Quote:
Originally Posted by bizaro86
The gap between the rich and the poor widens because of over regulation of the real economy. Regulation falls hardest on the weakest in society, who have the least means to avoid it. Thus, they are weakened even further, and the gap grows. I'll provide two general examples and one personal anecdote.
1) The tax code. It gets more and more complicated every year, and corporations and the rich require a huge staff of tax accountants/lawyers to minimize their bills. Those people are high income white collar types on the top of the gap. But the increased tax burden means marginal economic activity (the plant that was only making a bit of money before) gets shut down, and the front line workers have to find other work. They move down the income ladder, and the gap widens.
2) Regulations like dairy supply management raise prices of basic goods for everyone (compare our dairy prices to other places - we're higher), a burden which affects an underemployed single mom much more than a wealthy person. The benefits from this are concentrated into a few farmers, all of whom now have hundreds of thousands of dollars of government created assets (quota). A small politically connected group benefits at the expense of everyone, especially the poor. Seem fair to you?
3) Government monopolies and regulation make business less competitive. I ran a small mail order business, but Canada Post shipping wasn't even close to cost competitive with the prices my US competition could get. It cost less for them to mail my product from Florida to Calgary than it did for me to mail it from Calgary to Calgary. The enforced lack of postal competition cost me that business. I'm fine, I focused on my career instead, and am no worse off. The decent job for an unskilled person doing packing and shipping is gone now though. The regulation didn't hurt the higher income person, it hurt the low income person. And the benefits of the regulation flowed to a small politically connected group (postal workers) at the expense of everyone else, especially the poor.
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1) We'd all agree the USA tax code is an incomprehensible mess and became that way through time as entitlements kept being added.
From Wall St. titans to the lowest of taxpayers, most would agree it needs to be simplified . . . . . or at least, they all agree right up to and until reform takes away something that currently benefits them. Then the debate gets tougher.
About 47% of Americans pay no taxes while roughly 20% of taxpayers pony up about 80% of all receivables.
2) Dairy issues may be completely different than other industries. You can't make a blanket statement to say all regulatory oversight is bad and raises prices.
A lack of regulatory oversight in easily-manipulated, leverage-creating, poorly understood derivatives as well as in the mortgage business created a substantial part of the financial collapse of 2008. And is sitting out there waiting to happen again.
In addition, allowing normally staid, long-lived and predictable banking businesses to be integrated and then taken down by leverage-loving investment bankers was, in hindsight, a regulatory mistake as much as a human mistake.
Looked good on paper though!!!
3) Enhanced regulations in the Canadian financial sector limited growth relative to global peers in the 2000's but also ensured the sector didn't become as unhealthy as the rest of the world, saving Canadians a large part of the strife you see in the USA right now.
Again, every industry is different and requires differing levels of oversight but it is a raw mistake, backed by ample amounts of history, to assume ALL business will police themselves for the betterment of society.
That assumption is contrary to everything you should know about human nature and the profit motive.
As Reagan once said, "Trust but verify."
Cowperson