Percentiles

One of the most striking successes of the Occupy Wall Street movement has been the “We are the 99 per cent” idea, and more specifically in the identification of the top 1 per cent as the primary source of economic problems.


Thanks to #OWS, the fact that households the top 1 per cent of the income distribution now receive around 25 per cent of all income (up from 12 per cent a few decades ago) has been widely disseminated. The empirical work on tax data that produced this evidence, done most notably by Piketty and Saez, has been slowly percolating into the mainstream consciousness, but “We are the 99 per cent” has hammered it home with surprising speed.

Even more surprisingly, the analysis as it relates to the 1 per cent has been almost unchallenged by the organized right. Having spent decades denying the obvious growth in inequality, and of the wealth and power of the super-rich, the right has implicitly conceded to reality on this point.

Their response to ‘We are the 99 per cent’ has been the snarky claim that ‘We are the 53 per cent’. This line is based on the lame and long-refuted  WSJ ‘lucky duckies’ talking point, that low-wage workers ‘pay no income tax’. It is, of course, true that many workers don’t pay the tax called the Federal Income Tax’ , but they do pay the Social Security payroll tax, which is a tax on wage incomes, not to mention sales taxes and many others. By contrast, capital gains, the preferred income source of the ultra-wealthy, are not subject to payroll tax and attract only half the standard rate of the Federal Income Tax.

What’s more interesting to me is the 53 per cent number, redolent of the Buchanan-Nixon plan to ‘tear the country in half and take the bigger half’. It stands in stark contrast to the hypocritical complaints of Republican politicians about class warfare and turning Americans against each other. The fact that anyone could see this slogan as clever politics is an indication of the costs that are eventually incurred in the creation of a hermetically sealed thought bubble like that of the US right.

Coming back to reality, I’d like to think a bit about the relationship between the 1 per cent and the remaining 19 per cent of the population in the top quintile (that is 20 per cent). Most if not all of the bloggers here at CT fall into the latter group. Given our lamentable lack of market research, I can’t say much about readers, but a reading of the comment section suggests that most of our readers also belong to this group.

 The top quintile as a whole commands the great majority of US income, and virtually all financial wealth – few households outside this group own much beyond their homes and perhaps some money in a pension fund. It follows that any significant improvement in public services, or in the position of the unemployed and poor, must be funded by higher taxes on the 1 per cent, the 19 per cent or both.

The 19 per cent also have a disproportionate political weight, since they are much more likely than Americans in general to register, vote and engage in political activity. So, it makes a big difference whether, as as implied by ‘We are the 99 per cent’ their interests are aligned with the mass of the population or with the top 1 per cent.

Until quite recently, I would have (and did) argued against this view. The top quintile as a whole has done very well over the past few decades, and (despite some silly claims to the contrary), high-income earners have mostly voted Republican, in line with their economic interests. Certainly there are plenty who don’t vote their interests, but that is also true of many people in the top 1 per cent, not to mention bona fide billionaires like Buffett and Soros.

There was always an argument in terms of enlightened self-interest or class-interest, that it was better to give up a bit of (pre-tax and post-tax) income to maintain a stable and relatively egalitarian society. But in an individualistic society like that of the US such arguments don’t go very far.

As far as policy is concerned, my implicit assumption, formed in a relatively egalitarian society, was that taxes imposed only on the very rich might be satisfying but couldn’t raise a lot of money. So, for example, I dismissed Obama’s focus on ending the Bush tax cuts for incomes above $250k (roughly, the top 2 per cent). In the ‘Trickle Down’ chapter of Zombie Economics, I looked mainly at the top 20 per cent (or sometimes 10 per cent) of the income distribution rather than the top 1 per cent.

I’m now much more sympathetic to the ‘99 per cent’ analysis. First, a closer look at income growth figures suggests that, while the 19 per cent have enjoyed rising incomes, they’ve only barely maintained their share of national income. The redistribution of the past three decades has gone from the bottom 80 per cent to the top 1 per cent.

That suggests the possibility of a policy response in which the main redistributive thrust would be to reverse this process.  This would almost certainly involve higher tax payments, but this would be offset by the restoration of public services, which are in economic terms a ‘superior good’, valued more as income rises. The top 1 per cent can buy their own services, and are largely unaffected by public sector cutbacks, but that’s not true of the 19 per cent.

Another important factor is the growth of economic insecurity. The myth of the US as a land of opportunity for upward mobility has been replaced by Barbara Ehrenreich’s Fear of Falling (another good source on this is High Wire by Peter Gosselin). Even if people in the top 19 per cent are doing well, they are less secure than at any time since the 1930s, and their children face even more uncertain prospects.

Finally, there is the alliance of the 1 per cent with the forces of rightwing cultural tribalism. The 1 per cent can only rule by persuading lots of people to vote against their interests, and that requires a reactionary and anti-intellectual agenda on social, cultural and scientific issues. As a result, educated voters have increasingly turned against the Republican Party.

I don’t want to make too much of this last point. As Allan Grayson said during his memorable takedown of PJ O’Rourke recently, the 1 per cent own the Republican Party outright, but they also own much of the Democratic Party, and can rule satisfactorily through either. Also, having a college degree isn’t the same as being educated – Tea Party supporters are more likely than the average American to have a degree, and college-graduate Republicans are even more prone to various delusional beliefs on issues such as climate change.

Nevertheless, taking account of all the factors listed above, even the most comfortably affluent members of the professional class, looking at the alliance of plutocrats and theocrats arrayed to defend Wall Street could reasonably conclude that it was in their own interests to support the 99 per cent and not the 1 per cent.

We are therefore (surprisingly to me) suddenly back in a situation where a progressive movement can reasonably claim to act in the interests of a group that is (I’m quoting Erik Olin Wright from memory on the Marxist conception of the working class0
(a) the overwhelming majority of the population
(b) responsible for nearly all the productive activity (as against the 1 per cent’s incomes drawn from a parasitic financial sector)
© economically desperate or at risk of becoming so.

Can all of this be sustained? I don’t know, any more than anyone else. But #OWS has already achieved things that most people would have regarded as impossible a month ago, and for the moment at least, the momentum is still growing.

(Hopefully links to come when I get a bit more time)

340 thoughts on “Percentiles

  1. John, can you comment on how much this analysis applies to the current Australian society? ISTM that we are still a bit more egalitarian; and given the recent threats of shareholder resistance to ballooning executive payouts we have a reasonable chance of staying that way.

  2. I think that’s right, but we have tended to follow the US path with a lag, and need to resist that.

  3. As much as capitalist deny it, the symbol of capitalism is falling apart. The future of America looking very grim unless the top 20 percentile willing to cooperate (which will be extremely unlikely).

    Professor Q, as much as I hate to be pessimistic, I don’t really think this soon-coming crash of Capitalism can be avoided simply because the top percentile have too much power right now and they have endless greed (you can see it from the case of arrests in Occupy Boston protest in a what they call it “democracy” country). America can only hope that when the future generation comes into power (America by that time would most possibly be in deep depression), they will see this mistake and attempt to put forward a better economic and political system to recover.

  4. I don’t think it’s greed per se, although that certainly worsens matters.

    The problem is that capitalism itself, in the aggregate, is a collective action problem – a prisoner’s dilemma and race to the bottom. In the words of Roubini, “cutting jobs weakens final demand… because it reduces labor income… Because a firm’s labor costs are someone else’s labor income and demand, what is individually rational for one firm is destructive in the aggregate.”

    Hyman Minsky, I think, knew how to deal with this, but governments seem to only feel they’re in a position to offer a fraction of a solution.

  5. Dan :I don’t think it’s greed per se, although that certainly worsens matters.
    The problem is that capitalism itself, in the aggregate, is a collective action problem – a prisoner’s dilemma and race to the bottom. In the words of Roubini, “cutting jobs weakens final demand… because it reduces labor income… Because a firm’s labor costs are someone else’s labor income and demand, what is individually rational for one firm is destructive in the aggregate.”
    Hyman Minsky, I think, knew how to deal with this, but governments seem to only feel they’re in a position to offer a fraction of a solution.

    In theory, yes that is correct but you need to look at the reality of the system itself. People are proven to be less resistant when they get a wage cut in the way of limited wage rise when inflation exist compare to a direct wage cut when both ways are similar (only difference is you will have more current spending power before price rises). Now when you put it in the place of executives, more labour cost means less profit mean less bonus. Even if they understand that cutting job will mean less demand for the total economy (which I’m pretty sure a lot of them do). They will not do it simply because of greed for bonus and fear for losing the job due to not meeting shareholder demands. If the US government fails to act on this, it will only be time until America faces prolong recession/depression similar if not much worser than Japan.

    To be honest with you, with the current power the wealthy and the Murdoch media holds in US; the US government is pretty much a defenseless kid.

  6. Well, we will have to see whether the 99% can gain traction. Or when the chips are down will the US plutocracts behave any better than Assad?

  7. Gee, once in a while the great unwashed wake up and reach for the pitch forks and torches!

    Not to worry, the cleverer monkeys, stake through their hearts, decapitated, having been consumed by flame or not, will soon resurrect themselves from their crypts once more, and pull the wool over their eyes all over again.

  8. Arab spring, British summer, US fall, no matter what, only a few of the one percent will lose, if any of them do; the rest will reinvent and recycle themselves and remain exactly where they are, at the top. Such is life.

  9. Capitalism in its current form (its only form?) presumably relies on consumers consuming, and surely in a globalised system those consumers are also the workers – unless, of course, a bunch of wealthy Martians or Venusians turn up. If workers’ income falls below that required for a meal and a bed, then where do consumers come from? It is all too confusing for this mind…

  10. “If workers’ income falls below that required for a meal and a bed, then where do consumers come from? It is all too confusing for this mind…”

    Let me try to clear it up for you: they don’t.

  11. Hi All the problems of over-accumulation don’t even necessitate a fall in wages below the level workers need to reproduce their conditions: just to a level that they can no longer consume enough commodities to realise a sufficiently attractive level of profits for capital invested. Since the general stagnation of wages since the mid 1970s ( I am not sure that Australia fits this pattern) demand has been increased through the expansion of credit. With the crisis of this architecture the crisis of over-accumulation has returned.

  12. Yes, the growth in private debt was a panacea for stagnating real wages, with two rather unfortunate drawbacks: a) the fundamental value of assets became unpricable, b) the longer it lasted, the worse the crash had to be.

  13. “Soak the rich” has always been a political message with some potency. One objection I have always had is that the notion is frequently marketed by pointing to the excesses of billionaires but the practical application has been imposed on people who are on good incomes but by no means super rich. If the left now want to redefine the world into two classes, the 99% and the 1% and they follow through on that division when it comes to their “soak the rich” policies then their message is likely to gain more political traction and will also probably do less economic damage.

    Tax cuts now for the 99%!!

  14. Or better yet, jobs for the ~20% unemployed and underemployed. They tried the tax cuts thing, resounding success that.

  15. So John, I guess my question has to be – what does the pareto population want?

    If you’re going to posit some sort of cohesive group that should be able to be either milked for more or be able to create more change in themselves, then I guess you’ve got to create some sort of a belief that they have anything in common – either within themselves as the top 20%, or within the bottom 80% that excludes them.

    My understanding of how our current western society is arranged is that these top 20% and bottom 80% groups have so much variability internally that no actionable change can be managed.

    I dunno, give me some sort of hope for change and I’ll be thrilled, but I just don’t see it.

    I think the 1%/99% split has more obvious differences.
    My reading is that one group is oblivious, and one group doesn’t understand.

  16. Oh no. TerjjeP and Quiggin are in agreement. The natural order has been overturned. Maybe the world really is going to end in 2012.

  17. If memories of Saturday morning plot arcs serve well, there’ll now be a denouement where Terje is unmasked *as* John Q, playing the part of a resolute defender of the indefensible to get these threads really cooking.

    “And I would have got away with it too, if it wasn’t for you interfering kids…”

  18. Greg :So John, I guess my question has to be – what does the pareto population want?
    If you’re going to posit some sort of cohesive group that should be able to be either milked for more or be able to create more change in themselves, then I guess you’ve got to create some sort of a belief that they have anything in common – either within themselves as the top 20%, or within the bottom 80% that excludes them.
    My understanding of how our current western society is arranged is that these top 20% and bottom 80% groups have so much variability internally that no actionable change can be managed.
    I dunno, give me some sort of hope for change and I’ll be thrilled, but I just don’t see it.
    I think the 1%/99% split has more obvious differences.My reading is that one group is oblivious, and one group doesn’t understand.

    The fundamental issue that caused this problem I suppose can only be solved through government regulations and the ideology of socialism; which creates economic growth at the sametime give fair share of the economic growth to the whole society (which capitalism fails to share the economic growth to the whole society and ultimately end up in extreme poverty of the lower/middle class; communism also fails to create noticable economic growth because it kills off any means of incentives for people to get extra reward for improving their quality of work). But I have yet to see a country that operates REAL socialism.

    It is an irony to see the comparison between monarchism and capitalism (democracy as they call it). People revolted against monarchism because the majority of the people lives in slump and hardly able to afford food; while we are seeing the samething happening in the symbolic country of Capitalism, the US of A.

  19. The reason you don’t hear “soak the poor” is because many of the rich are rich because they ensure many of the poor are pre-soaked. Given that, rather than “soak the rich” why not “rinse the rich” to clean them out of ill-gotten GFC precipitating gains. Sounds much better.


  20. It is an irony to see the comparison between monarchism and capitalism (democracy as they call it). People revolted against monarchism because the majority of the people lives in slump and hardly able to afford food; while we are seeing the samething happening in the symbolic country of Capitalism, the US of A.

    Not such an irony if you recognise that the US was founded with a faux revolution, rather than a real revolution. Those who did the taking over were already running the country, albeit as a subsidary of British Inc. In the case of the US it was, effectively, a management buyout sans payment for the buyout. The French revolution, and the British Civil War, were different. The pattern set in the US ‘revolution’ has been repeated many times since – management managing to walk away with what was shareholder value. Current affairs are simply keeping the tradition alive!

  21. John Goss :
    Oh no. TerjjeP and Quiggin are in agreement. The natural order has been overturned. Maybe the world really is going to end in 2012.

    Like Buffett and Carnegie, Terje will trim a few glutenous capitalists (the 1%) to permit the rest to carry-on much as before. Several shareholder activist groups are seeking the same from their own executives.

    But lets not get too sideswiped by this. The Commonwealth Bank, after this sacrificing ploy, still pays its new CEO, Ian Narev, $2.5 million base annual salary plus bonuses. His predecessor, Ralph Norris, received $3.2 million base salary.

    Whatever concerns the homeless and unemployed had over executive pay over $3 million, they are hardly alleviated by paying $2.5 million.

    Most executives of capitalist corporations are around the $1,000,000 per annum base pay, plus copious fat feed to them through bonus and share options etc.

  22. “Their response to ‘We are the 99 per cent’ has been the snarky claim that ‘We are the 53 per cent’. This line is based on the lame and long-refuted WSJ ‘lucky duckies’ talking point, that low-wage workers ‘pay no income tax’. It is, of course, true that many workers don’t pay the tax called the Federal Income Tax’ , but they do pay the Social Security payroll tax, which is a tax on wage incomes, not to mention sales taxes and many others. By contrast, capital gains, the preferred income source of the ultra-wealthy, are not subject to payroll tax and attract only half the standard rate of the Federal Income Tax.”

    Whether or not SS, Medicare and state unemployment payroll taxes should be included as taxes at all is debatable, insofar as these are largely contributory-based insurance programs that are essentially off-budget. Whereas taxes are normally considered to be the means by which governments raise general revenue for expenditures unrelated to the means through which it is collected.

    But even besides that, the fact remains that in the United States payroll taxes, sales taxes, and taxes on alcohol, tobacco and fuel (which tend to be less progressive than income taxes) are relatively low, particularly compared to European countries. Income tax is a larger share of government revenue, and the proportion of income tax paid by low and middle-income earners is very low. Moreover, investment income is often double taxed due to a lack of imputation credits for corporate dividends. So the broader point, that the US tax system is relatively progressive, remains. The OECD has confirmed in recent times that the US has the most progressive tax system of any developed nation.

    Moreover, it is a bit silly for leftist commentators to complain about the cost to struggling working Americans of funding programs like Social Security. Which side of politics created these programs in the first place? Which side has most stridently defended such programs for so long? Which side has fiercely resisted attempts to means-test, impose any cuts, or allow workers to opt out of such programs? Which side has made a perennial campaign theme out of scaring old folks about their entitlements being taken away? By your own reasoning, it is only the continued existence of New Deal and Great Society entitlement programs that prevent the US tax system from being even more progressive than it already is. That is a telling admission. Personally, I think it is absurd, obscene and unsustainable that struggling working families should be forced to subsidise wealthy retirees with a couple of yachts in Florida. But most American liberals are stridently opposed to means-testing.

  23. Glutenous capitalists! Sounds like my vegetarianism won’t stand in the way of me eating the rich 😛

    However, I agree with you. The notion that wealth needs to be distributed close to as unevenly as it is or… or… just doesn’t hold water. In fact the global economy would be a lot healthier were quasi-clever people not handsomely rewarded for finding ways to externalise risk via “financial innovation”.

  24. Freelander, one of the signatories of the US Declaration of Independence, John Jay, the first Chief Justice of the Supreme Court, allegedly had a favourite aphorism, ‘Those people who own this country are going to run this country’. It’s never changed. It also explains the hideous savagery of US policy in the Middle East, and the continued sadistic brutalisation of the Palestinians.

  25. @Mulga Mumblebrain

    I agree. US foreign policy is hardly of any benefit for the majority of Americans. The manage to sell what they do under the banner “My country right or wrong”. Too many ordinary Americans have been willing to swallow the bull and waste their lives ‘defending their country’. Problem is, they haven’t been defending their country, rather they have been pursuing the interests of various small elites. The US has not had to defend itself, really since WWII. Even 911 was better treated as a crime, not an act of war. How can a rag tag bunch of ‘terrorists’ whose international operations have sometimes resembled the activities of keystone cops be a group capable of ‘declaring war’ on the country that spends as much on defense as the rest of the world combined. Rather than eliminating the threat from terrorism, alot of the US actions since 911 have been the greatest recruitment tool terrorist could hope for. But maybe that was the plan. After all, no cold war, the peasants might start to think that there is no need to spend up large on security. If 911 hadn’t happened they would have to have invented it.

  26. Americans are not nearly as wealthy as they were. Redistribution will help but cannot fix this problem. Global competition is intense and oil has peaked while the American population still grows. It will be very difficult to adapt effectively to lower wealth if the 1% is thought of as the only problem.

  27. @stockingrate
    Care to justify this claim? US national income per person has risen substantially over the thirty years since 1979. That was the peak in oil consumption per person, and US consumption per person has fallen more than for the world as a whole.

    By contrast, median household income has barely moved – that’s all due to upward income redistribution.

  28. Chris – you should read what I wrote not what you imagine I wrote. I offered analysis of a position not advocacy for it.

  29. @John Quiggin

    What data are you using?

    Using current dollars may appear to show a “substantial” rise but not so in constant (2005) dollars.

    American personal disposable per capita income (constant dollars) was:

    $18,897 (1979) and $33,025 (2010)

    See: row 81, Table 673 at:

    census.gov/compendia/statab/cats/income_expenditures_poverty_wealth.html

    This is an annual growth of around a mere 1.8% pa. and of course if the distribution of this wealth becomes more adverse, it is possible that some Americans can in fact be worse off even over this huge timescale. 1.8% is not a substantial rise.

    You can easily see that all Americans were definitely worse off for the years: 2008-2009. This burden would have been disproportionately shared amongst Americans.

    It is not clear in all this how the impact of household debt is factored-out.

  30. TerjeP :
    Chris – you should read what I wrote not what you imagine I wrote. I offered analysis of a position not advocacy for it.

    You never make sense. But for clarity’s sake:

    Do you support the continuation of:

    the practical application has been imposed on people who are on good incomes but by no means super rich

    or moving some of the practical application onto the “super rich”?

  31. @Chris Warren
    Just a disagreement on terminology. Against a claim that Americans are “not nearly as wealthy as they were”, I’d say a 75 per cent increase is “substantial”, even if the rate of increase has been slower than in the post-1945 boom. YMMV.

    As I already said, the problem is distribution, not the absence of growth in income per person, let alone the decline claimed by stockingrate.

  32. This may be somewhat off-topic.

    I notice Sinclair Davidson has a piece on the ABC Drum yesterday, talking up the Laffer curve. Sigh! I thought it was dead and buried by reality.

  33. Davidson is not the only one peddling the Laffer-Bull Laffer Curve. I recall the fragrant Julie Bishop pushing it a few months ago, but, of course, she would not have any idea of the con’s history or its stupidity. Davidson, naturally, is another kettle of fish, a hardcore ideologue. It just goes to show that the Right has learned nothing, can learn nothing, from the comprehensive failure of market fundamentalism. They intend to continue ripping off the rest of humanity, including future generations, to feed the insatiable greed of the parasite caste, come what may.

  34. Chris – leftwing policy would be made more consistent with leftwing propaganda if the tax burden was moved off the top 20% and focused more on the top 1%. However this is not what I personally advocate. I think we should be cutting tax rates for everybody. I think increasing the tax free threshold is a good place to focus the effort to start with but I also think the top income tax rate is too high. I think these tax cuts that I advocate should be funded by freezing the size of government rather than continuing to grow it in line with private sector growth. To do that in practice means economic reform.

  35. @John Quiggin

    It is preferable to always attach a baseline to statements like 75% increase. 75% is anemic over 75 years, hardly functional over 31 years but would be substantial over 10 years.

    It seems clear that this much vaunted “capitalism” only produced average annual growth in people’s disposable incomes of less than 2%. Presumably a redistribution of economic growth to capital, has warped society to create massive chasms between social strata and in levels of access to financial security, food and basic services. Given that so many working class jobs were exported this relative impoverishment has now reached such an extent, that the only option for the people who feel, but do not understand, their predicament, is to Occupy Wall Street to show their grief. They are a surplus population just wandering the streets all across America crying for social justice.

