# Is income inequality bad for a society? **URL:** \ **Category:** Great Debates\ **Created:** [December 14, 2011, 3:12pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170 "2011-12-14T15:12:14Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [December 14, 2011, 7:31pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/41 "2011-12-14T19:31:16Z")
> [@Jas09](#): > > Well, that invites the following. Is there any level of inequality that is unacceptable? > > As an example, imagine some scheme in which you got a standard deduction at the poverty level, then a 100% marginal tax rate until $100k. So everyone either took home poverty-level wages or took home the amount earned beyond $100k. Your statements are equally true for this (one could move up to the top by learning more skills), but I don’t think you would consider this a just society, right? That’s a really strange sort of hypothetical to pick out. Sort of like if I were to say that since you were considering social distribution as not inherently immoral, that invites the following. Imagine some scheme in which everyone in the US got a standard deduction at the poverty level, and a 100% marginal tax rate for the rest of their income, which is then distributed to the rest of the world to feed the hungry people. Your statements are equally true, but I don’t think you would consider this to be a just society, right? ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [December 14, 2011, 7:32pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/42 "2011-12-14T19:32:57Z")
> [@bldysabba](#): > > Heh. You’re getting nowhere with me if you quote a religious source to prove something isn’t inherently immoral. Fair enough. But there still isn’t anything inherently immoral about redistribution. It’s damn-near universal. Unless you oppose every form of social safety net and favor a completely flat tax (and by flat I mean everyone pays the same amount, not the same percentage), then you are accepting redistribution. It’s just a question of how much. > [@](#): > > Government sponsored charity on the other hand, sets up a perverse system of incentives in a framework that already has plenty of moral hazard. It is not just morally bankrupt, it is likely to do more harm than good over time. What evidence do you have that government-run social services have done more harm than good? ---
**Author:** ![Oakminster](https://avatars.discourse-cdn.com/v4/letter/o/77aa72/32.png) [@Oakminster](https://boards.straightdope.com/u/Oakminster)\ **Post date:** [December 14, 2011, 7:36pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/43 "2011-12-14T19:36:44Z")
> [@Jas09](#): > > Isn’t this an excluded middle? Nope. Before my office closed, I was solidly in the middle class. Assuming I find future employment, I should remain there, and possibly improve my position over time. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [December 14, 2011, 7:41pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/44 "2011-12-14T19:41:29Z")
> [@bldysabba](#): > > That’s a really strange sort of hypothetical to pick out. Sort of like if I were to say that since you were considering social distribution as not inherently immoral, that invites the following. Imagine some scheme in which everyone in the US got a standard deduction at the poverty level, and a 100% marginal tax rate for the rest of their income, which is then distributed to the rest of the world to feed the hungry people. Your statements are equally true, but I don’t think you would consider this to be a just society, right? I don’t think you understand. My point is merely that there are many frameworks that are unjust - some with high inequality and some with low (or zero in your example’s case). I readily concede that perfect equality is neither achievable nor desired. But you don’t seem to concede that there are levels of inequality that are equally undesirable. My position is that redistribution is morally justifiable, and that the important policy question is what level of redistribution is acceptable while maintaining a working capitalist system and maintaining a civil society? Or, put slightly differently: given a set amount of government services required to maintain a healthy, functioning society what is the best way of raising the funds for these services in a manner that has the least-negative impact on economic activity and social stability? ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [December 14, 2011, 7:42pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/45 "2011-12-14T19:42:03Z")
> [@AHunter3](#): > > I do not think serious adversarial competition (as opposed to competition for pleasure and sport) is an inevitable organizing principle for economic and political structure. I also do not _like_ it. It’s unpleasant, a socially undesirable thing. > > I take it for granted, as a “given”, that we’ve long since established that it’s stupid and short-sighted to move from that to some kind of redistributivist band-aid that gets stuck on an economically competitive system, aka redistributing the wealth of the wealthy back to the poor in some misguided spirit of “fairness” or “equality”. It doesn’t work. It pays the competition’s losers to remain in loser-space, removes the incentive for the winners to continue to strive to win, creates a powerful political class of distributors of that wealth, and makes the entire system unweildy and inefficient. But that does not in any way detract from the original observation that adversarial competition is not pleasant and is not necessarily the only way to organize things. Ah. You make some very good points, but reach an (IMO) flawed conclusion. Winning in serious adversarial competition is a big part of how our species has evolved. Whatever configuration does things better and more efficiently than others will win out over the medium to long term, whether directly adversarial or not. Competition still brings out the most from us. What alternative do you propose to it? ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [December 14, 2011, 7:44pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/46 "2011-12-14T19:44:49Z")
