# Benefits to a smaller income gap? **URL:** \ **Category:** Great Debates\ **Created:** [August 19, 2009, 4:32am UTC](https://boards.straightdope.com/t/benefits-to-a-smaller-income-gap/506922 "2009-08-19T04:32:08Z")\ **Posts on this page:** 9\ **Page:** 3
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [August 21, 2009, 10:24pm UTC](https://boards.straightdope.com/t/benefits-to-a-smaller-income-gap/506922/41 "2009-08-21T22:24:03Z")
> [@Voyager](#): > > Their income disparity had a big impact on their education, even when the education was free. The income gap between their two incomes had nothing whatever to do with it. If the income of the richer ancestor had been tripled, that would have had no effect on the ability of the poorer to afford anything. > [@](#): > > You seem to see workers as only a bunch of people with the nerve to ask for living wages where they should be grateful for getting even the minimum wage or close to it they don’t deserve. No, what I see is someone repeatedly asserting things that clearly aren’t true. If I make X, absent inflation, it matters not even a tiny little bit if my neighbor makes X[sup]5[/sup]. This has no effect on my spending power - none. And whether it increases or decreases or stays the same, it has no effect on my spending power. And you have failed to provide a single instance where it might. Regards, Shodan ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 21, 2009, 10:54pm UTC](https://boards.straightdope.com/t/benefits-to-a-smaller-income-gap/506922/42 "2009-08-21T22:54:13Z")
> [@Shodan](#): > > If I make X, absent inflation, it matters not even a tiny little bit if my neighbor makes X[sup]5[/sup]. This has no effect on my spending power - none. And whether it increases or decreases or stays the same, it has no effect on my spending power. And you have failed to provide a single instance where it might. > > Regards, > Shodan Increases in the income gap are correlated with stagnant wages on the bottom. Decreases are correlated with growing wages on the bottom. I’ve already offered a model of how these things are actually correlated. The absolute value of the gap may not make a difference, but how we got to the gap does. To summarize, the increase in the gap during the Bush years came from a combination of favorable tax treatment for the rich and improved corporate profitability, much of which came from downward pressure on wages which led to wage stagnation. The decreased gap during the Clinton years came from low unemployment which led to increasing wages. An increase in consumption led to high corporate profits and even better increase in wealth by the rich - just not as great as the increase in wages by others. If we have an economic policy that improves wages at the bottom faster than the top, we’ll see prosperity for everyone again. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 21, 2009, 11:00pm UTC](https://boards.straightdope.com/t/benefits-to-a-smaller-income-gap/506922/43 "2009-08-21T23:00:42Z")
> [@Sage\_Rat](#): > > (Looking at those actual numbers though, it seems like trying to flatten the scale truly is ultimately pointless. You’re just depriving those who could use money effectively in the economy from having it, at the expense of giving a lot of people a few spare cents.) You’re assuming a zero sum game here. Due to economies of scale and allocation of fixed costs over more products shipped, rising sales increases profitability. Higher profitability means more money available to invest, so you get that benefit anyhow. You won’t see it in your small example ---
**Author:** ![athelas](https://avatars.discourse-cdn.com/v4/letter/a/5e9695/32.png) [@athelas](https://boards.straightdope.com/u/athelas)\ **Post date:** [August 22, 2009, 1:40am UTC](https://boards.straightdope.com/t/benefits-to-a-smaller-income-gap/506922/44 "2009-08-22T01:40:41Z")
> [@](#): > > Wage dispersion among narrowly defined groups of workers is substantially larger for older and more educated workers than for younger and less educated works. As [a] result, I show that a large fraction of the increase in residual wage inequality is a spurious consequence of the fact that the work force has grown older and more educated since the early 1980s. That is Thomas Lemieux, from "“Increasing Wage Inequality,” the lead article in the June 2006 American Economic Review. Lemieux also dismisses the common view that information technology is the major cause of growing wage dispersion. From [http://www.marginalrevolution.com/marginalrevolution/2006/06/the\_best\_two\_se.html](http://www.marginalrevolution.com/marginalrevolution/2006/06/the_best_two_se.html) ---
