2012 November 12 Monday
Obamacare Will Raise Immigrant Quality
Papa Johns pizza chain CEO John Schnatter is unhappy with how much Obamacare will cost his company. But there are two big silver linings.
He estimates that Obamacare will end up costing his company $5-8 million annually.
The issue: the Affordable Care Act dictates that full-time employees (30 hours or more per week) at companies with more than 50 workers need to be provided health insurance. Schnatter has further claimed that some employers will cut employee hours to avoid providing them with healthcare.
My contrarian take (that has only just now occurred to me): Obamacare will accelerate the automation of low skilled jobs. This could deliver a big net benefit, especially on immigration.
Obamacare amounts to a government-mandated increase in wages for lower paid workers. Doesn't hit highly paid workers who get medical benefits already. It is like a minimum wage increase but hits a lot more workers and employees. It most increases the cost of employing minimum wage workers because employers can't forgo wage increases to pay for the medical benefits.
By driving up wages Obamacare provides a big incentive for the Papa Johns, the Dominoes, and McDonalds operators to install customer-operated ordering panels and automated machines for making pizzas and burgers. This will of course drive up unemployment of the least skilled. But that's a feature. It will keep out less skilled immigrants and raise the average skill level of immigrants. How cool is that?
The second silver lining: since more people will get medical insurance from their employer fewer will demand Medicaid treatment. That's cool too.
Higher manual labor costs will also accelerate the development of technologies that will raise productivity in the medium and long term. So there's a third added benefit to Obamacare.
My biggest complaint about Obamacare: It doesn't raise labor costs enough. We need to tack another $5 per hour onto minimum wage jobs. We need a higher minimum wage. This should be an urgent priority for the Republican Party. With both parties supporting this improvement to the American labor pool it could pass into law quickly.
Republicans need to drop their opposition to minimum wage increases and mandated benefits for low skilled workers. These are the sorts of policies that can shift America's demographic path onto a more favorable direction.
By Randall Parker at 2012 November 12 08:06 PM
1) A shitty economy means fewer jobs (mostly filled by immigrants)
2) A higher minimum wage means fewer jobs (especially of the kind filled by immigrants).
Higher taxes, like the kind Obama is now asking for, will cause Northeastern whites to realize that voting for Obama has real consequences. By opposing the tax increases the GOP is all at once a) burnishing its reputation as the party of the rich; and b) protecting Obama from a voter backlash.
I don't think the consequence of Obamacare is that lots more people get medical coverage from their jobs. The real consequence is that more workers will find themselves working two jobs (if they can get them) as employers cut hours to avoid having to provide coverage. This will be hell on peoples' schedules, and hell on parents and would-be parents.
"Doesn't hit highly paid workers who get medical benefits already."
Actually, it hits them quite hard. Obamacare mandates all sorts of new benefits so even company health plans will see premiums increase substantially. Also, much of it is being paid for by middle class earners. For instance let's say you make $80k/year. You don't qualify for subsidies on the exchange. However, excise taxes amounting to several % got added to your health plan to help fund the subsidies for low income people on the exchange.
Anyway, a big problem with all this is that illegals work under the table anyway. Who cares what benefits you give them on the books if its all off the books.
Based on the described outcome of low skilled workers becoming unemployed as a result of a coming wave of automation would it also follow that the large population of low skilled unemployed workers may turn to crime as a means to subsidizing thei income?
Raising the minimum wage would just increase the size of the underground economy - as will Obamacare. asdf is right; this will just *increase* the incentive to employ illegals. Interesting thing is that in my neck of the woods, the Amish already do this kind of stuff, and no one cares. The lesson there is that it's the externalities that piss people off. If you don't gobble up Medicaid benefits and other social services, and you don't commit crimes, no one will give you shit about the fact that you're not paying social security or that your sawmill fails OSHA regs or that you're not paying minimum wage.
I suspect this is also why the hispanic presence in Pennsylvania is so small. People would rather hire Amish. Probably a little more expensive but you don't have to keep an eye on all your tools and equipment.
