Would someone like to complete the above sentence?
I posit a society in which everyone has enough, and some have far more than that. In the absence of inflation, what is the downside of allowing the rich to keep what they have?
In other words, is it the relative difference between the rich and everyone else that is the bad thing, or is it that the rich are rich while the poor starve? And since, at least in the US, the poor do not starve, is it OK to ensure that everyone reaches a minimum level and then leave well enough alone?
Keep in mind that I’m going to reply to this with theories and wild-ass guesses, so I most likely don’t actually believe any of this, it’s just mental gymnastics I suppose. I also fully intend to work with unrealistic extremes and gross generalities…
That being said, I think one argument against “excessive” income inequality (I have no idea where I would draw the line for “excessive”) is that you might end up with thoroughly discouraged workers. Suppose you were making absolutely bare minimum subsistence wages, while your company president was in the position to purchase Norway… I figure you’d have three options: either continue working for da man, do everything in your power to get his job, or simply turn to a potentially more lucrative life of crime. If the odds of becoming the new president or some other comparable position times the difference in salaries is lower than your current job, and the chances of not getting caught as a criminal times the marginal benefit of becoming one are higher than your current salary, and barring no moral hangups in leading a life of crime, you’d ditch your job and steal President Riche-homme’s new Mercedes. I suppose the real variable here is how likely it is for any one peon to move on up to the east side… and I think this is really the most important point in any discussion of the relative merits and downsides to extreme income inequality.
Another possibility is that if he have a country that effectively has no middle class, there may not be enough consumption… some (such as Lord Maynard Keynes) theorize that the depressions of the 1930s were in large part complicated by not enough consumption. People at bare subsistence spend all of their income on, well, things off which to subsist and the extremely wealthy tend to spend a relatively small portion of their income on consumption and invest the rest… we could have an economy where there is more than enough loanable funds and not nearly enough people to buy the fruits of the economy. In my own experience, cities that have a large number of minimum-wage workers and a small handful of millionaires tend to be a lot worse off than cities where those millionaires do not exist but are rather replaced with a larger number of middle-class types… even if the sum of the wealth of the latter is less than that of the former.
Actually, now that I think about it, exactly what is the hypothesis against which we are arguing? Completely perfect equality where every single person receives not only the same income in nominal terms but also in real terms, such that their income can purchase the exactly same amount of any type of good no matter where they are? Some intermediate where the highest paid employee can only receive 150% of the lowest paid employee’s income? Countries that engage in low to moderate income redistribution through progressive income taxation such as the United States, or countries that are more agressive in their approach such as Sweden?
Well, that’s what I can think of so far, I think this has the potential to be a very interesting thread. I’ll try to think of some journal articles or other sources that might be relevant to the discussion…
Income inequity is a bad thing because if you don’t have any (income) you tend to die young, or in some cases don’t even receive the benifit of being born.
A society in which everyone has enough would be great, but enough for what exactly? And who is in charge of deciding when you have enough? I have enough to keep a roof over my head & not go hungry, but I don’t have enough to drive a Mercedes. Is that the inequity you’re talking about? You see, not everybody has the same definition of “enough”. Just ask Ivana Trump, her “enough” was $14 million and a Connecticut mansion.
Everything is bad if taken to extremes. If I got too wealthy, I just might consider buying that block of low income housing and putting up some high priced condos. All of a sudden there would be a lot of people who suddenly found themselves without “enough” to have a roof over their heads.
In a perfect world where everybody plays nice, inequity wouldn’t matter so much. But in our current world where the goal seems to be to use what money you have to take the little guy’s money away, a little bit of inequity can do a whole lotta hurt.
You would probably get more and better responses if anyone in the world actually believed that income inequity, in and of itself, were a bad thing. I know of no individual or group that espouses that belief. A large number of people believe that certain social and economic mechanisms that lead to income inequity are bad, but that would seem to be a different question.
It may be true that in the United States, the poor do not frequently die of starvation. However, there are many people in the United States who do not earn enough money for basic necessities, such as health care.