**Author:** ![Try2B\_Comprehensive](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/try2b_comprehensive/32/65_2.png) [@Try2B\_Comprehensive](https://boards.straightdope.com/u/Try2B_Comprehensive)\ **Post date:** [August 22, 2009, 5:06am UTC](https://boards.straightdope.com/t/benefits-to-a-smaller-income-gap/506922/45 "2009-08-22T05:06:38Z")
> [@](#): > > The idea was to present a method whereby granting personal freedom, in end result, would push the individual into working to better the world for himself and his fellow man through no other prompting than personal gain. Again, the goal is to improve the lot of humanity, not to be fair nor to be democratic nor personally free. So the argument can be made that tampering with the market is allowed so long as it is an improvement on the system (where improvement equates to improving the overall lot of humanity at a greater rate.) > > In a free market, where the ability to move between pay scales is entirely free and possible for an individual with the proper skills and willingness to work hard and take the right steps, and where the pay scale is itself set on the free market based on human opinion of the value of the position, is there any overwhelming positive advantage to flattening the pay structure? How would one show it to be true? In the thread about the role of the working poor, it was demonstrated if not quite explicitly stated that the ‘market mind’ is not a sufficient basis for a world view. Remember how that went? Eventually a proponent of a market-only point of view ends up in the paradoxical position of being able to identify virtue in a person while yet remaining powerless to judge whether or not the person is ‘good’. So ‘How would one show it to be true?’ First you need to abandon the market-only perspective. It is inadequate to answer questions of social justice, as it is not capable of judgment. The ‘market mind’ essentially is only a type of calculator. Let the ‘market mind’ be one subroutine in a much larger consciousness. You might avail yourself of the fields of moral philosophy, political science, and/or legal precedent. Taking law first- notice that plenty of legal acts are bullshit. It isn’t illegal to be bad, it is only illegal to be a criminal. Similarly, political science and also moral philosophy can we warped to benefit some mischievous motive or other. So. ‘How would one show it to be true?’ First develop a sense of intellectual honesty. Keep an eye on your motives. Then, try to be comprehensive. ---
**Author:** ![Try2B\_Comprehensive](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/try2b_comprehensive/32/65_2.png) [@Try2B\_Comprehensive](https://boards.straightdope.com/u/Try2B_Comprehensive)\ **Post date:** [August 22, 2009, 7:32am UTC](https://boards.straightdope.com/t/benefits-to-a-smaller-income-gap/506922/46 "2009-08-22T07:32:31Z")
If it is easier, just listen to [this song](http://www.wikio.com/video/1464952) Here’s a quote, in case you don’t have the time: > [@](#): > > Yes as through this life I’ve wandered, > I’ve seen lots of funny men > Some will rob you with a six-gun > And some with a fountain pen ---
**Author:** ![TokyoBayer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tokyobayer/32/13989_2.png) [@TokyoBayer](https://boards.straightdope.com/u/TokyoBayer)\ **Post date:** [August 22, 2009, 1:10pm UTC](https://boards.straightdope.com/t/benefits-to-a-smaller-income-gap/506922/47 "2009-08-22T13:10:45Z")
> [@Shodan](#): > > If I make X, absent inflation, it matters not even a tiny little bit if my neighbor makes X[sup]5[/sup]. This has no effect on my spending power - none. And whether it increases or decreases or stays the same, it has no effect on my spending power. No, because you can’t eliminate price increases or decreases in reaction to people’s changes in income. If a significent number of people receive wage increases, then prices will go up. So if enough of your neighbors make 5 times your income, you will find that there are things which will be prices out of your budget. ---
**Author:** ![Digital\_Stimulus](https://avatars.discourse-cdn.com/v4/letter/d/aeb1de/32.png) [@Digital\_Stimulus](https://boards.straightdope.com/u/Digital_Stimulus)\ **Post date:** [August 23, 2009, 2:10am UTC](https://boards.straightdope.com/t/benefits-to-a-smaller-income-gap/506922/48 "2009-08-23T02:10:31Z")
> [@TokyoPlayer](#): > > No, because you can’t eliminate price increases or decreases in reaction to people’s changes in income. > > If a significent number of people receive wage increases, then prices will go up. So if enough of your neighbors make 5 times your income, you will find that there are things which will be prices out of your budget. Succinctly – and in terms that are familiar – it changes what the market can bear. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 23, 2009, 5:49am UTC](https://boards.straightdope.com/t/benefits-to-a-smaller-income-gap/506922/49 "2009-08-23T05:49:37Z")
> [@athelas](#): > > That is Thomas Lemieux, from "“Increasing Wage Inequality,” the lead article in the June 2006 American Economic Review. Lemieux also dismisses the common view that information technology is the major cause of growing wage dispersion. > > From [http://www.marginalrevolution.com/marginalrevolution/2006/06/the\_best\_two\_se.html](http://www.marginalrevolution.com/marginalrevolution/2006/06/the_best_two_se.html) Notice he said narrowly defined groups of workers. I’ll buy what he is saying for the lowest 90%. But what people usually mean by income gap is that between the outliers in the top 5% or so and the rest of us. It is this gap which is getting much bigger. [Previous page](https://boards.straightdope.com/t/benefits-to-a-smaller-income-gap/506922.md?page=2)