That's an interesting attitude Randall. I was actually wondering myself a few days ago why pizzas from chains aren't automated in production. Just thinking about it, it seems like it'd be a fairly straightforward process, although a human staff would still be necessary to oversee and to do deliveries. So I don't know if chains would save that much. I think the other posters are correct in pointing out that this incentivizes hiring illegal immigrants, though. Penalties for hiring illegal immigrants should be punitively high.
How might employers (who are in business to make money and maximize profits) be expected to deal with Obamacare?
1. One possibility, as you state, would be to increase automation. This might be a good thing overall but would certainly cost a lot of low-wage employees their jobs.
2. Reduce hours to below 30/week. This is already occurring in the food service and other industries.
3. Move jobs overseas (not possible for many service jobs, but could happen elsewhere).
4. Hire more illegal immigrants and pay them off the books.
Overall, I don't think the automation effect would win out. The perverse incentive to hire illegal workers and pay them off the books might prove stronger. The automation argument would be much more plausible if we deported the illegals and strictly enforced the laws against hiring them.
The unemployment rate for American youths in July was 17.1% For blacks, it was 28.6%. Any minimum wage increase, direct or indirect, will substantially increase these numbers. And what are we supposed to do with these folks? After all, they're American citizens. Shall we let them live on the dole forever because there's no work for them? Or allow them to turn to crime to support themselves and mostly end up in prison or the morgue? The best thing we could to to assist Americans at the lower end of the wage scale would be to strictly enforce the immigration laws.
One of the many ironies of the recent election has been the overwhelming support of black Americans for Barack Obama. I understand that it's an ethnic solidarity thing, but Obama's policies have had a devastating effect on the economic situation of blacks. If he were a white conservative Republican, we would be reading pious editorials in the New York Times about the Administration's racial insensitivity or outright racism. But because he's black, he gets a pass. Now he wants to cook up some sort of amnesty for illegal immigrants, which will hammer black Americans even harder.
These employers need to either raise prices or go out of business. Raising prices will reduce the demand for their products, but it more truly reflects the costs of their doing business on society.
If they can't do business at the new prices then they were not viable to begin with.
These bottom feeders are the magnets that attract the illegal aliens. They pay them crap and then expect society to bear the social cost of crime, educating their kids and providing them heath care at the emergency room.
Who will shed a tear if these pizza places and fast food restaurants go under? I for one will surely not. They are a blight on society in so many ways including making people obese
"Who will shed a tear if these pizza places and fast food restaurants go under? I for one will surely not."
In my experience pizza shops and sandwich shops, except in resort towns, mostly seem to hire citizens or legal immigrants - people who can speak English. Burger joints and Mexican restaurants (from Taco Bell on up) employ more illegals, along with sit-down restaurants (in the kitchens). The problem with relying on more automation is that it accelerates the process of *every* unskilled worker becoming unemployable, rather than just the illegal ones.
Vis-a-vis illegal immigration/mass immigration, I do see some possible benefits with Obamacare, though:
1) Employers don't like working around school kids' and college kids' schedules. Their increased demand for part-timers will make them more amenable to that.
2) Workers under 26 will be covered by their parents' insurance, so they won't need health coverage and will be cheaper than older illegals or illegals without parents in the country.
3) Reduced job creation in low-skilled work, slowing the draw for illegal immigrants but also hurting job prospects for citizens.
Back during the steroid Bush Boom, you heard a lot about how employers needed immigrants because they were creating more jobs than there were citizens to take them. Rather than an argument for looser immigration laws, I always saw that as a solid argument for higher minimum wages and mandated benefits.
Randall - the mandate to provide health insurance for those working more than 30 hours is more akin to the overtime laws than it is to minimum wage. The ObamaCare requirement and the overtime rules both impose a "tax" on the employer when an employee works more than a certain number of hours per week. As is the usual case when the government imposes a "tax", the party that ultimately bears the brunt of the "tax" is not the one intended by the government.
"In my experience pizza shops and sandwich shops, except in resort towns, mostly seem to hire citizens or legal immigrants"
The main point is that more low wage bottom feeder employers will have to start paying for at least some of the services they employees use, which is a good thing. These jobs are a huge pull for both illegal and legal immigrants who then go on to consume huge amounts of public resources - far beyond the negligible economic value they bring to the table.
