In the new thread trying to give conservatives a chance to lay out their wet dreams (I would link, but I amposting from my phone), Shodan stated he would not address income inequality. I have seen this sentiment displayed before by conservatives in discussions about Occupy Wall street.
One opinion I seem to hear again and again is that the method for choosing CEOs is just and they are paid according to their value (by definition, as the market will correct). Well, OK, I actually tend to agree. But I always felt that this misses the point; I was always under the impression that income inequality was a bad thing per se when it became too great. I have always thought that a moderate amount of inequality is good in that it spurs competition, but a lot is bad because the inequitable distribution of resources stifles productivity.
So I have several questions that I hope to resolve with this thread:
Is income inequality bad for a society as a whole or a country, and if so how? What I am looking for here is evidence based quantifiable effects like GDP growth, innovation, etc… Basically, what is a measurable effect of having a high GINI coefficient.
If it is bad, should society address it? If it is bad, wouldn’t this best be addressed by government as they have a mandate to promote the general welfare? What methods should be used?
For myself, I have always been of the opinion that the government should correct inequality through increased funding of education, especially at the collegiate level, and the promotion of small business creation. Universal healthcare would help greatly in the latter.
Inequality of opportunity is bad for society. Inequality of outcomes should be treated as neutral. So, income inequality is not bad if opportunities are equal. And if income inequality exists because of inequality of opportunity, that’s where government should focus. That’s, or should be, the easy part. But I doubt people on either side of the spectrum of political debate agree on even this.
Missed the edit window.
So, I agree with you on increased funding of education and health(to some extent), but differ on the level. I think increased public funding should exist till the high school level, public funding for college should be based on a combination of merit and ability to pay.
ETA: Also missed the whole quantifiable aspect that you’d asked for. Apologies for being slow, I will bow out of this thread until I have time to back up what I say.
Well, I can say that I very much agree with this, so that’s one person.
A distinction which should be made but often isn’t:
When discussing inequality of wealth, often the situation presented is : “On the one hand you have some very rich people and on the other you have people starving”.
This mixes two issues; relative levels of wealth and absolute levels of wealth. If we took that society and made it so that everyone was starving, we would have more equality of wealth. Yet I don’t think many people would regard that as a good thing.
If we made it so that people in the bottom half had twice as much purchasing power as they now do while people in the top half had three times as much purchasing power as they now do, this would represent an increase in inequality of wealth. Yet I’d be quite fine with it and I think most people would be as well.
So, one must distinguish as sabba does between outcome and opportunity and also between relative levels of wealth and absolute levels of wealth and not mix the issues.
I don’t disagree with the notion that inequalities of opportunity are more egregious than inequalities of wealth.
However, I also believe that rising inequalities of wealth should indicate that there are likely rising inequalities of opportunity. That is, the changes in the outcomes should at least cause us to consider if “the rules” have changed in such a way as to cause these outcomes.
As to the OP’s question would could consider the list of GINI coefficients. Here is a map that lays them out by color: File:GINIretouchedcolors.png - Wikipedia. A quick glance shows that most of the developed world has less income inequality than the developing or undeveloped world. The US being a notable outlier.
I have assumed that inequality of opportunity correlates with inequality of wealth, especially when the government bows out of the equation. If we cut government spending around education, childhood health care and child hood nutrition, I would argue that they definitely correlate.
This is true, but what needs to be added to the mix is the anthropological concept of “relative deprivation”. That is, humans to an extent (and obviously above certain minimum thresholds) measure their circumstances by relative, not absolute, means.
For example: welfare recipients in the West today are almost certainly better off in numerous absolute ways compared to medieval nobility. Yet the comparative sense of well-being would probably favour the nobles.
Or to give another, the absolute material well-being of aboriginal communities in Canada has certainly increased with contact with Europeans: yet obtaining material bounty has not necessarily increased their sense of well-being, because while they may be absolutely better off, compared to the European population they live in relative deprivation.
Then why is it that we would all agree that a system wherein wealth were redistributed according to a society-wide lottery every fifty years, with 1% getting 33% of the wealth, 50% getting 60%, and 49% getting 7%, and in which everyone had the same chances of winning was, the equality of opportunity notwithstanding, not a desirable system?
Let’s not assume that there are only two choices - absolute equity, or the status quo. Even if there were perfect equality of opportunity, there is not equality of skills and talent, so there will not be absolute equity of outcome. (Unless we want to live in Vonnegut’s “Harrison Bergeron” world.) But there is some point where inequity goes way beyond natural inequity. No one is really 200 x smarter or more clever than the mean. It doesn’t seem very extreme to me that those on the top get nudged slightly back to the mean through tax policy - and nudged does not mean confiscatory taxation. Especially when the money can be used to support equality of opportunity, which everyone seems to agree with.
