Why inequality isn't a problem: it's a sign of progress

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    May 05, 2014 12:45 AM GMT
    http://blogs.telegraph.co.uk/finance/andrewlilico/100027182/inequality-isnt-a-problem-its-a-driver-of-progress/

    Almost all inequality in developed economies does not arise by the wealth of almost anyone else declining. (That does happen in less socially and politically developed societies, in which wealth arises from political control of resources or access to corruption.) In modern developed economies inequality arises when someone – a Gates or Zuckerberg or Cowell or Ronaldo or Rowling or just an ordinary businessman or professional – finds some way (some skill or invention or investment) that adds considerable value, and that value is not then shared equally.

    In our modern globalised economy, the gains from a new idea or skill can now be leveraged over enormously more people. Instead of your new and better mousetrap being sold just to the fair folk of Wolverhampton, the whole world beats a path to your door. In such a world, improved added value creates large inequalities. But that is precisely because the added value of a Windows or Facebook or awesome evening's football skill benefits so enormously many people – even if each only benefits a little compared with the huge aggregate benefits benefits taken by the value-creator.


    To add to this:


    Throughout the history of the world, the average person on earth has been extremely poor: subsisting on the modern equivalent of $3 per day. This was true until 1800, at which point average wages—and standards of living—began to rise dramatically. Prof. Deirdre McCloskey explains how this tremendous increase in wealth came about. In the past 30 years alone, the number of people in the world living on less than $3 per day has been halved. The cause of the economic growth we have witnessed in the past 200 years may surprise you. It's not exploitation, or investment. Innovation—new ideas, new inventions, materials, machinery, organizational structures—has fueled this economic boom. Prof. McCloskey explains how changes in Holland and England in the 1600s and 1700s opened the door for innovation to take off—starting the growth that continues to benefit us today.
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    May 05, 2014 1:50 AM GMT
    Hogwash.
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    May 05, 2014 2:09 AM GMT
    ElectroShark saidHogwash.


    I think it's easy enough to argue that inequality creates an underlying sense of dissatisfaction for many, and as much as this is a negative, it also drives progress, and inequality itself is a direct result of the wealth/value that was created (not taken) unequally by some (and not by others).
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    May 05, 2014 2:18 AM GMT
    The point is that inequality is built into every economic system, and to some extent it should be. What's hogwash here is that we're really not debating whether inequality can or should exist, but how to cope with the insane lengths to which it has been taken in the past 30 years, to a point where it warps politics and the economy in terrible ways.
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    May 05, 2014 11:26 AM GMT
    ElectroShark saidThe point is that inequality is built into every economic system, and to some extent it should be. What's hogwash here is that we're really not debating whether inequality can or should exist, but how to cope with the insane lengths to which it has been taken in the past 30 years, to a point where it warps politics and the economy in terrible ways.


    How has it changed to "warp politics and the economy in terrible ways" relative to 30 years ago? As a starting point, can you agree that we've had at least massive progress in the last say 100 for nearly everyone (unless you're one of the unfortunate few who live in a war torn African country)?
  • tj85016

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    May 05, 2014 11:47 AM GMT
    lol that's the most convoluted bunch of propaganda I've read in some time
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    May 05, 2014 12:04 PM GMT
    tj85016 saidlol that's the most convoluted bunch of propaganda I've read in some time


    Er, it's pretty straight forward:

    1. Inequality today is the direct result of wealth/value being unequally created by some.

    2. We are far far wealthier than we have ever been. In fact, as an aggregate (and on average/median) we have more wealth today than we ever have and substantially more so.
  • tj85016

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    May 05, 2014 2:20 PM GMT
    lol I doubt you're converting many minds here by promoting your nut-job beliefs in extoling the glories of living in a plutocracy
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    May 05, 2014 2:47 PM GMT
    Plutocracy *nod nod*

    Yes... The man must hold the door open for the man exiting the car...

    Everyone must bow..
    Bow now!
  • HottJoe

    Posts: 21366

    May 05, 2014 3:11 PM GMT
    I just realized that you're a few unintelligible diatribes away from being the next Unnamed5.icon_eek.gif

    He posted yesterday that he supports slavery. And, as I recall, you support sweatshops and are anti-union.

    Yet I have a feeling that neither of you are in the top 1%. I hate to see you guys being sycophants to an elite set. Can't you see that you mean nothing to them? You're putting cheap price tags on 99% of the world, saying we're practically worthless. You're both being chumps.

    icon_sad.gificon_cry.gif

    There's a reason you're labeled conservatives. You're always looking backwards, never forward.
  • tj85016

    Posts: 4123

    May 05, 2014 3:19 PM GMT
    ^^

    the sad thing is, they both think they're compelling icon_rolleyes.gif
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    May 05, 2014 6:03 PM GMT
    tj85016 saidlol I doubt you're converting many minds here by promoting your nut-job beliefs in extoling the glories of living in a plutocracy


    Versus the conspiracy minded? The problem who take the opposing approach of believing that the sky is perpetually falling is that you start getting ignored.

    I'll be the first to say that there's a long ways to go to level the playing field and to increase opportunity, but this doesn't mean there hasn't been substantial progress to date - and the facts support this case.
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    May 05, 2014 6:05 PM GMT
    HottJoe saidThere's a reason you're labeled conservatives. You're always looking backwards, never forward.


    The irony is that it's so called "progressives" who seek the same old tired solutions to what amount to manufactured crises.
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    May 05, 2014 8:42 PM GMT
    riddler78 said
    tj85016 saidlol that's the most convoluted bunch of propaganda I've read in some time


    Er, it's pretty straight forward:

    1. Inequality today is the direct result of wealth/value being unequally created by some.

    2. We are far far wealthier than we have ever been. In fact, as an aggregate (and on average/median) we have more wealth today than we ever have and substantially more so.

