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Is there an inherent problem with income inequality? Would you rather live in: * World 1, where everybody has x, except one person has 100x * World 2, where ev

Is there an inherent problem with income inequality? Would you rather live in: * World 1, where everybody has x, except one person has 100x * World 2, where everybody has .5x and is thus totally equal (I realize assets and income are not equal, but I think the point stands)

dragonwriter 8y ago
> Is there an inherent problem with income inequality? Yes, because once you get past the truly abject absolute poverty (which isn't an issue for most of the developed world), there's a lot of indication that experienced utility or disutility is driven more by relative material position than absolute position. So, yes, outside of very poor economies (where absolute gains that increase inequality may still improve utility across the board), increases in inequality are very often utilitarian ills that are not compensated by absolute gains at the lower end.
- commandlinefan 8y ago
  Well, I think what he's saying (which I don't necessarily disagree with) is that if I have everything I need, what difference does it make to me - besides jealousy - if the guy down the street has more than he needs?
  - dragonwriter 8y ago
    It's a common a priori moral argument about how many people think people should derive utility from material circumstances, sure, but “stop feeling pain from relative deprivation” is about as effective as “stop feeling pain from me twisting your arm”, even if you think it is morally obligatory for people to disregard having their arm twisted.
    - darkerside 8y ago
      Yeah, parent post expressed it well. Probably better than me. I purposefully didn't say anyone should feel anything (and got flamed for being an absolutist for it). While it's how I personally feel, I think others should decide how they feel about it. Funny enough, framing the problem in a slightly different moral perspective leads to vast differences in how people feel about the situation.
  - FabHK 8y ago
    Lots. 1. We are social creatures, not homines oeconomici whose utility function only includes our own consumption. (In fact, I feel that the argument you (and others) make comes from this mistaken Econ 101 idea that the simplifying economics assumption of a utility function only including own consumption is has normative character (ie we should only look at that). But it has neither positive (descriptive) nor normative character for actual humans.) 2. Extreme inequality jeopardises the democratic project, and corrodes the political process. 3. In the real world, higher inequality is linked to more crime. (Too lazy to find the reference now, but there's a recent book out on it.) 4. The jostling for status arguably leads to enormously wasteful spending (ie conspicuous consumption, ostentatious waste, etc.) 5. Life expectancy, health, happiness seem higher in more equal societies. You can't just dismiss these facts (some empirical, some philosophical) by "why should you care about what someone else has?". (Note: none of the above objections are dependent on a false "zero-sum" or "fixed-pie" argument.) In addition to Nozick, I recommend reading Rawls (or even better, somebody writing about Rawls - his "Theory of Justice" is very heavy reading, taking way too long to get to the points).
    - darkerside 8y ago
      What's really disempowering is making utility a social responsibility instead of a personal one.
munk-a 8y ago
I don't really understand why this scenario is worded this way, it seems like World 2 where everybody has .5x is just worse due to World 2 getting the shaft. Here's a setup: * World 1, where everybody has x except one person has 100x * World 2, where everybody has 1.2x I think World 2 pretty clearly wins but this is a bit of a strawman to begin with. I'd personally rather live in a world where the poor have x and the rich may benefit by having 6x in extreme cases. I agree with the general concept that incentives can increase productivity and different people are adding different amounts to society, I disagree with the idea that some people are equal in skill to 100,000 other people and need to be rewarded accordingly.
- malandrew 8y ago
  Well you actually do end up with 0.5x instead of 1.2x because in World 2 you have eliminated the profit motive that drives progress forward. Basically you forego all progress that would have happened with the opportunity to profit by creating and inventing things and then making those things faster, cheaper and better.
  - maxxxxx 8y ago
    The question is how much profit should go to a few. I don't think many people would object to a world where most people get 1.5x and some get 10x. The 10x people should have enough profit motive in that world. I don't think today's CEOs are better than the ones in the 50s when they made it 20 times morw than their workers compared to them making several hundred times more today.
  - munk-a 8y ago
    Sorry, so part of your scenario to divine why wealth inequality isn't so bad is an assumption (without grounding or explanation) that a lack of wealth inequality necessarily leads to high levels of economic inefficiency? I feel like your initial question is just coming from a very disingenuous place, the discussion of the relative economic efficiency of unequal vs. perfectly equally distributed wealth is a bit aside from the question of how extreme wealth inequality is. So I suppose, I agree that wealth inequality does provide value, but it does so in very small doses which we have greatly exceeded at this point.
maxxxxx 8y ago
These are artificial choices that don't help. I think the last decades had most people in rich countries staying the same or going slightly negative while a few got much more. To me that's not desirable.
- darkerside 8y ago
  Keep in mind the alternative may have been even more people sliding into poverty. I think inequality is more misleading than my artificial choice. Why anchor on what the richest have, as opposed to what they poorest SHOULD have? The rich will always get richer. It's basically a law akin to gravity. You can shovel shit uphill fighting it, or you can accept it and use that force to make the whole world better.
pyrale 8y ago
The point does not stand because the proportions you gave are very far from reality. The world 1 you describe is a communist utopia compared to what we currently have. It is interesting, though, that your idea of what's grokable is so far from reality
zanny 8y ago
Instead of dealing in black and white absolutes, how about World 3, where 99% of everyone has .9x and 1% have 9x. Plenty of economical arguments exist to supply a profit motive as a means to spur economic development and advancement. At the same time, I highly doubt Bob the CEO of Big Bucks would staunchly refuse the job and that no other qualified candidate would consider doing it if the mean CEO salary was only $600,000 a year instead of 7 million. Hell, thats what they did make until Clinton era tax incentives. Its the same argument as to why lifetime of the creator + 70 years copyright is ridiculous and absurd. Maybe Jules Verne would have written ten sequels to 20000 Leagues if only he could guarantee a distribution monopoly for 70 years after he died? The orders of magnitude of wealth difference are colossal, and something with plenty of documented study showing your average citizen has no clue how large the disparity is between the average and the extreme prosperity at the top. Others have answered why its a problem, I just want to point out its not a black an white either you go full communism or laissez faire.
- darkerside 8y ago
  I agree it's not black and white. The reason I presented a theoretical extreme was not to straw man. It's because I think it illustrates an interesting philosophical paradox. It seems that people would rather that others (the CEO) make much less, even though it may not mean the "proceeds" are distributed broadly, and in fact, everyone may individually be worse off due to economic fallout.
djrobstep 8y ago
What is it that motivates you to be a bootlicker for the rich?

