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I find it interesting that you frame income inequality as "wealth polarisation." Are you implying a bimodal distribution of some sort? My personal theory of "

by stvswn 6y ago

I find it interesting that you frame income inequality as "wealth polarisation." Are you implying a bimodal distribution of some sort? My personal theory of "inequality" is that it isn't necessarily a bad thing. A distribution of income levels will always have a long right tail as you cannot make negative income but there is no theoretical limit to the maximum income. If all wages grow by the same relative amount, you would see increased inequality. I think it is a problem if wages aren't growing for all portions of the distribution, but that is precisely because of the lack of growth for some and not because of the existence of growth for others. So, yes, I do think that growing income inequality may be a societal issue, but only if it is an effect of wage stagnation for middle and lower classes (which it is). I do not believe that the rich getting richer is the cause of the stagnation, though. If anything, automation and globalization have been the main reasons for stagnation among middle and lower income levels. Automation and globalization may also be the cause of the continued growth in the very high wages. Even if they share the same underlying cause, one didn't cause the other. I understand, but don't agree with, the argument that increased inequality causes social problems on its own. According to this theory, as I understand it, you can't have the differences among people be too great because it will cause too much power imbalance and resentment and eventually the masses will rise up and destroy the system from within. I don't agree, I think social problems come from the difference in reality compared to expectations of how one thought their future would go -- in other words, it is much worse for someone to see low wage growth in a stagnant economy where their standard of living is declining relative to their parents than it is to see moderate wage growth in a growing economy but there are some other people getting super, super rich. I don't think one's life relative to rich people is that important compared to one's life relative to personal expectations. So, in that sense, I don't agree with redistribution schemes that intend on fixing a symptom of a problem (that rich people exist) rather than fixing a cause (wages are stagnant). If the idea isn't to just reduce the inequality, but rather to supplement lower incomes -- there is absolutely no version of "taxing the mega rich" that we could do which would raise enough money to redistribute to the rest of workers such that it compensates them for the lack of wage growth at the lower end. It can't be done, there's not enough money. Eventually you have to tax the (productive) middle class. From that perspective, I prefer policies that focus on wage growth for the lower and middle classes, even if that's a harder problem to solve.

arrosenberg 6y ago
> I do not believe that the rich getting richer is the cause of the stagnation, though. If anything, automation and globalization have been the main reasons for stagnation among middle and lower income levels. Who disproportionately benefitted financially from automation and globalization? > From that perspective, I prefer policies that focus on wage growth for the lower and middle classes, even if that's a harder problem to solve. You need to do both. No one was talking about this 20 years ago because most people were participating in the "good economy", even if some benefitted far more than others. Now people are being told the economy is good (by both major polities), but it doesn't match reality, which you noted is a major cause of angst. Additionally, if your goal is to create more jobs and wage growth for low and middle income people, the best way to do that is to reduce economic concentration and create more opportunity for competition and small business. It will be less cost efficient, but the economy will be more resilient and the wealth would be more broadly distributed, even though some people could still achieve obscene wealth.
spinningslate 6y ago
Thanks for the comment. One point to clarify on my post: > I find it interesting that you frame income inequality as "wealth polarisation." Are you implying a bimodal distribution of some sort? I wasn't intending to equate distribution and polarisation. By the latter, I meant the steady shift of wealth to a smaller population who have become progressively wealthier. While, at the other end, the majority have beome comparatively less wealthy compared to equivalent social cohorts over time. Perhaps more succinctly, it's the _change_ in distribution, not the _presence_ of a distribution. I'm no economist and I know there are a variety of opinions on distribution, but I understand there's reasonable agreement that globalisation has increased polarisation [0]. [0]: https://en.wikipedia.org/wiki/Economic_inequality https://en.wikipedia.org/wiki/Economic_inequality
thomasahle 6y ago
> According to this theory, as I understand it, you can't have the differences among people be too great because it will cause too much power imbalance and resentment and eventually the masses will rise up and destroy the system from within. You shouldn't think of the destruction of the system from within as the problem. Some might fear that, but afterall, its unlikely that the people without power would beat those that have it. The problem is the power zero sum game in itself. Wealth and power are both ways to gather even more wealth and power. In a simple society without a government you could simply use the power to buy weapons and soldiers to coerce the wealth of others. In our society you can use power to shape the rules more favorably for your own group. As the wealth ratio of one group converges to 100%, the other groups have gradually less influence, unless allowed by those in power because of ideology or their good hearts. Either you see this as fine and natural, or your ideology prefers everyone to have some amount of freedom over their own lives. In the later case you may look at ways to reduce the wealth and power inequality, by weeding out rules particularly favorable to the powerful, or by trying to spread wealth more evenly.

by stvswn 6y ago

arrosenberg 6y ago

> I do not believe that the rich getting richer is the cause of the stagnation, though. If anything, automation and globalization have been the main reasons for stagnation among middle and lower income levels. Who disproportionately benefitted financially from automation and globalization? > From that perspective, I prefer policies that focus on wage growth for the lower and middle classes, even if that's a harder problem to solve. You need to do both. No one was talking about this 20 years ago because most people were participating in the "good economy", even if some benefitted far more than others. Now people are being told the economy is good (by both major polities), but it doesn't match reality, which you noted is a major cause of angst. Additionally, if your goal is to create more jobs and wage growth for low and middle income people, the best way to do that is to reduce economic concentration and create more opportunity for competition and small business. It will be less cost efficient, but the economy will be more resilient and the wealth would be more broadly distributed, even though some people could still achieve obscene wealth.

spinningslate 6y ago

Thanks for the comment. One point to clarify on my post: > I find it interesting that you frame income inequality as "wealth polarisation." Are you implying a bimodal distribution of some sort? I wasn't intending to equate distribution and polarisation. By the latter, I meant the steady shift of wealth to a smaller population who have become progressively wealthier. While, at the other end, the majority have beome comparatively less wealthy compared to equivalent social cohorts over time. Perhaps more succinctly, it's the _change_ in distribution, not the _presence_ of a distribution. I'm no economist and I know there are a variety of opinions on distribution, but I understand there's reasonable agreement that globalisation has increased polarisation [0]. [0]: https://en.wikipedia.org/wiki/Economic_inequality https://en.wikipedia.org/wiki/Economic_inequality

thomasahle 6y ago

> According to this theory, as I understand it, you can't have the differences among people be too great because it will cause too much power imbalance and resentment and eventually the masses will rise up and destroy the system from within. You shouldn't think of the destruction of the system from within as the problem. Some might fear that, but afterall, its unlikely that the people without power would beat those that have it. The problem is the power zero sum game in itself. Wealth and power are both ways to gather even more wealth and power. In a simple society without a government you could simply use the power to buy weapons and soldiers to coerce the wealth of others. In our society you can use power to shape the rules more favorably for your own group. As the wealth ratio of one group converges to 100%, the other groups have gradually less influence, unless allowed by those in power because of ideology or their good hearts. Either you see this as fine and natural, or your ideology prefers everyone to have some amount of freedom over their own lives. In the later case you may look at ways to reduce the wealth and power inequality, by weeding out rules particularly favorable to the powerful, or by trying to spread wealth more evenly.