Despite being a bleeding-heart pinko commie, or at least despite everyone thinking that I am, I do not actually think there is anything wrong with being rich, with the following provisos:
A society that has the means for some people to have luxury typically has the means for everyone to have enough. The latter is an ethical imperative.
In a capitalist society, wealth is power; therefore, like all public power it brings with it the ethical imperative to use it responsibly and in the public interest.
Even if Jane makes one million times more money than John, she is not going to purchase anywhere near as much as one million Johns would. There just aren’t enough hours in the day or space in her house. It is therefore wise from an economic point of view to make sure that those Johns are capable of making up in purchases what Jane is removing from the economy by concentration of wealth.
The poor don’t starve? I’d have to disagree with you on that.
That said, I’d say that if a society has provided enough for everyone, it doesn’t matter how rich the rich are. But that’s a very big IF. The United States has a looooong way to go before we reach that point.
Unless Jane is quite literally burning her money she is not removing it from the economy. You’re right that Jane’s money will not be used to purchase all those things that a million Johns can purchase. Her money will be used to build factories, homes, and to employ those millions of Johns out there.
Back to the OP. It is actually misleading to worry about the income of the lowest employer with that of the highest. As Matt pointed out those Johns are all pretty darn important. It is the middle class that is the best idicator of economic health.
hunger: 1 a : a craving or urgent need for food or a specific nutrient b : an uneasy sensation occasioned by the lack of food c : a weakened condition brought about by prolonged lack of food
And according to the Thesaurus:
Entry Word: starved
Function: adjective
Text: Synonyms HUNGRY, famished, ||peckish, ravenous, starving
Related Word underfed, undernourished; weakened; half-famished, half-starved
I suppose it depends on exactly what you mean by “starving”. If you mean a total lack of food, then there is a slight difference. If you mean having an inadequate amount of food, then, yes, they’re the same thing.
What I meant to point out is that in the US, we still haven’t conquered the problem of ensuring that everyone gets enough to eat, not by a long shot. There are people in the US who cannot get enough to eat, and are incapable of providing for themselves.
Well, I’m a cold-hearted capitalist pig-dog who’s completely lacking in moral conscience, so… <wink>
What you haven’t accounted for is how the wealthy have become wealthy. Let’s look at Bill Gates, for various examples. He had a small company in the mid-80’s that made software. Now he’s among the wealthiest people on earth, and he has contributed to the economy by providing jobs for a much larger number of people. It seems to me that he’s satisfied the points you make, in that he’s contributing to the economy and using his wealth in line with the public interest.
OTOH, he does have his drawbacks. I haven’t been following the case lately, but the DoJ is definitely taking an interest in his business practices. It seems that he’s been attempting to use his wealth in a manner which does not fit well with the public interest. What’s the point, you ask? Checks and balances do exist, and there is a limit to the amount of power we’re willing to allow due to wealth.
Note that I do not claim the system is perfect. I agree that there’s room for improvement. I chose Mr. Gates specifically to demonstrate all three points.
Moving on, I’m interested in this “ethical imperative”. If I make $100,000 annually, yet I need much less than that to support myself and family and account for “basic necessities, such as health care”[sup]1[/sup], what does this ethical imperative you describe demand I do with the rest of my money?
Which choice is more ethically sound, sorted in ascending order of expense:
A) A 3-bedroom trailer
B) A 3-bedroom house in a rural area
C) A 3-bedroom house in a suburban area?
Additionally, should I get cable? On the one hand, that money can go to a charity for the hungry. On the other hand, I’m removing that money from the economy, where it would have been part of some cable-employees salary. Again, which is more ethically sound?
Perhaps my leftover salary is enough to start a company a-la Bill Gates. But now, instead of making $100,000 a year, my software does well and I’m (personally) making $1,000,000 a year, while providing jobs and income (via my company) to a couple-hundred people. When have I given enough?
Finally, in point 3, you seem to assume behavior patterns which do not necessarily exist. How does Jane make “one million times more money than John”? The implication is that she’s somehow been handed this money and is making no contribution equal to what she takes.