Their employers are freeloaders trying to externalize costs onto society while internalizing profits.
daveg - I hope you realize he irony of complaining that these employers are "freeloaders" who want others to pay some of their costs while they enjoy the benefits. The whole purpose of ObamaCare (other than to serve as a vehicle for liberals to buy the votes of the freeloading moocher class) is to enable the so called "poor" to freeload off of the productive class and the poor, "taker" class of citizens supported in because they want others (the maker class) to pay for the health care that the "takers" will enjoy. In your terms, the "takers" want to externalize the costs of their health care onto society while internalizing the profits (of heaving health care).
So, please tell us, why do you label the employers as freeloaders for wanting to keep what is theirs when you don't apply the same label to the employees for wanting to take something that isn't theirs?
"One of the many ironies of the recent election has been the overwhelming support of black Americans for Barack Obama. I understand that it's an ethnic solidarity thing, but Obama's policies have had a devastating effect on the economic situation of blacks. If he were a white conservative Republican, we would be reading pious editorials in the New York Times about the Administration's racial insensitivity or outright racism. But because he's black, he gets a pass. Now he wants to cook up some sort of amnesty for illegal immigrants, which will hammer black Americans even harder."
Remember, we are talking about blacks here.
"Remember, we are talking about blacks here."
Blacks don't vote - Magic Negroes do.
That's the context in which the press interprets their political views. Note the differnece between the way the press treats the uneducated, unenlightened, ignorant, selfish, lazy, violent, bigoted white voter who happens to be Republican versus the way they treat a black Democrat who is otherwise exactly the same. Holly Solomon's getting lots of attention. Were she a black Obama voter, OTOH...
"So, please tell us, why do you label the employers as freeloaders for wanting to keep what is theirs"
Because their employees inflict huge costs on society and they don't want to pay for those costs. The 'jobs' they create are nothing more than arbitrage plays whereby they inflict costs on society and then they skim of some money from these people by selling underpriced and bad tasting pizza.
If they were forced to pay for the social costs of their employees they would never be profitable as they don't create enough economic activity to justify their existence. These employees pay essentially no taxes at their pay scale yet they consume huge resources. Medical is just the start - the employers should be forced to pay for education of the offspring as well as for police and jails.
If they were forced to pay these cost it would quickly become clear that they are not economically productive entities. Economic productivity would probably only start at incomes of something like 30-40K/year, which people start to pay at least some taxes back into the system.
These jobs are magnets for immigrants and in fact most new jobs go to immigrants.
According to this Forbes article (http://www.forbes.com/sites/calebmelby/2012/11/12/breaking-down-centi-millionaire-papa-john-schnatters-obamacare-math/), the cost associated with implementing Obamacare would amount to an increase of about 3-5 cents per pizza pie. I'm sure you will agree that it is a catastrophic price increase. Or do you guys just want these jobs eliminated so there is no more pizza delivery?
"the cost associated with implementing Obamacare would amount to an increase of about 3-5 cents per pizza pie"
According to Wikipedia, Papa Johns has about 16,000 employees and lost ~$50 million in 2010. In the last 4 quarters their net profit was just over $60 million. If you assume half their employees don't yet have coverage, providing them all with coverage would cost ~$20-40 million per year from revenues of about $1.3 billion, or a 2-3% increase per pizza - a lot more than 3-5 cents..
It seems stupid that Obamacare has created a very high marginal cost for employing someone more than 30 hours per week. That 30th hour of work can cost an employer several thousand dollars. Instead there should simply be a payroll tax of $1-2 an hour (in addition to minimum wage) that goes into a health savings account for the employee, or towards the cost of their coverage.
"Because their employees inflict huge costs on society and they don't want to pay for those costs. The 'jobs' they create are nothing more than arbitrage plays whereby they inflict costs on society and then they skim of some money from these people by selling underpriced and bad tasting pizza."
Presumably you're referring only to the immigrant employees, as the American employees would be here and creating a burden on society #esp. if they were unemployed# whether Papa John's existed or not. I agree that it isn't the taxpayer's responsibility to validate someone's business plan by providing them with cheap labor (via immigration), but costs incurred by *American citizens* aren't the responsibility of the employer.