> [@Oakminster](#): > > Nope. Before my office closed, I was solidly in the middle class. Assuming I find future employment, I should remain there, and possibly improve my position over time. What I mean is that your reasoning as to why marketable skills require higher compensation has the fallacy of the excluded middle. That is, you seem to be saying that any amount of redistribution will eliminate your incentive to learn more marketable skills. I don’t think this is the case, as there are certainly incentives in current US society which has income redistribution. There is plenty of middle ground between zero redistribution and communism. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [December 14, 2011, 7:56pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/47 "2011-12-14T19:56:13Z")
> [@bldysabba](#): > > 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. You’re assuming that the humans who get the most bananas do the most work. Actually the reverse is true. The rich work, if they do, because they want to. The poor work because they have to. As for the monkeys, here’s one: > [@](#): > > Brosnan said the response to the unequal treatment was astonishing: Capuchins who witnessed unfair treatment and failed to benefit from it often refused to conduct future exchanges with human researchers, would not eat the cucumbers they received for their labors, and in some cases, hurled food rewards at human researchers. > > Those actions were significant. They confirmed that not only did capuchins expect fair treatment, but that the human desire for equity has an evolutionary basis. > **[National Geographic](https://www.nationalgeographic.com/)** > > Explore National Geographic. A world leader in geography, cartography and exploration. But seriously, do your own experiment. Find two kids. Give one a pony, and the other a pair of socks. See what happens. ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [December 14, 2011, 7:57pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/48 "2011-12-14T19:57:12Z")
> [@Jas09](#): > > I don’t think you understand. My point is merely that there are many frameworks that are unjust - some with high inequality and some with low (or zero in your example’s case). I readily concede that perfect equality is neither achievable nor desired. But you don’t seem to concede that there are levels of inequality that are equally undesirable. > > My position is that redistribution is morally justifiable, and that the important policy question is what level of redistribution is acceptable while maintaining a working capitalist system and maintaining a civil society? > > Or, put slightly differently: given a set amount of government services required to maintain a healthy, functioning society what is the best way of raising the funds for these services in a manner that has the least-negative impact on economic activity and social stability? You seem to be ascribing to me the position that there should be no taxation. I have advocated government trying to ensure equality of opportunity. Where would the money come from? Of course it would come from taxation, and if the taxation so required needs more money than taxing everyone at one rate would generate, take more from rich people. My position is that the taxation should not be based on the idea, (nor should it be trying to attain the objective), that inequality of incomes is a bad thing. If there is inequality of opportunity, then yes it is a bad thing. But if there IS inequality of opportunity, \*that \* is the real disease policy needs to be aimed at curing, not the symptom of income inequality. ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [December 14, 2011, 8:01pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/49 "2011-12-14T20:01:43Z")
> [@LinusK](#): > > You’re assuming that the humans who get the most bananas do the most work. Actually the reverse is true. The rich work, if they do, because they want to. The poor work because they have to. > > As for the monkeys, here’s one: > > [National Geographic | National Geographic](http://news.nationalgeographic.com/news/2003/09/0917_030917_monkeyfairness_2.html) > > But seriously, do your own experiment. Find two kids. Give one a pony, and the other a pair of socks. See what happens. From your own cite, it turns out that the researchers actually conducted the experiment I laid out and then got the response you’ve quoted. > [@](#): > > Partners of capuchins who made the swap either received the same reward (a cucumber slice), or a better reward (a grape, a more desirable food), for the same amount of work or, in some cases, for performing no work at all. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [December 14, 2011, 8:02pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/50 "2011-12-14T20:02:01Z")