    Please define who the "we" are. I assume it's not US citizens, since you aren't one, are you? So who is this wealthier "we" of whom you speak?

    And wealth measured how? In currency numbers today vs. the past, or adjusted for inflation and actual buying power?
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    May 05, 2014 11:57 PM GMT
    Art_Deco said
    riddler78 said
    tj85016 saidlol that's the most convoluted bunch of propaganda I've read in some time


    Er, it's pretty straight forward:

    1. Inequality today is the direct result of wealth/value being unequally created by some.

    2. We are far far wealthier than we have ever been. In fact, as an aggregate (and on average/median) we have more wealth today than we ever have and substantially more so.

    Please define who the "we" are. I assume it's not US citizens, since you aren't one, are you? So who is this wealthier "we" of whom you speak?

    And wealth measured how? In currency numbers today vs. the past, or adjusted for inflation and actual buying power?


    The western/developed world. And practically everyone in general with the exception of a select few in war torn countries. Is this really a surprise to you or are you still just looking for a gotcha moment?

    Measure wealth however you like (life expectancy, intellectual capacity, nutrition) and in context the results are the same - we are far better off.
  • creature

    Posts: 5197

    May 06, 2014 12:01 AM GMT
    riddler78, I can't say I'm surprised you hold this position. I remember a post of yours where you said the corporation is man's greatest invention.
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    May 06, 2014 1:34 AM GMT
    creature saidriddler78, I can't say I'm surprised you hold this position. I remember a post of yours where you said the corporation is man's greatest invention.


    One of the greatest because of the creativity it unleashed allowing good ideas to be funded without the personal liability for the people who funded them.

    Not sure if I said it was the greatest, but I can definitely see how that argument can be made. Look back at history, and you have to ask yourself why are we different? What allowed some countries to develop while others didn't?

    What of countries that are more equal? Why are they almost all universally poorer? And then in the context of history, there is no contest even our poor in the developed world would have been considered extraordinarily wealthy by historical measures. Does this mean that there isn't something better to strive for? Of course not, but let's keep things in perspective and actually look at what's worked instead of following our feelings and creating a world that leaves everyone worse off.
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    May 06, 2014 1:57 AM GMT
    Cold as numbers but lets dance
    as though it were it easy for you to lead me
    I could be passive gracefully

    Half the horizons gone, skyline of numbers
    Half the horizons gone

    working the numbers til I'm sick

    I hate this.
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    May 07, 2014 10:16 PM GMT
    http://www.forbes.com/sites/timworstall/2014/05/06/us-inequality-is-not-at-all-like-you-think-it-is/

    Market income is what people earn (or get paid if you think the two sums are likely to be different). Disposable income is what people have left after the influence of the tax and benefits/welfare system. Between the top and the middle market income inequality has roared away, yes it has. But disposable income inequality has been pretty much flat since 1996. This isn’t evidence of some great plague of inequality infecting our society. Rather, it’s pretty good evidence that the tax and benefits system is ameliorating rather successfully the increase in market income inequality.

    The second chart is showing the same for the bottom to the middle. And there again market income inequality has been rising while disposable income inequality has been nearly flat since 1983. Clearly, our welfare system is doing something right in dampening down the inequalities being caused in that market.
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    May 08, 2014 3:50 AM GMT
    On Piketty:
    http://gregmankiw.blogspot.com/2014/04/first-thoughts-on-piketty.html

    The book has three main elements:
    A history of inequality and wealth.
    A forecast of how things will evolve over the next century
    Policy recommendations, such as a global tax on wealth.
    Point 1 is a significant contribution. I like this part of the book a lot.

    Point 2 is highly conjectural. Economists are really bad at such things. In particular, the leap from r>g to the conclusion of a growing role of inheritance in society seems too large to me. Many capital owners consume much of the return on their capital, so wealth does not grow at rate r. This consumption ranges from fancy cars and luxurious vacations to generous charitable giving. In addition, unless mating is perfectly assortative, or we return to an era of primogeniture, wealth per family shrinks as it is split among children. So, from my perspective, Piketty tries to draw way too much from r>g.
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    May 08, 2014 3:58 AM GMT
    Manufacturing a crisis:
    http://fivethirtyeight.com/datalab/inequality-booms-on-msnbc-and-fox-news-cnns-looking-for-flight-370/
    silver-datalab-inequalitymsnbcfox-11.png
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    May 08, 2014 11:17 PM GMT
    A critique on Piketty here:

    http://www.realclearmarkets.com/articles/2014/04/22/the_systematic_errors_in_thomas_pikettys_new_book_101016.html
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    May 10, 2014 5:25 PM GMT
    Obviously not... especially if it's not a problem?

    The Piketty Problem: Why taxing the rich won't solve inequality
    http://finance.fortune.cnn.com/2014/05/09/the-piketty-problem-why-taxing-the-rich-wont-solve-inequality/
    Economist Thomas Piketty is proposing a global wealth tax to battle inequality, but that won't help Americans build wealth. It's time U.S. policymakers helped all households save more.
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    May 10, 2014 7:35 PM GMT
    Another damning critique of Piketty and his supporters:

    http://gregmankiw.blogspot.com/2014/05/rogoff-on-piketty.html
    Would Piketty’s followers be nearly as enthusiastic about his proposed progressive global wealth tax if it were aimed at correcting the huge disparities between the richest countries and the poorest, instead of between those who are well off by global standards and the ultra-wealthy?
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    May 10, 2014 9:34 PM GMT
    riddler78 saidInequality isn't a problem.


    hungry-child_pic.png
    Be sure and explain that to her.