Liberalism will be the cure for reduicng mass immigration, but that was always understood. Milton Friedman understood it when he said that 'it's just obvious you can't have unlimited immigration and a welfare state.' Thanks to our current budget predicament we're going to end up with both less welfare and slower economic growth. The further goal should be to ensure that we act in every way to create policies that nudge employers to hiring citizens.
"The second silver lining: since more people will get medical insurance from their employer fewer will demand Medicaid treatment. That's cool too."
Maybe there could be a problem here. That more and more employers are going to hire on a "temporary" basis. Perhaps renewing contracts every few months, in order not to pay medical insurance. Is that possible? Don't know. With all the unemployment and therefore need for work going on, employers usually take advantage of that. That could start making millions of low-paid, no-benefit workers really uncomfortable. Just a guess.
My guess is, high-skilled workers and grads are going to have to take all sorts of menial jobs and have a more servile attitude. The economic system will soon begin to work only for the very few.
Republicans need to drop their opposition to minimum wage increases and mandated benefits for low skilled workers.
The Republican party's position isn't what's good for the party or its members, it's what's good for the Chamber of Commerce.
Automating all the unskilled labor jobs out of existence is a small price to pay to stop the influx of low skilled workers.
Crime: We can automate prisons. Plus, we can provide make-work jobs to US citizens.
Under-the-table: Most employers do not want to pay less than minimum wage because the laws against that are enforced more strongly than the laws against employing illegal aliens.
Yes, good point: more demand for part time workers will help teens vis a vis illegal aliens.
As for whether to tax employers who hire low wage employees in order to pay for medical care: Surely there are better ways to achieve the goal I'm advocating than Obamacare. But Obamacare really is a step in the direction of cutting the demand for low wage employees. Could we take bigger steps in that direction? Sure.
We could also come up with more policies that will tilt the playing field in favor of natives. A higher minimum wage will do that. What else will?
Less welfare as a result of immigration: Well, less welfare per recipient. But with so many more recipients we are going to pay more to keep it going. Liberals who just want to soak us with taxes win.
People who employ illegal aliens really are freeloaders. They are bringing in people who can't afford their own medical care and who do not pay enough in taxes to fund the schools their kids attend either.
Randall, check the original post that I replied to. It referenced both illegal and illegal immigrants, but clearly indicated that his point was that employers of any and all low paid employees as being freeloaders, i.e. the fact that some of these employees are illegal was a side issue. If you read his followup post, you'll find that he reinforces this idea and never mentions "illegal".
The distinction is an important one and highlights the ideology of those with a Marxist inclination. The illegal immigration "problem" that in many people's minds consists of non-contributing aliens taking more from the system than they contribute can be solved by eliminating the government goodies - but the welfare/entitlement programs should be eliminated for legal immigrants and US citizens as well as they serve as an disincentive for people to work. If we desire to have a safety net in place, it should be a safety net where recipients are prevented from starvation or death, but are still uncomfortable enough that they don't want to maintain their status quo. It should not be a safety hammock where non-working folks enjoy the same quality of life as those who are working. The real illegal immigration problem should be our concern for national security, i.e. bad guys crossing our borders. From an ideological standpoint, one could also argue that too many immigrants too fast makes it difficult to assimilate into our culture, but my main concern (particularly with hispanic immigrants) is that their native culture is one characterized by nanny state, big government policies and they bring with them this concept of government being responsible for taking care of people (with the consequence of a loss of freedom) rather than personal responsibility.
The post I responded to labeled employers of low wage employees as freeloaders because they didn't buy insurance for their employees and hence they are freeloaders because somehow it then becomes the responsibility of others in society's to provide that insurance (or healthcare). But this premise is WRONG. It should be the individual's responsibility to pay (either directly or thru insurance) for his healthcare - or for any other goods or services he chooses to have. Rather than the courts letting those off the hook who obtain healthcare and then expect the rest of us to foot the bill, people should be held responsible for the services they use even if they must be forced to do so by our justice system.