Attrayant, can you tell me who’s goal is to “use what money [they] have to take the little guy’s money away”? Other than the IRS, of course. This seems to be a common belief, but I don’t know what the reasoning is.
Why, the cold-hearted capitalist pig-dogs of course <wink>
Actually I’m just offering up capitalism with a twist of corruption. Like I said, if everybody plays nice, no problema. Bill Gates does wonderful things with part of his excess wealth via his Gates Foundation, but everybody is not like Bill Gates. Money is exchanged for goods & services - but with profits always landing on the side of the wealthy. Okay, that’s the way business is supposed to work, you say, but taken to extremes we desdinova’s evaporation of the middle class dilema. This is the “Rich get richer & poor get poorer” spiral.
I do not have a problem with the mere concept of unequal incomes. If Bob the farmer has a few less lentils than Maryanne the farmer, I’m cool with it, as long as they all have enough lentils to live.
My problem is when Maryanne sells her excess lentils, and then buys Bobs farm. Then Bob, the dispaced lentil farmer, is forced to work for Maryanne, and Maryanne takes a portion of the lentils that Bob produces. Bob is no longer the owner of his lentil produceing labor. He no longer get the full benefits of the work that he still performs. Bobs actions are now at least in part owned by Maryanne (or whatever other lentil farm owner he works for). In that sense, Bob is no longer free.
In real life, that translates into inescapable ghettos. It translates to a chronic lack of hope. It translates to humiliation in the face of so much plenty.
I’m frankly disappointed by most of the responder’s comments thus far. OF COURSE significant income disparity is harmful!
Take one of the most obvious social harms arising from the vast income inequality in our country: our national health. We rank near the bottom of industrialized nations in several important health factors. We spend more money as a percent of GNP on our health care system than anyone else in the world, but we have a depressingly lousy return for our dollar. We have the most expensive health care system in the world, but we are a long way from the healthiest country in the world! Why? Mostly because the American free market health system has priced proper health care beyond the means of too many people who need it. We can thank conservatives and libertarians for this disaster. It is a national disgrace!
Studies from both Harvard and the University of California at Berkeley have clearly shown that income inequality is to blame. Not wealth or the lack of it, per se, but rather the vast divide between the wealthy and the poor. It isn’t the absolute level of wealth in a given U.S. state that determines health; it is the size of the gap between rich and poor. These studies have found a remarkably strong correlation between the size of the gap between rich and poor and the infant mortality and premature death rate in that state. Let me quote from a paper discussing these studies:
*This measure of income inequality was also tested against other social conditions besides health. States with greater inequality in the distribution of income also had higher rates of unemployment, higher rates of incarceration, a higher percentage of people receiving income assistance and food stamps, and a greater percentage of people without medical insurance. Again, the gap between rich and poor was the best predictor, not the average income in the state.
Interestingly, states with greater inequality of income distribution also spent less per person on education, had fewer books per person in the schools, and had poorer educational performance, including worse reading skills, worse math skills, and lower rates of completion of high school. States with greater inequality of income also had a greater proportion of babies born with low birth weight; higher rates of homicide; higher rates of violent crime; a greater proportion of the population unable to work because of disabilities; a higher proportion of the population using tobacco; and a higher proportion of the population being sedentary (inactive). Lastly, states with greater inequality of income had higher costs per-person for medical care, and higher costs per person for police protection.*
These studies were certainly not the only ones to find that the large disparity in income levels were almost certainly responsible for these social consequences. They were only the most recent! It is not difficult to see the cause and effect relationships. For one thing, the expenditure on exotic and enormously costly medical procedures by the wealthy inflates the cost of medical care for everyone else. The costs are not distributed fairly, and the poor end up paying the price – too often with their own lives and the lives of their children.
It never ceases to amaze me how stupefying credulous so many low- and middle-class economic conservatives and libertarians are! Apparently, they don’t realize that they’ve been duped to believe that what is good for the rich is good for them. How astonishingly naive!
It is quite common in my experience that the poorest people are often the most envious of the rich and admire them the most. They often seem to hate themselves for not being rich. It is perhaps somewhat paradoxical, but with the righties out there duping the lower and middle socio-economic classes into believing their lies and distortions, it should not be surprising.
