Communism good or bad? - Page 3

[jwenting]

you've never heard of them because you've not been listening. Of course noone in the places that have them call them that...
In the UK there's the inaptly named NICE, which determines what can and cannot be treated and supplied to patients. If they decide something's not to be treated, it's a death sentence (for example, they've banned the distribution of a large number of cancer treatments, meaning a lingering death for tens of thousands of sufferers).
In the Netherlands there's an upper limit on the number of heart operations (and similar in many other countries), and panels (made up on paper of doctors but including bureaucrats of course) to determine which patients are most worthy of receiving one of the few slots available each year. They decide you're not to be treated, you're dead unless you have the money to pay out of hand for an operation abroad.
There's "working groups" determining what medication is allowed for which condition based not on medical necessity but purely on cost. This had the effect that my parents would now both be dead if they'd not have had the money to pay for the pills themselves that they needed to stay alive.

The list goes on and on.

Insurers in the US refuse to insure people for certain conditions unless they can pay enough to cover the risk involved. That's a business decision, and no death panel. If you want to pay enough, they'll cover it. Over here, the government sets limits on what they're allowed to cover, and what they're required to cover, then goes ahead and determines that although covered it won't be provided.
The UK is now going one step further and decides to refuse treatment at all to people who "live an unhealthy lifestyle", but by law they're still required to pay up. So the UK NHS and NICE are handing out death sentences to people based on factors like whether you smoke or not or whether you're overweight or not (irrespective of the reasons why), which can be arbitrarilly expanded to cover most anything. Next up they might well decide to not cover respiratory illnesses for people living near highways (because those people are at an increased risk from those, and thus have an unhealthy lifestyle by living there).

[Agilemind]

You're still assuming everyone can pay for any treatment/coverage they need in the USA which is absolutely untrue. If your living off minimum wage because your family couldn't afford to send you to college then many of the higher insurance plans that you would be force to pay if you had an underlying condition are simply unaffordable its a choice between healthcare and food without either one it is a death sentence.

And Priority lists for treatment exist under the US system as well (eg. organ transplant lists) which are supposed to be based on NEED but in a free market system are often based on who will pay the most (or make the biggest donation to the hospital).

Triage based on NEED prevents deaths since the patients most likely to die before the next organ becomes available is given the transplant.

Triage based on money results in more deaths since even if patient X could live for another 1-2 years they will be given the transplant ahead of patient Y who will likely die in the next month if patient X happens to be wealthy and patient Y is not. Even though you could have saved them both if patient Y was given the transplant first since another organ would have been available before patient X was going to die.

As for cancer treatments, not getting the absolute state of the art treatment for a cancer is not a death sentence. There is always other treatment options available that cost much less and are only slightly less effective (most new drugs are only marginally better than the old ones). And if it means you can treat 3 people with the less costly drug instead of 1 with the more costly drug, your again saving lives.
Also when it comes to drug treatments there is always to option to pay for them yourselves via the free market and there is usually free market insurance available for anything not covered by the gov't single payer system so your back to the US system for those cases.

[jwenting]

"As for cancer treatments, not getting the absolute state of the art treatment for a cancer is not a death sentence."

We're talking about getting no treatment at all because some government flunky decided that $10 a day is too much to keep you alive...

If you want to try government run health"care", go live in the UK for a few years and make sure you're going to need doctors and hospitals.
Not all are bad, but many are.

"Also when it comes to drug treatments there is always to option to pay for them yourselves via the free market and there is usually free market insurance available for anything not covered by the gov't single payer system so your back to the US system for those cases. "

There isn't, not in countries like the UK where such things are illegal.
Here in the Netherlands it's also illegal to buy drugs without a prescription, even to posess them without a prescription, but there is some leeway in insurance coverage options to buy a bit of extra coverage to reduce the mandatory payment you have to make for all drugs on top of the standard coverage (our insurance doesn't even cut in until after the first several hundred Euro has been paid out of hand, and after that covers only part of the cost, by law). However, if something's not on the approved list (which is created solely based on cost, not applicability) it's illegal to distribute so you can't have it even if you're willing to pay the total cost.
So if that one drug that would save your life was deemed too expensive at $10 a day, you're dead. There's no way to get it, through your insurance or otherwise.
Of course that's quite deliberate as there's a 25-50% death tax on your estate and the government doesn't want you spending money on things like staying alive as that would reduce their tax income.