Now, even if you want to argue that it's unrealistic for such enforcement of responsibility and that "society" must take care of these people, why is it that the private citizens who happen to own the types of businesses that use low skill employees should be deemed freeloaders because they don't want to pay these low skill workers more than they are worth? After all, an employees wages consist not only of the cash they take home, but also the cost of the healthcare insurance. So, when an employer at a high skill business buys insurance for his employees, it is only because he is paying them less than he would pay them if he didn't buy the insurance. Unfortunately, due to minimum wage laws, the employer of low skilled workers cannot do this, i.e. his workers are NOT worth minimum wage plus insurance and he cannot reduce their cash wages by the cost of health insurance.
If the "low skill" employer doesn't buy insurance, he gets castigated by those who don't look beyond the obvious for freeloading on the rest of society because he passes on this cost to others. But if he does pay for this insurance, he must raise the cost of his goods and services, in which case he is still passing along this cost to the rest of us. Either way, the rest of us are still helping to raise the effective pay of the low skilled worker to a level above what he produces. The real error occurs when we are fooled into thinking that we "owe" the low skilled worker - or anyone - healthcare (or any other good or service). If you want to be charitable and help him, that's one thing, but when we convey the idea that these things are "owed" to people and that they are therefore "entitled" to them whether or not they pay for them, we end up with a society full of people who abdicate their responsibilities and demand even more free goodies form the government.
"It should not be a safety hammock where non-working folks enjoy the same quality of life as those who are working."
We are reaching, especially if we cut off immigration, a state of economic plenty in which we can provide a basic living standard to everyone. Food, shelter, medical care. Then if people want to work and better themselves beyond that (fancier food, nicer living space, exotic medical procedures) they can do so. However, there is no need to take away their citizen's dividend if they start to succeed and create weird ass incentive structures.
"It should be the individual's responsibility to pay (either directly or thru insurance) for his healthcare"
What if you are born too sick to pay for your healthcare and no company wants to write your policy unless they are compelled to by law? This is a death sentence.
"But if he does pay for this insurance, he must raise the cost of his goods and services, in which case he is still passing along this cost to the rest of us."
However, this is honest. Then we all know the real cost of goods and services and can change our purchasing habits accordingly. If that means a few less fast food joints its not the end of the world. Supply and demand will adjust.
"we end up with a society full of people who abdicate their responsibilities and demand even more free goodies form the government."
The one we've got is one where 50% of the wealth is owned by 1% of the population, and most of them either inherited it or where FIRE sector corporate psychopaths. That's "free goodies" they didn't work for. Common man, grow up. Slightly above average earning people in that $60k-$250k threshold are the ones getting most screwed by the system, and it ain't because your waiter might get health insurance.
"It should be the individual's responsibility to pay (either directly or thru insurance) for his healthcare"
But it is not. If you go to an emergency room you will receive care whether you can pay for it or not. If you do not have medial insurance We all end up paying for it.
And until you change that (an absolutely no one is advocating changing that, Republican or Democrat), there is a social cost to employment of immigrants of any type. That social cost should be reflected in the cost of the employee. This is also true for education, law enforcement and general public services such as parks and roads.
When "we" guarantee a certain living standard for everyone, there are consequences. The first consequence that we remove an incentive to work. Sure, many people will still work in order to achieve even more, but an increasing number of people will wonder, "Why bother?" and cease being productive members of society. This places an increasing burden on the remaining workers. In other words, the act of "not working" takes from the workers and rewards the non-workers, i.e. those who succeed and produce more ARE punished - despite your belief to the contrary. The other conundrum we face is that if "everyone" is guaranteed "food, shelter and medical care" - like the did in the USSR - but everyone decides to stop working and let the government provide these things, there will be nobody to produce these goods and services. Despite your misinformed contention, we are moving away from a state of economic plenty. When the government attempts to equalize outcomes, as the Obama administration has, we do become more equal, but we do so at the expense of everyone becoming less rich.