    Any economic system should be able to provide its population with at least 2% annual growth in disposable income. The only economic system that structurally could fail to do this, is capitalism. Presumably the amount of capital in America (in 2005) dollars has grown at higher rates. If so, this is the classic Marxist phenonema and the final outcome is unavoidable, irrespective of how much stimulus our Keynesians flood into their play-ground.

    The whole understanding of the Occupy Wall Street phenomena must be based on the long-run failure of capitalism to provide decent, equitable, disposable incomes to the bulk of the population in the long-run.

    75% over 31 years – aggravated by a redistribution from the poor to the rich – plus growing macroeconomic instability over 40 years, plus increasing per capita debt over 100 years, is teaching people a thing or two about the reality of capitalism.

  36. @Chris Warren

    “Any economic system should be able to provide its population with at least 2% annual growth in disposable income.”

    I’m not sure about that claim at all – subsistence and nomadic societies can’t and don’t, old-school feudal societies can’t and don’t – and that’s Marx’s position. Heck, Marx saw the increase in production which capitalism resulted in as astonishing – he just saw that it was prone to structural instability. Which it is.

    As for Marxism per se – my view is that power imbalances would simply re-emerge in some other configuration.

    I believe that reformist and redistributive social democracy is the least worst option for organising our societies.

  37. @TerjeP

    Obviously such eccentric tax cuts would destroy society.

    There is no such thing as private enterprise, except for a few family businesses. All companies only survive by obtaining their market from the public arena. The word “private” is a misnomer. This only indicates where profits go.

    It is strange that those on $180,000 only pay 30% tax + GST. Those on twice this only pay 37.6% + GST, and if you get 10 times this – you only pay 43.5% + GST, although at this point you can usually divert most of your millions into trusts and family homes, or travel the world in fancy yachts, (tax free forever).

    On the other hand if you are earning less than 6,000 – you still have to give 10% to government through GST.

    So the key is to reduce the GST and insert several new tax brackets above the current top bracket of 180,000.

    It would probably increase retail employment, and improve the economy generally, if extra tax from those over 180,000 funded cuts in tax rates for those under 37,000, leaving them with more cash-in-hand.

    People in these lower brackets probably spend more of their cash in Australia.

    An additional mechanism would be to insert new tax brackets for company and trust incomes.

  38. @Dan

    Yea – a bit of further qualification would help.

    Any modern economic system should ……

    If everyone is free and equal, there is no reason why they should not choose to have a mere 1% growth and a lot more leisure time.

  39. @Sam

    Diminishing returns on investment (ie technology) may be implicated.

    Economic redistribution can be seen as a consequence, an excercise by which the wealthy maintained their profits – given diminishing returns on their investments.

    The fact that American capitalists have increased their profit share of national income from 7.2% in 1982 to 12.7% in 2010*, seems more an excercise in redistribution (after the slowdown you speak of), than anything else.

    Although the global economy (NAFTA and etc) and other factors (eg US union busting) may have complicated the picture.

    [* Table 673, at

    census.gov/compendia/statabcats/income_expenditures_poverty_wealth.html ]

  40. Try this… there was a missing backslash ….

    census.gov/compendia/statab/cats/income_expenditures_poverty_wealth.html

    or…

    census.gov/compendia/statab/2012/tables/12s0673.xls

  41. @Chris Warren
    Fair enough. Going somewhat against my previous argument, it’s quite likely that financialisation of the economy led to a wastage of productive resources. For instance, laying transcontinental optic-fibre lines that shave 6 milliseconds of transit time, just to enable high frequency trading. Another example would be the best mathematicians and engineers going to work for Wall st, rather than inventing new technologies.

    These effects aren’t directly caused by an increase in inequality, but all these ideas come from the same wellspring of economic rationalism.

  42. TerjeP :Chris – leftwing policy would be made more consistent with leftwing propaganda if the tax burden was moved off the top 20% and focused more on the top 1%. However this is not what I personally advocate. I think we should be cutting tax rates for everybody. I think increasing the tax free threshold is a good place to focus the effort to start with but I also think the top income tax rate is too high. I think these tax cuts that I advocate should be funded by freezing the size of government rather than continuing to grow it in line with private sector growth. To do that in practice means economic reform.

    This will not work. The US government is already having troubles paying public debt and is on budget constraint; further tax cut would simply means the government will have to significantly cut spending on roads, infrastrures etc. These spending creates jobs (whether if those jobs created can support rent or food is another story). Giving further tax cut will not fix the fundamental issue of low demand and spending power unless the majority of the population receives signifcant rise in income consistently which tax cuts will not provide because the proportion of their income taxed is very insignificant in the first place. Of course if the US government ignores the debt and deicide to go to war with the world when it becomes “impossible” to repay then be my guess and give out tax cuts.

  43. I’m of the view that the US government will inevitable default on it’s public debts and it’s social security obligations. That which can’t be sustained won’t be. Whether the default is via traditional means or currency debasement isn’t clear.

  44. @Sam

    It’s also unclear why Terje would want those who don’t need a tax cut and whose behaviour will not change in a positive way as a consequence of a tax cut to get one, even allowing that serious harm to public interest would not be a consequence of such a measure.

    It seems to me that unless one can show that the “greatest good for the greatest number” would be served by this measure or at the very least that the beneficiaries of the tax cut are obtaining relief from an unwarranted and unreasonable imposition there simply would be no case for doing so.

    The fact of the matter remains that wealth in the US has become progressively less equally distributed in the three decades since 1979 (even amongst super rich people there is more inequality), yet there’s very little evidence of any corresponding general benefit — quite the reverse. Worse yet, there’s good reason for thinking that this inequality has debauched US politics and the quality of governance.

    Even Teddy Roosevelt — no friend of soc|al|sm — thought great inequality subversive of democracy and community. Today, radical inequality is the key marker of US cultural life.

  45. The fact of the matter remains that wealth in the US has become progressively less equally

    Why is this presumed to be a bad thing? It doesn’t matter if some people have more than other people. Equality of wealth and / or income is an issue that occupies far too much time in public policy debate and those on the left are typically to blame for this preoccupation. There are a whole array of far more meaningful metrics such as life expectancy, literacy, homelessness, health, unemployment, and any number of measures regarding freedom that ought to rate vastly higher in public policy discussions than “equality”. And even worse the word equality is often just a weasel word used when the real intent is “conformity”. It is those that want to enforce more equality that ought to be demonstrating some benefit.

  46. p.s. Also it seems to me that if the rich get richer and the poor get poorer it does not follow that the former caused the later. There are many possible causes as to why groups of people might get poorer and it makes more sense to examine the specifics.

  47. TerjeP :p.s. Also it seems to me that if the rich get richer and the poor get poorer it does not follow that the former caused the later. There are many possible causes as to why groups of people might get poorer and it makes more sense to examine the specifics.

    The fact that rich gets richer does not imply that the poor will always get poorer. The cause of the middle and lower class gets poorer because there is a thing called “inflation” exist and income of middle and lower class has been taking a pay cut for 3 decades via inflation. I can see that you have economic knowledge from your comments but you are deliberately ignoring inflation.

  48. TerjeP :p.s. Also it seems to me that if the rich get richer and the poor get poorer it does not follow that the former caused the later. There are many possible causes as to why groups of people might get poorer and it makes more sense to examine the specifics.

    True, why a person is rich and why a person is poor is a matter of detail rather than yielding to a single explanation. There is one thing thought that is increasingly true in the modern developed world and it is that we are all in this together. No one would manage to get rich in the developed world if it were not for the efforts of others. Once apon a time a person could go out in the woods knock down a few trees, build a house, farm some land and more reasonably claim everything was all down to themselves. (But even then that claim would hardly be completely true.) Nowadays, what we acheive is very much dependent on others. And that is without admitting that what we acheive is also highly dependent on all the things that have been left to us by previous generations – substantial knowledge and physical capital.

    Recognising that whatever our individual acheivements, we owe a lot to others ought to be the basis for a more public spirited attitude, as exemplified by Warren Buffet. The distribution of society’s wealth, always ought to be in part a collective decision. And those who think otherwise, ought to be pushed off the ice. (As the eskimos would have it.)

  49. Freelander :

    TerjeP :p.s. Also it seems to me that if the rich get richer and the poor get poorer it does not follow that the former caused the later. There are many possible causes as to why groups of people might get poorer and it makes more sense to examine the specifics.

    True, why a person is rich and why a person is poor is a matter of detail rather than yielding to a single explanation. There is one thing thought that is increasingly true in the modern developed world and it is that we are all in this together. No one would manage to get rich in the developed world if it were not for the efforts of others. Once apon a time a person could go out in the woods knock down a few trees, build a house, farm some land and more reasonably claim everything was all down to themselves. (But even then that claim would hardly be completely true.) Nowadays, what we acheive is very much dependent on others. And that is without admitting that what we acheive is also highly dependent on all the things that have been left to us by previous generations – substantial knowledge and physical capital.
    Recognising that whatever our individual acheivements, we owe a lot to others ought to be the basis for a more public spirited attitude, as exemplified by Warren Buffet. The distribution of society’s wealth, always ought to be in part a collective decision. And those who think otherwise, ought to be pushed off the ice. (As the eskimos would have it.)

    I agree, in US the problem is that workers’ aren’t getting the reward they contributed to the economy. There is nothing wrong with rich gets richer and I am not extremist that believe executives are greedy and lazy. In fact I believe executives works really hard and have immense pressures but it doesn’t justify that they get pay hundreds/thousand times more than average worker that works fulltime. What TerjeP doesn’t get is that he thinks average workers’ contribution to economic growth should not be awarded with a pay rise that at least cover inflation.

  50. Barbara Ehrenreich has just published some interesting commentary on the 99% worth looking at in The Progressive (http://www.commondreams.org/view/2011/10/13-3). Sorry I am too technologically challenged to embed a link properly.

    TerjeP – you seem to be engaging in the standard knee-jerk conservative reaction to critique of inequality that equates that critique with a utopian belief in perfect equality. Can you credit that in some (possibly many) circumstances high levels of inequality can be a bad thing – a social evil or contributing to a poorly functioning economy or both.

    You do not have to be a socialist or bleeding heart liberal to acknowledge there are some important policy issues around the impacts of inequality that should be considered (though it probably helps).

  51. I think cockney-conservative types like Terje receive some sort of psychic benefit by identifying with their plutocratic superiors. It could just be a vicarious thing but I suspect it’s much more than that. The real reason probably has some affinity with Muslim women who would fight and die for their right to wear the burqa and be kept a de facto prisoner by related males.

    Maybe it’s false consciousness meets Stockholm Syndrome?

  52. Anthropogical studies show that high levels of inequality are detrimental in many ways. The real way that it is detrimental in the USA however is in the level of crime and desperation which leaves people homeless and hungry.
    The #OWS is significant because it is the first time in a long time when the mainstream media has not been able to massage the message to make the 99% think that there are no other options than have been offered.

  53. Yeah, gross inequity leads to all sorts of lousy social, health and labour market outcomes that Terje mentions; this is well-known and you have to be an ideologue not to acknowledge it. Not to put too fine a point on it, people die unnecessarily early when societies are highly inequitable.

    Of course on the other hand under a market system in practical terms there needs to be some level of inequity – rewards innovation and effort, individual responsibility, blah blah blah, the usual stuff that libertarians bang on and on about like it was the *only* thing that was important.

    I guess the question is, what is the *optimum* level of inequity for achieving good outcomes and ye olde Equality of Opportunity? It’s not the US, Terje, I can tell you.

  54. Further to Chris Warren’s point and JQ’s answer, doesn’t JQ’s answer depend on the assumption that money is a good measure of welfare – ie that being “more wealthy” is the same as higher welfare? I would guess that previously it was, and increasingly it isn’t. One can point to lots of technological improvements, but surely a large part of the increase in monetary wealth of the last several decades has been the monetisation of social and environmental services previously outside the monetary economy (childcare, a considerable number of other personal services, access to open spaces, environmental reserves etc), together with the financialisation of hypothetical future monetary income streams? I don’t know how to measure it (the various tries I have seen are none completely convincing), nor even am sure it can be measured. But I think it worth bearing in mind.

  55. Can you credit that in some (possibly many) circumstances high levels of inequality can be a bad thing – a social evil or contributing to a poorly functioning economy or both.

    No not really. By the way I’m not a conservative. I’m libertarian and relatively radical (although also an incrementalist).

  56. TerjeP :

    No not really. By the way I’m not a conservative. I’m libertarian and relatively radical (although also an incrementalist).

    False. You are a capitalist trying to spread capitalism against the interests of all.

  57. Yeah, gross inequity leads to all sorts of lousy social, health and labour market outcomes that Terje mentions; this is well-known and you have to be an ideologue not to acknowledge it. Not to put too fine a point on it, people die unnecessarily early when societies are highly inequitable.

    This is not what the empiracle evidence shows. The evidence shows that inequality and the sorts of things we ought to care about (health, life expectancy, crime rates etc) do not correlate with income or wealth equity. I’m not saying that we should not measure or talk about inequality but I think it is completely crazy to devote so much energy to the topic. The only virtue of equity as a metric is that it can be used to justify socialist policies and that isn’t really a virtue.

  58. The 1% will obviously agree with you TerjeP. However in the past inequqlity has led to revolution – French, Russian and Chinese and we could even include the two internal wars for the USA and recent uprisings in the Middle East. These have not always been positive outcomes. The inequality experienced in the Wiemar Republic wasn’t all wonderful either. To have an inequitable system which works you need to have a religious or other framework which means people accept their lot in life with a degree of fatalism. This is harder to maintain in a wired world.

  59. None of those revolutions were much about inequity of income or wealth. And plenty of societies have endured without revolution for centuries. And relatively equal societies (eg Soviet Union at least in theory) have collapsed due to revolution. To make the argument that inequality causes revolutions you need to demonstrate some sort of correlation between the two. I don’t think the case can be readily made.

  60. @TerjeP

    There wasn’t a revolution in the Soviet Union. There was a coup which was ultimately unsuccessful. The dismantling happened at the top because they had lost faith and were not willing to kill the large numbers of people that would have been required to maintain the current order of things. As for inequality, considerable inequality can be maintained if those in control have the apparatus to meet out harsh treatment. However, without those tools and the willingness to use them the peasants will soon be revolting. Give those peasants half a chance and they will be over their overseers like flies over a pile of offal, and offal it will be too once they are done with them.

  61. The opposition to as great equality as possible is, in my opinion, motivated simply by hatred of others. The Right, the ‘libertarians’ at the extremity, follow Rand in holding others in contempt and seeing them as ‘moochers’. Greed, for them, is the highest virtue. Every philosophy and religion with which I am acquainted, save one, regards avarice as a great vice, and preaches some form of fraternity, in some cases of all humanity, in others merely of the in-group. The one exception is capitalism, a doctrine that, I believe it is irrefutable to say, displays an attitude towards existence that conforms more or less closely to the mentality of the human psychopath. The libertarian, following Rand, with her open admiration for a child murderer as some sort of ideal type, is the most grotesquely extreme example of the type.

  62. @TerjeP
    “The evidence shows that inequality and the sorts of things we ought to care about (health, life expectancy, crime rates etc) do not correlate with income or wealth equity”

    Really Terje? I haven’t been able to watch your video yet, but it is unlikely to be much good as it conflicts with an enormous amount of empirical research.

    I can only assume you are ignorant of the vast literature on this topic. Relative (within group) inequality is highly correlated with a large number of social ills, and I believe in some cases it is shown to have a causal effect. By the way this research comes from people like probable future Nobel laureate Angus Deaton (Professor at Princeton) who specializes precisely in this area.

  63. The opposition to as great equality as possible is, in my opinion, motivated simply by hatred of others.

    Damn you found me out. The truth is I hate humanity and so I spend my spare time trying to trick decent people into loathing equality. It’s all part of a cunning human hating plot that I hatched one evening whilst boiling babies alive. 😉

  64. Really Terje? I haven’t been able to watch your video yet, but it is unlikely to be much good as it conflicts with an enormous amount of empirical research.

    Well you should watch it if the topic is really important to you. Even if you don’t agree at least you will be in a position to strengthen your pro equality arguments.

  65. As for inequality, considerable inequality can be maintained if those in control have the apparatus to meet out harsh treatment.

    You can’t say the downside of unequal societies is that they have revolutions at a higher rate then equal societies, and then also argue that inequality prevents revolutions. That kind of entails a suspension of logic.

  66. “None of those revolutions were much about inequity of income or wealth.”

    I think that’s wrong. Of course, they were more more about power, but wealth is power. At a more abstract level, they were about justice, and inequality features greatly in people’s perception of justice.

    Perhaps you’re making the same mistake John Humphreys has made when I’ve discussed this topic with him – assuming there has to be a linear relationship between inequality and unrest. My contention then (and I think others on this thread are making the same point) is that there is a threshold of inequality above which people revolt. Not that steadily increasing inequality means steadily increasing social strife.

    “This is just ignorance on a stick. Not even decent trolling.”

    Terje doesn’t troll. You should know this by now.

    “an enormous amount of empirical research…the vast literature on this topic…Relative (within group) inequality is highly correlated with a large number of social ills, and I believe in some cases it is shown to have a causal effect.”

    Actually, the correlation (below certain tipping-point thresholds) is minimal if not non-existent after taking into account other factors, and no plausible causal mechanism has been identified.

    “By the way this research comes from people like probable future Nobel laureate Angus Deaton (Professor at Princeton) who specializes precisely in this area.”

    I’ve just read two papers by Deaton on this topic. His findings do not support your claims. Perhaps you are taking your information from third parties who may have distorted or misunderstood him?

  67. @TerjeP
    Sure I will do that. Any you should read Deaton and the (quite possibly) hundreds of other pieces of peer reviewed literature appearing in top international journals (as opposed to youtube videos) that say just the opposite.

  68. @TerjeP

    Might be too you. But it is quite simple. If societies have considerable inequality the haves have to resort to strong measures to keep the have nots in their place and to maintain the status quo. Sometimes they are successful in doing that and sometimes not. I don’t know what equal societies you seem to be referring to as having revolutions. In fact, I wouldn’t know what equal society you could refer to full stop.

    You seem to be channelling Alf Garnnet or Archie Bunker or both, I suppose your support for the status quo could be called aspirational.

  69. @Jarrah
    I don’t think so. Deaton talks about relative (within-group) inequality and the relationship that this has with health. People with high incomes that are relatively low (i.e. lower than their peers) have greater health problems than people with the same absoulute income whoe are relatively rich. There is plenty of other research along these lines.

    BTW I was exaggerating a little with my previous post – I suspect that the number of papers that support this argument is more like a hundred rather than several. It could be more (or less – I haven’t counted) although it is very substantial.

  70. @Jarrah
    Apologies Jarrah and Terje – it does appear that Deaton’s position on this is not as strong as I thought it was. Although a great deal of other research on this does support this argument Deaton is not as persuaded as I thought.

  71. I think that’s wrong. Of course, they were more more about power, but wealth is power. At a more abstract level, they were about justice, and inequality features greatly in people’s perception of justice.

    Generally speaking revolutions are where the regime is toppled. Revolutions can be violent and bloody or relatively peaceful. What defines a revolution is that the preceding regime is swept away.

    Revolutions happen either because a few people are trying to acquire power or because a lot of people feel that they have suffered an injustice and will continue to suffer injustices under the existing regime. Or it could be a complicated mix of the two and usually is. Those that want power through revolution always promise to impose a more just regime because that is how you get your interests aligned with the masses. Whether or not it works like that varies.

    I’m not saying that inequality of income and wealth will never be a factor in a revolution. I just don’t think it is ever likely to be a primary factor. If the people are poor because the King is stealing their land the key injustice is the theft of land not income disparity. Nobody much minds a rich King so long as he mostly respects the rights of the people.

    I do regard what happened in the Soviet Union following the fall of the Berlin Wall to have been a revolution even though it was relatively bloodless. The old regime is gone even if some of the old players are still playing.

    The numbers may be hard to tabulate but to make the case that inequality leads to revolution you would need to look at the timing of various revolutions and show that they were proceeded by periods of higher than usual inequality. However confounding any thesis in this regard is the thesis that rising prosperity causes democratic revolutions. We know that as societies become wealthier democracy becomes more prevalent however we also know that often prosperity arrives along with inequality. Untangling the mix wouldn’t be trivial.

  72. NickR :
    @Jarrah
    Apologies Jarrah and Terje – it does appear that Deaton’s position on this is not as strong as I thought it was. Although a great deal of other research on this does support this argument Deaton is not as persuaded as I thought.

    Find what you think is a solid example and I’ll look at it. However please do check out the YouTube I linked.

  73. TerjeP :

    I think that’s wrong. Of course, they were more more about power, but wealth is power. At a more abstract level, they were about justice, and inequality features greatly in people’s perception of justice.

    Generally speaking revolutions are where the regime is toppled. Revolutions can be violent and bloody or relatively peaceful. What defines a revolution is that the preceding regime is swept away.
    Revolutions happen either because a few people are trying to acquire power or because a lot of people feel that they have suffered an injustice and will continue to suffer injustices under the existing regime. Or it could be a complicated mix of the two and usually is. Those that want power through revolution always promise to impose a more just regime because that is how you get your interests aligned with the masses. Whether or not it works like that varies.
    I’m not saying that inequality of income and wealth will never be a factor in a revolution. I just don’t think it is ever likely to be a primary factor. If the people are poor because the King is stealing their land the key injustice is the theft of land not income disparity. Nobody much minds a rich King so long as he mostly respects the rights of the people.
    I do regard what happened in the Soviet Union following the fall of the Berlin Wall to have been a revolution even though it was relatively bloodless. The old regime is gone even if some of the old players are still playing.
    The numbers may be hard to tabulate but to make the case that inequality leads to revolution you would need to look at the timing of various revolutions and show that they were proceeded by periods of higher than usual inequality. However confounding any thesis in this regard is the thesis that rising prosperity causes democratic revolutions. We know that as societies become wealthier democracy becomes more prevalent however we also know that often prosperity arrives along with inequality. Untangling the mix wouldn’t be trivial.

