[rayiner]

Even leaving aside rich using their status to solidify their position, consider this: are the policies that maximize GDP and lead to high wealth inequality the same policies that maximize the prosperity of the middle 50% of the population? No economic rule I know of guarantees that to be the case.

Wealth isn't created in a vacuum. Wealth can only be created in places with a high level of social order. That social order isn't created by exceptional individuals, it's created by the behavior and attitudes of ordinary people. Given that, why should societies not structure themselves to maximize the prosperity of the majority?

[dctoedt]

> Wealth isn't created in a vacuum. Wealth can only be created in places with a high level of social order. That social order isn't created by exceptional individuals, it's created by the behavior and attitudes of ordinary people. Given that, why should societies not structure themselves to maximize the prosperity of the majority?

This is a brilliantly-succinct summary of something that conservative politicians should shout from the house tops. It's reminiscent of Elizabeth Warren's famous remarks on fairness during the 2012 campaign. [1] Rayiner, I continue to be bowled over by your socio-political acumen.

[1] https://www.youtube.com/watch?v=htX2usfqMEs

[harryh]

> No economic rule I know of guarantees that to be the case.

Certainly there is no economic rule, however, I think that most people generally believe that for most of human history it has been the case that at least in the medium-to-long-term, top line growth does accrue pretty cleanly to the middle 50%.

There are certainly some people that are starting to wonder if this is no longer the case but personally I'm always pretty skeptical of "this time it's different!" arguments so am unconvinced by the evidence to date. Who knows what the future will hold though!

[rayiner]

I agree that top-line growth accrues to the middle 50%, but I think the proper question is: what policies maximize the prosperity of the middle 50% (as opposed to maximizing the top-line number)? That said, I expect the answer to that question is more or less what the developed democracies are already doing.

[harryh]

If the top line number continues to accrue to the middle 50% then maximizing the top-line number and maximizing the prosperity of the middle 50% are the same problem (at least in the long term). That's really my point.

[AnimalMuppet]

> If the top line number continues to accrue to the middle 50%...

If. But whether that "if" is true was, I think, rayiner's question.

[beat]

The problem is, the policies that maximize transfer of wealth upwards can overwhelm growth policies. That's the situation of the American economy. As it becomes less about wealth generation and more about rent, the already-wealthy benefit disproportionately from control of resources.

[paulpauper]

I've heard of this argument. 'Why do the rich need so much money? Why not just create a 'wealth cap'? The problem is, capitalism is about incentives. When you create a negative incentives, it creates externalities, possibly in the form of companies moving overseas, job loss, and economic stagnation. Second, is it fair for someone or some entity to confiscate what is not theirs, beyond taxes? Third, capitalism is expensive. Venture capital is funded by wealthy, an example being the Space-x and Blue Origin rocket programs, both very costly and funded by billionaires Musk and Jeff Bezos. If taxes were much higher, such programs may not exist.

Most venture capital is private:

http://si.wsj.net/public/resources/images/MK-CQ161_KEYWOR_16...

http://www.wsj.com/articles/humanitys-last-great-hope-ventur...

High corporate tax rates create an economic incentive for companies to move factories and offices overseas through 'inversions' to get a lower tax rate:

http://www.economist.com/blogs/economist-explains/2015/08/ec...

Relative to most developed countries, America has a very high corporate tax rate:

It’s a rock-solid fact that the U.S. corporate statutory tax rate is the highest among developed nations and is significantly higher than the average. According to 2014 data from the OECD, the combined federal and state statutory corporate tax rate for the United States is 39.1 percent. The average of the other 33 members of the OECD is 24.8 percent — 14.3 percentage points lower than the U.S. rate. Weighted by country GDP, the average for these 33 countries is 28.3 percent — 10.8 percentage points lower than the U.S. rate.

[totalrobe]

Venture capital is important, but don't forget that the recent private space ventures have piggybacked on 50 years of government funded technologies...same as pretty much the entire modern IT industry that developed out of military and publicly funded research.