[Agilemind]

Hang on I thought you said you were in the UK? but now your saying your in the Netherlands? Which is it?

BTW I do have government run healthcare because I live in Canada.

Of course you can't buy prescription drugs without a prescription -> that is why they are called prescription drugs. I highly doubt even the Netherlands requires a prescription for cough medicine or Tylenol. But, if gov't health insurance doesn't cover drug X that doesn't mean it is illegal for a doctor to prescribe it to you. Canada's drug coverage is based on need, cost, and availability of alternatives. So for instance if your tumour is small enough that it hasn't metastasized and it was cleaning cut out with surgery they won't pay for a new highly expensive specialized drug to reduce the chance of it coming back from 3% to 1.5% (note I just made up the numbers but it is based on a real story), but it isn't a death sentence either. And your free to pay for the drug yourself if you so desire.

If other countries are different it is because they voted for something different, it is not an inevitable consequence of single payer healthcare.

[jkon]

I believe that communism was a stage that we (as humanity) had to gone through and built in order to reveal the goodness of human kind. Some might say that it failed one hundred percent , others , that it never really applied.

From what I have read in books and sheen in real life, I believe that it was a theory having big logical gaps from the beginning. I am not going to speak for the victims of such regimes as I can’t speak for the victims of capitalist ones.

I keep one great benefit for us out of all that; that you can dream, that you can act as society and change the fundamental rules, maybe in future that will make even more sense.

[nitin1]

bad, in my opinion.

[Ancient Dragon]

In a way communism was good for the world -- many of the things we have today was because communism gave us the incentive to build bigger and better things. Space exploration, for example, may not have happened had the Soviet Union not started it first. The microchips used in today's computers were a direct result of that action.

In a way communism was good for the world -- many of the things we have today was because communism gave us the incentive to build bigger and better things. Space exploration, for example, may not have happened had the Soviet Union not started it first. The microchips used in today's computers were a direct result of that action.

Communism is awful for the world. Look at N.Korea or Cuba. China is not Communism anymore it's more Captalism (that's even worst). Nothing really good come out of it just people dying for a lost cause.

[Reverend Jim]

The way communism was supposed to work was "from everone according to their ability and to everyone according to their need". That was the theory. In practice it always seemed to work out that those in power got and those who weren't didn't.

The way communism was supposed to work was "from everone according to their ability and to everyone according to their need". That was the theory. In practice it always seemed to work out that those in power got and those who weren't didn't.

Especially now, at this present ... I really doubt anyone will understand that theory!

[ObSys]

I personally think that socialogical systems like communism and socialism would work very well....but only in a perfect society. This is where their fundamental floor lies. The fact that it's human nature to want, means that any full implementation of these systems will fail. Saying that, many democracies such as ours here in the UK take elements from these systems such as taxes....these are a form of socialism just without taking 100% of your income.

[Reverend Jim]

I think that certain things should be run for the benefit of all and that some things are too important to be left in private hands. For example, here in Manitoba, where the winters are cold and long, energy (natural gas and electricity) is a critical resource. It is produced (electricity) or and/or distributed (natural gas) by Manitoba Hydro, a crown corporation. If it were put into private hands and run for profit we might end up with the situation that arose in California where artificial outages were created to force electricity rates sky high.

For an enlightening time please see the documentary "ENRON: The Smartest Guys in the Room".