    I would have to agree with inequality will not be the main factor of revolution, but inequality causes problems in which leads to revolution. Through studying much of the history of China as my personal interest, income itself have never been equal.

    However in times when people even just be able to afford food and shelter, they will not revolt against the king nor will they protest about income inequality. Whenever there is a fall of a dynasty the state of the society is so bad that people can’t afford food and shelter but when times like these happens; the government officials are so rich that some of them have bigger net worth as the government itself. The latter case does not happen when the time is in economic growth (i.e. the income is more equal in this case). In fact when the economy of ancient China shows good time, a “larger” proportion as comparing to economic downturn/revolutions, the top government officials are poorer (some to the extent that even they themselves can’t afford food).

    Now when people are eatting the thousand miles of forests to dead and are trading babies with other families to eat them to surive while the government officials have more wealth than the government itself; does that suggest income inequality? Yes, the cause of that usually comes from corruption of government assistance to natural disasters or high local tax both suggests greed.

    To conclude what I want to say (sorry for bad grammar) income inequality might not be the cause but income inequalty are larger during revolts in cases of Chinese history (I’m pretty sure revolts in a lot of other cultures’ history would be similar); and that this income inequality are generated through greed, corruption, exploiting on the general public but are not generated through improvements in work quality, technology advances, increase work time and quality outcomes like it should. This is exactly what the USA have been doing for the past 3 decades if not longer; do you genuinely think that the majority worker’s have contributed so little to economic growth that they shouldn’t be rewarded and the executives have contributed so much that their income are rewarded hundreds percents more than GDP growth of 3 decade while the middle/lower class receives nearly none (in this case not only that they are not receive a reward for their contribution, they are being punished because their income improvements for 3 decades are far less than inflation).

  74. John Quiggin :
    @Monkey’s Uncle
    A lot of effort to respin an unsalvageable talking point. Fortunately Paul Krugman has already taken out the trash on this one
    http://krugman.blogs.nytimes.com/2011/10/13/buffetts-buffetts-everywhere/

    I suppose Paul Krugman is considered the ultimate authority to appeal to around here. In the article you linked to, Krugman repeats the trite leftist populist talking point that large numbers of wealthy individuals are able to use various sneaky means of minimising their taxes. Again, few people seriously deny that significant numbers of wealthy individuals are able to use certain loopholes or financial planning to reduce their tax. But that doesn’t change the fact that, despite this, the overall percentage of taxes paid by high-income earners is still very high. Moreover, if 100% of all taxes were levied on the wealthy 100% of all tax evasion and tax minimisation would also occur among the wealthy, according to logic 101. That a lame partisan hack like Krugman is widely revered as some kind of economic genius says a lot about the general decline of what passes for sound economics today.

    Back to the main point though. Even if one conceded to you and Krugman that the US tax system is not particularly progressive if you factor in payroll taxes, where does that leave us? According to much of the US left, programs like Social Security and Medicare are vital features of the welfare state that they are proud of introducing and defending and which evil Republicans wish to cut or eliminate. But at the same time, they are also regressive, unfair burdens on the working poor! The fact that you can only stay remotely competitive in such a debate by bringing up Democratic Party entitlement programs should be a sure sign of the weakness of your side of the argument. Moreover, if one follows the logic of the argument through, the US tax system is apparently less progressive not due to the tax cuts of Reagan or Bush 2, but instead due to the continued existence of FDR’s social programs!

  75. I’m not appealing to authority, I’m linking to a refutation of your silly and contradictory talking points. Krugman is authoritative not because he has high professional status, but because he is so obviously right, and you are so obviously rambling from point to unrelated point.

    As I said in the original post, it says a lot for the effects of the rightwing parallel universe that you can imagine that anyone would be impressed by the desperate and self-contradictory line you are pushing here.

  76. And, also recent, Krugman has a nice opinion peice on the parallel universe that rightwing-nuts occupy:

    “Rabbit-Hole Economics”

  77. The 1%.

    In my opinion, the one percent view themselves as an arisitocracy and are therefore “entitiled” to their grip on economic power.

    The origins of this theme go back to Alexander Hamilton who argued the case for a British style aristocracy in the discussions, debates and conventions that took place prior to the forming of the US Constitution. He was soundly defeated in this aim but went on to be an important force in the building of the new government and its finances. But the US has ever since felt inadeqaute for not having an aristocracy and I believe they now have it in the form of the irremoveably wealthy elite. But most significantly this elite is one to which in the “American Dream” one can rise to join through their own enterprise. It is only now that most Americans are coming to terms with the reality that the “American Dream” is just that….a dream. Not a reality.

    http://en.wikipedia.org/wiki/Alexander_Hamilton

    Here is a link to Alexander Hamilton. Follow the links of scandal to uncover the “dark” side to American Society.

  78. @Jarrah

    Yes, I am one of those on this thread who concurs with your: “My contention then (and I think others on this thread are making the same point) is that there is a threshold of inequality above which people revolt. Not that steadily increasing inequality means steadily increasing social strife.”

    The phenomena is better represented by a system with catastrophic points (as illustrated by the example when a dog retreats and retreats into a corner when faced with a threat and then, suddenly, attacks).

    For what its worth, I don’t know of any theoretical model of a market economy where perfect wealth equality causes a problem but in all models I know, wealth inequality causes a severe problem for the logical consistency of the model unless the inequality is severely restricted (minimum wealth condition).

  79. *Of course* revolutions arise out of chaotic rather than linear processes. Here is my very incomplete list of some of the factors that would feed in:

    -inequity and limited social mobility
    -the perception that inequity is morally illegitimate/not sufficiently philosophically justified
    -the perception (or reality) that regular political channels are moribund/unresponsive
    -armed forces that are ambivalent or friendly to the aims of the revolution
    -charismatic and well-resourced leadership
    -a window of opportunity

    That’s just a start, of course.

    The national mythology in the US for a while that they had social mobility, that “anyone could make it” (and therefore social as well as wealth inequity was nothing to be alarmed about), and that their political system was not bought and paid for by special interests. The sounds from OWS suggest to me that’s less convincing than it once was. Rightly so.

  80. Monkey’s Uncle at 36

    That article talks only of the income amoungst the 1% that is actually assessed for tax. The real issue is the invisible trading that is not assessed for taxation, or is exempt from taxation. The best way to start to claw some of this back an identify who is benefiting is with transaction taxes. These should be National and International, with the international taxes being used to fund to operations of the United Nations.

  81. Rightwingers like to think that inequality does not cause revolutions and that we should not devote much energy to it. I suppose using this blindfold is the only way they can sleep at night. Anarco-capitalists stridently cry “who cares”, “that’s life” and “move on” when it comes to discussing equality and equity. Although there are other tricks:

    Trick 1 – “nobody minds a rich King if he respects the rights of the people”

    Unfortunately this is idiocy, because you cannot have a rich King if he respects the rights of the people to own their own production.

    Trick 2 – flood the arena with smoke and mirrors – “a whole array of far more meaningful metrics such as life expectancy, literacy, homelessness, health, unemployment, and any number of measures regarding freedom that ought to rate vastly higher in public policy discussions”

    Unfortunately this is idiocy because poor people suffer deprivation in all these compared to rich people.

    Trick 3 – misrepresent peoples views by claiming they – “argue that inequality prevents revolutions”.

    Unfortunately this is idiocy as no-one argues that “inequality prevents revolutions”. This misrepresentation is just perpetual trolling.

    Trick 4 – re-write others statements as; “unequal societies have revolutions at a higher rate than equal societies”.

    Unfortunately this is idiocy – no data exists and this statement was only constructed to facilitate trolling.

    Trick 5 – simply deny. “None of (French, Russian, Chinese) revolutions were much about inequity of income or wealth.”

    Unfortunately this is idiocy – The French, Russian, Chinese revolutions were based on and driven by savage, fuedal, inequity in property, rights, income and wealth.

    Trick 7 – simply contradict – “It doesn’t matter if some people have more than other people.”

    This is trolling, the past-time of rightwing idiots.

    Trick 6 – erect diversions. Assert some “need to demonstrate some sort of correlation between the two” (inequality and revolution).

    This is standard gun-lobby tactics. They also demand correlation between guns and homicide, knowing damn well that many homicides exist for other reasons and there are many guns that cause no deaths.

    This is also idiocy – it also creates the opposite obligation ie to demonstrate that either there is no correlation between guns and homicides, or in the case of our troll, to demonstrate that there is no correlation between inequality and revolution. But all they can do is spread the diversion and move on.

    Capitalism clearly breeds inequality, OECD nations have generally exported much of it to poorer nations with oppressed working conditions, and capitalism is now leading to a need to get rid of capitalism – the root cause, in modern circumstances.

  82. Re: Terje’s objection to my largely uncontroversial, almost tautological point – I evaluate health policy for a day gig so I know how social disadvantage = lousy health outcomes = social disadvantage.

    I did say at the outset: you’d have to be an ideologue not to acknowledge it.

    Then he described himself as a radical libertarian.

    QED.

  83. I guess if Marie Antoinette had survived she would have agreed with the proposition that great inequality in wealth and power were unimportant. However she managed to flame a desperate situation with her remark that if the poor people were starving “Let them eat cake”. She propobably regretted that remark in her dying mments.
    There seems to be a little of that kind of attitude in the sorts of justifications that have been made by the 1 per centers.

  84. @Ernestine Gross

    So is there, specifically, a capitalist model where there is a minimum wealth condition. Is the condition a minimal share of output, or a fixed amount irrespective of output?

    While I am skeptical about all modelling as society is driven more by politics and games, presumably a model maintaining your minimum wealth condition in the long-run would need to be a market socialist mode?

    .

  85. “Capitalism clearly breeds inequality”

    It depends. As capitalism replaced Europe’s feudal systems, inequality decreased. Where it replaces highly equal systems – like subsistence living, or China’s mid-century communism – it does increase inequality. But as Terje has pointed out, inequality isn’t always bad – if I’ve got $10 and you’ve got $15, increasing them to $20 and $30 doubles the inequality, but we are still better off.

    “OECD nations have generally exported much of it to poorer nations”

    Actually international inequality has been decreasing, thanks mostly to liberalisation in China and India.

  86. @Jill Rush

    Historians now think that Marie might not have actually said this, but then the honesty of historians is always suspect. Shakespeare made just as many valid points about inequality in his plays even though Julius Caesar and Kings Henry and Richard may not have actually said the words Shakespeare wrote.

    “There shall be in England seven
    halfpenny loaves sold for a penny: the three-hooped
    pot; shall have ten hoops and I will make it felony
    to drink small beer: all the realm shall be in
    common; ”

    Unfortunately the real-world Kings and Queens had other ideas.

    But the masses have long flocked to Shakespeares plays.

  87. @Chris Warren

    The models I have in mind are ‘competitive private ownership economies’ with various market structures (complete commodity markets, complete security markets, incomplete markets, sequence of commodity and security markets, partially segmented markets).

    IMHO, these models are very helpful in distinguishing theoretical knowledge from libertarian and other ideologies. There is no government in any of these models, there are no class structures, there is no Politbureau, there is no military or other dictator, there are no feudal lords.. Yes, these models are unrealistic in some sense but they are very helpful in identifying unrealistic policy objectives and policy measures (for example, the direction of financial and labour market deregulatons, new public sector management – roughly speaking the direction of policies marketed under the headings ‘globalisation’, ‘competition’, ‘economic rationalism’ and ‘new public sector management’).

  88. my largely uncontroversial, almost tautological point

    Dan – that you regard it as a tautology says a lot about your ideology.

  89. Well obviously, Terje, you endorse CEO’s who charge 343 times the median workers pay. That is an 8 fold increase over 30 years. You’d like a piece of that action, Terje, wouldn’t you!

    “Among the 299 companies listed in the S&P 500 Index, the average CEO’s compensation was $11.4 million in 2010, or 343 times more than the median pay ($33,190) of American workers. The ratio of CEO pay to median worker pay was just 42:1 in 1980, and is currently 25:1 in Europe”

  90. So if Alan Joyce is getting only 5 million a year and the median income of Quantas workers is 60 thousand then his income is just a mere 83 X factor over his workers.

    So that is what it takes. Balls 83 times the size of everyone elses to say “Your all fired”.

  91. @BilB
    Excellent facts.
    This would usually put a stop to much of the trolling we are witnessing.
    the site: cbpp.org/cms/?fa=view&id=957 was particularly interesting and definitive.

  92. The key one in Australia is Indigenous and remote disadvantage.

    The findings of AIHW, COAG Reform Council, Australian Institute of Family Studies, much academic literature (including Deaton) is the now-familiar: the people who most need greater opportunity – economic, social, health-wise, are least able to access it.

    If that doesn’t have reform implications, I don’t know what does.

    (No, the market won’t fix it – for example, delivering health services remotely is, from a capitalist’s perspective, a mug’s game).

  93. A poppy article, but nonetheless, here’s a strong quote:

    “Social class is simply the best predictor of health,” says Nancy E. Adler, Ph.D., a professor of medical psychology at the University of California at San Francisco. “If you could know only one thing about a person and predict that person’s health and longevity, you’d ask about social class. It’s even more important than family history.”

    http://www.menshealth.com/fiscally-fit-man/healthy-and-wealthy

  94. @Jarrah

    I am not going to waste much time with this. But if you start with different endowments $10 and $15 and increase them to $20 and $30 – then there is no capitalism. You only have capitalism if there is an expropriation from one to the other, so you end up with $18 and $32.

    And please do not make some rightwing trolling comment such as – but you can get the $18/$22 outcome under feudalism etc etc.

    If international inequality is decreasing, this has NOTHING to do with the export of oppression from OECD economies.

    Completely irrelevant. It would be a consequence.

  95. Dan – are you saying that the problem in indigenous communities is a lack of income and/or wealth equality. And further more are you saying that any measures that lead to an increase in income inequality in these communities would be a bad thing.

  96. No! I’m not talking about the distribution of wealth within the communities themselves at all. (Are you deliberately misreading me?)

    I am saying that social and labour market inequity and disadvantage go hand in hand with income and wealth inequity and disadvantage. I recognise it’s important not to conflate inequity and disadvantage, but the arithmetic truism is, given a certain *national* level of wealth, it’s got to be distributed somehow. A progressive redistribution (including such measures as the government as employer of last resort, for instance) would result in better outcomes for the most disadvantaged. Which is what building a decent society is supposed to be all about.

  97. So what you are saying, Dan, is that we need a “A progressive redistribution””of wealth” to “result in better outcomes for the most disadvantaged”. Presumeably this means that the most needy get paid the most and the less needy get paid the least.

    That is very revolutionary thinking there, Dan. If you can pull it off there will a Nobel Prize in it for sure.

  98. @BilB

    I expect that the more modern churches, unions, progressive political parties and community activists will be able to pull this off, when the need becomes clearer.

    There will be no Nobel prize because the theory was all produced by Ricardo and Marx.

    However we can still give out Ignoble awards to Paul Krugman (and Gregory Mankiw ) for his finding that:

    deliberate inflation will solve our economic woes

    See: chron.com/opinion/outlook/article/Falling-down-a-rabbit-hole-on-the-economy-Paul-2219532.php

    This is flying-pigs economics.

  99. I recognise it’s important not to conflate inequity and disadvantage, but the arithmetic truism is, given a certain *national* level of wealth, it’s got to be distributed somehow.

    You make it sound like rations on a ship where wealth was packed before the journey and no more can be created. However that isn’t how an economy works. In so far as we need a system to distribute wealth and income I’d suggest we use a market. Markets are great. Not only do they distribute stuff they facilitate the creation of new wealth and income.

  100. I was thinking, Dan, more along the lines of “salus populi suprema lex esto”, but then what the hell do I know.

  101. Terje – largely agree – I’m not anti-market *per se* – just have massive reservations, backed, I think, by economic history, about their ability to deliver equity and indeed effectiveness alongside efficiency. It’s about getting the balance right, “civilising capitalism”, saving the market from itself. The other thing is that of course public expenditure can generate wealth as well – just ask any capitalist who has benefited from publicly-provided infrastructure.

    Bil – heh, nice one.

  102. As all growth falters and the darkness looms
    we billions watch, our fear growing each day.
    Some sit in their homes in their empty rooms

    stare at their screens and have nothing to say,
    or cry their tears of rage and rising fear
    through powerless words that their fingers spray.

    And others, their numbers growing each year,
    complain bitterly and head for the street
    while politicians and the rich all sneer.

    And well they might those who have life so sweet.
    They live in a dream blind to what will come.
    Huge numbers suffer, resources deplete

    and all of your plans to what will they sum?
    To revolution and a boundless slum.

    http://thepeakoilpoet.blogspot.com/2011/10/revolting-ode.html

  103. The other thing is that of course public expenditure can generate wealth as well

    Rarely does it create wealth. Mostly it transfers wealth from one group in society to another. Just ask any capitalist who has benefited from public expenditure.

  104. @TerjeP

    Ridiculous,

    The New South Wales government rail network created massive wealth, as did the Federal Snowy Mountains Scheme and the Murrumbidgee Irrigation Scheme.

    When wealth transfers it goes from one less preferred point to another more preferred point – so there is usually some wealth (extra utility) being created.

  105. @Jarrah

    if I’ve got $10 and you’ve got $15, increasing them to $20 and $30 doubles the inequality, but we are still better off.

    Ceteris paribus, which in practice, will probably not be the case, society wide.

    If the prices of essential goods and services have doubled, neither is better off in absolute terms, and in relative terms one is worse off. If goods that wwere hitherto free or part of thje commons are now charged, then the poorer person is worse off in absolute terms. If the poorer one has to work longer to double his/her income than the richer one, then again, he or she is worse off.

  106. if I’ve got $10 and you’ve got $15, increasing them to $20 and $30 doubles the inequality, but we are still better off.

    Ceteris paribus Jarrah, but that’s almost never true of whole communities. Economies are dynamic and interconnected things and the relative wealth of one section of it authors the operation of and relationships between other sections of it.

  107. Terje:

    “Rarely does it [government] create wealth. Mostly it transfers wealth from one group in society to another. Just ask any capitalist who has benefited from public expenditure.”

    Wrong on so many levels, Terje.

    As one of many possible examples, think about the limited liability companies that are a major feature of modern capitalism. Such companies only exist because Government has paased law to allow them. Put simply, companies like BHP and News Limited are able to hide behind the skirt of the Nanny State if they get into too much debt and this transfer of risk to the public allows them to take on risk both directly and through spin off companies that would otherwise render many ventures untenable.

    Your libertarian ideas are cartoonish and ignorant.

  108. Mel – my comment was clearly in the context of public expenditure not legislation. Your attempt to refute my comment is cartoonish and ignorant and a little bit churlish and rude also. Try and be nice.

  109. Mel’s right though – free markets don’t exist except micro textbooks and libertarian wishful thinking. I think you need to get real about the extent to which economies are embedded in societies and indeed cultures, and how much of a crucial enabling role the state plays, whatever its specific shape might be. Once you’ve acknowledged that, you can move on to issues that are interesting and relevant, like responding sensibly to macro shocks, equality of opportunity, provision of decent basic services, sustainable development, etc. etc.

    All of this stuff about individual freedom arising from economic freedom is a chimera – first, because there’s bugger all relationship between the two – liberalised economies have not infrequently had tragically repressed populations – and secondly, because *true* economic freedom is kind of a myth – economies are inescapably ensconced in legislation and history.

    Often libertarians at this point say okay, but there’s this (often selectively applied) non-coercion principle at stake here – all transactions should be voluntary. Great(ish) principle!* When do you think Big Money and Ruthless Dictators will begin abiding by it? They won’t. It’s up to us, as *political* actors, to build a decent society served by a sensible economy; they don’t just spontaneously emerge.

    Markets are wonderful, clever things that often solve problems. However, there are problems they don’t solve, and they often cause problems too.

    *Though there are other worthwhile principles as well. Incidentally I’d be able to take non-coercion more seriously if it came from a vegan who works in the charity sector.

  110. Well said, Dan.

    Terje: “my comment was clearly in the context of public expenditure not legislation. ”

    Once again you are making a fool of yourself. Low to almost no public expenditure countries like Somalia have not been able to develop successful capitalist economies.

  111. “You only have capitalism if there is an expropriation from one to the other, so you end up with $18 and $32.”

    100% untrue. Capitalism creates economic growth (as does communism and a bunch of other isms, but they tend not to do as well over the medium to long term). Regardless, my thought experiment wasn’t anything to do with capitalism or any other ism, but simply to show that inequality, in and of itself, is not a problem (this applies to Fran’s comments as well). In fact, it may be the result of unambiguously good things like a doubling of everyone’s income, as in my example.

    “The other thing is that of course public expenditure can generate wealth as well”

    In the sense that any investment that gets a profit generates wealth, this is a truism. However, on average and in aggregate, centralised decision-makers (governments) tend to not do as well as decentralised ones (the wider market). This is due to a number of factors. For example, governments are using other people’s money, so don’t operate under the same incentives. They sometimes aren’t using return on investment as the reason for spending money. They suffer from diseconomies of scale. There’s the unavoidable deadweight loss. The list goes on, I won’t bore you. The point is that the money they take to invest on the nation’s behalf, right or wrong, takes away from the investment others would make.

  112. *sigh*

    After semi-conceding that governments provide public goods that allow capitalists to create wealth, you then go on to say government expenditure takes away from the investment others would make.

    Apart from being at least borderline self-contradictory, this demonstrates that you have no conception of how a well-performing government department runs – tight and with a view to both a budgetary and broader bottom line, is the answer. Given the profligacy of and mistakes made in the private sector all the time, you’re just being a True Believer here.

    And governments suffer from *diseconomies* of scale!? They’re the private sector’s biggest client!

  113. So to what extent is it possible for Australia to act to reduce income inequality?

    When I was young (mid 70’s), I worked summers in a soft drink factory. There were people there whose employment was subsidised – in a more competitive environment the company could not afford to employ them.

