Everyone has universal basic income whether they work or not - quite generously so. Nobody is homeless, nobody is poor, everyone gets free high-quality healthcare if needed, everyone gets free (or affordable) high-quality education. If people do choose to work, the wages are good. Nobody is poor. Housing is available to all. The environment is good, the society is safe, crime is low, and it isn’t hard to climb the opportunity ladder.
Now, in such a society, what would be wrong with there being billionaires (or perhaps even trillionaires), as long as they accumulate their wealth the honest way and pay all proper taxes? Suppose that you have 1 percent of people at the top who own 50 percent of all wealth.
It would be unequal, for sure. But would anyone necessarily be being harmed by such inequality?
We have an example - professional sports, particularly basketball. Everyone makes a ton, some make more than others. Is there resentment? Especially if the people making the most are measurably superior to the others. I suspect not too much.
Inequality also means the market for new goods shrinks. One study shows that if incomes are more equal among people, people who are less well off, buy more. Having this larger market for new products, incentivises companies to create new things to sell.
Lots more from the study over here (original link for the study in that article is not working now):
That’s my first thought. But I’d be worried about the unequal distribution of power, which could lead to some form of oppression if you’re not careful.
What’s wrong with not paying your workers if work is reading your favorite books and everyone lives in magic tree-houses and eat the ice cream fruits on them …
Money is power and wealth multiplies. If “paying all the proper taxes” allows 1 percent of people to accumulate 50% of all wealth, it’s unlikely that is a stable situation. It’s also highly unlikely “it isn’t hard to climb the opportunity ladder” in such a society. Hypotheticals can be useful, but they have to be at least remotely possible.
That’s not a very good example IMO, because it requires an artificial support structure in a sense and only applies to not just a tiny percentage of the population (pro athletes), but the top few percent of them. Money in that system comes in from many more sources than end up getting paid by it, so it’s not realistic in comparison.
Also, those athletes are very competitive with each other and every year have to re-earn their right to remain there. Plus, too many injuries or bad performances and they are out. And as already stated, these are the top-achieving people to begin with. It’s sort of like saying all lawyers are well-paid, just some more than others. Similar to pro-athletes, being a lawyer is out of reach for most of the population.
In general, I’d say it’s uncommon for someone to have 100X the wealth of their peers and not use that to some advantage which hurts others… especially to their competitors in whatever realm they make their money. Demand for a product will be finite, and the owners of McDonald’s will always be able to outspend me and put me out of business as a small burger joint owner.
So, at what point do you consider someone elses advantage a harm to you? Are people in this utopian society expecting to be able to run inefficient businesses, or do they expect a certain amount of competition and the occasional bankruptcy/failure?
And wealth (not income per se) is power. Wealth is not having an expensive car. It is the ability to have one. It isn’t getting someone to detail that car, it’s the power to make it happen if you want to.
There is always going to be power inequality but extreme and dramatically increasing levels of power inequality are harmful even if all are well fed and housed.
Well fed and well housed slaves were still slaves.
I concur. The other aspect of this that strikes me as extremely unrealistic and is basically a different take on the same thing, is that if 1% own 50% of the country’s wealth, then the other 99% of the population is being supported in an apparent utopia where all their needs are met with only half of the country’s wealth. Now it’s not clear how this “wealth” is actually measured, but this strikes me as the kind of economic miracle that has never yet been achieved and likely never will.
And even if it somehow was, say a relatively small country that found itself literally sitting on the world’s largest deposits of gold, the inequality would still manifest in potentially very unfair allocation of limited resources. For instance, the super-rich buying up vast tracts of all the best land, either for their own use or as investments. One could argue that from a moral standpoint, even if such a miracle economy were possible, that the 99% should have much more than just their basic needs met, but should more equitably share in this fabulous wealth. Indeed, studies of national “happiness” indices showed that general happiness and contentment, once you achieved a certain basic subsistence level of income, were determined less by absolute income and more by relative income with respect to others and to the national average.
I don’t think that there has ever been a society in all of human history where unequal distribution of money did not correspond to an uneven distribution of power.
Also even if we reach the point where everyone has a decent standard of living but the top .01% has half the total wealth, then there is enough wealth that everyone has a better than decent standard of living and the top 0.01% has only a quarter of the total wealth. Overall the second society is better for most people than the first.
Also, as I first saw mentioned after the 2008 economic crash, one of the problems with massive income inequality is that the most wealthy end up with literally more money than they know what to do with. As in, high investment risk is no longer a deterrent, so financial markets start skewing toward products that are high-yield but also high-risk, due to all the “excess” wealth being pumped into them.
A whole bunch of people with modest amounts of money and prudent levels of risk tolerance makes for more stable financial markets than a lot of people with very little money to invest and a few people with vast quantities of “extra” money that they’re willing to gamble with very speculatively.
If you can do 3-pointers like Steph, you’re in.
Unlike society, there is a barrier to entry there. I wonder if the OP’s utopia included undocumented immigrants.
I was using it not that this is a good model of society, but to examine how well-paid people in an environment with income inequality feel about better paid people.
In other words, would the high school dropout who still lives well resent the CEO or the rich surgeon or not?
However I don’t think any such society is remotely possible, for reasons already given.
Right, but I think the real problem with your analogy is that highly paid members of professional sports teams, just like CEOs and members of exclusive golf and country clubs and the like, regard themselves as privileged elites in contrast to the unwashed masses. So again, in terms of the income relativity I mentioned earlier, the differences between their incomes once they’re in “the club”, either literally or figuratively, is unimportant relative to the fact that they’re the 1% that are in it, looking down on everyone else.
IOW, yes, I really do think the high school dropout would consider himself not “living well” at all in contrast to the CEO and the rich surgeon, and would resent it if the inequality was sufficiently large. That was the point of my reference to the “happiness index”.
The key to this scenario, IMHO, is that something like the world’s largest deposits of gold, or diamonds, oil, rare earth metals, or anything of that sort, isn’t what would make this type of economy work. The only way the scenario works is if we solve the shortage of benevolent billionaires. If all the people like Rupert Murdoch, Rebekah Mercer, the Walton family, Jeff Bezos, etc. had the mindset of Bill Gates, this type of society might be possible. Large amounts of gold won’t cut it.
As has been said, such a hypothetical society is very unlikely, and should one somehow come into being, it would be very unstable.
How much do rich people complain now about how much they have to pay in taxes to support all the undeserving lazy bums who want to sit on their asses all day? You increase that inequality further, you think that the rich people will complain any less?
So, you end up having the 99% existing entirely at the whim of the 1%. Are they really going to have quality lives, will they have opportunities to work hard and join in tha 1%? I doubt it.
This also is a negative to the rich folks. Less demand for goods and services means less variety of goods and services are available. If everything is catering only to the 1%, even though they can afford to pay a high price, less will be made. For instance, The Avengers movie was not made because 1% of the population was willing and able to pay an exorbitant amount to see it, it was made because a much larger percent of the population was willing and able to pay a more reasonable amount to see it.
Aren’t some oil rich countries already like that? Of course, that doesn’t take into account all of the foreign workers brought in to do the menial labor.