Having said that I fully believe in an open market where competition keeps corporations honest. Unfortunately we've all seen what happens when happens when that system breaks down due to lack of oversight.

[mike_2000_17]

The fact that it's human nature to want, means that any full implementation of these systems will fail.

That's very true. I see that argument as a warrant of caution for those who might dream of a total socialist overhaul of society. Most of what we can point to as the main components of a "civilized" society are the things that go against our human nature (at least, the nastier side of human nature):

• Just grab the money and run: Can't do that.
• Kill the guy who slept with my wife: Can't do that.
• Punch the prick who cut in the line: Can't do that.
• Slap that girl's behind: Can't do that.
• Tell lies about your products to sell them: Can't do that.
• Put your kids to work for a little extra drinking cash: Can't do that.
• ... and so on..

Of course, you can argue that all the above restrictions and laws are destined to be failures, because you'll never be able to eradicate these tendencies. But does it invalidate those restrictions / laws / rules? No. The same goes for socialism. It goes against the tendencies of people to be greedy, to screw people over, to use their power to exploit and corrupt, to collude in order to control the market, and so on. In some domains, like health care, law enforcement, or fire-fighting, if those tendencies are given free reign, people die, and that's why so many civilized western countries have adopted a public system for these things.

One of the arguments for socialism is that if a public / collective governance works and save lives in certain areas (health care, law enforcement, military, etc.), then it will also work in other areas to improve the general well-being of everyone. And that's hard to argue against (either logically or empirically), and I personally can just nuance this argument by pointing out certain things that you lose when adopting a collectively run system and certain slippery slopes about it. So, the whole point is to figure out in which cases the drawbacks are worth the gains. Certain things have minimal impact on people's well-being, and can be carried out very well in a so-called "free-market", I'm thinking of things like producing consumer products (shoes, cars, food, etc.), and may only require some basic regulations like workplace health and safety, consumer-protection, and economic regulations (protect from fraud, or insider trading). However, some things are just too important, either because people's lives are on the line, because there is huge potential for collective benefits (e.g., natural resources, etc.), or because there is a huge risk of exploitation. And in those cases, a public system is necessary, period.

On the opposite end of the spectrum, the reverse argument, which is often proported by so-called "free-market" capitalists, is completely ridiculous. That argument is usually about saying that society should be geared in the same direction as human nature, i.e., greed, selfishness, etc., and that will be better at the end (because you are not working against the grain, so to speak). First of all, this argument completely neglects the fact that humans do have a lot of good tendencies too, like empathy, compassion, wanting justice for all, and so on. So, capitalism is also working against the grain, but against the good grain, instead of the bad. Second, you can make the same point about capitalism as you do about socialism, that is, that capitalism will always fail because of human nature that will never accept a complete dog-eat-dog world / economy. And usually, when an argument works just as good for either sides, it means the argument is completely useless. And finally, but not least, there is really no logical path from "let everyone fend for themselves / compete" to "everyone is happy and well". That rhetoric is repeated all the time by so-called "libertarians", but that doesn't make it true. And when you've studied game theory and artificial intelligence like I have, you can prove that it's not. This rhetoric always reminds me of the Southpark episode with the dwarf collecting underpants, with their super plan, "1. Collect underpants. 2. ??? 3. Profits!", there's a pretty critical piece missing.