    Things became more competitive during the 80’s and 90’s. Government pensions and superannuation became much less generous. Contractors replaced employees. Real pay rates stagnated after the 1989 recession.

    The soft drink company was taken over, and I’m sure the idea of “subsidised” employees vanished.

    We are told that Australia would have gone to the dogs without these changes.

    To what extent is that true? That is, how much leeway do we have to create a more equal society without the price being too high?

  114. @Dan

    sheesh is that so untrue

    i’ve worked in government – and the one thing i’ve learned is the concept of “vote right spend left” – where right wing elite types (from North Sydney) working in senior positions spend enormous amounts of tax payers money – just because they can – on things that are not needed and in ways that are totally inefficient – whereas something we had done in my own companies might be done in a week using 2 or 3 people the same level of achievement in government would take a year and involve 50 contractors – and often be curtailed at the last minute for one reason or another.

    Anyone who thinks that government offices are more efficient than the private sector has never run a company with their own money.

    On top of that you have people employed for years beyond their use by dates – whereas talented people might find themselves in government positions their talent will lead them to the private sector – leaving much of what is left behind the dregs – talented people will have faith in themselves and their ability and so will take risks with their careers – less talented people know full well they have no chance of getting anything like the same kind of job in te private sector and so stay and eventually become the “core” of the government offices. Not all of these are inept but sufficiently large enough percent such that if the whole crew had to compete on even ground with the private sector they would last like all of one financial accounting period before they’d be gone.

    Fortunately (kindof) there’s so much fat in the government sector that there’s enough for companies to make a profit from the stupidity and expressiveness of government. Maybe that’s the whole point – and maybe that’s where “trickle down” actually works.

    pop

  115. Hah. Well, I work in a tiny office in a central agency and my gig is government accountability and program evaluation. It punches *way* above it’s weight. I’ve also worked in a larger agency that put run after run on the board, month in month out (ABS)… and I’ve worked in the private sector too, and I wasn’t blown away by how much cleverer and harder they worked. Spent a lot of time tripping over themselves, frankly. Like the state gov’t agency I worked at, briefly.

    (You’ll note I did say “well-performing”.)

  116. Yeah, I run a record label. It’s a hobby though, breaks even just about.

    I might add that that’s not relevant to how Big Capital does its thing. OWS aren’t mad at mum and pop running the corner store.

  117. Looks like the Percentiles are going to worsen as (believe it or not) in America they are reducing unemployment benefits.

    see: 247wallst.com/2011/08/04/the-nine-states-slashing-unemployment-benefits/

    No wonder they are occupying various cities.

  118. @Dan
    “After semi-conceding that governments provide public goods that allow capitalists to create wealth”

    When did I mention public goods? That is a different topic altogether.

    “you then go on to say government expenditure takes away from the investment others would make.
    Apart from being at least borderline self-contradictory”

    What is borderline self-contradictory about it? It’s a mathematical reality. Government expenditure comes from taxes and loans, which means taking resources from society that would otherwise be used in other ways. It’s another truism. That you don’t recognise it as such is deeply worrying.

    “this demonstrates that you have no conception of how a well-performing government department runs – tight and with a view to both a budgetary and broader bottom line, is the answer.”

    I’m sure that’s the ideal, and rightly so. However, the problems I identified – incentives, deadweight loss, diseconomies of scale, etc – are inescapable. They’re built into the institutional architecture.

    “Given the profligacy of and mistakes made in the private sector all the time”

    There is plenty of waste and mistakes in the private sector, but because there are millions of people and thousands of firms all making different decisions, the mistakes only affect some of the decisions. It’s called diversification, as important in economies as it is in ecologies. When government makes mistakes, it’s on a national scale.

    “And governments suffer from *diseconomies* of scale!? They’re the private sector’s biggest client!”

    Of course they do, as do all large organisations. Don’t you know what they are?

  119. “Anyone who thinks that government offices are more efficient than the private sector has never run a company with their own money.” Source: The Peak Oil Poet @31, p3

    Here we have a lovely piece of obfuscation. “The private sector” is characterised as operating on “their own money”. I wish it were the case.

    There are indeed a few examples found in the “private sector” where people “run a company” on “their own money, although the term “company” is a bit overstretched. Even tiny ‘private sector companies’, in terms of any measure of size (turnover, number of employees, market share, public exposure, profit) use other people’s money (loans). The “private sector” in question regarding this thread is run, more often than not, by people who get paid a lot for “running a company” (often into extinction) on other people’s money (getting equity shares for free or at a discount due to an interest free or low interest rate loan or via share options).

    Another Australian mathematical economist, Frank Milne, wrote a nice paper at least a couple of decades ago in which he showed that the decision problem of a corporation with multiple shareowners is akin (under realistic conditions identical) to that of a public sector decision maker. Milne was not the only economist who analysed the decision making problems. It seems, all this work as well as that of various institutions and writers concerned with ‘accountability’ is wasted on the author of the quote in my first paragraph. Myths die slowly if at all, don’t they?

  120. In SA electricity production was so fractured and ineffective that it was socialised by Sir Tom Playford’s LCP. It ran well and trained many young men who added to the wealth of the state. It was sold by the Liberal Party and as a result makes a lot of money for its overseas investors while the infrastructure is being run down and will almost certainly require state funding – socialising the losses only. There is precious little training on offer to build the skills base either.
    An enterprise like Qantas was an icon in government hands but now it is in private hands it is being taken off shore and staffed by those in other nations and seems to be on the skids in general. The Commonwealth Bank was a highly profitable enterprise in government hands and is still doing well. Big government however is often easier for a population to control than big multinational business. Government may not manage well but at least it can be voted out whereas a multinational company controlling essential services is not going to act in the national good at any time unless it aligns with its own goals.

  121. @Ernestine Gross

    Quite right. In the private sector as is the case in the public sector, organisations are run by bureaucracies. The problems in both sectors are much the same. The organisational form exists because it is typically, in many situations, more efficient than a little owner operated enterprise, but still, large organisations bring their own problems and due to the efficiencies they can carry a lot of bagage for a long time without going bust.

    As Jill suggests, public sector organisations have been very important historically by providing solid training that former staff often take with them into the private sector. In the bad old days, some people used to be attracted to the public service because they wanted to make a positive contribution to society. That was rarely the reason people decided to work in a private business. Unfortunately, in the era of market worship too many people in the public service nowadays are simply out for themselves in as ruthless a way as many are in the private sector. And that mentality shows in some of the results.

  122. Markets don’t ‘produce wealth’. Working people make stuff, and capitalists accumulate wealth by stealing as much as possible of the value created for themselves. It’s pure parasitism, and on this planet it has reached the stage where it has become not just immoral and pernicious, but toxic as well. Despite the obvious disaster that market capitalism and literally insatiable parasite class greed has wrought, the bloodsuckers and their toadies absolutely refuse to act differently. And it has reached the point where the destruction caused by this parasitism has so deranged the planet’s life support systems that an era of mass death is upon us. And the Right is not just unconcerned, it sees a Malthusian ‘final solution’ as very much to its advantage.

  123. @Ernestine

    Yes. That in the context of the continuing reverberations of the global *financial* crisis there are still people acting as if the market is as pure as the driven snow, composed only of little companies with low barriers to entry, all spending their own money and nothing but… shameless.

  124. Anyway, none of the right-wingers have even acknowledged, let alone challenged, my characterisation of the historical and political context of economics. As usual it seems like they are just arguing in favour of a normative fantasy, which is incorrect but moreover irrelevant.

  125. The bureaucracy is an important and necessary part of large organisations; they coordinate the organisation’s operations. However, they can also reap a significant amount of the surplus created, with the plunder going mainly to the upper echelons. By surplus in this context, I mean the surplus due to efficiencies when compared to alternatives, plus the premium gained by the creation of market power in their input and output markets. They do create wealth but they also appropriate wealth. The question of how to deal with them appropriately is non-trivial and still seems open.

    Organisations create wealth. And markets do to some extent also, by facilitating more efficient allocation of resources to organisations, so that production is more efficient. Without some market-like mechanism efficiently allocating resources (including outputs) would be difficult indeed, if not impossible.

    Although there are problems with details, and significant problems at that, markets are important and their benefits should not be forgotten.

  126. POP doesn’t know about the huge range of rip-off’s perpetrated by commercial, profit-maximising, businesses. Greedy entrepreneurs will fire-bomb their competitors and murder their rivals. They will also misrepresent their valuations and products.

    POP’s ‘efficiency’ is merely private ‘efficiency’ irrespective of the cost to others.

    Real efficiency only exists when the price of a commodity = average costs, but only socially responsible producers will ever structure and maintain production at this point.

    When you get wacko arguments from the dregs like POP, one can see why all our global incompetent capitalists are desperately turning to government to save their souls.

    In the final analysis, other forms of efficiency (Pareto, MB=MC, etc) are just convenient word-play to justify higher prices or commercial cartel imposts on the community.

    In general, it is the dregs who prattle-on like this POP.

    If POP wants to brag about its own company, then it had better provide the details. Running a fish and chip shop is not like building the harbour bridge.

    While government enterprises may or may not be best in most circumstances – we need much more business with social purpose ahead of profit maximising. But this can be cooperative entities and family non-profit businesses and farms etc.

    When I worked for government I met a lot of private enterprise people and industry leaders. They were mostly slow-witted, uninformed except for being informed on their own narrow commercial tunnel, uninterested in the long-term future, empty of vision, ignorant of history, and with chips on their shoulders the size of boulders.

    When we advertised for mundane jobs – we were inundated with people desperate to get out of the hell holes of working for pathological business bullies, and when they did get through the competition and entered the public service relayed so many tales of mistreatment at their hands of their previous employers that your heart would weep.

  127. @Chris Warren

    vicious little viper aren’t you 🙂

    actually my companies were international telecoms companies (and in australia we were the first company to track and recover a stolen vehicle using GPS, first email to mobile phone and other firsts)

    not big companies but we did work all over the world – sold to many of the worlds largest telcos (no US customers though)

    and i stand by what i have learned – though of course there was variation in pretty much everything including levels of corruption (mostly in post communist countries where corruption is endemic and deeply ingrained into the fabric of society)

    private companies – especially small ones – live or die by their efficiency – and they are much more efficient than government orgs – by orders of magnitude

    of course efficiency can equate to harsh – letting people go because you don’t have the income is never easy

    the dregs here dear boy are those who will, like Stalin, lead the people to bloody class warfare – pretending it’s about fairness when it’s more to do with desperation – when there’s not enough to go around we start to look for those who have more. Hitler targeted the Jews because they had a lot of nice juicy assets that could be stolen. It’s a pattern we humans repeat often.

    If you want to attack anyone you should attack Government – Corporate incestuousness – and stop confusing the private sector in total with the evil capitalist running dogs you are seething to murder

    because you and many like you would happily drive the masses to murder anyone you point to and label a capitalist

    it is those who are like you that terrify everyone

    because at your core is a terrible hatred of human kind

    bloodthirsty desire to kill (your father image?) and rip flesh and scream your blood curdling yell of “down with the capitalists”

    in small village culture we’d just off you and bury you in a ditch and go back to working the fields – simply because you’d be seen to be much like a rabid dog – to be destroyed and forgotten

    pop

  128. @The Peak Oil Poet

    You are bawling for no good purpose.

    Dry your eyes and get over it.

    If you want to know about corruption try finding decent private enterprise in Africa or South America.

    At best 1/3rd of private enterprise is worth salvaging, depending on debt levels and corporate culture.

    I would imagine the employees “you let go” would have a very different story to tell.

  129. @Chris Warren

    it’s not about bawling (strawman)

    it’s about correctly identifying your murderous violent nature

    which you can not escape by accusing me of anything (other than being equally violent by virtue of my being like you – human)

    whereas i call a spade a spade

    you worm your way around your dishonesty and virulence

    and frankly – there is no better support to be found for keeping our crappy system than looking at people like you – who lack any subtlety and all see as “commies” calling for the downfall of everything

    let’s see how well you do walking the CBD with a sandwich board with the slogan “kill the capitalists – bring back Stalin”

    i’m an Anarchist by nature – i detest all forms of government – but i’d rather have bad government than the bloody change of power you call for

    and will never get

    pop

  130. “It’s pure parasitism”

    I guess you haven’t been reading the Sandpit, Mulga?

    “Anyway, none of the right-wingers have even acknowledged, let alone challenged, my characterisation of the historical and political context of economics.”

    While not right-wing myself, you are probably lazily lumping me in with this description. The reason I haven’t challenged your characterisation is because I agree with it. That’s what makes me a moderately libertarian liberal democrat, and not a doctrinaire libertarian. Also, I’m still waiting for you to answer #38.

  131. @The Peak Oil Poet

    @Chris Warren

    Stop arguing guys, both of you agree on the fact that pure capitalism will inevitably fail but your arguing and accusing each other over little things. What POP said is actually true, not all of the business owners are greedy capitalist (although a majority of them are and POP admitted it himself).

    I do agree with what POP said small private sector business do operate more efficiently than government agencies due to smaller work environment that makes it much easier to operate; and the fact that government jobs are underpaid compare to private sector industry average that gives no incentive for people to be innovative and improve their efficiency. However large “top tier” corporations are pretty much as inefficient as government as well if not worse.

    Both of you have extensive economic knowledges (more than myself I believe), but if you guys can just be a little bit “lower tone” in your comments it would make other blog readers easier to be convinced by your comments. For Chris, some of your comments are great but it makes people hard to accept because it is a little bit extreme. I hope you can change the style of your comments.

  132. Jarrah – sorry, didn’t see #38.

    Yes, I should have said libertarians.

    Is there any strong empirical evidence for diseconomies of scale?

  133. Thanks – I’ll read up, but based on a quick look there there doesn’t seem to be a particularly strong claim that diseconomies of scale (or their causes) *more than offset* economies of scale.

  134. Yeah, well, markets – especially real-world markets – have their problems too – so I think as far as we’re willing to grant that we’re both reasonably non-ideological representatives of our respective “stripes”, we’ll probably just have to agree that how much emphasis one places on various manifestations of market and government failure, and what needs to be done to mitigate against them remains a matter open for debate, one on which reasonable people can reasonably disagree, etc.

    Back on topic, though: I maintain that the wealth disparities produced by the present economic system are unconscionable. They would be less so if everyone was doing okay. But they’re not.

  135. Yes there are both economies and diseconomies in scale but increasingly for most things except maybe restaurants, economies tend to outweigh diseconomies which is why there is a tendency toward larger organisations. But larger organisations have other benefits when compared with smaller ones. The most important is power. A lot of advantages flow from power. Or at least flow to those who have power.

  136. @Dan There has been a lot of conclusions drawn from studies similar to this one. Most of it boils down to tobacco use, those that use it are more sick and die earlier and their group suffers because of the effects.

  137. Okay, but tobacco use correlates with low levels of education and high levels of mental illness. So you can see how we still have a tangle of disadvantage, and if some aspects could be addressed, other aspects would be addressed as a matter of course.

  138. Mulga Mumblebrain :Markets don’t ‘produce wealth’. Working people make stuff, and capitalists accumulate wealth by stealing as much as possible of the value created for themselves. It’s pure parasitism, and on this planet it has reached the stage where it has become not just immoral and pernicious, but toxic as well. Despite the obvious disaster that market capitalism and literally insatiable parasite class greed has wrought, the bloodsuckers and their toadies absolutely refuse to act differently. And it has reached the point where the destruction caused by this parasitism has so deranged the planet’s life support systems that an era of mass death is upon us. And the Right is not just unconcerned, it sees a Malthusian ‘final solution’ as very much to its advantage.

    thank you all for this thread and as a small comment on a comment

    the current situation happening at qantas ,to me, illustrates this in spades.

    the eighties mantra of

    “brand uber alles”

    has been brought to it’s logical conclusion where the fact that qantas IS the people who actually,with their skills, dedication, and justifiable pride in standards of excellence has been pushed into a tiny irrelevant corner and the “brand” qantas means more than the reality.

    the amazing quality of service and safety is now just an image to be protected and virilently defended by public relations and large (expensive)meaningless advertisments in the face of a hollowing out of that same safety and service in the name of cost cutting.
    while “executive officers”which is just a fancy name for managerial servants claim outrageous pecuniary benefits in the name of indispensability.

    qantas never had safety problems.
    qantas mean’t worlds best safety standards.
    the reality of globalisation does not mean Australian or any other country has to dissolve into an undifferentated amorphous mess of lowest common denominator.

  139. and.

    the turgid has also a place.

    i would never have imagined the how bloody vile the ideology of libertarian “take care of the rapacity”actaully was unless it had been so carelessly spelled out in this forum.

  140. @The Peak Oil Poet

    Yea – a capo-anarchist with a lot of demons in its head.

    The antithesis of social democracy. The anti-Christ of government.

    Narcissism writ large, defacing civilisation. Economic piranhas feasting on the commons.

    Capo-anarchy – where the bottom of the barrel meets the bottom of the well.

    Capo-anarchy – declamation, desperation – no explanation.

  141. @Chris Warren

    maybe

    but i don’t actually think killing capitalists simply because of their ideology is that great a platform

    or communists (though in your case it’s tempting)

    or killing Muslims

    or Christians

    or Homosexuals

    i’m more for getting rid of systems that focus power in the hands of a few and that force the many into servitude under a legal system controlled by elites – whatever the ideology of those elites

    i realise that elites will always emerge and will ultimately have disproportional power – and that periodically they piss people off so much that they get hammered down

    but i’d rather that their ability to gain such power is not built on taxing the population and channelling those taxes to where they think the money should be spent – which is always on weapons, cronies, supporting corporations or government offices (CIA, KGB, etc) etc

    you want to replace one set of scum bags with a different set of scum bags (with you in a prominent position of power, wearing a uniform with a red star on it and ordering the interrogation and water boarding of people like me)

    i’d like to get rid of the way scum bags get to have power

    pop

  142. @Chris Warren

    nah nah n nah nah

    commie pinko comment Chris
    has no wiser words than this:
    “you’re are scumbag” (nah n nah)
    “i’m a pinko” (blah blah blah)

    yes we know you pinko sort
    grab your share of what we wrought
    claim you’re fair and claim you’re good
    but i see just a violent hood

    cowards cry that “life’s not fair”
    thieves and liars steal their “share”
    thieves and liars dressed in red
    you Pol Pot sorts are better dead.

    pop

  143. Good exposure of capo-anarchy here.

    It is quite willing to label everyone else as “scum bags” etc (see above) but go into indecipherable apoplexy when they get paid in the same coin.

  144. “Back on topic, though: I maintain that the wealth disparities produced by the present economic system are unconscionable. They would be less so if everyone was doing okay. But they’re not.”

    Implicit in your statement above is what I have been arguing since the beginning – inequality, in and of itself, is not a problem. I’m glad we’re making some progress here.

  145. That’s like saying bleeding to death isn’t, in and of itself, a problem; it’s the stab wounds you’ve really got to look out for 😛

  146. @Jarrah

    The reason why inequality itself is not a problem is because it is a consequence not a cause. Inequality always exist but it will not be a problem as long as that inequality is generated through proper means such as increase work hours, innovation and technology improvement etc and not through exploits on the general public/workers. I believe blaming the problem on inequality is not valid as well, because inequality isn’t a cause but a consequence.

  147. No, it’s more pernicious than that. Limited opportunities beget limited opportunities. See Myrdal’s work on circular and cumulative causation. That’s why it demands a policy response.

  148. @Dan

    I’m not saying that it should not be acted on, because I know that inequality in US isn’t generated through proper means. Almost all inequalities generated in US are through exploiting on the weaker (worker). But if you are going to sue someone you have to sue them for the right reason, like if you got robbed you should sue them for robbery not theft.

  149. @Chris Warren

    there’s a difference between not understanding and not wanting to understand

    as for apoplexy – i hardly think i’m likely to get emotional over someone as lowly as you

    it’s more like, ya know, slugs and other icky things that people are repulsed by

    i’d not expect a slug to have a clue why i’m repulsed by it

    then again, slugs are not nearly as repulsive so i guess if i was to get emotional about such a slimy creature then you’d be the best bet that i’d find for us to try it out

    what is it with you anyway – are you retarded or something? Bitter old fogey in a wheelchair or what? You certainly are vitriolic and your violent streak is something else.

    No wonder people are scared of commies if you are their flag waver – i’d expect a more successful approach might be sound reasoning and an even temperament but i guess you are just one of many

    you know the funniest thing is that the only other people i meet who are as whacko as you are the right wing sorts that hoard gold and stop their kids getting vaccinated

    same behavior – exactly – just different slogans

    don’t ya think that’s kinda telling?

    pop

    pop

  150. @Tom

    This seems to be saying the same thing.

    Inequality is not the problem – the cause of some inequality is, and the existence of huge inequalities indicates there is a huge economic and social problem.

    There are two sorts of inequality – a natural inequality due to normal differences in human attributes, but the extra inequality based on exploitation.

    Its the exploitation that is hard to understand.

  151. Off topic but… The crazies are at it again. The Heartland Institute has ‘published’ a ‘highly authoritive’ ‘interum’ report by the nongovernmental international panel on climate change.

    http://www.nipccreport.org/reports/2011/pdf/2011NIPCCinterimreport.pdf

    “With its emphasis on natural variability as a cause for the recent climate changes, it is a must-have for serious climate scientists who should not just rely on the IPCC Fourth Assessment Report alone to get the full picture of our current state of knowledge (and what is not known) about climate and climate change.”

    Are you a ‘serious’ climate scientist?

