1. When everyone was a farmer, the difference between the best possible farmer and the worst farmer just wasn't that great. Maybe you're 2x faster at picking corn, or 3x better at hunting deer. But a few guys literally built a communication tool (WhatsApp) to be used by billions of people. So maybe in the old world you could pick 2x as much corn, but in today's world you can build 1 billion times the communication tools as someone else.
2. The whole idea of inequality, while potentially useful, kind of assumes a fixed pie. The question is phrased as, "What percent of the total income pie did the 1% take" and not "How much pie did the top 1% of people produce to make the overall pie bigger?". I don't think either mentality is totally correct, but both are vitally important to understand (and the second belief is non-obvious to many). Did Steve Jobs producing the iPhone (and becoming a billionaire) take any of the poor people's money, or did it increase the overall output of the country? Steve jobs making the iPhone certainly made the country more unequal, but it also made the economy bigger and the country better off.
3. Does anyone care about equality, or do people care about poverty? Would a world where 1% of people had 100 yachts but 99% of people each had 1 yacht bother you? Would you rather live in a poor equal country or a rich unequal country?
Part of the problem is that the inequality leads to behavior that protects the inequality. Disney passing lobbying for laws that will keep their work out of public domain despite how much they benefited from public domain. Drug companies lobbying to outlaw certain products that would help people but cut into profits.
Enough inequality allows information control. Enough information control allows government control.
Overall, if things were constantly getting better, I doubt people would care. But once things start stagnating for those at the bottom, they begin to consider not playing by the current set of rules.
> The whole idea of inequality, while potentially useful, kind of assumes a fixed pie.
No. The idea of income inequality assumes that no matter the size of the pie, everyone should have a decent slice of pie that lets them live comfortably.
Industrialization was supposed to reduce the amount of hours we work and increase our quality of life. We seemed to have reached a floor at 40/50 hours a week and many many people are struggling to make ends meet, even if the richest countries in the world. There's a problem.
Like Steve Jobs made the iPhone with his own hands... He played a role in the creation of the iPhone, but the level and proportion of reward he received for that role is a choice we made as a society, not an intrinsic physical fact. I guarantee you, even in a world where telling other people to make iPhones doesn't make you a billionaire, there are still people who would line up at the chance to do it.
> But a few guys literally built a communication tool (WhatsApp) to be used by billions of people. So maybe in the old world you could pick 2x as much corn,
But the problem is that anyone can build whatsapp. It's not technologically sophisticated or difficult to do.
> but in today's world you can build 1 billion times the communication tools as someone else.
Which depends on market access, free time ( wealth ) and most importantly - access to capital. Most people in the world don't have access to it.
> 2. The whole idea of inequality, while potentially useful, kind of assumes a fixed pie.
That is an argument. But it really doesn't matter if the pie grows if a small fraction of the population gets a greater share of the larger pie.
> 3. Does anyone care about equality, or do people care about poverty? Would a world where 1% of people had 100 yachts but 99% of people each had 1 yacht bother you?
Yes, if yachts = power. The problem in america is that money = power and more importantly, now money = speech.
> Would you rather live in a poor equal country or a rich unequal country?
Neither? You are offering a false dichotomy. It's the same argument posed by monarchists centuries ago. Either we have divine right monarchy or anarchy/complete chaos. How about democratic representative government?
You are offering us two extremes and falsely claiming those are our only two options. It isn't. Extreme poverty and extreme economic inequality are both terrible systems.
that's an econ 101 concept that so badly misses the point, i'm not even sure it knows what the target is. and then a false dichotomy is tacked on to boot.
yes, if you are playing an ideal, rational, competitive economic game, one strategy is to "grow the pie" and as a result capture larger economic gains even if your proportion of the market remains the same (or even shrinks).
but when it comes to the real world, with all its complexity, we consider many more consequences than just the economic one (the profit motive).
to answer the false dichotomy (the last question), we care about both. we want fairness (not perfect equality) and we want less poverty. and yes, that's entirely possible and should be pursued rigorously and with singular focus.