dragonwriter 8y ago

> Is there an inherent problem with income inequality? Yes, because once you get past the truly abject absolute poverty (which isn't an issue for most of the developed world), there's a lot of indication that experienced utility or disutility is driven more by relative material position than absolute position. So, yes, outside of very poor economies (where absolute gains that increase inequality may still improve utility across the board), increases in inequality are very often utilitarian ills that are not compensated by absolute gains at the lower end.

commandlinefan 8y ago
Well, I think what he's saying (which I don't necessarily disagree with) is that if I have everything I need, what difference does it make to me - besides jealousy - if the guy down the street has more than he needs?
- dragonwriter 8y ago
  It's a common a priori moral argument about how many people think people should derive utility from material circumstances, sure, but “stop feeling pain from relative deprivation” is about as effective as “stop feeling pain from me twisting your arm”, even if you think it is morally obligatory for people to disregard having their arm twisted.
  - darkerside 8y ago
    Yeah, parent post expressed it well. Probably better than me. I purposefully didn't say anyone should feel anything (and got flamed for being an absolutist for it). While it's how I personally feel, I think others should decide how they feel about it. Funny enough, framing the problem in a slightly different moral perspective leads to vast differences in how people feel about the situation.
- FabHK 8y ago
  Lots. 1. We are social creatures, not homines oeconomici whose utility function only includes our own consumption. (In fact, I feel that the argument you (and others) make comes from this mistaken Econ 101 idea that the simplifying economics assumption of a utility function only including own consumption is has normative character (ie we should only look at that). But it has neither positive (descriptive) nor normative character for actual humans.) 2. Extreme inequality jeopardises the democratic project, and corrodes the political process. 3. In the real world, higher inequality is linked to more crime. (Too lazy to find the reference now, but there's a recent book out on it.) 4. The jostling for status arguably leads to enormously wasteful spending (ie conspicuous consumption, ostentatious waste, etc.) 5. Life expectancy, health, happiness seem higher in more equal societies. You can't just dismiss these facts (some empirical, some philosophical) by "why should you care about what someone else has?". (Note: none of the above objections are dependent on a false "zero-sum" or "fixed-pie" argument.) In addition to Nozick, I recommend reading Rawls (or even better, somebody writing about Rawls - his "Theory of Justice" is very heavy reading, taking way too long to get to the points).
  - darkerside 8y ago
    What's really disempowering is making utility a social responsibility instead of a personal one.