  152. The answer (the miraculous ‘spontaneous remission’ that is now our only hope) to humanity’s terminal predicament, caused as it is by capitalists acting as they are programed so to do, is certainly not to kill the capitalists. In doing so you become like them, so they win anyway. Murder and violence are two of their preferred modus operandi (or should that be modi?), No, capitalists must be disempowered. They will remain human-ish, and some may even become quite decent specimens. I’m all for markets-I love a good farmers’ market or city markets and weekly country markets. But they only work properly, in my opinion, when there is a fairly approximate equivalence of economic power between producer, vendor and purchaser. Capitalist markets, on the other hand, are predicated on grotesque imbalances of power and the exploitation of the powerless by the powerful, and this tendency is now more marked than at any time in modern history. Even worse, the beneficiaries of this unjust imbalance of power, having converted their money power into political, indoctrination and coercive power, are plainly determined to make the situation even more iniquitous and exploitative, and are even unconcerned that in doing so they are rapidly undermining the life-sustaining systems of the planet.

  153. Chris Warren, the answer to exploitation, which makes it perfectly understandable, is that some people hate and fear other people. They are known, colloquially, as the Right. Why they hate and fear others is a complex problem, but the type is best kept away from power, and humanity’s complete failure to do so explains our terminal predicament, in my opinion at least.

  154. “That’s like saying bleeding to death isn’t, in and of itself, a problem; it’s the stab wounds you’ve really got to look out for”

    Actually no, that’s a terrible analogy. We’ve already established that inequality by itself does nothing to anyone, unlike bleeding to death or stab wounds. It’s more like saying the colour of the sky isn’t a problem, it’s the composition of the atmosphere you’ve got to look out for.

    “The reason why inequality itself is not a problem is because it is a consequence not a cause.”

    That’s right. I would have said – a symptom, not a disease.

  155. @Mulga Mumblebrain

    Yes, but then another issue arises – why do some people act this way. One point is that the expectation of wealth, beyond ones own capabilities, requires mistreatment of others. You cannot enslave an African until you cast him or her as a lesser or something to be controlled (to be used for the accumulation of wealth).

    But the alienation needed to mistreat others for economic reasons cannot be contained just to that purpose. It flows into culture generally, and has done so from the first occasion of exploitation.

    If society can regulate exploitation and associated stresses and motives, a lot of hate and fear will evaporate. If you cannot regulate exploitation and it ratchets up, hate and fear will escalate and a Right wing reaction such as KKK in America and One Nation in Australia, will emerge. Andrew Bolt recent attack on aboriginals was an expression of his fears that Aboriginal Rights may interfere in the present pattern of economic exploitation in Australia although he was probably channeling the fears of corporate Australia.

    The interests of corporate Australia are at the base of hatred against anything that inconveniences corporate exploitation of resources, or accumulation of profits. So you will see that most rightwingers particularly hate trade unions and activists surrounding Wall Street denouncing corporate wealth.

    By why shouldn’t someone hate the loan shark or banker that drives their family from their job, home, family farm and future. You just have to make sure you learn to hate the exploitation ahead of the alienated cartoon character supporting or effecting the exploitation.

  156. Jarrah: name me a highly unequal country where everyone’s basic needs are met.

    Too high a bar? Well, this is the standard to which I hold societies, and what I hope for in Australia.

    Yes, Terje’s right – your analogy was limp. Inequality *does* cause problems – not least fomenting social unrest even in wealthy societies.

  157. “Yes, Terje’s right”

    I think you’ll find you disagree from different angles. Anyway, whatever problems my analogy has, at least it’s better than yours.

    “Inequality *does* cause problems – not least fomenting social unrest even in wealthy societies.”

    When it offends people’s sense of justice, then it causes problems. But simple inequality isn’t enough to give rise to those feelings – it has to be, as Tom has alluded to, inequality which is non-meritorious. That is, there has to be something else going on. I would argue that it is patently obvious that recent social unrest in wealthy countries is because people feel the inequality is based on unjust actions, like bailouts for investors and cutbacks for pensioners.

    Think of it this way. When something bad happens, unless there is intent (or recklessness, etc), there hasn’t been a crime, merely an accident. ‘Accidental’ inequality – ie the inevitable result of the vagaries of human existence – is morally neutral and harmless. Inequality from exploitation (the genuine kind, not the Marxian re-definition) or corruption or preferential treatment of private interests by institutions meant to serve the public interest, this is what makes people mad, and rightly so.

  158. mulga mb”this tendency is now more marked than at any time in modern history”

    I noticed the graphs in the finance report on Monday’s ABC news. The last time there was the disparity of 23+% of income going to just 1% of population in USA was 1928.

  159. Jarrah: name me a highly unequal country where everyone’s basic needs are met.

    Name me a highly unequal country which has a liberal economy.

  160. I’d say that’s about right. The more ‘liberal’ an economy (which means the more free are the rich to exploit the rest) the more inequality, injustice and disempowerment. That is the object in ‘liberal’ economies-to exploit the rest and accumulate wealth. The USA for example, has a highly ‘liberal’ economy, and a highly predatory, violent and determined capitalist elite ruling it as a crony capitalist kleptocracy and international stand-over thug.

  161. @TerjeP

    The trouble with your challenge Terje, is that you don’t specify what criteria meet your test of “a highly liberal economy”, so any example can be waved away with the “no true Scotsman” defence. If you simply mean an economy where expenditure by the state is a tiny proportion of GDP, Somalia is a good example. For all practical purposes, there is no state there.

    I’d say the US is a highly unequal country with a highly liberal economy.

    The specification of highly unequal countries where everyone’s basic needs are not met is obviously silly. If it’s highly unequal, then at least some people’s basic needs and then some are plainly being met. There’d be no point to inequality if at least someone wasn’t benefiting.

    The better questions are — considering only those countries where the basic needs of the poorest three quintiles are persistentlly being met,

    a) how ‘liberal’ are their economies?

    b) how inegalitarian sn their distribution of wealth?

    Posed this way we can begin to identify a correlation, if there is one, between liberal economy, inequality and basic needs provision without NTS DQs.

  162. OK … now I’m in moderation despite not having mentioned the term social|sm or any rude words. …

  163. Jarrah – we may have to agree to disagree on the limpness or otherwise of our metaphors too 🙂

    Chris Warren’s right – in the *real world* there is no, but *no*, inequality without the patronage, nepotism, exploitation, beginning from an unlevel playing field… this goes all the way back to geography if you accept Jared Diamond’s (quite compelling, I thought) thesis.

    It’s not harmless. It is the result of deep iniquity and the cause of further iniquity.

  164. As for “when it offends people’s sense of justice…”: what you’re basically saying here is that as long as the (paid-for) conventional wisdom about *not* having been shafted persists…

    In this context, the poll result that Americans radically underestimate the share of wealth held by the top tiers of their society, and when they are presented with the true figures they are in favour of radical redistribution, *regardless of their political allegiance*, should either worry you or, I hope, inspire you.

  165. @Dan

    actually, in the real world there is no such thing as equality – period

    equality is a mathematical abstraction and for people to think you can carry a mathematical abstraction across to life is, when you really start to dig into it, silly

    life is about ebb and flow – back and forth – push and pull – ying and yang and not just of simple variables but of complex interplays of variables

    ideological beliefs are very “Christian” in that they are essentially faith based and often ingrained from early upbringing – the very value systems of people are built on assumptions concreted into the personality

    such beliefs lead to people fighting over just about anything (though it’s ALWAYS attached to resources one way or another)

    i picture two carnivores standing facing each other over a carcass

    they both growl a lot and may even fight – and sometimes even fight to the death

    and other than being “at one with the moment” in every way they have no higher understanding of their predicament – and like ideologues – don’t care

    Communism always arises from times that are tough on the masses – someone gets up and yells “lets level the playing field” and everyone follows (eventually to mass killings and terrible destruction and then eventually to imbalance again)

    and always it’s the so called intellectuals who tease out all the issues such that in the end all of the death and destruction is validated (they don’t believe in God so lets kill them and steal their oil)

    the fact is we are all nasty predators and we are all on the blood scent of our prey

    with the commies it’s the nasty bad horrid rich

    with the neocons its the nasty bad horrid people trying to control their own resources

    fact is, that identifying anyone as “evil” is inherently predatory and a sign of conflict for resources

    it’s just then a case of which side you think will lead you personally to getting your bit of the carcass

    on this blog most commentors appear to be communists

    on others i visit they are extreme Aynn Rand types

    yet others they are radical religious nuts

    and if you deconstruct the flow of feelings and words you come to realise that they are all much the same – they just wave different flags and use different formulae and incantations to weave their spells

    very very few people stand back and try to grok the whole picture

    but then

    neither do the two predators i mention above

    pop

  166. Mulga Mumblebrain :
    I’d say that’s about right. The more ‘liberal’ an economy (which means the more free are the rich to exploit the rest) the more inequality, injustice and disempowerment. That is the object in ‘liberal’ economies-to exploit the rest and accumulate wealth. The USA for example, has a highly ‘liberal’ economy, and a highly predatory, violent and determined capitalist elite ruling it as a crony capitalist kleptocracy and international stand-over thug.

    Bunkum. If you took the Gini number for each country and plotted it against economic freedom (eg Heritage Index of Economic Freedom) you would find that the tendency is for liberal economies to be more equal. And the tendency is for more liberal economies to have better outcomes in terms of crime rate, life expectancy etc. They also tend to have more political freedom.

  167. That’s a cheap caricature. I haven’t said anyone is evil, and I’m open to new evidence.

    I’m a social democrat because I think the best societies to live in – and, in the context of modern economies, the most macroeconomically and environmentally stustainable – are social democracies. Yes, to a great extent, that comes back to values – everyone’s vision of the good society does, hence what I said before about reasonable disagreement.

    I’m not blind to the fact that humans are imbued with different levels of ability – I’m doing just fine myself thank you – and some value material wealth more than others, etc. etc. I’m arguing for *more* equity, not some complete equity that shrill student leftists would regard as normative.

    I like your implicit implication that you’ve got it all figured out. You haven’t.

  168. Jarrah – I might be more inclined to agree with you if, in the real world, disadvantage was evenly distributed.

    It’s not.

    Again if I can draw on Myrdal and Diamond, it correlates with being in a systematically disadvantaged social group, often a minority. Indeed, much of Myrdal’s work was on the persistence of the disparity of advantage and disadvantage in the US between black and non-black citizens.

    So, while I am at pains to point out that I don’t think your position is prima facie racist, nor that you are racist, I encourage you to carefully consider the actual distribution of all sorts of resources you are defending.

  169. @The Peak Oil Poet

    on this blog most commentors appear to be commun|sts

    Hardly. To the best of my knowledge, I’m the only person here who accepts that title. While he is almost certainly arguing from the left, I’m not sure what Chris Warren claims to be. As to the other regulars here, while there would certainly be many claiming to be liberal or Green or social democratic I’d be astonished if any of them claimed to be commun|sts.

  170. @TerjeP
    Terje I am genuinely interested in your POV here (and am halfway through your video – it is very long). However what you have said doesn’t appear to be correct. I did this using Ginis and the Heritage Freedom Scores (28 obs – I dropped a few observations that had missing values) on Wiki (not great data I know) but the correlation is 0.48 and has a p-value less that 1%.

    It is true that the data available probably focuses on richer countries and that a different pattern may emerge if we compared richer countries with poorer countries. However for the richer countries listed, the opposite appears to be true.

    Of course this doesn’t form a compelling argument either way due to the obvious endogeneity bias.

  171. The Peak Oil Poet

    “…actually, in the real world there is no such thing as equality – period”

    Why do we have to put up with these trolls? eh?
    Most sentient people will know that all humanity is morally equal. That access to public services is an equal right. That everyone should have equal rights to voting, emergency services, and to the right to work and housing etc. That the right to free speech also needs to be equal.
    In times of stress, say during the second world war, rationing was based on ensuring relatively equal access to goods.
    Those who deny all and any equality, are evil and are living in a false reality. And they do this to benefit themselves by mentally freeing themselves from the social expectations of democracy. Simply so they can plunder whatever they can get from others.

  172. @Chris Warren

    you wont ever learn will you

    you are incredibly aggressive – i can’t make you out – either you are very young and enthusiastic (and very ignorant) or you have some sort of mental problem (and it effects your social behaviour)

    stop attacking people – you’ve been doing it since the very first day i started reading this blog – in fact it was your attacks that prompted me to first comment on the blog

    it’s incredibly offensive and nasty

    like an evil little terrier that just won’t stop barking and bristling – the sort that every person responds to by wanting to kick it in the face – or by running in fear

    there is a middle ground Chris – try it for a few days and see how it fits – you might find it’s not so uncomfortable as you think

    pop

  173. Two topical Myrdal quotes:

    “The big majority of Americans, who are comparatively well off, have developed an ability to have enclaves of people living in the greatest misery without almost noticing them.”

    “In a time of deepening crisis in the underdeveloped world, of social malaise in the affluent societies . . it seems likely that Gandhi’s ideas and techniques will become increasingly relevant.”

  174. Fran Barlow :
    @The Peak Oil Poet

    on this blog most commentors appear to be commun|sts

    Hardly. To the best of my knowledge, I’m the only person here who accepts that title. While he is almost certainly arguing from the left, I’m not sure what Chris Warren claims to be. As to the other regulars here, while there would certainly be many claiming to be liberal or Green or social democratic I’d be astonished if any of them claimed to be commun|sts.

    You may be rising to a provocation.

    The problem is that the 10 point program in Marx’s “Communist Manifesto” was not a so-called “communist” program. It was a market socialist program based on progressive taxation.

    All this political theory has long been available at Australian universities, particularly the ANU. The most useful text is David McLellan, “The Thought of Karl Marx”. McLellan’s commentary is illuminating and worth reading on its own.

    McLellan appears to be the only writer who in 1971, noted the dichotomies of:

    political – social movement [pg 39, 161]
    production – demand [pg 38]
    classical – marginal economics [pg 85]
    capital as general social power – capital as private power of capitalists [pg 117f]

    These all provide bedrock understandings for the economic rationalism of the 1980’s, the unemployment in the 1990’s, the free-trade nonsense in 2000’s, and the GFC’s of the 2010’s.

    McLellan also analysed Marx’s concept of “communism” which is not one-wit represented by anything posted by our provocateur.

  175. Fran: “OK … now I’m in moderation despite not having mentioned the term social|sm or any rude words.”

    I find even two links puts you in auto-moderation, which makes it difficult when you want to respond to two people in one comment. Once out, the comment will appear in the thread at the point when it was originally submitted, making it less likely to be seen. This is in no way a complaint about Quiggin’s diligence in moderating his blog, just an observation about the software’s behaviour.

    Dan: “Americans radically underestimate the share of wealth held by the top tiers of their society”

    I think that is evidence that the supposed negative effects of inequality are not as bad as you make out. If people don’t even realise how unequal their society is, it can’t be having such dire material consequences that make them sit up and take notice.

    “and when they are presented with the true figures they are in favour of radical redistribution”

    Not according to the poll I saw, maybe you saw a different one. When presented with the true figures, they expressed a preference for greater equality, but weren’t given a policy prescription to have an opinion on, let alone one of radical redistribution. I think the next few elections in the US may give us good experimental evidence, as OWS is definitely raising awareness of inequality. If radical redistributionists get into office, then you will be vindicated. I don’t think they will, once people weigh up the actual costs and benefits of of the policies required to redistribute wealth and income.

  176. The possibility of radical reform through mainstream political channels in the US presupposes that US politics represents the people rather than vested interests. A tendentious claim, arguably negated by the very existence of OWS.

  177. @Dan

    Unfortunately, I don’t think there will be radical reforms in the current US political system because of the fact that the wealthy are so powerful (more so in a capitalist society). The US will inevitable collapse in that case, and the current young and future generations will live in a society of long term recession/depression and hopefully changes will happen by the time they get into power.

  178. just read that only 9% of prez O’s news coverage is positive.

    wonder what the figure for our prime minister is?

  179. @Jarrah

    “Americans radically underestimate the share of wealth held by the top tiers of their society”

    I think that is evidence that the supposed negative effects of inequality are not as bad as you make out. If people don’t even realise how unequal their society is, it can’t be having such dire material consequences that make them sit up and take notice.

    The evidence is a more complex than that. Being down the social scale is definitely negative, eg, life expectancy v income in group, is well documented. The physiological mechanisms for this are reasonably well understood. However, one of the sources for people’s take on their social status is their own self image or self-myth. Believing that you are better off financially than you are – plus more intelligent, good looking, well-informed, fashionable, witty, etc – is a viable way of minimising the impact of being down the list. Maintain the delusion and you’re ok, but if you were aware moment-to-moment of your deficiencies you’d likely be depressed.

    Biologically we have a deeply ambivalent to the rich and powerful. On one hand, we would like to usurp their position, but on the other, we recognise that we’d probably be better off aligning with them. We have evolved in socially stratified groups and most of this processing takes place pre-consciously. This is why organisations like the Tea Party draw so much support from the poor who, paradoxically, have the most to lose from their policies.

  180. “Being down the social scale is definitely negative, eg, life expectancy v income in group, is well documented.”

    I don’t think it’s as well documented as you might think.

    “The physiological mechanisms for this are reasonably well understood.”

    Please enlighten me.

  181. Just saw a right-wing discussion on why the Republicans might be toast due to internal matters: the pundits pointed to polling showing all manner of racial/cultural groups (eg Hispanic, African-American, various Asian ethnicities, etc) are Democrat supporters, even and especially in California, where Bush Sr and Reagan had their big wins. They noted that new immigrants are moving into California at alarming rate.

    Their conclusion? Cease all immigration! I kid you not.

    I think it was channel 604 (Fox News, Austar), and the program was “Hannity”, or the tail end of “Greta van Susteren”—I didn’t look carefully to catch which show, but I hope I don’t have this experience again, any time too soon 🙂

  182. Jarrah@15 – we’ve already been through it on this thread:

    “Social class is simply the best predictor of health,” says Nancy E. Adler, Ph.D., a professor of medical psychology at the University of California at San Francisco. “If you could know only one thing about a person and predict that person’s health and longevity, you’d ask about social class. It’s even more important than family history.”

    And of course the waaay elevated morbidity and mortality in disadvantaged groups.

    In the US blacks die about 5 years earlier than whites, on average.

    In Australia, Indigenous people die about 10 years earlier than non-Indigenous people, on average.

    This is how inequity actually manifests.

  183. @Dan
    Dan I was of this view but the data is not actually as strong as I thought it was. Angus Deaton (who argues that relative factors are important) shows that your relative income is not terribly related to your health when other factors are accounted for (although basic correlations do exist. I know that there is a great deal of evidence to support this view but he (who is more than sympathetic to the idea) does a pretty good job at debunking it.

    The conclusion to be drawn is that relative income inequality on its own is not a factor in determining health – however other closely related factors (social status, political power, wealth etc) quite probably are.

  184. “…however other closely related factors (social status, political power, wealth etc) quite probably are”

    Well, quite.

    I don’t think anyone’s arguing straight up that having a thinner wallet makes you sicker, *causally* (though a lot of personal bankruptcies in the US are brought about by the costs of health care; I wonder the converse extent to which treatment is foregone). It’s about social capital, for which wealth and income are a proxy.

  185. @Dan

    Note that this does not really support the libertarian position (at least not my understanding of it). Consider a society of two people. Person A has an income of $20 and person B has $80. If we transfer money from B to a (such that both now have $50) then the average health of the society will increase, as the incremental gain to person A will be more than the loss experienced by person B due to diminishing marginal returns. This is a causal effect and powerful argument for redistribution.

    The point that Jarrah corrected me on is the idea that if person C (who has $200) joins the society, then the evidence suggests that this will not have an impact upon person A or B’s health, despite them becoming relatively (psychologically) poorer.

    However in reality such a highly controlled experiment would almost never exist and the process that made person C rich could easily make others unhealthy or unhappy (again Deaton).

    Branko Milanovic from the World Bank has a good paper on this idea called ‘Why we all care about Inequality but some of us don’t like to admit it’.

  186. @NickR

    As soon as the extra $200 (from C) enters the market, prices will rise. A and B, on fixed incomes, will therefore suffer a drop in living standards.

  187. One couldn’t really parody those who rely on a rabble like the Heritage Fundametation for their propaganda. Most of the supposedly ‘liberal’ economies are Western states still enjoying the benefits of 500 years of Western economic, imperial and economic aggression. Those suffering comparatively are overwhelmingly in non-Western states recently freed from colonialism, then quickly ensnared in the tentacles of the IMF and World Bank and subjected to forced ‘liberalisation’ through Structural Adjustment Programs. A prime example of the real effects of economic ‘liberalisation’ is the former USSR. There the cirrhotic Quisling Yeltsin followed economic advice from the likes of the Heritage pathocrats and their ilk, and it resulted in a greater economic collapse than the Great Depression in the West, falling birth rates and life expectancy and the gobbling up of all the wealth created over seventy years of popular effort by a tiny coterie of hyper-parasitic oligarchs, the liberal type in excelsis.
    Whatever equality and social decency might once have been enjoyed by the masses in the West is rapidly being destroyed. Some examples are undeniable, (even for ‘libertarian’ lunatics), such as Latvia, lauded as an example of correct liberal economic policy. It is now rapidly de-populating as the people flee economic ruin and cease having children. Greece is another liberal success story, as are Ireland and Iceland, all of whom ‘liberalised’ their economies and were destroyed by greed, corruption and hubris. And the great USA itself, where the liberal triumph of the last forty years has seen median wages stagnate for a generation and now fall, work become more and more precarious and more and more millions thrown into poverty level employment, so poor that they qualify for food stamps although working full-time. Tens of millions unemployed, tens of millions without health insurance dying of untreated disease or seeing their teeth rot in their heads and inequality growing ever greater. Black and Hispanic households have seen their meagre household wealth, never great, diminish by around 50% in the last five years alone.That’s really existing economic liberty, matched by a politics without choices between teams of liars and hypocrites entirely controlled by those who finance and thus own them, the moneyed elites. For them, the 1%, and the 400 families who own more than the bottom 150 million in the USA, in particular, ‘liberalism’ is simply wonderful.

  188. “This is how inequity actually manifests.”

    Dan, the problem is the material disadvantage – lack of resources to pay for healthcare, lack of access to high quality services, lack of preventative health education, etc. The mere fact that someone is “down the social scale” is irrelevant. What matters are the material factors. That’s why someone at the top of the social scale in one place can have worse health outcomes than someone at the bottom in another place. Equality doesn’t matter, poverty matters.

