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Inequality is natural. There is no solution to starting inequality. Amartya Sen argues in that the great equalizer is Freedom. The greater freedom a society can provide to its participants, the more likely its participants will overcome whatever challenges they face micro-economically and can improve their lot in life.
However, increasing freedom can be difficult to do, as there are often competing interests. How to balance, say a monopolists freedom to charge whatever rate they would like for a service only they provide, with the freedom of people to be able to use said service at a rate that still allows them to remain competitive.
There are many aspects where we see this in conflict. The freedom to work can be impaired by illness or disease. It would be a substantial achievement for a society to be able to rid these leading impairments, but at what cost? A State provided healthcare would provide some freedoms to the majority, but not necessarily allow minority ailments attention to be cured. It may stymie future development in areas that may otherwise occur. The question of is it better to have a cure nobody can afford or to have no cure at all.
There's also significant limitations placed on those without education. People of talent are still corralled into occupations that do not utilize their full potential. Alternatively, people with limited prospects cannot achieve modest growth if the cost of training is too high. Where does one focus to maximize freedom for a society overall?
I believe the correlation seen in periods of relative tranquility is really the eroding of personal freedoms for a greater portion of a population. Even today in our relatively good times, we have one of the smallest overall % of workforce participation. Some have certainly exercised their freedom to no longer work, but has this come at a cost of stopping development of future generations? Do institutions with significant market power curb competition to force an acceptance of what they offer being what should be the expectation? Are political leaders as accessible by all as they once were?
There are many aspects of freedom or bondage that tie together to keep inequality in place. The microeconomic decisions of individual participants are not good or bad, they are simply logical in a given environment. Where the definitions come through are within an entity's laws. Those lowest common denominator activity determinants that a culture can support in total, backed by the ability of either the government or the culture to enforce these minimums to create a fair playing field. Advanced economic countries with homogeneous population bases have an advantage in this element, albeit at the expense of the innovation brought through diversity.
The freedom aspect is also important to understand when trying to determine why seemingly well planned and intentioned goes with socialism or planned economies have ended in terrible failure. The freedom aspect is necessary to account for the grand diversity present in each person's microeconomic condition. Few will simply set aside their needs for the greater good of something else....unless they are free to do so and to a degree they can determine.
In a free society then, inequality can be seen less as a static picture of how things are and ever will be, and more of where a particular participant is in their family or other unit's cumulative achievement in an area. That isn't perfect, but it is hopeful, and has some rather good qualities that accompany it.
There seems to be no correlation between inequality and political freedom. The Roman empire was less free than the Republic yet had higher inequality. Inequality is just as high in today's communist China as in the democratic India etc. Same for ancient Chinese Empires, not really a center of freedom.
There is an argument in favor and against economic freedom and inequality. First, you need economic freedom for inequality to develop. But then as inequality reaches a certain threshold, the rich can exert an undue influence on the political process, leading to crony capitalism. Which in turn increases inequality. It becomes self-reinforcing. That seems to be the natural outcome of peaceful human society. According to Scheidel's thesis there is no peaceful way to stop this. The only way would be an extreme act of violence, which is not desirable. It is like being stuck between a rock and a hard place.
Recently, I read "The Great Leveler" by Stanford ancient history professor Scheidler. His thesis is that only extreme violence or a pandemic like the Black Plague can temporarily diminish income and wealth inequality for maybe a couple generations but then it reasserts itself inexorably. In essence we are still in an exceptional circumstance following WW1 + WW2, but we also see that inequality is ramping up again massively.
The only events ("The four Horsemen") leveling inequality are:
- mass mobilbization warfare (WW2)
- state collapse (Somalia)
- transformative revolutions (October Revolution)
- pandemics (Black Plague)
Obviously, none of these are desirable. They are also much less likely in our time: there will be no more mass mobilization wars, no pandemics and states have become much more stable in our time. Also interesting that areas of the world less involved in WW2 like Latin America have greater inequality.
What does that mean going forward (take this only as rules of thumbs from my own number crunching):
- ~% ofreal income growths will go to top 1%
- ~ lower 70% of incomes will not see real growths - ever again.
- vestiges of "middle class" like home ownership etc. will probably not be available for lower 70% going forward
I find this both disturbing but also convincing. It seems that peaceful human society always evolve to this kind of distribution, regardless of times, cultures or circumstances. There are many examples in the book. What do you guys think?
I agree with him. Stability breeds opportunity which breeds wealth which breeds corruption and inequality which breeds an aristocrisy/elite that exploits the masses further. Living standards for the many decline and increase hugely for the few.
Somewhere somewhen comes a revolution, correcting the balance.
Unless of course the people are so sheep like they think they have it good.
I agree with him. Stability breeds opportunity which breeds wealth which breeds corruption and inequality which breeds an aristocrisy/elite that exploits the masses further. Living standards for the many decline and increase hugely for the few.
Somewhere somewhen comes a revolution, correcting the balance.
Unless of course the people are so sheep like they think they have it good.
Those are very good points. However, Scheidel says there is not a natural progression from inequality towards revolution. Extremely in-equal societies can be stable and tend to be more stable now than in previous epochs. As long as the basic needs of members are met like we have today in most countries, don't expect anything dramatic. I doubt we'll see any more October Revolutions.
Inequality is natural and good. The best people will always do better. That is fair and just and natural and moral and correct. Equality should not be a goal at all. In fact, it shouldn't even be an issue. Your income is your own problem. To increase it, become more valuable to others. Envy and complaining and "noticing" inequality will not address one's own lack of it
Utterly brainless. How many children die in war? How many potential doctors, physicists, biologists and other talented individuals have died in our history? Many more than we know and INEQUALITY OF POVERTY ensures that number will continue to grow.
