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)
John Quiggin 
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.
@NickR
Actually those results are with the Fraser Institute index. If I use the Heritage index the correlation is 0.55.
@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
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.”
@The Peak Oil Poet
The face at the bottom of the well is your own.
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.
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.
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.
@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.
“arguably negated by the very existence of OWS.”
Only if it were a mass movement.
I am inclined to agree. Until then: Dennis Kucinich for President.
just read that only 9% of prez O’s news coverage is positive.
wonder what the figure for our prime minister is?
Re: “I am inclined to agree” – that was @Tom
@Jarrah
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.
“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.
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 🙂
@Donald Oats
Arrgh, it might have been the tail end of O’Reilly, not Greta van Susteren. All the same to me…
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.
@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.
“…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.
@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’.
@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.
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.
“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.
@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”?
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.
(NB: that was @Jarrah)
Jarrah:
“Equality doesn’t matter, poverty matters.”
Probably untrue.
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.
“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.
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.
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?
“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.
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.
@Jarrah
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”.
@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.
@Tom
Yes most people would agree with:
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.
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
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.
@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.
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.
@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).
@Jarrah
No one disputes you having a basic idea such as;
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).
@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.
@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.
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”.
@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).
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.
@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.
@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.