BTW, I always say "so-called "free-markets"" because that term is extremely distorted. Most people think of so-called "free-markets" as meaning "no regulation" (or unfettered capitalism). And, the most ironic thing about that is that they most often associate it to Adams Smith (Wealth of Nations) (and when they mention the "invisible hand", I just can't stop laughing!). In reality (if you do care about reality), Adams Smith did define the concept of a free-market, however, his definition of it involves an enormous regulatory component to it, and it is in no way an "unfettered" system (in fact, it would probably be labeled as "socialist" today). His main point was that an unregulated market will lead to what is essentially a feudal system of large monopolistic corporations, which is not free nor competitive, and to keep the market "free" you need specific regulations, high tarifs, progressive tax rates (with very high taxes on the rich), solid public systems to releave small businesses from the burden of providing them, and so on. I doubt you would ever find him in a right-wing party if he was alive today (probably too progressive for the democratic party even). And, btw, the "invisible hand" part, he was just poking fun at how ridiculous the "let everyone fend for themselves / compete" to "everyone is happy and well" argument is, ".. as if an invisible hand [fixed everything]", in other words, he was saying unfettered capitalists are idiots. Don't you just love the irony of modern day capitalists waving the "Adams Smith" flag. Delightful.

Communism, Good or Bad?

This question is at best very complex to answer, and at worst, ill-posed. Communism is very difficult to narrow down an exact meaning for. Originally, communism was defined as a form of anarchism (and the ultimate expression of the socialist utopia, that's the "communist manifesto" meaning). Then, communism meant what is usually referred to as marxism today (or maxist-leninism), which is really a kind of centrally-organized (but not authoritarian) form of socialism. Put simply, marxism is a democracy in which all economic activity is public (by the government), i.e., centrally organized. In USSR and China, they kept the "centrally organized" part, and threw the democracy out the window, and called it communism to try to hide the embarrassing fact that they were just plain-old fascist states. So, if you talk about communism, and, in the next breath, mention USSR or China, you are not talking about communism, you are talking about fascism with a slight socialist edge to it. I personally try to avoid that word completely because it doesn't mean anything any more (the propaganda machines on both sides of the iron curtain have completely disolved any meaning it used to have).

Today, the main currents of socialism that can be found or discussed can be characterized as either social-democracy or as anarcho-socialism (or "grass-roots socialism"). The former essentially refers to democracies that setup fairly extensive social programs, take control of natural resources, are protectionist, and with steeply progressive tax rates. The latter essentially refers to grass-root movements of worker-owned enterprises, cooperatives, labor unions, and so on, i.e., direct worker control. Both are not absolute nor mutually exclusive, and come in different flavors. Discussing the different nuances of them is quite interesting (and can go on for ages), but you can hardly set a debate about "good or bad".

That's my take on it, as brief as I managed to make it.

[Reverend Jim]

Brief? No. Interesting? Definitely.

I expect someone to respond with the "slippery slope" argument in that if we start nationalizing areas such as energy production and health care it inevitably leads to communism. The trouble with slippery slope arguments is that they work both ways. Take gun control. The argument is that if we start regulating gun ownership it leads to the government seizing all guns. You could just as easily argue that if you start relaxing gun ownership laws then eventually you must legalize ownership of all weapons including tactical nukes.

As Mike points out, it is possible to run some "industries" for the good of all and still have a free-market (with oversight) system.

[pritaeas]

Communism is awful for the world. Look at N.Korea or Cuba.

For Cuba I think this is a little short-sighted. The changes over the last few years made things far worse than they were. For a long time communism in Cuba was well-accepted and a good thing. Been there several times. Once had a long discussion with a cab driver about both our situations, and it turned out that there was little difference in our living. Even though I earned a lot more (and so more costs), in relative terms things were the same.

[Reverend Jim]

I have a hard time understanding how the same people who believe that a small group of wealthy individuals (private industry) owning everything is OK can also believe that a small group of wealthy individuals (government) owning some things and regulating others is evil. Unless, of course, it's just an excuse to get the government to "let me do whatever I want and the public be damned".