Those are very good points. However, Scheidel says there is not a natural progression from inequality towards revolution. Extremely in-equal societies can be stable and tend to be more stable now than in previous epochs. As long as the basic needs of members are met like we have today in most countries, don't expect anything dramatic. I doubt we'll see any more October Revolutions.
I must say that I tend to agree with you and when I do I think of a certain book by Issac Asimov.
I can see an argument for inequality being natural, but I see no argument at all for inequality being fair, just, moral or correct.
Instead, I see where the innate human need for individual self preservation can in some cases be so powerful that it causes a belief that inequality is fair, just, moral and correct.
Perhaps this innate need is overdeveloped in some (unfortunately, perhaps overdeveloped in some that are in power, which eludes to the OP's second perspective on this subject posted today at 11:46 am)
OP, how do earthquakes figure into your argument in that post? I am not understanding the connection.
Thanks.
I took earth quakes and income distribution as examples of processes apparently governed by power laws. These power laws show very uneven distributions. Very few extremely powerful earthquakes. Many, many small earthquakes. Very very few extremely rich people vs. many many people living paycheck to paycheck. I think we underestimate how many relationships are governed by power laws as it is not intuitive to our brain.
And....the thread drifts into a political argument over individualism vs collectivism, with no middle ground allowed...
Please reread. There is no absolute. Freedom is dynamic and therefore leadership must change in order to present the greatest amount of effective freedom. A collective government that is the only source of necessary goods is no better than an unnatural monopoly that has become an only source of necessary goods. Effectively both will limit freedom.
That's what makes governance hard. If boiler plate policies would work, humans would have discovered the magic fit long ago.
The reality is that inequality must always exist, however a person's role on the inequality rung doesn't not have to be fixed.
There seems to be no correlation between inequality and political freedom. The Roman empire was less free than the Republic yet had higher inequality. Inequality is just as high in today's communist China as in the democratic India etc. Same for ancient Chinese Empires, not really a center of freedom.
There is an argument in favor and against economic freedom and inequality. First, you need economic freedom for inequality to develop. But then as inequality reaches a certain threshold, the rich can exert an undue influence on the political process, leading to crony capitalism. Which in turn increases inequality. It becomes self-reinforcing. That seems to be the natural outcome of peaceful human society. According to Scheidel's thesis there is no peaceful way to stop this. The only way would be an extreme act of violence, which is not desirable. It is like being stuck between a rock and a hard place.
Political freedom is simply a safeguard to protect economic freedom...and physical freedom. So long as law and order allow for economic participants to contribute without undue disruption, I would agree that political freedom is not necessary...albeit it could contribute to longevity.
Whether it's a benevolent dictator or a bunch of land-owning Greeks the freedoms that are most necessary are the freedom to own property, pursue trade in a free and fair marketplace, innovate a better solution, train myself or seek training etc.
India has a significant amount of regulation that severely restrict an individual's ability to better themselves. They are also culturally curbed by a caste system, even if it is not legally pursued. It is very far from free despite being a Democracy. However, small reforms are being made and these incremental steps towards freedom are helping the economy.
China saw it's growth once the Communists dropped socialistic aspects of their economy. The Communists increased its participant's freedom to work. While there are still Hokou laws intended to keep participants tied to their areas, like serfs, they are not widely followed. Where the government has increased freedom for participants, prosperity has followed. In areas it remains rigid upon, growth has stopped.
Together the two nations should have the most economic prosperity owing to their large populations. However, it will take time and resources to free many of the participants from missing freedoms. How many of the lower classes have the ability to do more, but never have the opportunity.
Beyond that, both governments are better than anarchy, which could also be seen as freedom of everything for everyone....but in reality is freedom for nobody. Hence, inequality of resources is not as important as inequality of effective freedoms. But it's hard to measure that or agree on how it is best achieved.
Let me be more succinct...this thread has drifted from the sub-forum's subject matter into a political argument. If you, and others, pursue this discussion in such a manner then it will probably get locked by the mods.
I agree there is a problem but let's not throw out the baby with the bathwater... there are lessons from history to be learned for the present, as fragmented as human history is. It sure is not like math where from a few basic concepts you can deduct almost everything. History is messy, agreed 100%.
I'm also not trying to alarm but paint a realistic picture. This entails no hope for real wage growth for the lower 70%ile in developed countries - which isn't great but it's also not the end of the world and much better than war, pestilence or bloody revolutions.
But also my point is that the very premise - that inequality is getting worse - is incorrect. It is getting better, not worse. None of that is due to wars or famine, in fact it is in spite of it. Resources are relatively abundant, social structures are more progressive, and technology is allowing for the exchange of ideas and and trade like never before.
Someone lamented about the difficulty of retirement. But that is a local, not global view. It's the playing field leveling as the poorest of the poor in the US are fat and happy, while the emerging middle classes in the once developing countries of India and China are now dealing with first world problems - cell phones and Toyotas and vacations to the beach. There is wage growth, tremendous wage growth in these countries so that inflation is now a problem.
What are we really complaining about here? It's not the rural dweller in Africa living in a tin shack, who probably have it better than anytime in history, but our paychecks here in the US. Yeah, your retirement income is going to fall in favor of that African who will work for cheaper. Wage growth is increasing in emerging and developing countries - 6% a year in Asia, 6% a year in Eastern Europe, 4% in middle east, the only exceptions are Africa and Latin America where it is at 1%. Where is it falling? - the developed countries where they are flat at best. This is all ILO information where the summary is at 2 points: Global wage growth driven mostly by emerging and developing economies
Flat wages in developed economies
Such is the reality of the times. I suspect people here are NOT complaining of global income inequality, but, in reality, the loss of it.
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