  189. @Jarrah

    This makes no sense. People on the top of the scale who use political systems such as, feudalism, capitalism, or slavery, create artificial inequality and poverty and have done so for centuries. In the long run the level of equality, or at least the perception, does matter. Who really wants to struggle on less than $40,000 a year when a strata of executives swallow 100 times as much.

    You cannot have meaningful poverty without also having inequality based on some people exploiting or restricting the opportunities of others.

    What is your “inequality from exploitation” that is “the genuine kind”?

  190. Okay. I’m arguing in favour of redressing such disadvantage directly (and you know what? I reckon it has macro benefits too).

    Whereas, unless you are either arguing that serious disadvantage doesn’t exist, or you’re a racist or misanthrope (and I don’t think any of this *is* the case), you’re arguing in favour of defunct notions – trickle-down, rising tide lifts all ships, etc.

    Historically, I don’t think you could have picked a less auspicious time to argue for such things.

  191. Mel – the argument in that book, “The Spirit Level: Why More Equal Societies Almost Always Do Better” has been demolished by Peter Saunders. The book is selective in it’s choice of data chucking out countries that have data that does not fit their thesis. Include these missing countries and the argument collapses. The data they discard is not outliers or anything either they just discard it without good reason.

  192. Chris Warren :@Jarrah
    This makes no sense. People on the top of the scale who use political systems such as, feudalism, capitalism, or slavery, create artificial inequality and poverty and have done so for centuries. In the long run the level of equality, or at least the perception, does matter. Who really wants to struggle on less than $40,000 a year when a strata of executives swallow 100 times as much.
    You cannot have meaningful poverty without also having inequality based on some people exploiting or restricting the opportunities of others.
    What is your “inequality from exploitation” that is “the genuine kind”?

    “You cannot have meaningful poverty without also having inequality based on some people exploiting or restricting the opportunities of others.” I agree 100% on that statement, however no past or current existing system in the real world can really fix that problem (some theoretic system might but when did a theoretic system really got implemented in a real world economy).

    I am in line of arguing that “genuine” inequality itself does not cause problem; theoretical suppose if the lower/middle/high class of the economy start off with an income that allows them basic needs such as housing, food, health, education, etc and some left overs to spend on luxury good depend on their income bracket. If economy growth exceeds inflation (assuming prices are not government controlled), and also that each income class gets their “fair” share of income rise according to their contribution (such as productivity improvement due to technology advance in the steel industry that contributed to economy growth would have a rise in income according to their increase in productivity). As long as those conditions are met (highly unlikely in the real world), proverty will never exist even thou inequality exist.

    Before 30 odd years ago in Australia, trade unions aimmed to do this “each income class gets their “fair” share of income rise according to their contribution “. However it did not work because the business and firms are free to rise their price level which makes to rise in income meaningless (I suppose really the only way to stop this kind of greed behavior is to have government controlled pricing, but it needs to take into account of the cost of the good on different quality levels which in most government controlled pricing society fails to do).

    Now IF “total equality” in income are to exist, who would really want to work longer hours, who would want to be at management level because of stress and pressure, who wants to be innovative, who will spend their time inventing new technology etc if they will not get reward for it? Don’t get me wrong, I know 100% US inequality is generated through exploitation on workers, but inequality should exist and it by itself is not the cause of problems.

  193. Just additional comment, nearly all non-government controlled market economy relys on businesses to give their worker income increase when the worker shows improvement in productivity, work quality and adjusting the increase in income according to inflation. However this underlying assumption will NEVER happen in the real world, and that is why capitalism will inevitably fail because it is the system that relys on that the most out of every other system that exist in the real world.

  194. Terje – as someone who does evidence-based program evaluation for a day job and has had frankly more stats training/experience than anyone should ever really be subjected to, I thought *The Spirit Level* was pretty thin/non-rigorous – imo they could have constructed a much more bulletproof argument (although it would have been less readable for a lay audience, which was perhaps why they went about things the way they did).

    But can you please provide the a to where Saunders presents his evidence? What, if anything, did the authors say in response?

  195. “People on the top of the scale who use political systems such as, feudalism, capitalism, or slavery, create artificial inequality and poverty and have done so for centuries.”

    Chris, sometimes your thinking is so different to mine that I can’t fathom what you’re trying to say. To you ‘capitalism’ is something I have trouble recognising as such. People have exploited social hierarchies since forever to accrue as much of the surplus as possible, no question. So I agree about feudalism and slavery.

    “You cannot have meaningful poverty without also having inequality based on some people exploiting or restricting the opportunities of others.”

    If I understand you correctly, I disagree. Humanity lived in what we would call absolute poverty for the majority of our time on this planet – subsistence tribes. They were also the most resource-equal social groups humanity has ever had. It was only once larger, settled groups developed that people could control the surplus (or take advantage of the specialisation and trade that arise from surplus) that substantial inequality grew. However the trend since feudal times is towards more equality. Think about it – the tiny aristocracy owning all the land, with incomes many-thousand-fold that of the peasants. Today’s executive, with a salary 100 times his lowliest workers’, is practically a comrade in arms in comparison.

    Mel, Wilkinson and Pickett’s thesis has been thoroughly debunked. The research was poor, the claims dubious at best, and the sociology abysmal. They have been criticised by many, but this one is pretty thorough.

    Dan, my point is that redressing that disadvantage may reduce inequality, but not necessarily. Economic growth, the best solution to poverty yet invented, may increase inequality. We keep coming back to this basic idea – it’s the poverty that matters, not the wealth.

    “you’re arguing in favour of defunct notions – trickle-down, rising tide lifts all ships, etc.”

    I’m arguing that policies aimed directly at inequality are missing the point, which is to improve the lot of those suffering hardship.

    “Historically, I don’t think you could have picked a less auspicious time to argue for such things.”

    I disagree. We are living in a time when greater economic freedom (leading directly to greater economic growth) in the countries that have previously spurned it the most is driving the fastest drop in poverty the world has ever seen.

  196. Quoting the extreme Rightwing ideologue Peter Saunders is simply risible. Everything Saunders has ever produced and every single study emanating from the Centre for Predetermined Results, I mean ‘Independent Studies’ (what a joke!)comes to the same predictable, predetermined conclusions. That greed is God, that inequality is good, that the rabble have never had it so good and that you encourage the poor by taking from them and encourage the rich by giving them more and more and more. Anyone who believes radically unequal (hence unjust) societies, growing rapidly more so, are good societies is, in my opinion, either demented or deeply malevolent.

  197. @Jarrah

    Today’s executive, with a salary 100 times his lowliest workers’, is practically a comrade in arms in comparison.

    Try 250 to 500 times, on average. Several years ago, the head of Macquarie Bank was getting as much as 30,000 average Bangladeshis, and a mere 750 times your average Australian.

    It would be interesting to hear someone reconcile the claim that humans are ethical equals with such differences in magnitude in the “worth” of people by “the invisible hand of the market”.

  198. @Jarrah

    Unfortunately you do not use concepts with rigor or clarity.

    For example we are still waiting for clarification of what is:

    “inequality from exploitation” that is “the genuine kind”?

    For me – inequality from exploitation is never a genuine kind and the level of exploitation also distinguishes your “subsistance tribes” from today’s capitalism.

    Whether today’s capitalism is more or less equal than feudal, or other society is not relevant. The exploitation within modern capitalism is still destroying many peoples rights to create wealth for the few.

    You have never explained what you use the word “capitalism” for. But even Wikipedia has a reasonable approach at:

    wikipedia.org/wiki/Capitalism

    As you will see Marx provided a useful objective definition that has a lot of analytical power.

  199. @Tom

    Yes most people would agree with:

    I am in line of arguing that “genuine” inequality itself does not cause problem;

    But the word “genuine” is subjective. This is Jarrah’s private concept but applied to exploitation not inequality. Why not just say “natural inequality”.

    This seems reasonable.

  200. I remember the first things I ever read about Peak Oil.

    I forget who those early writers were other than the obvious ones but one thing I got from it all was the need to study economics.

    So I did – for about 10 years – until I came to understand what economics actually is – it’s akin to John Michael Greer’s idea about magic.

    Economics, as much as any economist might claim otherwise, is about spells and incantations that lead people to believe one form of magic or another is the most powerful and the most relevant.

    The battle then becomes between “schools of magic”.

    http://thepeakoilpoet.blogspot.com/2011/10/equality.html

  201. Jarrah:

    “Wilkinson and Pickett’s thesis has been thoroughly debunked … ”

    The support for the thesis is strongest regarding health and certainly many if not most health researchers do not consider the thesis debunked. I think the truth is that you find the thesis ideologically inconvenient and accordingly you’ve sought out authorities who “seem” to have debunked the thesis to support your view that the thesis is incorrect. This is called confirmation bias.

  202. @Jarrah
    The point with any tit-for-tat one can choose any side of the argument and claim their view is supported by the evidence. For example a response from Wilkinson to this ‘debunking’ can be found online, and therefore if I wanted to I could argue that the libertarian position is actually the naive misinformed one. This is a fundamentally unscientific way of reasoning (as Mel points out) as we select our point of view and then find the evidence that supports this.

    The correct way to assess this type of argument is to survey the peer-reviewed literature, which, unlike books (Wilkinson) and YouTube videos and blog posts (Saunders etc) are subjected to a high degree of professional scrutiny.

    The peer reviewed literature that appears the most compelling (and that I have mentioned already) says that the Wilkinson hypothesis is overstated if not incorrect. However there is no support for the hard right here, as there is a ton of evidence to suggest that inequality is harmful in a direct (non-relative sense) which is all that is required to dismiss the ‘inequality is not important’ argument.

    BTW Terje, I notice that you have ignored my demonstration that you claim about a negative correlation between Gini coefficients and Freedom indices is very likely to be wrong (at least for relatively liberated, developed countries such as Aust and the U.S.). When I make a mistake, I acknowledge and correct it and adjust my position accordingly (see previous posts on this thread). Unless I have missed it, it appears that you do not do this, which makes me question your integrity.

  203. Again, Mel’s right.

    Jarrah, you haven’t addressed what I’ve said about minorities at all – you’ve just obfuscated and tried to change the topic. Yes, economic growth has benefits (and costs) – but economic growth comes in all shapes. You’re implicitly assuming a particular distribution of economic growth is the only possible one; and you’re wrong.

  204. @NickR – Terje’s “freedom indices” are a political construct anyway – note that they have nothing about, say, the freedom to organise labor, and they assume that government spending decreases freedm (whereas of course back out here in reality it may confer freedoms such as: the freedom to eat, the freedom to receive necessary medical care, or the freedom to take your goods to market via public infrastructure).

  205. @Jarrah

    No one disputes you having a basic idea such as;

    … it’s the poverty that matters, not the wealth.

    But the issue is not “wealth” but. more specifically, the resulting inequality in wealth, and the associated exploitation. Both of these lead to poverty.

    Wealth matters to the extent it represents exploitation (as measured by poverty).

  206. @Fran Barlow
    “Try 250 to 500 times, on average.”

    You’re thinking CEOs. Chris mentioned executives, and I followed.

    “It would be interesting to hear someone reconcile the claim that humans are ethical equals with such differences in magnitude in the “worth” of people by “the invisible hand of the market”.”

    In theory it’s perceived worth, but not of their moral standing or as humans, as profit-makers. Someone thinks it’s worth paying that much because of what they get out of the deal. However, in practice, with CEOs there’s a lot of exploitation of institutional structures. That, along with increased competition for top executives in an increasingly globalised business world, explains the steep increase in CEO wages.

  207. @Dan
    Yeah as far as I am aware they are only positive freedoms (freedom to) rather than a combination of positive and negative, where a negative freedom is can be freedom from hunger or other such thing.

    The point is Terje stated (quite matter-of-factly) that there is a negative correlation between Ginis and these freedom indices and suggested that more freedom would lead to less inequality. He made the point so I am happy to go with his definitions.

    However not only is his point is confusing correlation with causation ( ignoring the huge endogeneity problems that are obvious to anyone with any statistics training) it also appears to be wrong. I did the calculations using the most obviously available data (wiki) and found highly significant positive correlations. High ‘freedom’ – high inequality.

    I also pointed out that this was for a specific data set and I highlighted that we shouldn’t make too much of the results for the reasons I have indicated. This was done to give him some wiggle room, but so far he has not been capable of taking it.

  208. Another point for Jarrah to consider is the extent to which massive inequality in wealth and the associated power, influence and status corrupts democracy. A case in point is the now well known kowtowing of UK politicians both left and right to the Murdoch Empire. This is the type of thing the left has always known to be the reality of western democracies yet the right has always denied it. To rehash a Chinese saying, western style democracy is really “democracy with plutocratic characteristics”.

  209. @Jarrah

    I agree with what you said, any macro-economist would agree that shareholders’ interest conflicts with macro-economic growth and development. Shareholders’ agreed to pay that amount to hire an executive however that pay increase will have to come from somewhere, economic growth is not distributed properly if GDP growth is 1.8% per annum and pay rise for executive is 30% per annum (just example figures).

  210. Corrections “I agree with what you said, any macro-economist would agree that shareholders’ interest conflicts with macro-economic growth and development.” to I agree with what you said, “but” any macro-economist would agree that shareholders’ interest conflicts with macro-economic growth and development.

  211. @NickR
    “For example a response from Wilkinson to this ‘debunking’ can be found online, and therefore if I wanted to I could argue that the libertarian position is actually the naive misinformed one.”

    Good grief, are you serious? ‘Debunking’ refers to the quality of the argument, not the mere presence of one! Do as I did, and read the arguments from all parties. You will find that, contrary to Mel’s insinuation, that concern over the validity of Wilkinson conclusions spans the political spectrum and has been a feature of peer-reviewed work for years. If you’d bothered to read down the page I linked to, you would find examples of this. Perhaps it made uncomfortable reading, and you preferred to not engage your critical faculties?

    Also, it’s not a ‘libertarian’ position. This isn’t about subjective philosophical matters. W&P made definitive statements based on stark statistics. The problem is that the statistics don’t support their claims. You don’t have to be a political partisan to evaluate statistical validity.

    “but economic growth comes in all shapes. You’re implicitly assuming a particular distribution of economic growth is the only possible one”

    Actually, I’m not. There are economic growth patterns that leave the poor worse off than before. Not many, but they exist. You, however, might indeed be assuming that inequality reduction comes in only one shape, where the poor are better off. History is replete with examples of how vigorous equalising policies fail that criterion.

  212. @Mel
    “Another point for Jarrah to consider is the extent to which massive inequality in wealth and the associated power, influence and status corrupts democracy.”

    This is essentially where liberal democrats diverge from social democrats. It is axiomatically true that wealth brings power. The liberal solution is to reduce the amount of government power that can be subordinated by the wealthy. The socialist solution is to reduce the concentration of wealth. The latter seeks social justice by giving as many people as possible the means to influence government in their favour, while the former seeks social justice by minimising the coercive power people have over each other.

  213. Jarrah:

    “W&P made definitive statements based on stark statistics. The problem is that the statistics don’t support their claims. You don’t have to be a political partisan to evaluate statistical validity.”

    As W&P and various others have pointed out, there are many hundreds of peer reviewed publications that confirm many of W&P’s findings. Even if it were true that W&P present a poor case (and I’m not conceding they have while acknowledging that a work of such scope is bound to contain numerous errors), you still need to deal with the arguments and data that exists in a vast body of peer reviewed literature.

    An analogous situation here is the vast army of rightwingers (not coincidentally including many if not a majority of libertarians) who run the line that MBH’s hockey stick is wrong/ a lie/ a hoax therefore AGW does not exist.

  214. @Mel

    no, the majority of Libertarians believe simply that no matter what the extent or cause of climate change it is not in the best interests of the people to have a government dictating what should be done about it

    on the other hand, if all were Libertarian AND the majority believed that something should be done about it there would be nothing to stop them pulling together to try and do so

    some people, Libertarian or otherwise, choose to believe that AGW is bogus

    i suspect that the majority of those are either emotionally pre-committed or stupid or lazy or dishonest

    with some percentage like me – no matter how much i read i do not profess to know what the “truth” is

    but i certainly don’t believe idiots in government can do anything useful about it

    If it was true and they could then the best thing to do would be to cease all coal extraction world wide until a truly clean energy solution could be found

    bottom line for Aus would then be to stop exporting the enormous amount of coal we export

    does anyone see that ever happening?

    pop

  215. @Mel

    which thread? “Equality” or “Libertarian”?

    i assume the first

    it is 100% on topic

    go back to the beginning

    my belief is that all the noise people make about which is the best way to go is just that – noise and ignores the bigger picture

    pop

  216. @Jarrah
    Jarrah I think you misunderstand me. My point is that linking to books, YouTube videos or blogs is not really a scientific way to peruse this. I didn’t mean to direct that comment at you (you haven’t really done this), just at the general principle.

    As I have indicated I am happy to accept that the Wilkinson hypothesis is not well supported. I am simply indicating that one does not need to buy into it to believe that inequality is harmful.

    This can be shown as follows. Utility, welfare, health, status etc are generally regarded as concave, monotonic functions of underlying variables such as income or wealth. If one assumes separable functional forms (which is typical) then whatever measure of social welfare must be a decreasing function of inequality, which is maximized when inequality is zero. This is a fundamental concept in economics and pretty uncontroversial.

    Now this is not an argument for complete inequality, as this represents a static optimization of welfare rather than a dynamic one. And like you, I would have serious problems with anyone who tried to advocate it. However it does show that the literal ‘inequality is not a problem’ argument is simply not correct, which is something you should acknowledge.

  217. The sort of sensible argument that can be made in ‘favor’ of inequality (as well as against) runs something like this. “Sure inequality is harmful, but attempts to reduce it beyond a certain point are likely to be counter-productive (in terms of diminished incentives and the general intrusiveness of government). While agnostic about where the optimal point is, I suspect it is somewhere like *here*” (insert your preferred distribution of income or rule for generating one).

    I have not seen this argument been made clearly by anybody who is trying to defend the concept.

  218. @NickR

    But there are two types of inequality – natural and artificial.

    You end up with different understandings and arguments for each one.

  219. @Chris Warren

    i’d say it was an accurate estimate of the truth and i assert that anyone who knows you personally would back me up

    care to provide a list of referees i could call who would swear to you not being as described?

    and a Freudian slip mate is is where you use the word your mind was thinking instead of the word your mind had intended when it first thought up what to say (but i assume you can’t follow that – it is a bit complicated)

    you’d be fun if you were physically available

    pop

  220. @Chris Warren

    actually, i was serious – you can drop a list of referees in the comments section of my blog – it’s moderated so only i will get it (and i promise not to publish it)

    i’ll happily phone each person and ask them if they think you have a mental problem or not

    and the i’ll post the summary results here

    how’d that be?

    seems fairly straightforward and honest

    and, if the bulk of them all tell me you are an angel that spends the bulk of his spare time helping the needy i’ll publicly apologise to you for truly misunderstanding your nature

    pop

  221. @Mel
    “As W&P and various others have pointed out, there are many hundreds of peer reviewed publications that confirm many of W&P’s findings.”

    Actually, that very claim has been discredited. See my previous link.

    A word about the scientific literature. W & P are fond of claiming that their work is backed up by 100s of peer-reviewed studies. In a recent letter to The Guardian, for example, they once again referred to “hundreds of other academic research papers which show similar patterns.”

    Do not be fooled. Very few of the studies referenced in The Spirit Level claim that health or social problems are caused by income inequality per se (as opposed to absolute income or other socio-economic factors). Of the few that do make such a case, many were written by Richard Wilkinson and/or Kate Pickett (they refer to no fewer than twelve of their own studies in The Spirit Level).

    The bulk of the references are to newspaper articles, opinion pieces, other people’s books, studies that discuss specific issues (eg. stress, violence, obesity) and the sources of the raw data (eg. UN, OECD). Often the studies referenced give equivocal support or contradict W & P (see Questions 4 & 7, for examples). The only area which has a significant body of scientific literature is health and inequality, and much of it disagrees with Wilkinson’s hypothesis. As Wilkinson admitted in a recent interview with the magazine International Socialism, there is virtually no evidence from other academics to support the bulk of the claims made in The Spirit Level.

    “you still need to deal with the arguments and data that exists in a vast body of peer reviewed literature.”

    The arguments and data do not unambiguously support W&P’s claim that “more equal societies almost always do better”. For example, Sargent noted in Nature that during 2009, four of the six academic analyses contradict their hypothesis.

    The facts of the matter are that W&P extensively cherry-picked their data (somewhat like AGW denialists), cherry-picked their metrics, and cherry-picked when to introduce other factors.

  222. Jarrah:

    Sorry mate, but you simply aren’t responding to what I believe to be a key argument in favour of redistribution. I’m really interested in whether you have any plan for addressing this at all, or why, if not, you believe the costs of doing so outweigh the benefits. If you can’t answer at all, my inclination is to believe that we have fundamentally different moral values, and we are doomed to talk past each other. I’ll also read it as vindicating my position both morally and in terms of the robustness of my argument.

    I think we agree that inequality itself is not distributed equally; that is, disenfranchised groups systematically are poorer – income-wise, health-wise, social-capital-wise. COAG’s Closing the Gap targets, whatever you think of the specifics, represent one recognition of this; even in our robust and dynamic economy, Indigenous Australians, on average, are having a dreadful time of it.

    According to Myrdal’s landmark work, there are systematic and self-reinforcing reasons for why people in these groups find it difficult to break out of economic and social ruts.

    What to do? The answer to me is clear. Yours is…?

  223. Jarrah @15:

    “Actually, that very claim has been discredited. See my previous link.”

    As my next argument would be that the debunking has itself been debunked I think I’ll leave it at that.

  224. @Dan

    Unfortunately even thou I agree with you that income should be redistributed, doing so would be extremely difficult. Say for example, if minimum wage and government transfer in the US is increased and tax become more progressive to redistrbute income; in a free market economy where the government have no control over prices, this will just cause hyper-inflation as the businesses would just put up their price to reduce the marginal labour cost and meeting net profit targets and bonus targets.