Now I am not advocating any major changes in our political or economic systems. I am not a socialist, and I am certainly not advocating the end of the free enterprise system or democracy! But the system as it stands is OBVIOUSLY geared to advance the interests of the rich and powerful – largely at the expense of everyone else – because the rich and powerful run the system! It is as simple as that. The conservatives and libertarians together have managed to kill or maim many fair-minded and responsible attempts to provide the opportunities for poor and middle-class people to become economically successful on their own. What liberals like me want is NOT “wealth re-distribution”, it is fairness and opportunity re-distribution!
But with nearly all the power and wealth concentrated in an amazingly tiny minority, what chance is there for that? Face it, friends: we are – more and more – living in a plutocracy.
I am in agreement that there is enough wealth in the US, for example, to ensure that “everyone has enough” (barring the discussion about what exactly is enough and who gets to decide). However, I am skeptical about the implimentation of severe wealth distribution and its impact on incentive. People being wealthy–and a healthy economy–certainly does not a honey-pot make. It can, and probably will, dry up if precautions aren’t taken to keep people wealthy. Such a program will not go over well as the accusations levelled against fiscal conservatives will show.
I think that makes a number of assumptions which aren’t inherent in a capitalistic society. First, I can see that wealth is certainly a form of power. However, that doesn’t imply to me that one who has such a power is ethically required, in any way, to use it for the public good (even assuming such a thing can be defined and understood, which I admit is probably possible). I would think the ethical responsibility such a person has is not to use it for evil. From there it is anyone’s game. [waiting for jshore to call me on this]
[addendum to Marc’s post]Not really. Concentrated wealth is very important to advancement. Really, I think that is somewhat obvious. It is hard to get one million Johns to pool their money together to build a power plant even though all of them need it. Jane has the cash, it is a lucrative investment (since the government allows monopolies on power plants (or did, anyway)) and so will gladly drop her chunk of change down. The speed and efficiency one gains in concentrated wealth outweighs other economic concerns in many cases (not necessarily all cases). Not only that, but one million Johns aren’t going to spend their money in the same way one Jane would even barring actually buying property and using it to provide a direct service. The convenient stores would get rich, but how would that help develop new forms of power production, better farming techniques, genetic research on disease-resistent plants, etc? In other words, what are the johns doing to keep the pace accellerating?
There are benefits to distributed wealth. There are benefits to concentrated wealth. Because neither is truly “better in the end” we keep the income disparity with some gentle (I know some may snort at the use of gentle here, but whatever) redistribution.
even sven
Given that this is a simplification, I think it is still lacking in several important factors.
One: Are we arguing strictly pragmatic economics or are we arguing econ with a side of compassion for special cases? If it is the former, fuck Bob. He isn’t using his land to its best potential or he wouldn’t need to sell it for a price that would result in his “lack of freedom.” If it is the latter then there is the problem of Maryanne not being able to utilize her full potential–maybe not even a facsimile of full–all because Bob is going to lose his freedom. I think that you are implying some forcible takeover by Maryanne there, because I cannot see how it otherwise matters. In fact, Bob would have more freedom in many cases since he would have new money, and thus access to resources like spare time and other luxuries which, while slaving away on his own farm, he didn’t have access to before. His freedom went down in some respects, but went up in others.
If the thing you don’t like about wealth is that it causes people to buy other people’s stuff then I am truly lost at what we should do about things.
ambushed
Good, let’s see why you think so.
This is bullshit. There are many countries with income disparities and social health care programs. Our “socially harmful health situation” is the result of our representatives deciding that they are either representing the majortiy opinion or making the best economic decision. I suppose you may also take the view that their pockets are being stuffed by fat-cat insurance companies. You are welcome to have that opinion.
You are close to making me want to drag you in the PIT here. Maybe reading the rest of your post will change my mind on that.