BTW, the idea that CEO salaries (at the top, anyway) are purely market driven has been disproved here more times than I can count.
CEOs aren’t paid according to their value or their worth. Their salary is chosen by a board of directors, who are in chosen by the CEOs, and are often friends and associates.
The history of CEOs getting multimillion dollar salaries right up until the day they bankrupt their companies is long and depressing.
People who’ve studied it have found the relationship is inverse- companies that pay their CEOs less do better in subsequent years than those who pay them more.
Inequality is inherently bad, in terms of its consequences. If you give two monkeys one banana each, you have two happy monkeys. If you give one monkey a banana and give the other one three bananas, you’ve got one monkey who’s happy, and one who’s severely pissed off.
They’ve done this, btw, in labs. Not that you’d need a study to know it’s true.
People are monkeys. And there’s no such thing as “absolute” wealth, anymore than there’s “absolute height”. Your height, or your wealth, can only be judged relative to people around you.
Really? I would say things like starving or freezing to death, or not, or having a big TV or not, are objective facts uninfluenced by whether someone else is eating lobster tonight.
I don’t feel equality of opportunity is enough. Without some form of redistribution of the resultant income, whether through charity or governmental means, you will then end up with some winners and some destitute losers; some people just don’t have the talent or health or intelligence to do well, much as they might try. Morally speaking, the losers should be given extra income. I don’t think charity will generally be sufficient for this, plus it is more demeaning than some forms of government subsidy programs.
I also question that the existing system of compensation is fair. As mentioned by Voyager, many people who obviously don’t have hundreds of times the usual talent as managers or actors or writers, etc., end up getting hundreds or thousands of times what others get. Often this is due to family or social connections. Many times it is due to a willingness to cheat the system, to break laws and cut corners to get ahead, to cheat on exams, to bribe politicians, to sabotage the competition, to pander to the worst instincts of the buying public, etc. Our current system is based more on what you can get, fairly or unfairly, than what you deserve.
I feel like there’s obviously some truth to that, but it must have limits. I think there are several distinct issues:
(1) how much stuff we have. This is the one where relative status is the most important… if everyone you know lives in a one room house with no electricity, and you live in a one room house with no electricity, you probably think that’s just dandy, and might feel rich and blessed because you have two goats instead of one.
(2) how secure you are in what you have. Regardless of whether “what you have” is a hovel or a mansion (by modern standards), everyone wants to know that one random month of misfortunes is not going to suddenly result in having much, much less. Here’s one where the relative status is less important. If I know that any random injury will mean I lose my job will mean I lose my house, that is going to be constantly weighing on me, regardless of whether it’s also true for all of my neighbors (although if it’s true for all of my neighbors as well, I might just take it for granted as the normal state of things… but it won’t stop it from keeping me up nights, etc.)
(3) opportunities for one’s children. This is another one that is not hugely relative (although it’s certainly one that I’m seeing through a very US-centric viewpoint). I want to think that my (hypothetical future) children will have the chance to pursue their dreams. Again, that’s an absolute. If everyone else’s children also will have that chance, that doesn’t make me less satisfied with the level of opportunity my children will have.
So much for my decision to stay out of this thread
Sure it is. Which is why government has a role to play in ensuring equality of opportunity. But not in ensuring equality of outcomes.
They may very well correlate perfectly, but surely you realise that would say nothing about whether income inequality is good or bad, and tell you even less about the effects of income inequality?
Are you arguing that everyone gets handed what they earn and don’t deserve it at all?
I agree with a fair bit of what you say. Except that I haven’t seen ‘CEO salaries are market driven’ being disproved. And if the only place it’s been disproved is on this message board, I would be skeptical about it. If there’s any published research on the matter you can link to, I’d be grateful. (Not trying to be snarky, I have an open mind on the matter and would actually like to know) I have seen research on how CEO salaries act as a motivational tool for second and mid rung talent, and on how globalisation in the last 30 years(the addition of massive markets and cheaper workforces) allow for top executives’ compensation to jump beyond what middle classes can achieve.
I don’t know if I should reply to this, but hell, why not. For one, I’d love to see a cite for ‘They’ve done this btw, in labs’ and see if ‘They’ drew the same conclusions as you. For another, try this experiment in a lab. Train two monkeys to go around a course and give them a banana each time. Make monkey A go around thrice, give him three bananas. Make monkey B go around once, and give him one banana. Then take one of monkey A’s bananas and give it to monkey B. See if equality gets you two happy monkeys.