    When this happens, it will attract people to purchase imports as a much cheaper substitute, which will significantly harm local businesses and cause unemployment. So if businesses are forced to sell at competitive price and the sudden drop in profits would mean that investors will just pull their funds out the stockmarket causing it to crash and businesses go bankrupt. Another major problem that would cause that significant increase in general income level will cause large demand of housing, espeically mortgages which the investors will then again cause the housing price/rent to raise above equilibrium again.

    All these will cause the economy to become extremely unstable, but these problems can’t be fixed unless the government decides to regulate it which contradicts to what the Right’s view of “capitalism/free market”, and with the political/media system in US the government will be thrown out of power before these happens. Although I believe redistributing income is the only way to fix the problem in US, I don’t think it will ever happen.

  225. Huh? Income *is* redistributed – that’s what government education, healthcare, social insurance is.

    I’m arguing that it’s not happening enough.

  226. Tom :
    @Dan
    Unfortunately even thou I agree with you that income should be redistributed, doing so would be extremely difficult. Say for example, if minimum wage and government transfer in the US is increased and tax become more progressive to redistrbute income; in a free market economy where the government have no control over prices, this will just cause hyper-inflation as the businesses would just put up their price to reduce the marginal labour cost and meeting net profit targets and bonus targets.

    Aren’t you implying that Sweden should have had hyperinflation for the last 50 years?

  227. @Tom

    Tom there are better ways to do this. For example lower tax rates for low income households, higher tax rates for higher income households, increased spending on infrastructure (such as schools and hospitals) that benefit the poor, combined with means testing and other cuts to middle (and upper) class welfare. Sure they may be some distortions that would be created (and also removed) from this policy but in my view these would probably be outweighed by the benefits.

  228. @Dan

    I know what you mean by it is getting redistributed, but to redistribute it more equally than it currently is do cause problems, more so in a credit economy.

    @NickR

    I understand what you’re suggesting however the change won’t be enough, now assume that is the tax rate on lower/middle class is to be reduced or even eliminated. It would only provide a temporary boost in their income, overtime if inflation do exist and wage level stay at constant, the problem will come back overtime. By then how much more can you cut tax rate?

    Investments in infrastructure to create jobs do work I agree, but if the fundamental problem associating with income is not dealt with, having a job won’t do much good at all. There are people in OWS movement that have fulltime jobs and are working longer hours than Australian workers.

  229. “As my next argument would be that the debunking has itself been debunked I think I’ll leave it at that.”

    Assertion is not an argument, Mel. I’m not surprised you aren’t willing to engage, though – you’ve shown no sign of presenting anything resembling evidence or logical argument.

    “What to do? The answer to me is clear. Yours is…?”

    You want a political manifesto, Dan? Visit my blog. The short version: the ruts are multifactorial. Some welfare/redistribution is needed, but it’s clearly not enough. Changes in governance, emphasis, incentives, etc, are also necessary. Radically increasing the redistribution of wealth will endanger the creation of wealth.

    I thought we were talking about inequality and its desirability, but apparently you are content to keep moving the goalposts whenever I address your points. I’m not sure what your “key point” is, I thought I was responding to everything you brought up.

    “even in our robust and dynamic economy, Indigenous Australians, on average, are having a dreadful time of it.”

    Partly because they are excluded from participating fully in the economy!

  230. So essentially you are saying market liberalism will fix disadvantage, but in the interim, redistribution of wealth to redress disadvantage is antithetical to wealth creation so essentially counterproductive.

    That’s a strange thing to be arguing in the context of a thread on #OWS’s “We are the 99%”.

  231. @Jarrah

    I thought we were talking about inequality and its desirability

    But it is not possible to do this because you have not explained what is your “inequality from exploitation” that is “the genuine kind”?

    Do you accept there are two types of inequality – natural inequality, and inequality based on politics?

    The question on desirability is different for each.

  232. @Chris Warren
    I think Jean Jacques Rousseau would agree with you. His Discourse on Inequality distinguishes between ‘inequality from God’ (natural inequality) and ‘Inequality from man’. He seemed to believe that we should eliminate man made inequality, but not seek to alter natural inequality.

  233. Dan :So essentially you are saying market liberalism will fix disadvantage, but in the interim, redistribution of wealth to redress disadvantage is antithetical to wealth creation so essentially counterproductive.
    That’s a strange thing to be arguing in the context of a thread on #OWS’s “We are the 99%”.

    Sorry I don’t know who this is suppose to be addressed to, if it is addressed to me then I would have to disagree. I have never supported market liberalism, I’m actually very against it because I know that capitalism/market liberalism will inevitable fail. However the problem here is that the market is too free in America which makes any costs to the wealthy from reforms to be passed to consumers which will not fix the problem and it will make it worse. I personally believe that to fix the problem in US it will need heavily government regulation, but I don’t have any idea that would work; wage rise would just cause the cost to be passed on the consumers and price freeze would just drive away investment and cause the economy to crash. If it’s that easy to come up with a solution for this problem, won’t you think the problem is not a problem?

  234. “But it is not possible to do this because you have not explained what is your “inequality from exploitation” that is “the genuine kind”?”

    I would have thought it’s obvious. I’ve given several examples while discussing other things, eg CEOs exploiting stacked boards to set their own wages, or companies exploiting regulatory capture.

    “Do you accept there are two types of inequality – natural inequality, and inequality based on politics?”

    I think there’s dozens of types of inequality, including those two. Here’s an interesting one for you. There is a kind of inequality that isn’t earned, but inherited. It has no correlation with moral worth or social contribution. Being on the right side of this inequality means you’re more likely to have a better education, more likely to get a job, more likely to earn more over your lifetime (all after accounting for other factors). What is it? Height.

    It bears all the hallmarks of unjust inequality, except we can’t redistribute height, and raising the average does nothing because the effects are positional. So we just have to accept it, right? Similar reasoning applies to several other kinds, which I guess we can call ‘natural’ inequality.

    Wealth and income inequality generally arise from a mixture of natural and political causes. It is certainly possible to reduce wealth and income inequality through political means, but it’s impossible to eliminate it. Efforts to reduce it radically can have very strong negative effects – eg the Khmer Rouge.

    Regardless, social stratification remains in even the most economically equal of societies, because humans are status-seeking and will construct hierarchies out of the flimsiest material – high school cliques are a trivial example.

  235. @Jarrah
    Jarrah nobody is disputing this, and you are more or less recycling Chris Warren’s point. Most egalitarians that I know of are ‘soft’ in the sense that they accept differences due to personal effort, but wish to minimize (as much as practical) inequality from other sources.

    “Some welfare/redistribution is needed, but it’s clearly not enough. Changes in governance, emphasis, incentives, etc, are also necessary. Radically increasing the redistribution of wealth will endanger the creation of wealth.”

    This sounds entirely reasonable. Do I take it then that you agree with my point that inequality is harmful (as welfare is concave in income/wealth) but this harm must be balanced against the harm that can be incurred from trying to drive it down too low (whatever too low is).

  236. NickR: nice. Very hard to pin down Jarrah on specifics. His position seems to be: one – there is some inequity that can’t be reasonably addressed (in general that point is trivial; the specifics are maybe subject to a bit of debate but no-one’s seriously disputing it); two – disadvantage and inequity aren’t related (wtf?); three – the best way of redressing disadvantage is economic growth, and we’ll ignore the political economic dimensions of growth (wtf? trickle-down idiocy); four – disadvantage, where preventable, is deplorable and something should be done about it; five – see point three on why we’re so limp on point four.

    Let me be clear on my views:

    1) We don’t live in anything like a market system – to a great extent, we live in a capitalist version of a planned economy (apols to Galbraith). So being precious about the free market, the benefits thereof, and the dangers of central planning, is not so much wrong as irrelevant.
    2) To the extent that we have had actual genuine economic growth in the past 30 years (as opposed to the depletion of non-renewable resources and creative accounting), it has not raised all ships. It has raised some ships, disproportionately those who least need raising. This represents market and social failure and should be addressed through government action.
    3) The emergence of a consumerist middle class in China and India is good news for the individuals concerned, although it presents problems too – but it’s not relevant to the US (which this thread is about) or Australia (which is where most of the posters here live).
    4) Because disadvantage is persistent, the response of governments to disadvantage needs to be more aggressive. That means redistribution, particularly given that we *do* have the economic resources to do something about this.
    5) I have a hunch that wealthy, equitable societies (Sweden, Norway, Australia kinda) are more resistant to macro shocks than less equitable ones (does anyone know of any research that bears this out? Full disclosure: I’m tentatively examining the links in part of my masters program at the moment).

  237. @Jarrah

    But over paid CEO’s represent inequality that is of the Marxist kind. Depending on the specifics of regulatory capture, this may also be of the Marxist kind.

    Simply having CEOs setting their own wages does not necessarily mean unnatural “inequality from exploitation”. Fair minded CEO’s (say running church non-profit charities) may well have their mates on boards and still set their wages fairly with no suggestion of exploitation.

    Maybe there is no “inequality from exploitation” that is not the Marxist kind. Maybe Jarrah made a mistake when he said there was inequality from exploitation that is of the genuine kind (not the Marxian kind) .

    This was Jarrah’s claim and just leads to confusion.

    It seems to me that all “inequality from exploitation” is Marxist, and all other inequality, with no exploitation is normal or natural.

    Whether there are differences in height or skin colour or accent or abilities do not necessarily mean there is any inequality. This only arises based on other circumstances.

  238. “…and therefore we should curtail our attempts to redress it…?”

    Some can’t be redressed. Some can, but the costs outweigh the benefits. Some can be alleviated by civil society. For the remainder, I advocate a small amount of evidence-based government intervention.

    “Do I take it then that you agree with my point that inequality is harmful (as welfare is concave in income/wealth) ”

    Low welfare is a harm. Inequality is not a harm.

    “Nice Khmer Rouge Godwin too.”

    Since when does that count as an example of Godwin’s Law? I simply took the most extreme example of radically equalising policies off the top of my head, which is the attempt to create a classless society by the fanatical Khmer Rouge. Obviously none here want to go that far, but you shouldn’t shy away from what trying to eliminate inequality means.

    “three – the best way of redressing disadvantage is economic growth, and we’ll ignore the political economic dimensions of growth”

    Who said ignore it?

  239. “But over paid CEO’s represent inequality that is of the Marxist kind.”

    Do you mean exploitation of the Marxist kind?

    “Simply having CEOs setting their own wages does not necessarily mean unnatural “inequality from exploitation”.”

    I didn’t mean to say all CEO exploit commercial mechanisms, only that some of the inequality between those on huge wages compared to their workers can be explained by exploitation. And I said “not the Marxian redefinition” so as not to confuse people in case they thought I meant his concept rather than the normal sense of the word. Obviously that backfired.

    “Whether there are differences in height or skin colour or accent or abilities do not necessarily mean there is any inequality.”

    Actually, that is precisely what it means. Different means not equal, which means there has to be inequality by definition.

  240. @Jarrah
    “Low welfare is a harm. Inequality is not a harm.”
    This is of course correct, but it seems to me to be the kind of pedantic point that somebody makes when they are trying find a basis for disagreement (presumably to avoid being seen to acquiesce on an argument ).

    I can equally say ‘heart disease is not a harm, lost utility is a harm ’, or ‘liberty is not good, welfare is good’. Both are true, but it seems strange to insist we speak only of welfare and not its direct determinants.

  241. Jarrah:

    “Assertion is not an argument, Mel. I’m not surprised you aren’t willing to engage, though – you’ve shown no sign of presenting anything resembling evidence or logical argument.”

    Actually it was your mention of cherry picking that did the trick. It made me too hungry to continue the debate 😉

    I could of course provide links to the many dozens of peer reviewed articles that support the inequality/health and the income/crime thesis but I rather doubt that would make any difference to attitude. Moreover, if you’ve studied the issue as thoroughly as you are intimating, you would have read them all by now anyway 🙂

    Dan:

    “To the extent that we have had actual genuine economic growth in the past 30 years (as opposed to the depletion of non-renewable resources and creative accounting), it has not raised all ships. ”

    Economic growth can actually *sink ships*, for example renters on fixed incomes being forced out of well serviced inner suburbs into poorly serviced outer suburbs subsequent to gentrification. This was a major problem in Perth when house prices skyrocketed there a few year back.

    Dan is also correct about our economy. We don’t really live in a capitalist country, instead we live in a mixed economy with very significant government and not-for-profit sectors. The market itself is seamlessly embedded both into both culture and state-legal structures.

    To give an example of cultural embedment, a CEO of company Y in America may well take home $10 million per year but the CEO of company Z in much of continental Europe could not possibly take home that much even if he is a much better performer because it would be culturally unacceptable for him to do so.

    Libertarians tend to forget that “the market” is as deeply embedded in culture as every other social institution. One of the tasks of #OWS and social democrats such as my self is to change the culture so that such gluttonous greed is no longer socially acceptable.

  242. Jarrah@36 – why a small amount? It could be that to give disadvantage the shove it needs, you need more than that; to use a small amount in that instance *really is wasteful*.

    Nick@38 – that’s what I was getting at with the stab wound/bleeding out metaphor before. But I actually think you’re slightly off the mark – inequality *in and off itself* is deleterious – but probably the key argument on this thread has been: disadvantage exists; the market ain’t going to fix it; redressing it will as a matter of course result in greater equality; therefore it makes sense to see inequality as a proxy for suboptimal aggregate outcomes.

    But also it’s truly awful that anyone could be so well-off in a world in which so many go without, for no reason better than the luck of the draw.

  243. @Jarrah

    If someone wants to claim that any difference means inequality, then they missed the point.

    Imagine trying to pay for $1 newspaper with two 50cent coins and being refused by Jarrah the shop keeper, who claimed that two 50 cents was not equal to $1 because one was bigger than the other.

    Imagine telling a white skinned person and a black skinned person – they are not equal.

    Imagine trying to claim people are unequal because one has a different accent than another, or different abilities.

    Obviously this is just deliberate confusion and word-play, and those who do not have the ability to abstract from such neutral differences and focus on relevant aspects disqualify themselves.

  244. Dan it’s just a definitional thing. If inequality is harmful, then harmful to what? The answer comes down to ‘welfare’, which is generally a catch-all term for the fundamental thing we want to maximize (note that we can define this how we like, however there are some widely accepted principles).

    The point is that Jarrah doesn’t care about inequality, only welfare and I agree. However the seems to be his way of avoiding admitting that inequality is a fundamental input into welfare, and therefore a concern for welfare implies a concern for inequality.

    All this is pretty unambiguously correct, but it does not imply that we all have to be hard (or even soft) egalitarians. As I have stated previously, the way to make a ‘pro-inequality’ argument is to acknowledge it is bad but argue that the costs of driving it down are greater than the benefits.

    BTW Jarrah there is a large amount of liteature on the measurement of inequality directly in terms of social welfare functions. In fact there are a number of SWF inequality measures, and Tony Atkinson’s work on this topic may well win him the Nobel. If you are interested in the topic let me know and can provide some references.

  245. @Jarrah

    Wealth and income inequality generally arise from a mixture of natural and political causes. It is certainly possible to reduce wealth and income inequality through political means, but it’s impossible to eliminate it. Efforts to reduce it radically can have very strong negative effects – eg the Khmer Rouge.

    There is only an inequality that is created by political causes, there is no significant natural inequality.
    Your ideas come from wrong assumption that jobs are created to fit available talented people, not that people fill available jobs. You seek to change people not to change available pay that come from needed job positions.
    If you are interested to find examples of political efforts to change of pay that come with available/needed jobs take a look at Sweden or even better, take a look at Titoism in Yugoslavia. You can Wikki Titoism. If somebody starts to argue that the collapse came from the lack of motivation to work harder, then they should explain why is the same condition present in USA, or lack of motivation to finish the college and get the better salary. Collapse of Titoism came from political causes. In US motivation was created by idea of American Dream and in Yugoslavia by Brotherhood and Singularity. Not keeping All equal under the law destroyed both ideas.
    You can keep believing that jobs are created to fit available people and that there is a natural inequality but that will only keep you from seeking the change for better.

  246. “it seems strange to insist we speak only of welfare and not its direct determinants. … inequality is a fundamental input into welfare”

    I’m yet to see anyone show how inequality *determines* welfare, rather than just being a relation between levels of welfare.

    “BTW Jarrah there is a large amount of liteature on the measurement of inequality directly in terms of social welfare functions. In fact there are a number of SWF inequality measures, and Tony Atkinson’s work on this topic may well win him the Nobel. If you are interested in the topic let me know and can provide some references.”

    Always interested, and I’m sure others are too. Let me just say that I appreciate you helping sustain this discussion from the typical blog fare of descent into flame wars.

  247. “Jarrah@36 – why a small amount? It could be that to give disadvantage the shove it needs, you need more than that; to use a small amount in that instance *really is wasteful*.”

    That’s a reasonable point. It boils down to what works empirically, as our hypotheticals cancel each other out. My understanding of the tangled web of human existence is that a small amount is preferable, but there’s certainly room for disagreement between gentlemen 🙂

  248. “I could of course provide links to the many dozens of peer reviewed articles that support the inequality/health and the income/crime thesis but I rather doubt that would make any difference to attitude.”

    You might be surprised. I’m not close-minded. I used to be very left-wing, well into my 20s, but over many years of looking at data and arguments, found I could not sustain that worldview without significant cognitive dissonance. So now I’m a liberal democrat… or as my right-wing interlocutors would have it, a wishy-washy lefty Greens-voting multi-culti pacifist. Luckily, those on the left see me as a selfish neoliberal poor-hating market fundamentalist. And my views are still in flux.

    So go ahead, if you are so confident. Unless you aren’t, in which case no skin off my nose.

  249. Jarrah@47: Well, given that there we know there is unmet demand for, say, disability services, or that Aboriginal people die so much younger than non-Aboriginal people at current levels of expenditure (which I would describe as “not inconsiderable”), that would suggest to me that current programs are inadequate.

    (I recognise that chucking money at things doesn’t necessarily fix them; but I’m yet to learn of a social policy response that saves governments $ in the short term. The long term is a different question, and is another argument supporting my position; eg. multiplier benefits of comprehensive early education).

  250. @Jarrah

    I don’t think that not being on any side is a bad thing, I consider myself as centre/left, although I am against right side’s ideology but I do not consider people on the right wing are all “evil” and such.

    However, I don’t think a society can operate well in the long run without significant government interference (you can use US as an example because it is a really compare to other countries). Market will not redistrbute wealth properly and the more deregulated the market, the more inequality from exploitation will occur and ultimately it will collapse. With that being said significant government interference do contradict to liberal/democratic idelogy.

    When you research and examine data, sometimes it might not show you things behind it. One example will be that although the US is the richest country in GDP statistics it’s citizens are by far not the happiest in the world. In fact the crime rate, mental illness and poverty are much more of a problem in US than in Australia (according to IMF 2010 statistics US is higher ranking than Australia in GDP per capita basis). I’m not sure if you would consider the happiness index as a reliable data but unfortunately most of the top ranking countries aren’t rich at all if you use economic statistics.

    One other thing is as much as US claims that it is a democratic country, people are more or less being “forced” to receive tertiary education to hope for a future where they don’t have to live in poverty. Also some tertiary education subjects will get you no where or only such a small proportion of graduate can actually find a career in an industry they dream of working in (e.g. creative writing, economics). Then you compare to Australia where the liberals believes that the government interferes too much; teenagers leave school from year 10 and take apprenticeship which ends up getting them a higher salary than accounting/finance graduates, people are not forced to not get sick because they can’t afford health insurance, as long as you got a full time job even in minimum wage you can afford a unit/apartment mortgage (compare to living in basements and “forced” to share rooms because they can’t afford to live with a full time job). It really doesn’t matter which name of the system they want to use, whether if it’s capitalism, democratic or liberalism. It’s market will inevitably fail and cause social problems without government regulations (which I believe non of these systems likes).

  251. “that would suggest to me that current programs are inadequate.”

    Or there are bigger, systematic problems that welfare isn’t well-suited to address.

  252. Dan and Jarrah,

    Ok here are some references for the relationship between social welfare functions and inequality. I haven’t linked them as most of them can’t be accessed, you will have to go through a university library.

    The Atkinson paper is the most famous (probably the single most cited paper on inequality) but credit for the work is shared by Amartya Sen and Serge Christophe Kolm. There is a ton of other papers (mostly published in JET) on the topic but I will limit it to the most and most accessible and relevant examples. If you want any more I can send them through, although though I’d think that the first three in particular are sufficient for a general idea of the work in this area.

    “Let me just say that I appreciate you helping sustain this discussion from the typical blog fare of descent into flame wars.”

    Cheers. In response let me say that while I disagree with you in certain respects I do find your posts interesting and challenging (in a good way) and you have managed to shift my view of the issue somewhat in your direction.

    Atkinson, A.B. (1970). ‘On the Measurement of Inequality’ Journal of Economic Theory, 2, 244-236.
    Aigner, D. and Heins, A. (1967). ‘A Social Welfare View of the Measurement of Income Inequality’ Review of Income and Wealth, 13, 12-25.
    Sen, Amartya, (1974). ‘Informational bases of alternative welfare approaches : Aggregation and income distribution,” Journal of Public Economics, 387-403,.
    Kolm, S.-CH. (1969). ‘The Optimal Production of Social Justice’ In: J. Margolis and H. Guitton (eds) Public Economics 145-200 London, Macmillan.
    Kolm, S.-CH. (1976). ‘Unequal Inequalities I’ Journal of Economic Theory, 12, 416-442.
    Kolm, S.-CH. (1976a). ‘Unequal Inequalities II’ Journal of Economic Theory, 13, 82-111.
    Sen, A. (1973). ‘On Economic Inequality’ Oxford: Clarendon Press.

  253. Thanks Nick!

    Jarrah: try telling someone in the disability sector that resourcing has undergone a ceiling effect and that any additional resourcing incurs more costs than benefits.