munk-a 8y ago

I don't really understand why this scenario is worded this way, it seems like World 2 where everybody has .5x is just worse due to World 2 getting the shaft. Here's a setup: * World 1, where everybody has x except one person has 100x * World 2, where everybody has 1.2x I think World 2 pretty clearly wins but this is a bit of a strawman to begin with. I'd personally rather live in a world where the poor have x and the rich may benefit by having 6x in extreme cases. I agree with the general concept that incentives can increase productivity and different people are adding different amounts to society, I disagree with the idea that some people are equal in skill to 100,000 other people and need to be rewarded accordingly.

malandrew 8y ago
Well you actually do end up with 0.5x instead of 1.2x because in World 2 you have eliminated the profit motive that drives progress forward. Basically you forego all progress that would have happened with the opportunity to profit by creating and inventing things and then making those things faster, cheaper and better.
- maxxxxx 8y ago
  The question is how much profit should go to a few. I don't think many people would object to a world where most people get 1.5x and some get 10x. The 10x people should have enough profit motive in that world. I don't think today's CEOs are better than the ones in the 50s when they made it 20 times morw than their workers compared to them making several hundred times more today.
- munk-a 8y ago
  Sorry, so part of your scenario to divine why wealth inequality isn't so bad is an assumption (without grounding or explanation) that a lack of wealth inequality necessarily leads to high levels of economic inefficiency? I feel like your initial question is just coming from a very disingenuous place, the discussion of the relative economic efficiency of unequal vs. perfectly equally distributed wealth is a bit aside from the question of how extreme wealth inequality is. So I suppose, I agree that wealth inequality does provide value, but it does so in very small doses which we have greatly exceeded at this point.

maxxxxx 8y ago

These are artificial choices that don't help. I think the last decades had most people in rich countries staying the same or going slightly negative while a few got much more. To me that's not desirable.

darkerside 8y ago
Keep in mind the alternative may have been even more people sliding into poverty. I think inequality is more misleading than my artificial choice. Why anchor on what the richest have, as opposed to what they poorest SHOULD have? The rich will always get richer. It's basically a law akin to gravity. You can shovel shit uphill fighting it, or you can accept it and use that force to make the whole world better.

pyrale 8y ago

The point does not stand because the proportions you gave are very far from reality. The world 1 you describe is a communist utopia compared to what we currently have. It is interesting, though, that your idea of what's grokable is so far from reality

zanny 8y ago

Instead of dealing in black and white absolutes, how about World 3, where 99% of everyone has .9x and 1% have 9x. Plenty of economical arguments exist to supply a profit motive as a means to spur economic development and advancement. At the same time, I highly doubt Bob the CEO of Big Bucks would staunchly refuse the job and that no other qualified candidate would consider doing it if the mean CEO salary was only $600,000 a year instead of 7 million. Hell, thats what they did make until Clinton era tax incentives. Its the same argument as to why lifetime of the creator + 70 years copyright is ridiculous and absurd. Maybe Jules Verne would have written ten sequels to 20000 Leagues if only he could guarantee a distribution monopoly for 70 years after he died? The orders of magnitude of wealth difference are colossal, and something with plenty of documented study showing your average citizen has no clue how large the disparity is between the average and the extreme prosperity at the top. Others have answered why its a problem, I just want to point out its not a black an white either you go full communism or laissez faire.

darkerside 8y ago
I agree it's not black and white. The reason I presented a theoretical extreme was not to straw man. It's because I think it illustrates an interesting philosophical paradox. It seems that people would rather that others (the CEO) make much less, even though it may not mean the "proceeds" are distributed broadly, and in fact, everyone may individually be worse off due to economic fallout.

djrobstep 8y ago

What is it that motivates you to be a bootlicker for the rich?