First, I would caution you on comparing other countries’ health care systems with America’s. Not that it can’t be done, but it is a rather wide brush you are painting with there. There are several good reasons why a country might choose to impliment socialized medicine in a form that is considerably stronger than the one we have now. Not doing so is not a disgrace. That opinion is founded on your preconceptions and notions on how a country should behave. I might as well say that all Communists are a disgrace to freedom.
Secondly, we can thank our fucking government for that decision. Since, in theory, our government is really just comprised of puppets representing the will of the people, you can also thank your neighbor. Leaning toward one end of a political spectrum doesn’t automatically imply a religious devotion to any particular stand on any particular topic.
Good, then perhaps you can link me to those studies, or perhaps to which magazines might contain the methods used to come to such a conclusion.
I would refer you to “The Economist”, June16th-22nd edition. In big, bold letters on the cover is the question, “Does inequality matter?” The answer, of course, is yes. They present a clear case for its plusses and minuses without, suprisingly, debasing any particular ideal or political party. One might consider it a reasoned response. I am not about to summarize the over-17-pages they have dedicated to the topic.
The quotes you offer from the study do indeed seem to establish a causal link between income disparity and commonly-defined social ills. However,
This makes no sense to me. Inflated costs of medical care is a result of not enough people getting it and paying for it. That doesn’t mean that the wealthy people paying high rates for certain specific cares is the cause of this. I would think that would be obvious. The cost of launching a shuttle is not so high because the government is paying it. It is simply that high. Even granted that countries with socialized medicine do, dollar for dollar, pay less than America does doesn’t mean it still isn’t a costly affair for the government.
Apart from that, you will find that previous discussions on the topic do indicate that not everyone is satisfied with, say, England’s medical program.
A poster named kabbes has much to say on the topic from an insurance prospective, and has largely convinced me of (among other things) the benifits that socialized medicine has to offer us.
:rolleyes: This is an extremely understated and exaggerated opinion. There are demonstratably many cases where what is good or the wealthy is indeed good for the rest of us. This blanket assertation does nothing to further the cause of addressing income disparity.
“Liberals” don’t want anything that can be pinned down, except (maybe) a vague sense of more security. Security in what? Depends on the liberal. Security through what means? Depends on the individual.
I am frankly astonished at the lies you are believing in the matter.
As well, “fairness and opportunity redistribution” won’t necessarily eliminate large wage gaps because, obviously, not all people have the same abilities and in any form of meritocracy those with more abilities and the same amount of “fairnes” will become wealthier. To eliminate a large wage gap one will need to actively redistribute welath in addition to creating an opportunistically fair workplace. Others may want to correct me on this, but I doubt they will.
Yeah, and should we follow your plan we’d be living in a fascist state. See how easy it is to throw these words around?
The American government has done things to try to reduce staggering wage gaps, provide better job security, and so forth. It has not done this as effectively as some other countries. It is also not comprised of the same type of people as other countries, and they certainly don’t vote the same. While we may be able to draw a causal connection between income disparity and other social dilemmas, it ultimately requires the view that those dilemmas are of ultimate urgency, or if we are getting by as it is, and will patch things up along the way.
I believe any representative government is ultimately prone to corruption. I do not believe that our entire government is corrupt. We do not live in a plutocracy.
Well, since this is indeed an ethical question, I will simply have to assert that it is my ethical belief that the purpose of power is to serve the common good. On this issue we will have to agree to disagree, which is what makes life interesting.
As for your point about concentration of income and Jane’s propensity for investment vs. John’s, the problem is that Johns and Janes have different investment habits.
Jane’s capital is much more mobile; a politician (Kim) who bases her economic policy on making sure that Jane will have huge amounts of capital to invest with has no way of knowing that the capital will end up anywhere in Canada (Jane lives in Toronto). It could just as well end up in Japan or the Cayman Islands, where it will end up diffused, as you say, to the economies there. This is all very well for the fine folks of those polities, but Kim has failed in her duty to assure the weal (create jobs, stimulate investment, etc.) in her own polity (Canada).
However, another politician (oh, I don’t know… Svend) who institutes various policies to ensure that John’s share of the wealth* increases is stimulating investment in his own polity. Being poorer than Jane, John spends a much higher proportion of his income on consumer goods and services from local businesses. This is a more efficient way of creating widespread sufficiency in the polity that Svend serves, because the local businesses are also hiring other Johns who move into the same cycle.