  254. This Harvard Medical School study that was published last year in the American Journal of Public Health puts the death toll from a lack of health insurance in the US at 40,000 per year. Obviously, most of the dead folk are at the lower end of the social spectrum and many of them are the working poor who may’ve been able to afford insurance if income in America was distributed more evenly, as per major continental European countries.

    I haven’t had time to sift thru other studies yet but will do so altho I can’t give a timeframe.

  255. Jarrah,

    Even better, take a look at this densely referenced CDCreport from this year.

    Once you’ve read the several hundred mostly peer reviewed publications cited in the report give us a hoy and I’ll find you some more.

  256. “Obviously, most of the dead folk are at the lower end of the social spectrum and many of them are the working poor who may’ve been able to afford insurance if income in America was distributed more evenly”

    This is where you’re going wrong. They’re dead because they couldn’t afford proper healthcare. Not because someone else *can* afford proper healthcare. Inequality doesn’t enter into it, obviously. Lack of resources does, but I’ve never suggested that isn’t a problem. The mere fact that someone is twice (or a hundred times) as well off is simply irrelevant. Why aren’t you getting this?

  257. OK, I’ve only just started reading the CDC report, and I find this:

    the nation is likely to continue experiencing substantial racial/ethnic and socioeconomic
    health disparities, even though overall health outcomes measured by Healthy People 2010 objectives are improving for the nation.

    They’re making my case for me. Are you sure YOU read the report? 😉

  258. Jarrah:

    “The mere fact that someone is twice (or a hundred times) as well off is simply irrelevant. Why aren’t you getting this?”

    I don’t get it because it is wrong. Incomes in US organisations are heavily skewed towards the top end. If instead incomes were more evenly distributed within organisations (both private and public) those at the bottom end WOULD NOT lack resources.

    You appear to have no idea as to how badly income is skewed towards the top end in America compared to most other western countries. This skewing even permeates the public sector. To give one example, NCOs and enlisted men in America are paid so little that many work extra jobs and charities exist on many military bases provide them with household furnishings etc.. In contrast, the higher ranks are paid handsomely. This skewing of military income is nowhere near as large in Oz. I’m well aware of this from my 20 years as a DoD employee as Oz troops became acutely aware of it in joint Us- Oz operations.

    Also note this:

    “Decades of peer-reviewed epidemiological research, funded by research councils have, he imagines, been torn to shreds by Christopher Snowdon—author of The Spirit Level Delusion. While Snowdon is described as a “public health researcher,” in actual fact he has no public health qualifications and appears never to have published research in a peer-reviewed journal. Instead, his main contribution to public health is a diatribe against tobacco control and a denial of the ill effects of second-hand smoke.”

    The man you cite to “debunk” W&P is a tobacco shill.

    Further:

    “Our critics also ignore the fact that these relationships have been widely demonstrated by other researchers. For example, as early as 1993 in the Criminal Justice Review, Hsieh and Pugh reviewed 34 studies of income inequality and violent crime and found a consistent correlation between the two—the authors estimated that it would need 58 new studies which found no effect in order to overturn this result. But studies since then have continued to confirm the link.

    Similarly, our review of research papers published in peer-reviewed journals found that the tendency for health to be worse in more unequal societies has been demonstrated well over 100 times (see Social Science and Medicine, 2006). Faced with research papers showing that this pattern is repeated among the regions of Russia, the provinces of China, the counties of Chile, or rich and poor countries together, we wonder what regions, provinces, counties or developing countries our critics would find excuses to exclude to deny a relationship?

    Again in contrast to our critics, we offer a coherent theory of why so many health and social problems are linked to greater inequality. Rather than being caused directly by material conditions or being simply a reflection of selective social mobility sorting the resilient from the vulnerable, the link with income inequality suggests that the problems associated with social status are responses to the stresses of social status differentiation itself.”

    While the right wing noise machine has tried to debunk TSL, the peer reviewed literature hasn’t battered so much as an eyelid.

  259. Good work Mel. The efforts of the Right to deny the ills of inequality are morally wicked and intellectually paltry, so no surprise there. Business-as-usual, I’d say. And being an apologist for inequality and its inherent injustice and the consequent human suffering is the stigma of the misanthropic psychopath, the Rightwing type par excrescence. Of course, they deny that as well.

  260. Nice, Mel. You’re spot on – inequality *itself* is a problem, but furthermore by redressing this problem, we redress related problems too (and vice versa).

  261. Mulga, I actually have a lot of respect for Jarrah as I have stoushed with him many times over the years. I don’t believe people are necessarily wicked just because they have ideas that defy the evidence and that produce harm. Us humans have an endless capacity for self delusion and all us, if we’re honest, have a few wacky beliefs!

  262. Yes Mel, I have no idea about Jarrah or anybody else’s inner workings. But ideas and opinions are fair game for attention, and some are simply odious, in my opinion. I have a rather high opinion of my opinions, but hold them tentatively, and endeavour to keep them flexible. My opinion, now, and for a long time, and which has not varied much over time, is that equality and justice and compassion for human beings are very high values, and any ideology that seeks to dismiss them and which is indifferent to inequality and injustice is what I call ‘wicked’. So there you have it. I think that those who preach indifference to injustice, acceptance of inequality and equanimity in the face of global imbalances of wealth and income are behaving badly. Some of these are, of course, merely deluded and may be expected to see the error of their ways. Others are simply expressing their inner character and psychology, the roots of which vary from individual to individual. These people I believe are evil, and that, too, is a matter of degree, and a state that individuals may, occasionally, escape, if a deeper understanding is achieved. This type, amongst whom psychopaths are common, clearly dominates the world at present and their dominance and that of their pseudo-religion, market capitalism, sufficiently explains (to my satisfaction, at least) why humanity is on the brink of destruction. I really think that this is a very big deal, the biggest deal ever, and if we remain unable to keep those unfit to hold power, economic, political or military, away from the sources of these powers, then we are gone a million. There doesn’t seem much progress in this regard, just ever darkening retreat into barbarity and excess.

  263. @Mulga Mumblebrain

    my gosh! you sound just like every Libertarian i have ever known!

    And every Muslim.

    And every Buddhist.

    And every ….

    the only thing i will suggest that you deviate from my own feelings on is that i believe we are on the brink of destruction simply because we are in overshoot.

    Everything we experience from here on in is heavily influenced either by the effect of overshoot itself or the anticipation of it in some way

    and that amidst billions of people trying to get by day to day

    and a handful of opinionated nutters like us

    🙂

    pop

  264. I agree with you Mulga, I am just as disgusted, but not as pessimistic.

    I thought pop had gone away for the weekend.

    Jarrah back at #30 “social stratification remains in even the most economically equal of societies, because humans are status-seeking and will construct hierarchies out of the flimsiest material – high school cliques are a trivial example.”

    Do you think stratification is always social? I’m thinking that in the most economically equal societies and this would be the old hunter gatherer group, is ‘social’ or is the stratification based on ‘ability’, ie natural inequality?

    And re the anomalies in the correlation between inequality and health, might this be due to the ‘sterotype threat’.

    http://en.wikipedia.org/wiki/Stereotype_threat#Effects_on_performance

    In the example that you have referred to – that of second tier executives with a higher income having lower health outcomes than higher level execs who recieve a lower income – the mechanism would be that the second tier exec assess his worth and status as less than that of the boss.

    Garbled but it is Saturday.

  265. Sorry Mulga, but I find your simplistic Doomsday talk and your willingness to denounce so many of your fellow human beings as evil far more disturbing than anything Jarrah has said. What is possibly even more disturbing is the incessant and deranged comments that you make about Zionism on countless websites. For your sake, I do hope you seek professional help.

  266. I recon we should all agree to be a little happy for a bit – even if it is only for today and tomorrow

    gosh, as bad as it is for so many on this planet are we ever lucky – i count my blessings every single day

    and yes i’m away for the weekend but there’s a computer here

    love to all

    pop

  267. @Mel
    ” If instead incomes were more evenly distributed within organisations (both private and public) those at the bottom end WOULD NOT lack resources.”

    You’ve got it backwards. If those at the bottom had more resources, inequality would lessen. Inequality is just a measurement, not a determinant! We’re just going around in circles here.

    “The man you cite to “debunk” W&P is a tobacco shill.”

    You don’t seem to be aware that you are employing a logical fallacy called ‘ad hominem’. Snowdon may be the devil incarnate, but that doesn’t mean he’s wrong about this topic.

    It’s rational to not bother engaging with those you think are going to waste your time, but his arguments aren’t complex, and makes a very strong argument. Do yourself a favour, and actually read his arguments, rather than relying on third parties.

    “the link with income inequality suggests that the problems associated with social status are responses to the stresses of social status differentiation itself.”

    This is, if anything the absolute weakest point of the thesis. Japan is among the most economically equal countries looked at by W&P, and its excellent social outcomes are frequently the outlier producing the simplistic trend line in their graphs (one of the main statistical problems of their work, but let’s leave that for now). Yet Japan is also one of the most status-conscious societies on Earth, with social stratification deeply embedded in the culture and even the language itself. This supposed sterling example of the correlation between equality and social outcomes goes directly against the inferred causal mechanism.

  268. @Julie Thomas
    “Do you think stratification is always social?”

    No, but when you remove one way of measuring status – eg income – humans always find other ways of doing so. In communist countries, there was greater income equality, but in its place you got greater political inequality. Being a member of the party got you a better life. Being higher up the party hierarchy got you a better life.

    You can’t get rid of status-seeking behaviour, because it’s part of our pre-human inheritance in the competition for sexual mates.

    Some inequality is good. Too much is bad, because it causes underclasses to form and then seek to change society in their favour – revolutions, in other words. We need enough redistribution in the short term to alleviate suffering, and enough in the long term to prevent revolutions.

  269. “We need enough redistribution in the short term to alleviate suffering” – Yep. Exactly. If you’re going to continue to claim that this is the situation at present, or in fact we’re already being too generous, you just have no idea what it’s like out there.

  270. Jarrah, I think, in our endeavour to understand why we behave as we do now, and what systems will work in the future, the information from evolutionary biology/psychology, is useful, not as a model for how to organise ourselves now, but as one way of understanding our unconscious motivations. Speculating wildly here, but perhaps the unconscious bias we have toward tall people – or is it only tall men? – is based on the benefits that tallness would have provided for hunters?

    I don’t think the male/female thing is the key to the development of stratification. It is an important discussion to have but I’m not willing to talk about it while there are people like Bolt who would use the debate to inflict more damage on women just as he inflicted more damage on indigenous people’s self-esteem.

    You are focusing on the dichotomy between communism and free enterprise and are motivated to defend the system you have already decided is the ‘best’ one. I think both of these ideologies are just ways of organising the distribution of resources and income, and as John Ralston Saul says, neither is a proper ideology; they do not tell us how to live our lives well and how to look after each other.

    Both of the ideas flounder on the fact that human nature is not rationally predictable and it seems clear that we need something like the social mores that Confucious developed to underpin any economic and political system; Adam Smith knew this and for him the Christian values were the only way that capitalism could be ‘tamed’.

    I think that you can get rid of status seeking behaviour and traditional indigenous society is an example of a society in which status seeking behaviour is not the primary motivation for living.

    Buddhist philosophy also offers ways of reducing desire and status seeking behaviour. Japanese society is socially stratified but the difference between their stratification and ours is that those at the bottom are not denigrated and stereotyped as welfare bludgers, as stupid and lazy, the ‘no-hoper class’; that was how Bob Katter referred to ‘them’ a few days ago.

  271. @Julie Thomas

    Unfortunately Buddhists erected the most savage form of feudalism in Tibet until overthrown.

    They simply take the desire for status seeking behaviour and divert it into alternative forms.

    Modern society can do better with football and cycling teams.

  272. The IQ data is interesting in Japan also. In European countries, it seems that there is an IQ difference between rural and urban populations, in the obvious direction, but this difference is not found in East Asian populations, including Korea.

    But, a group of Korean workers in Japan, imported back in the days of Japanese Imperialism, who are stereotyped in the usual way that out-groups are sterotyped – lazy dirty stupid – have been found to score lower than their counterparts back in Korea. So is it being part of a less valued group that ’causes’ lowered IQ scores?

    Perhaps the Jewish people have done so well, despite all the negative stereotyping and abuse they have been subjected to over the centuries, because their belief in themselves as the chosen people is ‘positive sterotyping’ and it works to increase IQ. Through their strong family system they have been able to maintain this self created positive stereotype.

    But it is also seems obvious that it is the solidarity they show toward the members of their particular society that maximises their success.

  273. Chris – some Buddhists do bad things but the philosophy itself is very adaptable and football and cycling teams could benefit from it. The helping kind of psychology is successfully using some of the principles – such as mindfullness to good effect.

    It’s not a panacea at all just an alternative that offers possiblities.

  274. @Julie Thomas

    Yes I suppose, but we need to have useful moral principles in humanity separate to religious constraints and without invoking splits in citizenry.

    If moral principles arise only through religion they are not properly based. If they are already represented in social life, they are properly misrepresented and exploited in religion.

    It is very hard to see “mindfulness to good effect” in the Bhuddist story of the Maiden Rohini who had to spend her 10 thousand pieces of money and jewels to build a two storey assembly hall, and then work sweeping it constantly, preparing seats, and keeping water vessels full of water.

    After being summoned (againts her will) she was told she needed to “perform works of merit” by the Venerable Anuruddha and his retinue of 500 monks.

    See Ch 23 of “Buddhist Stories from the Dhammapada Commentary “

  275. Chris I didn’t mean to suggest that we adopt buddhism as a religion! Those stories sound awful but they belong to the religion of buddhism. The philosophy is different; http://plato.stanford.edu/entries/comparphil-chiwes/

    We could look at some of the knowledge that the buddhist tradition and some of the other Chinese philosophies developed about keeping governments benign. I think they had long periods of stable governments so they might have something to offer but I am in no way knowledgable about Chinese history or the philosophy. It is a huge area but I was intrigued to find, in my mind anyway, some interesting similarities between Spinoza and aspects of Chinese buddhism.

    And sure ‘mindfullness’ is the therapy of choice of the worried wealthy well, but the practice, silly as it is, parts of it work for youngest son, a hands on youth worker who cares too much; not about alleviating suffering in the no-hoper disabled class he knows and loves, but about how much suffering there is and that there really is nothing available that does alleviate it.

  276. Mulga Mumblebrain is pemanently banned. I’m deleting all his recent comments and replies to those comments.

  277. @Jarrah

    “You’ve got it backwards. If those at the bottom had more resources, inequality would lessen. Inequality is just a measurement, not a determinant! We’re just going around in circles here.”

    Agreed, however that just implies the market has not been allocating resource effectively for the past 30 years, because the government has not intervene with the market in relation to income redistribution such as raising minimum wage, changing tax rate to more progressive tax rate etc. This by itself already proves that market is ineffective at resource allocation without government interventions (hence liberalism/capitalism does not work).

    If you take the case in Australia, minimum wage has improved, progressive tax, and transfers,welfare increases over time, and public healthcare etc are all government intervention with the market. The result? Well is Australia facing the same problem as the US? It is fair to say Australia is not a capitalist society, it is combined with a major right (liberals), center-right (labour), and a minority left (green, independent).

    Inequality is a measurement however, if it is not natural generated inequality such as difference in work duties, pressures, responsibilities and performance etc. It is harmful to the long run economic stability of the economy; and a deregulated market generates more abnormal inequality than a more regulated market (US:Australia).

  278. “This by itself already proves that market is ineffective at resource allocation without government interventions (hence liberalism/capitalism does not work)…and a deregulated market generates more abnormal inequality than a more regulated market (US:Australia).”

    I disagree strongly with your premises, but we are straying far from the original topic, so I’ll leave that for another time unless you want to continue in the Sandpit.

    I’m glad we are in agreement on inequality being just a measurement, not a determinant. One or two others have agreed with this basic point as well. Overall, I consider this to be a very successful foray into the blog jungle.

    Peace out.

  279. @Jarrah

    Sure, I’d love to discuss with you on the topic “Is the market more efficient in allocating resources relating to income in a more deregulated economy than a regulated economy”; that is if you are willing to spend time on discussing it with me in the Sandpit.

    To point out, I have always agreed that natural inequality should exist.

  280. @Tom

    Surely a regulated monopoly where the price = average total cost is the most efficient of all.

    How can you get more efficient than this.

    I suppose you can always fiddle with the concept of efficiency.

  281. @Chris Warren

    I’m not suggestings regulated monopoly, competition will have to exists as a mean to control inflation and improve efficiency. However market liberalism/capitalism generally implies the government should have as little regulations on the market as possible, even if some regulations benefits the economy.

    Now, for example a lot of countries around the world is trying to get China to float the RMB. Why because local business are having trouble competing with Chinese exports, and low labour cost due to manuiplated currency. Now assume that if the Chinese government did float it’s currency and it rose to the estimate that it should worth 40% more than it current is. A lot of the manufacturing plants imported from other countries will move to somewhere else with cheaper labour, further more the demand for Chinese export will decrease which will significantly increase it’s unemployment rate. You have to know that a lot of rural population of China lives on the imported manufacturing plants on $1 per hour. This is a classic example how Chinese government used regulations that benefits the economy.

    No doubt, heavy regulations harms the economy however I believe there should be a equilibrium between regulations/deregulations; which means that an economy should not be heavily regulated nor it should be purely free.

  282. Apologies for correction, “should be a equilibrium between regulations/deregulations” should be level of regulation/macroeconomic stability.

  283. The market allocates resources to their highest value use. The poor don’t have any resources simply because they don’t value them highly enough as indicated by their unwillingness to purchase them at market prices. No injustice; any resulting inequality is entirely fair and choice driven. We are all free to choose. All is well in the world.

    See, simple as that; economics explains all.

  284. @Tom

    Personally, I think regulation does more good than harm, once you understand the huge damage being wrought through deregulation, or at least, the gaming strategies people adopt in a deregulated environment.

    However regulation tends to smother innovation which is the main source of real growth.

    Maybe it is best to avoid the “market liberalism/capitalism” couplet unless you want to restrict market liberalism to just capitalism. In this case the role for regulation is even stronger.

    Normal market liberalism can exist outside capitalism.

  285. @Chris Warren

    Thanks for the advice, I agree wtih your point. I’ll avoid market liberalism/capitalism now and stick with capitalism.

    Also agreeing that regulation do more good than harm; however in what I meant by heavy regulation though is something like price controls and wage controls. These can be really effective if it is use properly; but it is hard to measure the quality/cost of good or productivity/performance of a particular worker. Which if not measured properly it will create disincentives for businesses to differentiate their product via quality; same goes to worker.

  286. Dan I enjoyed the article, thanks.

    This quote:
    “Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible”
    is particularly relevant from my perspective. When we abuse people for being dole bludgers, stupid, lazy, luvies, whatever the term of abuse is, we diminish their ability to contribute whatever it is that they have to contribute.

    And this quote makes it clear that the idea of equality is a desirable goal, for self-interested people, and not just for the luvies.

    “ Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society—something he called “self-interest properly understood.” The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest “properly understood” is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite.”

    Spinoza :), I think was making the same argument and that a government was the only way to ensure that everyone’s self-interest could be achieved.

    Also, if one is interested in self-organisation and believes that this process can achieve a good society, the idea of the common welfare as a precondition for one’s own well-being, is the mutual goal that they need.

  287. this is a cross post because i suspect my original post will be deleted from the site i posted on

    here is the original post

    http://blog.mises.org/18826/the-obession-with-equality/comment-page-1/#comment-806741

    here is what my comment said (ps, feel free to jump onto the mises site and have a go at them – but keep the flaming down else they’ll for sure lock out comments)

    ————————————————————————————————– post start —
    My question is this

    exactly what is wrong with equality? Not that i believe that either equality or inequality will matter much in the big picture – in the end we are all dead and i do not mean in Keynes’ way.

    What is clear to me is that when there’s lots of fat to go around the fact that some scum bags make and hoard a lot more than the average Joe is something everyone can live with – simply because they can live

    but when the pie to be shared starts to shrink things get a little more dramatic – no matter whether or not those with most of the pie are losing their share to a shrinking pie or to those who’s shrinking portion drives them to try and get more of anybody else’s share of the pie, they are going to try and hold on to their share – rationality will never come into it

    in the dim dark ages past when there were so few of us that to lose any of us was a threat to all of us it was normal to pull together

    but when there are so many of us that risk seems to no longer exist and with it has gone the care for others exemplified by by the attitudes of some who post to this blog – whatever huff and puff reactions they might make to my assertion (and yes i do know them all – being as well schooled in Libertarianism as any)

    you might think that you are a survivor and that that survival is all because of something about you that makes you superior – and heck it aint hard to feel superior to many of the countless no-hopers and low-lifes out there

    but the fact is that when it all turns to poo it will be the animal in us all that determines the outcome and not the godliness – by forever walling off those with little pie from those of us who have been lucky enough to have more of it all that happens is the wall gets more and more expensive and eventually it falls and leaves us to deal with reality tooth and nail

    that is our future buddies and no amount of ideology is ever going to keep it at bay for long

    so as you see and hear more and more calls for equality – instead of looking for the flaws in the rationality or ethics of the messengers you’d better step back and think about how we all might survive – as a species – as a civilisation

    because as Friedman conceded on his death bed – if we had true democracy there would be no inequality (and your sneaky side-step use of 50-50 hides the truth) – the masses we deny any share of the shrinking pie to would legally vote themselves more of the pie

    so you better either figure out how to make a bigger pie (which seems to be physically impossible) or to ensure there are far far fewer of us to have to share it

    and to do so without resorting to where your ideology must logically lead – pogroms and “demographic cleansing”

    pop

    i’ve often wondered if the peak of population looms
    and our time is bright but short just like a fleeting flower blooms
    and maybe there’s no going back the tipping point’s been crossed
    ’cause we’re all of us the most we’ll be – peak people

    http://thepeakoilpoet.blogspot.com/2011/08/peak-people.html

    http://thepeakoilpoet.blogspot.com/2011/10/equality.html

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