody would be ok with the reverse or with the abuse of any person or group by another. We could say, then, that one should not abuse another and leave it at that.

In answer to the first, I think the Wikipedia description (that I linked to in the first post) is perfectly adequate as a starting point. But we can do better by incorporating the third question: The LFE view is that there is a relatively particular meaning to abuse, essentially violence, theft, and fraud. Government is doing quite well if it can prevent these abuses by one person or class of people against another. (Historially, not only have governments failed to prevent such abuse, they have often been the primary tools of such abuse.)

Yes, I think this brings us to the main point of dispute. To state it more generally, if I haggle with you in a trade (be it goods or labor) am I abusing you? Does the poverty of one party to a trade negotiation turn an otherwise fair trade into an abusive one? Obviously LFE answers both negatively.

Well, yes, people in positions of power can take advantage of the needs of others. Bargaining or haggling is fine if each is free to walk away if a deal can’t be reached. But when one person doesn’t have that freedom and the other takes advantage of it, then that would be abuse.

I would also like to suggest that there are variations of investment. An employee may have all his resources “invested;” the manager may or may not, and the money investors, in a big enough business, often have been advised not to put all their eggs in one basket, since they have so many eggs.

This is why my main economic philosophy is no corporations, no spread-out ownership. These contribute to a diffusion of respinsibility which is indeed inimical to those who are not wealthy, those with a lower level of resources, altho they may not actually be poor.

 

[Bubba_Switzler]

Well, yes, people in positions of power can take advantage of the needs of others. Bargaining or haggling is fine if each is free to walk away if a deal can’t be reached. But when one person doesn’t have that freedom and the other takes advantage of it, then that would be abuse.

I think you are being to loose when you claim that one side is not free to walk away from a bad deal and this leads to the conclusion that it is abuse. Slavery lterally means one side cannot walk away. Poverty is not slavery and even the poorest person can walk away from a bad deal. If, on the other hand, it is the best deal to be had then he is not walking away from it, it’s take the best deal he can get.

I would also like to suggest that there are variations of investment. An employee may have all his resources “invested;” the manager may or may not, and the money investors, in a big enough business, often have been advised not to put all their eggs in one basket, since they have so many eggs.

Yes, the contracts that people make can get very, very, very complicated. So complicated that even the Fed chairman can’t fathom them, never mind a mere president. What each person brings into a deal can be whatever they agree to, money, time, an idea, a gesture of support…

This is why my main economic philosophy is no corporations, no spread-out ownership. These contribute to a diffusion of respinsibility which is indeed inimical to those who are not wealthy, those with a lower level of resources, altho they may not actually be poor.

Responsibility is naturally diffuse. You think you are condemning corporations but you are condemning the human condition. Just think about all the people involved in enabling you to post to this forum. Who is responsible if suddenly you can’t get on? And, yet, for the most part, it works. And, more importantly, it works best if we don’t invite politicians to interfere.

 

[manualman]

Bubba, you sound like an Ayn Rand fan. True?

 

[St_Francis]

I think you are being to loose when you claim that one side is not free to walk away from a bad deal and this leads to the conclusion that it is abuse. Slavery lterally means one side cannot walk away. Poverty is not slavery and even the poorest person can walk away from a bad deal. If, on the other hand, it is the best deal to be had then he is not walking away from it, it’s take the best deal he can get.

When the option is walking away to continue without money or food or a place to live or taking a really bad deal, yes, one is technically free because the government is not forcing you to stay, but it’s not black and white the way you propose.

If I *want *a radio, then I am free to walk away. If I need to get medicine for aa sick child, not so much.

If my boss starts cutting my pay while expecting the same work and I can’t get another job because of the bad job market and I have a sick child at home and if I quit I won’t get unemployment and would have no health insurance for my child, sorry, that is abusive.

Yes, the contracts that people make can get very, very, very complicated. So complicated that even the Fed chairman can’t fathom them, never mind a mere president. What each person brings into a deal can be whatever they agree to, money, time, an idea, a gesture of support…

I’m not sure what point you are making here.

Responsibility is naturally diffuse. You think you are condemning corporations but you are condemning the human condition. Just think about all the people involved in enabling you to post to this forum. Who is responsible if suddenly you can’t get on? And, yet, for the most part, it works.

Here is where I disagree, but i am sure that you read the same news I do and have simply come to different conclusions.

And, more importantly, it works best if we don’t invite politicians to interfere.

I don’t see distributism as inviting politicians to interfere; I see it as maintaining a local control/responsibility/authority which is within reach of those affected.

 

[Least]

Bubba, you sound like an Ayn Rand fan. True?

While the Fountainhead should steer my opinion, it was separated in her writing by some time. I can’t tell if Rand had a good idea and petered-out in Atlas, or, if she went over center and started attempting to invent Communism for ‘wealthy’ people.

 

[Least]

I don’t see distributism as inviting politicians to interfere; I see it as maintaining a local control/responsibility/authority which is within reach of those affected.

“control” requires a large amount of buy-in, if you don’t get it you get there with compulsion, from there anything goes, and we are going to use my version.

 

[10gr8kids]

Ever hear those lottery winners complain about the taxes?

nj.com/news/index.ssf/2011/06/rockaway_woman_suing_state_ove.html

I agree taxes are too high, but I don’t know how much the poor benefit from them. Here is an article and graph that shows where our taxes go.

cbpp.org/cms/?fa=view&id=1258

High taxes hurt the poor too. We are certainly not rich, and maybe not dirt poor, but I’d say we are closer to poor than rich. We owned chicken houses until about ten years ago, and they made money for the poultry company, bank, gas company, and gave work to various other people, but we were doing good to make enough money to keep paying the loan. We were very blessed and we sold them with just enough money to pay them off, then we had to borrow $30,000 to pay taxes on them. Which seemed pretty good because the first accountant we talked to told us it would be $60,000.

 

[Bubba_Switzler]

When the option is walking away to continue without money or food or a place to live or taking a really bad deal, yes, one is technically free because the government is not forcing you to stay, but it’s not black and white the way you propose.

Not just “technically” free and not just free of government. Under LFE, free of violence, theft, and fraud from anyone. If you think this hypothetical poor person should have better choices, give them to him. You can offer him charity, you can offer him a job. But when government stands between the poor and a potential employer (for example) they are not doing the poor a service.

If I *want *a radio, then I am free to walk away. If I need to get medicine for aa sick child, not so much.

The dire necessity does not render the choice merely “technical”. The free market does an amazingly good job of providing us not only with luxuries but life’s essentials.

If my boss starts cutting my pay while expecting the same work and I can’t get another job because of the bad job market and I have a sick child at home and if I quit I won’t get unemployment and would have no health insurance for my child, sorry, that is abusive.

Life is hard sometimes. It doesn’t follow that government can fix it by forbiding employment at low wages.

I’m not sure what point you are making here.

Here is where I disagree, but i am sure that you read the same news I do and have simply come to different conclusions.

You brought up the complexity of various human arrangements and the resulting difusion of responsibility. I am attempting to explain that life is complex by its very nature and our human relationships simply match that complexity. Inert matter is realtivly simple as compared to a living organism. An ameba is simple compared to a mouse. A mouse to a human. Human relationships have grown in complexity over the eons. Etc.

Government mandating simplicty is a recipe for a disaster.

I don’t see distributism as inviting politicians to interfere; I see it as maintaining a local control/responsibility/authority which is within reach of those affected.

That’s just a shallow euphemism. People have control over their own choices and that has a tremendous impact on their wellbeing. But we also depend on one another in ways that we simply cannot fathom and that is a good thing.