In regards to those born unable to produce for themselves, we as a society in the US have always been charitable enough to recognize the difference between those who CAN'T work and those who DON'T WANT to work. This is best handled at a local level where community members can "police" the situation and see that such aid is going to the right people. When the federal government gets involved, the overseers are far removed and the funds are seen not as local resources to be protected, but as manna from heaven. When I talk about personal responsibility, I refer to people ABLE to assume responsibility for themselves. They comprise the vast majority of our population and consist of two subsets - those willing to work and those unwilling to work. Those who are ABLE to work, but UNWILLING to work should not be supported by the rest of us. Those who are able and willing to work should not be given incentives to drift into the "able, but unwilling" category.
When you (via the federal govt) force the employer to add to his costs by buying insurance and hence cause him to raise his prices, you infringe on my choices. I may like fast food or I may be in a busy household with two wage earners where it makes economic sense to work a few more hours and eat some fast food rather than taking the time to cook. Why should someone else's desire for health insurance mean that I have to pay for it and therefore have to do without something I want or work more hours myself?
Your contention that most rich people inherited their wealth is absolutely FALSE. Furthermore, you (purposely) choose to omit the many rich folks who started their own business in non-FIRE sectors. These folks have greatly enhanced our standards of living, but their contributions don't jibe with your "hate the rich" agenda so you dishonestly ignore them. Your contention that because someone makes a living in finance, insurance or real estate they are a psychopath, says a great deal about your bias and your level of maturity. I'll give you the benefit of the doubt and assume you mean they don't deserve their income. But the vast majority of them do work for and deserve their income. People who voluntarily purchase their services want their knowledge and expertise less than they want whatever it is that they are giving them in return. Your outrage should not lie with the vast majority of these individuals who are providing valuable services, but with the corporate cronies and their counterparts in the federal government.
"The first consequence that we remove an incentive to work."
You remove the incentive to work out of fear. However, you don't remove the incentive to work. In fact you often increase the incentive to work on things that really are productive and satisfying because you are no longer working out of fear but out of hope.
"but an increasing number of people will wonder, "Why bother?" and cease being productive members of society."
For the most part these people just aren't going to be very productive whether they want to or not. Machines are more productive then they are.
"This places an increasing burden on the remaining workers."
In a post industrial economy where nearly all the basics are in abundance and produced cheaply, its really not.
"those who succeed and produce more ARE punished"
Production and success are only loosely correlated. The highest compensated people I ever met were finance psychopaths, and they produced nothing. Your average manual laborer is more of a net positive producer for society then them.
"but everyone decides to stop working and let the government provide these things, there will be nobody to produce these goods and services."
Except that doesn't happen. When you give everyone a basic standard of living most of the people with high productive capacity still try to improve their lives. People on the right side of the bell curve don't want to live in the projects, even if they are provided for free.
"In regards to those born unable to produce for themselves, we as a society in the US have always been charitable enough to recognize the difference between those who CAN'T work and those who DON'T WANT to work. This is best handled at a local level where community members can "police" the situation and see that such aid is going to the right people. When the federal government gets involved, the overseers are far removed and the funds are seen not as local resources to be protected, but as manna from heaven. When I talk about personal responsibility, I refer to people ABLE to assume responsibility for themselves. They comprise the vast majority of our population and consist of two subsets - those willing to work and those unwilling to work. Those who are ABLE to work, but UNWILLING to work should not be supported by the rest of us. Those who are able and willing to work should not be given incentives to drift into the "able, but unwilling" category."
This is fair enough, but you assumption that privately driven charity will fill in all the time is false. I myself and lots of people I know didn't get private charity. Often it isn't there, especially if you have a really bad and expensive health problem.
"When you (via the federal govt) force the employer to add to his costs by buying insurance and hence cause him to raise his prices, you infringe on my choices."
I guess the taxes that go to pay for the police that protect you infringe on your freedom too. Freedom = externalities for free apparently.
"Your contention that most rich people inherited their wealth is absolutely FALSE."
Based on what statistic? You really oughta look up where wealth comes from buddy.
"choose to omit the many rich folks who started their own business in non-FIRE sectors."
They are a minority. This is a mathematical fact.
"Your contention that because someone makes a living in finance, insurance or real estate they are a psychopath, says a great deal about your bias and your level of maturity."