[mike_2000_17]

I just want to point out, there is one example of completely unfettered capitalism (i.e., a perfect "free-market"), it is called drug trafficking. Government has no effective control over that market, it doesn't regulate the workers, the products nor the economics. What is the result? Exactly what Adams Smith predicted, a feudal system of monopolies (drug cartels) where competition is harshly quelled, prices are entirely controlled by the suppliers, the drugs are most often produced in slave labor, and there is a whole bunch of power-drunk incidents and activities like hijacking local authorities and extorsions in local businesses. This is just a glimpse of the horrors of unfettered capitalism. Another interesting case is, of course, Chile, which has been this lab experiment for neo-liberals to try out a "privatize everything and no regulation" strategy. This state has been nothing but miserable failures one after the other, a huge gap between the poor and the rich, and just general mayhem of riots and protests ever since, even as they get tremendous "help" from corporations and foreign investments.

As for N. Korea, has anyone ever seriously suggested that it is a communist state? That's news to me. They might have originally been established with the help of the soviets and chinese (which are themselves just fascist states, as I said earlier), but now it is just this weird and crazy military dictatorship and "necrocracy" (with a dead man as eternal president). In fact, the words "communism" or "socialism" have been banned for a while in N.Korea, so that people forget there ever used to be some faint elements of communism when N.Korea started out. Communism or any kind of socialist institutions are long gone from N.Korea, for decades.

As for Cuba, they don't have a very good record on human rights and freedom of the press, like most dictatorships. However, their economic system is still very much a centrally organized socialist economy and system of governance in general. And at that, this system has worked wonders for them. Given that it is a small island with few resources, and under a complete blockade by the U.S., they managed to have one of the best economy, health care and education of their latin-american neighbors. Countries like Venezuela and Bolivia which have started to implement similar systems (without the dictatorship part) are seeing the same kinds of benefits. Cuba being very poor is mostly a consequence of the blockade, not their internal economical system. Any state under a complete blockade is going to wither and die, look at the Gaza strip, another state under complete blockade, which now just turned into a big prison camp with many people starving to death. The fact that Cuba avoided that kind of fate is a miracle in itself.

As for the USSR, before the revolution, it was a third world country of poor farmers and rich aristocrats (Tzars). In about one generation, from Lenin's rule up to stalinist pre-WWII, it turned into an industrial power capable of rivaling countries like Germany, the UK and the US. When the US noticed that very rapid development, once WWII had come to an end, that was very scary to them, and that was the core of the cold war, which was mostly a competition of which economic system was the best. Considering that the USSR mostly consisted of very poor and war devastated countries (in eastern Europe and Central Asia), most of which were pulled out of "third world" status by the USSR, it is estonishing that they managed to rival an already large, rich and unscathed power like the US, and for so long. The main reasons for its failure was not a fundamental failure of the sort of "managed economy" system they had, but mostly due to resources being stretched very thin (building up a huge military power and also developing all these very poor peripheral provinces) and the general sentiment of the people being fed up with the totalitarian measures. But most testamonies that I have heard paint the economic system and the organization of labor as the things that were going well and few people complained about, they mostly hated the lack of free press, free expression and democracy, and the strong inclination towards the military and its presence. Which, ironically, is exactly what most people are fed up with today in the United States (and in "capitalist" and "democratic" Russia as well).

Conclusion, things aren't black-and-white. Things are a lot more complicated than stupid statements like "communism is bad, look at Russia, China, Cuba ..". There are many more factors that come into play here. And you can't just point to some random example of a very complex geo-political situation and history, labeling it as "communist" because you've heard that somewhere, and then saying "well, these people are worst off then us, their system must be bad". I could point to a largely socialist country, like Norway (or even post-WWII U.S.A.), and say that it means that socialism is the best system ever, but, for that, I would have to neglect certain extremely important factors such as the presence of large oil reserves, a high level of education, and things like that which are often more important that the system being employed. That's why I don't make such blunt statements. You can look at what effect different factors had in the different historical contexts, as I have done above, and that's an interesting conversation, but "pointing, labeling and shunning" is just stupid.

@pritaeas

For Cuba I think this is a little short-sighted. The changes over the last few years made things far worse than they were. For a long time communism in Cuba was well-accepted and a good thing. Been there several times. Once had a long discussion with a cab driver about both our situations, and it turned out that there was little difference in our living. Even though I earned a lot more (and so more costs), in relative terms things were the same.