*This doesn’t necessarily or even primarily involve direct fiscal grants, but also includes such things as medicare, education, environmental health, adequate housing, and whatnot, all of which enhance the amount of money that John has at his disposal to stimulate the local economy. Various thinkers refer to these things as “the social wage.”
Of course, the above is an oversimplification. Both Janes and Johns are necessary in balance, as others have shown. However, that the dominant ideology among the elites in my country and yours is an intensely neoliberal one leads me to believe that some of Svend’s politics are necessary to bring the political economy back into equilibrium.
hmmm…yessss. Well, the idea is we are counting on them having different investment habits. That can be a problem, but it is also its strength.
Collounsbury has said some pretty pointed things about foreign investment. I only wish I could give them the treatment they deserve in repeating them. Instead, I must say that this is a possiblity and that it can be viewed as a negative.
Hey, were you in the trickle-up economics thread? Reminds me of that one. I don’t know that it is necessarily more efficient, though, or that it could even serve many of the ends we’d like to meet.
Hmm, perhaps. I agree that income inequality can certainly be a bad thing given the appropriate definition of bad (and I see no reason to argue that at all here), but it still never has to be. I think that I agree with the op that, given a high enough floor on income, the disparity of wages isn’t as crushing as many believe.
An interesting side-note… figures from 1995 ranked America as the number one in philanthropy. American philanthropists donated the equivalent of 1% of the GDP that year. The closest after that was Spain with around .85% GDP. This was all private donations, btw, not including religious sources. However, as we can all testify to, this philanthropy doesn’t seem to equal out with the services many of those countries offer in place of it. It is speculative to say that there could be a growing trend which would change that fact and make philanthropy more successful than government programs, especially if it were guided by tax breaks (which are more successful at philanthropy than tax breaks, for you GWB fans :D). But, if there is to be such a trend, it will take a continued strong economy and a keen eye on not letting the wage gap become unbearable.
The upside to promoting this mentality is the speed and efficiency with which private funds can be channeled into such programs. BGIII, for example, literally decided almost overnight to funnel 21 billion dollars toward developing vaccines in poor countries. This helps the world economy, and that certainly isn’t a bad thing. But how long would it take the government (any representative government) to dole out that kind of cash, and how much time and money would be wasted getting there?
Provided we can encourage redistributive-style programs successfully I think they are truly a better alternative. But, can we wait that long? That may take a few more generations of “the new rich” to get into motion. (damn, that was a long side-note)
I’m doing something I shouldn’t - namely jumping in to respond before reading the whole thread carefully.
Number Six says that people are starving in America, and posts a website as proof.
A quick read thru the statistics on the website reveal that they are all or almost all based on how many people are receiving food aid. Doesn’t seem to follow.
If someone, who may well be hungry, receives free food, this is an argument in favor of the idea that no one starves to death. You can’t count deaths from falling by seeing how many people hit the safety net, to stretch a metaphor beyond all reason. So the safety net of food, at least, seems to be working fairly well.
I am also sceptical of statistics saying that people are “at risk” of being hungry. I suppose if you tried hard enough, you could expand your definition of being “at risk” to include practically anybody.
Sort of how I felt when I realized (way after the fact) that I qualified for food stamps at one point in my life. I never collected, because it never occurred to me that I was poor, but statistically, I was. But I was never hungry in the sense that I did not have enough to live on. Although macaroni and beans gets monotonous after a while.
It never occurred to me that a majority of posters might think that income disparity was morally indifferent. I keep reading statistics in the newspapers who present “the growing gap between rich and poor” as a self-evident evil.
Now to read the rest of the thread (carefully). Thanks to all who have responded so far!
I suppose the point is that since food aid is necessary, the free market is failing to provide for everyone’s nutrition and is having therefore to be supplemented.
Reminds me of that one. I don’t know that it is necessarily more efficient, though, or that it could even serve many of the ends we’d like to meet.