# 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:** 16\ **Page:** 4
**Author:** ![Buck\_Godot](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/buck_godot/32/6573_2.png) [@Buck\_Godot](https://boards.straightdope.com/u/Buck_Godot)\ **Post date:** [December 14, 2011, 9:28pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/61 "2011-12-14T21:28:08Z")
> [@John\_Mace](#): > > Well, all we have to do is determine what that amount is (for the CEO) and we’re set. Piece of cake, right? I never intended to suggest that it was that simple. The CEO was as an example of inequality that seemed to be the focus of the discussion. As I suggested, there is much argument where the optimal inequality is to maximize overall marginal utility while at the same time not stifling ambition and even if that was solved I don’t have a solution to get us from here to there. > [@Oakminster](#): > > 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. And if the taxes for these top tier CEO’s went to 90% would they sit on the side lines because they are bringing home (only) 3 million a year? ---
**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, 9:30pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/62 "2011-12-14T21:30:34Z")
> [@Voyager](#): > > 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. I’ll check out Gretchen Morgensen, a quick search says she’s a journalist though. Any academic work you could point me to? Also, if there are conflicts of interest in determining CEO pay of private companies, I see it primarily as a principal-agent problem. Regulation could ask for greater disclosure to help shareholders decide perhaps, but I don’t see it as a problem for society at large. And sure globalisation is global, but you perhaps fail to take into account how successful US companies are. Most of the biggest corporations in the world are American. And much of that success has to do with leadership. I’m sure some CEO pay is undeserved and there are examples of malpractice, but it isn’t hard to argue that CEO pay is at the level it needs to be either. In addition to the factors I pointed to earlier, good leaders have a disproportionately large impact on their organisations, and as a result they are exceedingly valuable, but at the same time difficult to _a priori_ determine the value of. Boards don’t know whether they’re getting Steve Jobs or a dud, but they have to pay enough to attract Jobs. And if you think it’s unhealthy that kids/people should dream, then I don’t agree with your viewpoint. They should dream and work towards their dreams, and maybe at some point learn to reconcile themselves with not realising them, but to not dream at all? ---
**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, 9:40pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/63 "2011-12-14T21:40:10Z")
> [@Buck\_Godot](#): > > And if the taxes for these top tier CEO’s went to 90% would they sit on the side lines because they are bringing home (only) 3 million a year? Quite possibly. At that level, many of the top candidates earn more than that in investment income every year. Why do liberals always want to punish success and reward failure? ---
**Author:** ![MaxTheVool](https://avatars.discourse-cdn.com/v4/letter/m/9fc29f/32.png) [@MaxTheVool](https://boards.straightdope.com/u/MaxTheVool)\ **Post date:** [December 14, 2011, 10:17pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/64 "2011-12-14T22:17:39Z")
Here’s one argument I haven’t seen touched on: For a society to be, in any meaningful fashion, a society, people in it have to identify with and relate to each other. They have to view the other members of the society as, in some fashion, their peers. They have to view those people as ON THEIR TEAM at some fundamental, tribal, level. I think sufficient income inequality interferes with that. Imagine a town in which the poorest person is a janitor who makes $20,000 a year and lives in a small house and drives a used car; and the richest person is a banker who makes $450,000 a year, and lives in a large house, has two new cars, and has a cottage he owns up in the hills with some land by a lake and the cottage is nicer than the janitor’s home. Now, that banker is a LOT richer than the janitor by any practical standard. But their lives are at least comprehensible… both have jobs, both live in the town, they might well send their children to the same public high school, they’ll occasionally eat at the same restaurant (a super special treat for the janitor and a typical lunch for the banker), etc. But the next town over, the poorest person is a part time farm laborer who makes $8,000 a year, and the richest person is a CEO who makes $12 million a year. The farm laborer lives in an attic that he rents from a cousin, doesn’t own a car, is on food stamps, and has to get handouts to get clothing for his children. The CEO lives in a gated community outside town and flies around in a helicopter. Now, imagine both of these towns being hit by tornadoes. In which town are the citizens of the town more likely to band together and help each other out in an emergency? Which town is more likely to have an active PTA? Which town is going to be more of a real community? ---