> [@Buck\_Godot](#): > > In terms of maximizing use of resources, there is much in favor of reducing economic disparity. The marginal utility of a dollar is much greater for a poor person than for a rich person. So to maximize the over all marginal utility of the available resources one should have the wealth rate as flat as possible. > > The problem of course is that you also need to motivate people to actually produce or else there won’t be any resources produced to distribute, so there is sort of a Laffer curve type effect where some middle ground is best but no one will agree where that is. > > From my point of view the inequality should be the least that is required to motivate people to work. So that a CEO’s salary should be the lowest salary that will still make being a CEO a desirable position to a well qualified candidate. I suspect that this number is much lower than its current rate. Personally, I’d rather be the CEO than the janitor, even if the pay’s the same. But the reason the pay’s different is that CEOs have a lot of power. Janitors don’t. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [December 14, 2011, 8:04pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/51 "2011-12-14T20:04:22Z")
> [@bldysabba](#): > > My position is that the taxation should not be based on the idea, (nor should it be trying to attain the objective), that inequality of incomes is a bad thing. If there is inequality of opportunity, then yes it is a bad thing. But if there IS inequality of opportunity, \*that \* is the real disease policy needs to be aimed at curing, not the symptom of income inequality. And here we have come to agreement. I would add that the symptom of income inequality, in general, should cause us to search for the source and attempt to address it, if possible. One could hypothesize, for example, that changes in executive compensation may be traced to changes in the way these compensation packages are regulated, disclosed, etc. rather than some change in the fundamental value of a CEO. And that we should always be on guard for dangerous levels of inequality (obviously difficult to define), because these tend to lead to economic and social unrest (which I think was the general question of the OP). ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [December 14, 2011, 8:07pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/52 "2011-12-14T20:07:26Z")
> [@bldysabba](#): > > From your own cite, it turns out that the researchers actually conducted the experiment I laid out and then got the response you’ve quoted. Well, sort of. The results could, I suppose, be construed to support either “view”. The interesting point, to me, is that a monkey that received the same reward he always did (the cucumber) stopped participating if he saw that another monkey got a much better reward. It is not hard to extrapolate this to human behavior to explain why people feel jilted even if their income stays the same when they see the CEO get huge bonuses. In particular if they get these rewards for no discernible reason (say, destroying the investment bank they ran). ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [December 14, 2011, 8:11pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/53 "2011-12-14T20:11:26Z")
> [@bldysabba](#): > > From your own cite, it turns out that the researchers actually conducted the experiment I laid out and then got the response you’ve quoted. Nope. The experiment involved giving monkeys different rewards for the same work, or no work at all. Your experiment was to give more bananas to harder-working monkeys. See the difference? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 14, 2011, 8:13pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/54 "2011-12-14T20:13:46Z")
> [@Buck\_Godot](#): > > In terms of maximizing use of resources, there is much in favor of reducing economic disparity. The marginal utility of a dollar is much greater for a poor person than for a rich person. So to maximize the over all marginal utility of the available resources one should have the wealth rate as flat as possible. > > The problem of course is that you also need to motivate people to actually produce or else there won’t be any resources produced to distribute, so there is sort of a Laffer curve type effect where some middle ground is best but no one will agree where that is. > > From my point of view the inequality should be the least that is required to motivate people to work. So that a CEO’s salary should be the lowest salary that will still make being a CEO a desirable position to a well qualified candidate. I suspect that this number is much lower than its current rate. Well, all we have to do is determine what that amount is (for the CEO) and we’re set. Piece of cake, right? ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [December 14, 2011, 8:14pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/55 "2011-12-14T20:14:18Z")
> [@Jas09](#): > > And here we have come to agreement. > > I would add that the symptom of income inequality, in general, should cause us to search for the source and attempt to address it, if possible. One could hypothesize, for example, that changes in executive compensation may be traced to changes in the way these compensation packages are regulated, disclosed, etc. rather than some change in the fundamental value of a CEO. > > And that we should always be on guard for dangerous levels of inequality (obviously difficult to define), because these tend to lead to economic and social unrest (which I think was the general question of the OP). But..but..that’s what I was saying right from the beginning! 😛 The dangerous levels of inequality is kind of a strange one too. If I had to, I’d say that as a symptom income inequality would be like a mole. Benign in and of itself, although ugly to some, but if it gets too large and stays too long, look for cancer. If you find it, treat the cancer, but if not, beware the doc who tells you to go into general anaesthesia to take out a mole. Ok, there is such a thing as stretching a metaphor too far :smack: But you get what I’m saying. ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [December 14, 2011, 8:25pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/56 "2011-12-14T20:25:18Z")