The total size of the pie influences prices: if people have more money this by itself can cause inflation. See for example housing in San Francisco. Some people are forces to move, eventhough they have lived in the same house for years.
Housing prices in the neighbourhood go up, because potential buyers have a large piece of the pie. This causes average house prices to rise, which causes taxes to rise.
Suddenly the original piece of the pie is no longer enough to afford the house you always lived in.
With regards 2, the gap between most people earnings and house prices, has been rising steadily for years. It looks like the pie is getting bigger while people's share grows smaller faster.
There is a strong case to be against relative inequality.
What happens when the next difference is not yatchs, but something substantially different like access to longevity medicine, bionic instrumentation, genetic engineering, armament, whatever.
The great problem of some people being subdued to others clearly stems from the difference in power between them. Marx accounts that an English capitalist of his time could command 3 thousand servants, and as soon as he took them to america, literally all of them scrambled because they didn't have a dependency on him any more.
Not only that, but, there is a big question on why is this happening at all. Is it because the upper classes are better at tax dodging? Is it because its just how capitalism normally works and provides the best results? Is it because we have a crushing difference on how the State benefits one over others?
These are open questions, even Capital by Piketty doesnt have clear answers.
When the income comes from free trade, then the value comes from increasing the pie. When the income comes from forcible exchanges (such as taxation) then the value comes from transference.
I don’t think the total size of the pie matters so much as the proportion.
Also, it’s relative positioning that determines happiness—i’d much rather live in a place where I can look my neighbor in the eye than one where I can leverage my privileges to provide myself many times a better life than my neighbor. I’m american; my quality of life could plummit without affecting my happiness much at all. But I have no idea what could compensate for someone living on my stoop in a tent.
2. Wealth isn't a fixed pie, but power is (also, real estate).
3. In fact, happiness correlates more strongly with relative income than absolute income.
As an aside, I think that multigenerational wealth is particularly corrosive to society - I would be happy to accept extremely high inequality as long as it couldn't be inherited.
No matter how large the pie is, we might question how it is to be carved up. The size of the pie doesn't answer the question of who gets to eat it. If it grows and grows, we still make a decision as to how to distribute that growth.
1) Capitalism is creating commodities, like corn, and then shipping them. Picking one billion corn stalks is a lot more cost and effort than picking one corn stalk.
With software nowadays, you create the first product, and then with the push of a button, can duplicate and distribute it to billions, almost instantly, almost for free. What this means is you are not really making a commodity any more. Which means that in those parts of societies where this mode of production prevails, you're not even really working within a system of capitalism any more. The system of production outgrows the economic system it is in, just like town trade and manufacture outgrew feudalism centuries ago.
2/3) The helpful thing is to look at what is actually happening, as in a scientific experiment. The real world is not people sitting on top of piles of money, like a dragon in some fairy tale. Those who get the fruit of other's labor by rentier means - landlords, lenders and most importantly stockholders and owners, can only spend so much on luxury goods. They also need only so much as that aforementioned stacks of Credit Suisse gold bars stored somewhere for a rainy day. Most of the money is reinvested.
Where is the money invested? New construction projects, new companies, new loans - or further capital for existing projects. At companies owned, San Francisco apartments etc., more and more of wages go to profit and rent, as that is necessary for inequality. So the worker has less money to buy commodities. But more and more capital is being spent to build more and more commodities. The workers/consumers can not buy these increasing commodities made by the more enriched investors. Credit can kick the can down the road for a time, but if things don't go back to equilibrium, things get worse (see the 2008 taxpayer TARP bailout of banks, 2000 dot-bomb crash etc.)
There's a documentary called the One Percent, where a conversation between Bill Gates Sr., Warren Buffett and Chuck Collins (Oscar Meyer heir) is retold. He is talking about the inheritance tax (now corporate spinned to be called the death tax) and says if things are as unequal as they are now without an inheritance tax, what will happen when one does happen?
