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Do Markets Produce a Fair Distribution of Wealth?

I've heard it a thousand times. Free markets create a fair distribution of wealth and the produce the best product for the best price. This is a fantasy that those who promote it attribute to Adam Smith and the "Invisible Hand". Had they actually read AS instead of cherry picking quotes they'd realize that it's based on 2 virtually impossible conditions. !- Well informed consumers making logical decisions. 2- Only with perfect liberty will markets produce perfect equality.
The first one would eliminate the advertising industry as ads are designed to deceive and manipulate not inform. The second needs no explanation. Capitalist systems produce one thing. Fascism. Which is what we now have in the US. A govt controlled by corporations instead of the other way around where 90% of the people have no influence at all on govt policy.. This is the result of the massive concentration of wealth Capitalism creates. As to distribution, there are companies with a media salary of $60,000 a year while the CEO gets $350,000 a day. . . . . . . sounds fair to me. You?

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urwutuiss avatar Money & Economics
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To me a meritocracy would distribute wealth fairly. In a meritocracy people who produce more - because their talents and efforts - are compensated more than those who contribute less. Also everyone would start our with the same opportunities. This is idealistic, but so is the concept of fairness.

Clearly these conditions do not exist. A child born into poverty has more obstacles to overcome than one who is not. On the opposite end of the spectrum are people who society supports who are not required to contribute anything.

That is not to say that things are completely unfair. In general people are compensated based on their productivity.

@PhilboydStudge To me a meritocracy would distribute wealth fairly. In a meritocracy people who produce more - because their...

My concern is how you are going to measure 'contribution'? Heck, some of the conversation I have here are worth more to me than a Spielberg movie.

You talk about those "who are not required to contribute anything."? I call bullshit. Just because you or I don't recognize their contribution doesn't mean it is not incredibly important.

@VicZinc My concern is how you are going to measure 'contribution'? Heck, some of the conversation I have here are worth...

By contribution I meant nothing more than one's contribution to the organization to which she's employed. No doubt measuring performance is subjective.

In the context of this post I was referring to people who collect welfare, yet are not required to work. These people do not directly produce anything for the marketplace. I do not denounce any hard-working person on public assistance. Quite the opposite.

@PhilboydStudge By contribution I meant nothing more than one's contribution to the organization to which she's employed. No doubt...

And I argue that the contribution to society by people on welfare are generally ignored. I don't think (like a butterfly effect) we could ever calculate their contribution with any accuracy, and I suspect it is immense, and greatly misunderstood.

@VicZinc And I argue that the contribution to society by people on welfare are generally ignored. I don't think (like a...

Yea, poor people made some of the greatest contributions to music. Blues, folk, and reggae jump to mind. From an economic point of view though, unemployed people typically consume more goods and services than they produce.

@PhilboydStudge Yea, poor people made some of the greatest contributions to music. Blues, folk, and reggae jump to mind. From an...

So do I. I produce only ideas and I consume food, drink, and cars, appliances, etc. etc. - I produce none of that. I produce only intangible concepts.

Depends on your definition of fair.

Equal distribution of wealth will not occur, even under Smiths unrealistic assumptions, however equal doesn't mean fair as this overused illustration so aptly demonstrates.

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Nor does 'equitable' necessarily result in a fair result if we define fair as greatest overall utility. I think we need some rich and some poor in order to provide inducements for progress.

People who want an even distribution of wealth are generally those who haven't worked and earned it themselves. If they spent as much time working and earning it as they do complaining about how unfair it is, and they should given a portion of it, they probably would change to thinking people who earn it, should be able to keep it.

@JustJimColo People who want an even distribution of wealth are generally those who haven't worked and earned it themselves. If...

It largely depends on your definition of "earned".
If it's: obtained through an exchange for labor or services I agree 100%
Capital gains used to be called what they really are, unearned income
Does massive concentration of wealth make for a healthy society?

Nobody is suggesting a totally even distribution just one that isn't so skewed.
In the US three people own more than half the population.
How are democratic elections even possible?
This is how dynasties and dictatorships are formed.

Suggesting that people, myself included, who see problems with this disparity haven't earned their way is the indoctrination propaganda of the ruling class.

When there are people who get a lot of money from things they don't produce it means there are people who must produce a lot of things for money they don't get.

@urwutuis It largely depends on your definition of "earned". If it's: obtained through an exchange for labor or services I...

An AOL article claims that 3 people in the US have more wealth than 1/2 of the population in the US. It was on the internet so it must be true. (The article did say that the 50% of the population they were referring to was the poorest of the population.) You might also want to add that almost 50% of the population (those you refer to as not having as much as Bill Gates, Jeff Bezos, and Warren Buffet) are also living off government assistance in some way or another.

Are you claiming that because someone hasn't produced it with their own hands, they didn't earn it? Most of the people who produce things with their own hands wouldn't produce anything at all without someone else coming up with the idea, financing what they are producing, engineering the technology behind what they are producing and taking the chances that what they have produced will be successful.

People have a choice. They can either take the chance to go big and risk everything, which may leave them penniless or wealthy, or they can be the ones who play it safe, trading hours for dollars. I have no problem with people trading hours for dollars. It's what most people do. It's also fair to say they most of them aren't doing what needs to be done and taking the risks to become very wealthy.

Those who claim it is the fault or propaganda of some "ruling class" have to be honest and answer the question about who they are. Are they the ones who continuously, with great thought and research, risk everything, or are they simply envious of those who have and succeeded.

I'd like to know more about this ruling class that indoctrinates with propaganda. Is it the capitalists, who have had success? Is it the socialists who "preach" even distribution of wealth while being millionaires and even billionaire themselves? Is it the politicians who claim to be for the "little man" or minorities while amassing huge fortunes in personal wealth without creating anything or employing anyone except for servants, or is it those who make millions by creating companies and businesses that employ almost all the people in this country?

Of course massive amounts of wealth make for a healthy society. If it wasn't for the wealthy, who would create companies and businesses? Would there be companies like Microsoft, Boeing, IBM, Ford, Verizon, Kraft, and the list goes on and on. Many of these companies have even gone public, allowing anyone the ability to invest. Just because you chose to buy a new Ford car instead of driving an old Ford car and buying Ford stock, doesn't make it Ford's fault that you aren't receiving dividend checks from Ford. Too many people want the dividend check without buying the stocks.

That's true but while individual figures may vary on whats fair people have similar views.

Nobody advocates total equal distribution of wealth. That's ridiculous and nobody is against people acquiring wealth but does it only stop when one person owns everything?
The last 3+ decades have seen the largest redistribution of wealth in history.
If you're of the 2% you're a happy dog and if you're of the 0.1% you're a very happy dog.

Democracy cannot exist under these conditions.

The purpose of 'markets' is to sell products and services.
Never designed to fairly distribute wealth.

What you are talking about is socialism - a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.

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I've never heard, "Free markets create a fair distribution of wealth"... I don't think that's what they're normally saying... as when talking about free markets it's normally talking about price points and NOT distributions... where distributions is normally talked about with taxes... and rarely have I seen the discussions cross...

Also "taxes" and "fair distribution" are lately opinion based discussions while "free markets" and "price points" are normally evidence based discussions.

Not remotely

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