> [@LinusK](#): > > Nope. The experiment involved giving monkeys different rewards for the same work, or no work at all. Your experiment was to give more bananas to harder-working monkeys. See the difference? Yes I do. It’s minimal. The experiment is, at best, unhelpful in an ‘inequality of incomes is harmful’ debate. Sure people prefer fairness. That is not the same thing as equity, in fact quite often it is the opposite. Have one person work harder at a more difficult job than the other and then give them both the same pay. Is that fair? No. Is it equitable? Yes. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [December 14, 2011, 8:35pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/57 "2011-12-14T20:35:32Z")
Empirically, if memory serves, income inequality in the US tends to rise in boom times and fall in times of recession. Note, for instance, [that](http://www.nytimes.com/2011/12/13/business/economy/recession-crimped-incomes-of-the-richest-americans.html?_r=1&adxnnl=1&adxnnlx=1323894865-HBn2wZGuIMcSVlr8hK7o+g) “The share of income received by the top 1 percent … dropped to 17 percent in 2009 from 23 percent in 2007, according to federal tax data.” ---
**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:** [December 14, 2011, 9:01pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/58 "2011-12-14T21:01:03Z")
> [@bldysabba](#): > > S > 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. You shouldn’t believe us, you should read Gretchen Morgensen and the like. Now, in a certain sense even monopolistic pricing is market driven. But you don’t need massive studies - you need only look at the mechanisms of how CEO pay is set to figure this out. (You didn’t need to do detailed financial analysis to know Tammany Hall was corrupt either.) Sure globalization has an impact, but it is global, and so doesn’t explain why US salaries have risen so much faster than European or Japanese salaries have. Now, I’ll admit it is possible that big salaries affect the middle rungs. But NBA salaries also affect kids shooting hoops who should be studying. I’d say that even if true, it is not healthy, since 99.9% of people so affected should be studying their bosses salaries, not someone 5 levels above them. Mailroom guys don’t get to be CEOs unless they happen to have the same last name as the founder - **How to Succeed in Business** is a comedy. ---
**Author:** ![Oakminster](https://avatars.discourse-cdn.com/v4/letter/o/77aa72/32.png) [@Oakminster](https://boards.straightdope.com/u/Oakminster)\ **Post date:** [December 14, 2011, 9:04pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/59 "2011-12-14T21:04:52Z")
> [@LinusK](#): > > But the reason the pay’s different is that CEOs have a lot of power. Janitors don’t. There’s a lot more to it than that. Anybody can push a mop. Not everyone can run a company. Moreover, the CEO has a lot more responsibility than a janitor. If the janitor fucks up, some cleaning doesn’t get done…until they replace him with the next janitor. If a CEO fucks up, the entire company can go out of business, many people lose jobs, investors lose money, etc…and there may not be time to right the ship by replacing the CEO. The risks are higher, so the company pays more to attract top talent. The greatest janitor in the world is not going to affect the bottom line in any meaningful way…but a good CEO can be the difference in staying in business, returning profits to investors, or going belly up. ---
**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:** [December 14, 2011, 9:07pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/60 "2011-12-14T21:07:57Z")
> [@Tom\_Tildrum](#): > > Empirically, if memory serves, income inequality in the US tends to rise in boom times and fall in times of recession. Note, for instance, [that](http://www.nytimes.com/2011/12/13/business/economy/recession-crimped-incomes-of-the-richest-americans.html?_r=1&adxnnl=1&adxnnlx=1323894865-HBn2wZGuIMcSVlr8hK7o+g) “The share of income received by the top 1 percent … dropped to 17 percent in 2009 from 23 percent in 2007, according to federal tax data.” Only because the income of top earners is more volatile. No data yet, but the articles on this say most expect it to have recovered in 2010. In any case, notice how even with this massive drop in income we didn’t see the 0.1% decide to quit and go lie on the beach. In other words, we have proof that taxing them up to 17% additional wouldn’t hurt motivation. Just another example of marginal utility - a 17% drop income for someone on the bottom would really hurt. Not that we should tax the rich this much more, but the defenders of the rich don’t seem to be able to draw the proper conclusions. [Previous page](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170.md?page=2) [Next page](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170.md?page=4)