**Author:** ![Algher](https://avatars.discourse-cdn.com/v4/letter/a/3d9bf3/32.png) [@Algher](https://boards.straightdope.com/u/Algher)\ **Post date:** [December 14, 2011, 10:37pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/65 "2011-12-14T22:37:55Z")
Nothing wrong with income equality, as we are not all equal EXCEPT before the law. There is a need for a minimum level of lifestyle we should expect a fully employed person to be able to enjoy. This means our janitor should be able to have a place to live (not necessarily own), food on the table, healthcare at a certain level, and education for the kids. There is a need for an achievable middle class, that comes into play with owning a home and more frills. Finally, there is nothing wrong with the lifestyles of the rich and famous, as long as the system allows for new entrants on a regular basis (and people falling out in the same fashion). For every Mark Zuckerberg, you get an MC Hammer going bankrupt. ---
**Author:** ![MichaelEmouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/michaelemouse/32/101_2.png) [@MichaelEmouse](https://boards.straightdope.com/u/MichaelEmouse)\ **Post date:** [December 14, 2011, 11:24pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/66 "2011-12-14T23:24:30Z")
> [@Malthus](#): > > 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. > [@Malthus](#): > > My own opinion is not that inequality is per se bad (I think inequality is the inevitable consequence of freedom and meritocracy), but rather that _too much_ inequality, when transmitted through generations, _can_ have bad effects on society - in that it can create a self-perpetuating cycle in which those who ‘have not’ face difficult barriers to social mobility, thus threatening the very freedom and meritocracy that (presumably) gave rise to the inequality in the first place. Relative deprivation: It’s true that relative deprivation can affect someone’s sense of well-being. However, I can definitely see why others should pay for someone not to starve of freeze but if someone is unhappy because others have flat screen TVs and he doesn’t, my cold, stone heart doesn’t see why someone else should pay for it. A sense of well-being affected by relative deprivation has to do with jealousy and status-seeking. When a millionaire suffers from jealousy and status-seeking toward billionaires, that’s his psychological issue to work with, it shouldn’t be someone else’s burden, right? The rich man and the poor man who suffer from jealousy and status-seeking have the same flaws. They should turn on, tune in and drop out. Too much inequality: I can see why there could be such a thing as too much inequality. I can think of some but I’d like to know of what you think of when you mention difficult barriers to social mobility born out of too much inequality. ---
**Author:** ![New\_Deal\_Democrat](https://avatars.discourse-cdn.com/v4/letter/n/9d8465/32.png) [@New\_Deal\_Democrat](https://boards.straightdope.com/u/New_Deal_Democrat)\ **Post date:** [December 15, 2011, 12:35am UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/67 "2011-12-15T00:35:40Z")
> [@L. G. Butts](#): > > 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, There is little relationship between the amount of money spent on a public school system and the results. If the government is to reduce economic inequality, and I believe it should, it should do so directly with laws to strengthen labor unions, and raise the minimum wage. There should be a well financed public sector of the economy paid for by steeply progressive taxation. For at least a generation the people who own and run the United States have been exporting good jobs while importing cheap labor. When American manufacturers move manufacturing to low wage countries and sell what it produced in the United States, they should pay high tariffs on it. In addition we need to crack down on illegal immigration, and curb legal immigration and H1B Visas. ---
**Author:** ![New\_Deal\_Democrat](https://avatars.discourse-cdn.com/v4/letter/n/9d8465/32.png) [@New\_Deal\_Democrat](https://boards.straightdope.com/u/New_Deal_Democrat)\ **Post date:** [December 15, 2011, 12:43am UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/68 "2011-12-15T00:43:44Z")
When Vladimir Lenin established his government he was somewhat embarrassed to pay himself and his top advisers twice what factory workers were earning. Then he discovered that a modern economy requires trained and talented experts, and that most of them will not work to the best of their abilities unless they are paid more than he was paying himself. A certain amount of inequality is necessary. Nevertheless, beyond a certain point it becomes dysfunctional. Latin America has always been known for a high degree of economic inequality. It has never been known for economic growth and technical advances. ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [December 15, 2011, 1:04am UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/69 "2011-12-15T01:04:23Z")