It's must be nice place to go visit. I know why you go there a few times. It's because of those Cuban Cigars that you like. It's ban in US but I'm not sure in the Nederlands

[pritaeas]

Well. I did not go for the cigars. They are actually cheaper to buy here, than in Cuba.

@pritaeas

Well. I did not go for the cigars. They are actually cheaper to buy here, than in Cuba.

I was just kidding. I feel you really like Cuba. I not sure why but whatever reason it is you have a lot of respect regardless rather it's communism or not. You keep things in perspective.

[pritaeas]

I know. I do. Let's just say my first trip to Cuba was life-changing.

[JorgeM]

Fortunately, leaving Cuba was life changing for my family.

[Lardmeister]

It depends what you presently have.

[JorgeM]

yes, its called freedom.

[Aia]

Agilemind >>Could you please explain how this can be when the gap between the rich and poor continues to expand rapidly in the USA

After hearing and reading those almost exact word inumerable times in my life, I must wonder why everyone that regugitates it, always stops there, and they never explain what is the gap made of. Or in other words: what's the content of the gap? Perhaps, the reason is that this "always" rapidly expanding gap is made of ENVY. And that makes hard to sell the sentiment intented with those words.

[mike_2000_17]

and they never explain what is the gap made of. Or in other words: what's the content of the gap?

Wealth. The "gap between the rich and poor" almost invariably refers to the unequal distribution of wealth. You can measure it in a few different ways, mostly as income distribution or as cummulative wealth distributions. As income distribution, imagine you take all the people in the country, sort them from least income to most income along the x-axis of a graph, and then draw a line that follows the income from individual to individual data points. In a "perfectly equal" society, that line should be perfectly flat (i.e., everyone has the same income), but in a completely unequal society, the line would look like a hockey stick (i.e., the great vast majority are dead-poor, while a few at the upper end have everything). In case of a hockey-stick curve, there will be a marked jump at one point, and you can say that is the gap between the rich and poor. More accurately, however, you can take the cummulative (integral) of that curve to get a cummulative distribution. In other words, each point on the curve represents how much you and everybody poorer than you make together (cummulative), often measured as percent of GDP. Now, the "equal" line becomes a straight line (constant slope) on a cummulative distribution, and the more unequal the distribution is, the more that line curves downwards (concave). You can measure that level of inequality with statistical indices, for instance, the Gini index which conveniently ranges from 0 (perfect equality) to 1 (perfect inequality, i.e., one super-rich dictator commanding an entire population of slaves). The better countries have a Gini index around 0.25-0.3, the worst countries (third world and banana republics) have a Gini index in the 0.45-0.5 range, which is where both the USA and China are now. The 60s was the lowest point for the USA, and also one of its best decade in terms of buying power for the middle class and economic development in general. It has been increasing ever since.

Then, there are many many more ways to measure this "gap between rich and poor" in more casual ways. For example, taking each company and comparing the income of the CEO versus the average income of all of the company's employees. The more equal countries usually figure somewhere between 10:1 and 20:1. The US used to rank in the ball-park of 20:1 to 50:1 during the 60s, 70s, and early 80s. After Reagan and all the cronies that came after, it has been soaring to around 400:1 today (unfortunately, this statistical measure is no longer valid at such an extreme inequality level). Another casual way to measure inequality is to just count the percentage of people in the different income brackets, and thus the whole "we are the 99%", which refers to the fact that this is roughly everyone who isn't in the 250k$ income bracket. But I prefer the measure that about a third of the US population lives under the poverty threshold, meaning the US is a second world country, not a first world one, at least from the perspective of income distribution.

Another good metric is the Hoover-style metrics. These are pretty simple. Imagine that Robin Hood existed. How much wealth would he have to rob from the rich in order for the poor to get their due? That's an easy metric to calculate anywhere.