Or that I've worked in these sectors at a high level and know what I'm talking about.
"People who voluntarily purchase their services want their knowledge and expertise less than they want whatever it is that they are giving them in return."
Muppets do like getting fleeced.
"You really oughta look up where wealth comes from buddy."
Based on your fairy tale idea that, "We are reaching, especially if we cut off immigration, a state of economic plenty in which we can provide a basic living standard to everyone. Food, shelter, medical care. Then if people want to work and better themselves beyond that (fancier food, nicer living space, exotic medical procedures) they can do so," it would appear that YOU are the one who needs to find out where wealth comes from. Your premise implies that the human default condition is something other than poverty, that we are all born with some "right" to food, shelter and health care. But how can anyone be guaranteed these things - that are necessarily produced by someone else's efforts - unless we take away the freedom of the producers of these things to stop producing them or to charge for them what they feel is a reasonable price? You're living in the liberal's fairy tale land that assumes Obama phones" and "Obama money" grows on tress rather than the reality that dictates that the government can only give to Peter what it robs from Paul.
Which one of these moocher's is you?
We do not live in either a liberal fairy tale or a libertarian fairy tale. Our policy options, however, are constrained by a combination of which fairy tales are most popular among the public and also what the public sees as in their best interests - whether or not their best interests are fair to everyone else. Some degree of parasitism is unavoidable.
We can expect unfairness by voters and governments. Our choices have to be between unfair policies that violate our rights to varying extents. I'm taking the view that we should opt for unfair policies that minimize the amount of parasitism, folly, and dysfunction in the long term.
I'm actually curious to know what percentage of the wealth of the top 100 wealthiest was inherited. The Waltons obviously inherited. But Bill Gates and Warren Buffett made their own money. So you got a source for the percentages inherited versus made in their own lives?
For people who earn: There's a separate angle there as to whether they did it in clearly productive pursuits versus pursuits that have a higher degree of parasitism. The whole mutual fund and money management industry has a huge rate of parasitism that boggles the mind. Daniel Kahnemann has a great section in his Thinking: Fast and Slow about the predictive abilities of supposed experts including information about stock pickers. I'm already aware of the basic facts about the randomness of mutual fund performance. But he puts this information in the framework of research on how bad experts do at making predictions. I've started reading Richard Tetlock as a result.
According to Forbes Magazine, seventy percent of the Forbes 400 members (the 400 richest people in America) are classified as self-made. Of course, as Forbes notes some of those who are classified as having inherited their wealth, inherited from a spouse such as Steve Jobs widow. I would NOT classify this as "inherited" wealth. So, it appears that asdf got his facts about inherited wealth from the same place he invented his other "facts" - he assumed they must be true because they fit his preconceived agenda. But since we're on the topic of inherited wealth, why do you demonize someone for something they inherited? Do you have a greater right to determine what I do with the product of my labor than I do? If I take what I have lawfully earned and give it to my kids, neither I nor my kids have taken anything from you nor have we prevented you from earning your own fortune. So, why are you so angry and bitter? Your destructive envy helps neither you nor my kids. Instead of demonizing them for something they have not done, it would be better for you to emulate those who have made something of themselves by producing goods and services that help others.
Randall, I agree that the financial industry has its "dark side" and these shady characters will ultimately earn their just reward. However, what you label as "parasitism" is often the result of customers who are either to lazy to do their own homework or too greedy to care about the profiteering of the money managers as they (the customer) too get rich. Particularly with the advent of low cost brokerage services and exchange traded funds and the wealth of information available on the internet, NOBODY is forced to use the services of these money managers. Indeed, Kahnemann isn't the first to point out the fact that MOST money managers fail to beat an index fund. This has been well known for many years and widely publicized - remember the WSJ's guru vs blind monkey throwing darts contest? Your contention is that they are overpaid for what they do, but that presumes you or some other "expert", rather than the market, should determine their fair price. It would be equally appropriate for me to bitch and moan about a computer geek charging $500 for the "smile" task of setting up my network, a task I could have dome if I had spent a little time studying how the thing works myself and having the confidence that I could do it on my own (actually, I did, but many people don't and opt to pay the geek squad to do it).