> [@MichaelEmouse](#): > > Relative deprivation: It’s true that relative deprivation can affect someone’s sense of well-being. However, I can definitely see why others should pay for someone not to starve of freeze but if someone is unhappy because others have flat screen TVs and he doesn’t, my cold, stone heart doesn’t see why someone else should pay for it. > > A sense of well-being affected by relative deprivation has to do with jealousy and status-seeking. When a millionaire suffers from jealousy and status-seeking toward billionaires, that’s his psychological issue to work with, it shouldn’t be someone else’s burden, right? The rich man and the poor man who suffer from jealousy and status-seeking have the same flaws. They should turn on, tune in and drop out. I’m not suggesting that one should sympathize with it. It is an explaination of why people do not of necessity feel better off even if they are in fact materially better off. I do not necessarily think it ought to be characterized as “jealousy and status-seeking” so much as having a basis of comparison as to what is “normal” or “well off”. The harm that it does is that it can do damage to social cohesion. > [@](#): > > Too much inequality: I can see why there could be such a thing as too much inequality. I can think of some but I’d like to know of what you think of when you mention difficult barriers to social mobility born out of too much inequality. Sure. Such things as barriers to entry to higher education spring to mind. This is not only reflected in such things as fees for higher education that the parents of the wealthy can more easily afford, but mores subtley in such matters as demands that applicants be “well rounded” which parents of the well-off can more easily create by paying for lessons, sports, etc. Through such mechanisms, social inequality can be perpetuated - albeit not deliberately. ---
**Author:** ![Oakminster](https://avatars.discourse-cdn.com/v4/letter/o/77aa72/32.png) [@Oakminster](https://boards.straightdope.com/u/Oakminster)\ **Post date:** [December 15, 2011, 2:20am UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/70 "2011-12-15T02:20:29Z")
> [@Malthus](#): > > Sure. Such things as barriers to entry to higher education spring to mind. Everyone is not capable of doing college level work. Everyone that obtains an undergraduate degree is not capable of doing graduate level work. There are limited seats in college classes, and even more limited seats in graduate schools. Those seats should go to those most capable of completing the course and getting the degree. A person that struggled academically at the high school level is unlikely to succeed at the college level. A person that struggled academically in college is unlikely to succeed at the graduate level. A person that can’t cut the mustard at the graduate level should be washed out before graduation. You do not want your heart surgeon to be the guy that got his degree in some misguided liberal’s attempt to force equal outcomes…you want him to know what the fuck he is doing. ---
**Author:** ![Qin\_Shi\_Huangdi](https://avatars.discourse-cdn.com/v4/letter/q/f04885/32.png) [@Qin\_Shi\_Huangdi](https://boards.straightdope.com/u/Qin_Shi_Huangdi)\ **Post date:** [December 15, 2011, 5:15am UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/71 "2011-12-15T05:15:08Z")
If long as everybody is making money but the rich are at a faster rate it is of no concern. ---
**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 15, 2011, 8:17am UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/72 "2011-12-15T08:17:54Z")
> [@Oakminster](#): > > Everyone is not capable of doing college level work. Everyone that obtains an undergraduate degree is not capable of doing graduate level work. There are limited seats in college classes, and even more limited seats in graduate schools. Those seats should go to those most capable of completing the course and getting the degree. > > A person that struggled academically at the high school level is unlikely to succeed at the college level. A person that struggled academically in college is unlikely to succeed at the graduate level. A person that can’t cut the mustard at the graduate level should be washed out before graduation. You do not want your heart surgeon to be the guy that got his degree in some misguided liberal’s attempt to force equal outcomes…you want him to know what the fuck he is doing. People who shouldn’t go to college include the children of the rich who get in by legacy. They do not include the children of the poor who are smart enough to go but can’t afford it - not just because of tuition, but because of deferred income. And enough of this “liberals want the local moron to be a heart surgeon” shit, okay, because it is very, very stupid. ---