Perhaps, the reason is that this "always" rapidly expanding gap is made of ENVY.

Philosophically speaking, the gap between the rich and poor is made of, with, and by the growing injustice in a society. That's what this gap is a measure of. And it's not some propaganda tool, it is a scientific tool used by economists and sociologists for as long as they've been doing this. Measures of inequality in income or wealth is one of the most important factor in determining the general health of an economy and of a democracy. A large gap between the rich and poor has been shown to be strongly correlated with poorer health, higher mortality rates, higher crime rates, lower education levels, reduced innovation, and general economic precarity (prone to swings, such as the crash in 2008, and in 1929 which was also an all-time high for inequality). Anyone concerned with reality cannot ignore this fundamental measure of the health of a society and its economy.

[Agilemind]

Agilemind >>Could you please explain how this can be when the gap between the rich and poor continues to expand rapidly in the USA

I have no idea what you are referring to here, if you could explain what it is you would like me to explain I will but the last posts I made to this thread were months ago and were focused on countering false claims about single-payer universal healthcare.

After hearing and reading those almost exact word inumerable times in my life, I must wonder why everyone that regugitates it, always stops there, and they never explain what is the gap made of. Or in other words: what's the content of the gap? Perhaps, the reason is that this "always" rapidly expanding gap is made of ENVY. And that makes hard to sell the sentiment intented with those words.

gap/gap/
Noun: A break or hole in an object or between two objects

A gap is not "made" of anything and by definition doesn't have a "content". Please articulate your argument/point clearly without the excessive nonsensical word spewdum that is so commonly imployed by the USA far-right to mislead others and/or disguise their true motivations.

What I think you mean (which I will translate for those less skilled at reading between the lines) is:

"Left wingers keep repeating this gap between the rich and poor. The simple math and statistics behind this is irrefutable so instead I will undermine their argument by claiming they are just JEALOUS of rich people like me! but other people won't side with me if I say that so I'll wrap it up so it sounds vaguely like a logical argument. To stop people seeing through this facade by thinking critically about my 'argument' I'll make it sound like I'm the one being honest and open and that the Left wingers are the ones being sneaky and telling half-truths."

[Reverend Jim]

The top 25 hedge fund managers in the United States collectively earned $22 billion last year, and yet they have their own cushy set of tax rules. If they operated under the same rules that apply to other people — police officers, for example, or teachers — the country could cut its national deficit by as much as $44 billion in the next ten years.

Mitt Romney has been paying taxes at a rate of around 15% while the people on the other side of the gap pay at around 35%.

[arkoenig]

I guess you're referring to the favorable tax rates for capital gains.

Those rates are favorable for two reasons: (1) The money invested to produce those capital gains has already been taxed once, so you're really talking about taxing it twice; (2) Over longer terms, most of the returns from capital gains are due to inflation.

Let me elaborate on (1) because it's not completely obvious. Suppose you invest $1,000 in a way that earns 10% over some period of time. If there were no taxes, you would have $1,100. However, suppose that that $1,000 is subject to a 20% income tax before you invest it, so you have only $800 to invest. Then at the end of the period, you have only $880, not the $900 you might expect. In other words, taxing money before it is invested reduces not just the principal, but also the return.

An even stronger argument applies to corporate dividends. If you buy stock in a company, that company pays corporate income taxes on its profits. Then it distributes (part of) what's left to its shareholders, including you. Then that money, which has already been taxed, is taxed again. This double taxation is part of the reason that corporations are often reluctant to return money to their shareholders as dividends, preferring instead to reinvest that money to make the company bigger. That, in turn, is part of the reason that corporations tend to become so large. If shareholder dividends were taxed only once, rather than twice, I think it would be much harder for corporations to become so large that they dominate the landscape.

[G_Waddell]

There is no ideal system for we are not perfect beings and therefore there will always be the haves and the have nots.