**Author:** ![Oakminster](https://avatars.discourse-cdn.com/v4/letter/o/77aa72/32.png) [@Oakminster](https://boards.straightdope.com/u/Oakminster)\ **Post date:** [December 15, 2011, 11:47am UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/73 "2011-12-15T11:47:18Z")
> [@Voyager](#): > > People who shouldn’t go to college include the children of the rich who get in by legacy. They do not include the children of the poor who are smart enough to go but can’t afford it - not just because of tuition, but because of deferred income. How many of those legacy students are truly incapable of doing college level work? I’ll be wanting a cite with hard numbers to back up whatever you claim. There are numerous sources of financial aid available for poor but deserving students. Pell Grants, scholarships, student loans, work-study, military tuition assitance programs, etc. Anyone that really wants to go and can actually do the work can probably find a way to go. Maybe not to an Ivy League school, but at least to an accredited community college or state university. > [@](#): > > And enough of this “liberals want the local moron to be a heart surgeon” shit, okay, because it is very, very stupid. When you buy this board, you can tell me what I may post. Until then, not so much. ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [December 15, 2011, 1:30pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/74 "2011-12-15T13:30:07Z")
> [@Qin\_Shi\_Huangdi](#): > > If long as everybody is making money but the rich are at a faster rate it is of no concern. That’s the question, isn’t it? What if one slight proportion of the population is accruing wealth at a dramatic rate and the rest are at best flatlining? What if the majority of the population has to have multiple wage earners and to assume greater and greater levels of household debt to maintain a fairly average standard of living? And what if those accruing wealth at faster rates use their power to manipulate tax codes and tax enforcement efforts to actually increase the disparity in wealth over time? Do you really think such a system is sustainable? Do you really prefer having nearly three quarters of mothers of children under 18 working? Do you reallly prefer having household debt of 120% in this country? At some level, it really should become more about the society that you hope to realize than about whether Joe merits a 60 inch television and Larry does not. ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [December 15, 2011, 3:24pm UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/75 "2011-12-15T15:24:38Z")
> [@Oakminster](#): > > Everyone is not capable of doing college level work. Everyone that obtains an undergraduate degree is not capable of doing graduate level work. There are limited seats in college classes, and even more limited seats in graduate schools. Those seats should go to those most capable of completing the course and getting the degree. > > A person that struggled academically at the high school level is unlikely to succeed at the college level. A person that struggled academically in college is unlikely to succeed at the graduate level. A person that can’t cut the mustard at the graduate level should be washed out before graduation. You do not want your heart surgeon to be the guy that got his degree in some misguided liberal’s attempt to force equal outcomes…you want him to know what the fuck he is doing. This is not what I am referring to. What I am saying is that financial barriers to entry (direct or indirect) may prevent a person who is otherwise intelligent and capable from obtaining an education at the level he or she would have obtained, had the financial factor been equal. Over time, this can result in a cycle that creates self-perpertuating inequality. Rather that the _best_ person becomming a heart surgeon, the person who gets to be a heart surgeon is the best out of … the rather smaller pool of people whose families go to the right clubs, etc. The guy will probably be an okay heart surgeon, maybe even the best, but it is not the optimal outcome. Individuals who cannot compete, not because they lack talent but because they lack family money, are obviously disadvantaged; but more to the point, society is the poorer for the loss of talent caused by the fact that the _best_ candidates are not drawn from the whole of the population. Hence, extremes of inequality damage the meritocracy that gives rise to justifiable inequality in the first place. ---
**Author:** ![BigT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bigt/32/12044_2.png) [@BigT](https://boards.straightdope.com/u/BigT)\ **Post date:** [December 16, 2011, 10:40am UTC](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170/76 "2011-12-16T10:40:04Z")
> [@Oakminster](#): > > When you buy this board, you can tell me what I may post. Until then, not so much. True, but as long as you keep making it, we are free to ignore it, and thus discount the rest of your argument. Oh, and I don’t want people rewarded for success. I’d much rather live in a society where successful people were only that way because they cared for society as a whole. Capitalism is a necessary evil because most people are evil. Thus the minimal amount of reward we can give and keep these evil people from just sitting on their asses is all I think we should do. And if that minimal amount is not enough for you, then here’s the door. There’s someone under you ready to take your place. And don’t think we’re going to stop taxing you just because you quit, either. If you make the same amount of money on the market or even from a bank, it gets taxed the same as if you made it through work, perhaps even a bit more. [Previous page](https://boards.straightdope.com/t/is-income-inequality-bad-for-a-society/606170.md?page=3)