I myself don't think there's some liberal, social democratic solution. Idle class heirs have this self-destructive tendency to pull more and more power to themselves, to the point where they begin to undermine their own long-term power. At some point a very radical change comes. That has been the history of the past centuries. The US depression of the 1930s was so long ago, it's hard for Americans to fathom it, and I would guess most people think it could never happen again, but it could. It could even be worse.
regarding #2 and 3 - there is some sort of social psychological principle where it doesn't matter if the pie has been made bigger. You will end up with discontent if the inequality happens nonetheless. So while it may not be rational, you still have to avoid it unless you want French Revolution scenarios.
Changing the graph from "Share %" to "Average Income or Wealth" shows a much more optimistic looking chart, with every country ramping upwards, almost at an exponentially positive rate.
The world as a whole is moving away from poverty and quality of life is improving which IMO is the most important metric here. Far more important to the average person than the relative wealth ratios at the top vs the bottom, which yes I know will skew the bottom end upwards in these averages, but regardless is still on an upward trajectory overall.
This should be the primary metric which success is measured by. And I hope in the effort to balance the wealth ratios this progress isn't crippled in the name of some abstract concept of equality.
Averages can be troublesome. Compare Population A where 9 people have $1 each, and one person has $100, to Population B where 9 people have $5 each and one person has $40. Which population is poorer? Which would you rather live among?
EDIT:
How about Population C, where 9 people have $10 each and one person has $10,000?
What do you mean when you say success, progress or upwards?
Here's a hypothetical: If a person is moved from a situation where they have no money, but the food, services and mobility they need for a somewhat comfortable and stable life to a system of employment that is less stable and creates dependency on this employmenet is that progress? That person or family might have moved out of extreme poverty but is their situation improved?
I suppose my underlying point is a critique of how wealth and quality of life are connected. People in Cuba get $20 a month but they have have free healthcare and housing. I spend $20 a day and can't afford healthcare and worry every month about how I'm going to pay rent.
How much of the world is moving towards a situation where we're unable to see a doctor and hold down two or three jobs to make rent in a house we could never afford? Is this an upward trend?
It _is_ incredibly positive how the world economic system has been improving poverty in some of the most impoverished areas in the world. However, I don't think we can look at an average number and ignore concerns at the top end of the curve where many life quality measures and wealth accumulation have been going backwards.
The world economy isn't homogeneous, and what we may be looking at is that the current system is pretty good at taking people in economic/industrialized state A -> B, but bad at going from B -> C. If that's the case, sooner or later more and more people will arrive at state B and we will have a problem. It's even more of a problem if we get to B and it has people slipping back to state A in life qualitative measures (irrespective of imperfect quantitative measures like GDP...).
Are you sure you didnt select average income for the top 1% (which is the default on the left)
Switch to middle 40% and it will be still an increase but definitely does not look exponential - which most likely is the main point of the site creators
Depends on which average. In the case of very large wealth inequality the mean is going to make the picture a lot rosier than the median. I’d posit the average person cares more about the median than the mean as well.
progress has no bounds. it's like water, finding a route where none existed before. even if you try to dam up some portion, the pressure mounts, and the dam breaks. do not worry about stifling advancement, especially through economic means.
when it comes to wealth (in)equality, you basically want to balance greed on one side and anger on the other. sure, allow the greedy to amass a little weath to promote their playing by the rules, but only just enough for those ends. and the other side, make sure wealth is distributed enough that people feel collectively prosperous, so we don't have riots and the like (fairer wealth distribution should come from better ways to more equally value the work of all people, not just that of gatekeepers and rent-seekers; and it should especially not come from simplistic wealth redistribution schemes like universal basic income).
wealth inequality has risen sharply over the past 50 years. whether you're a lefty or a righty, most people agree that it's time to level that playing field. there's absolutely no need to worry about stifling progress as we do that.
The average would or at least could be a rather poor metric, most people could get poorer and the average could still rise. Besides that people certainly care a lot about inequality and, in my opinion, that is absolutely justified. You don't become a billionaire by producing goods worth billions with your own hands, you become one by letting a lot of people work on the factory floors and taking a share from the value they produce. And because you can, you don't take a share that makes you ten times better of than your workers as compensation for the risks you took, you take a share that makes you thousands of times better of.
I agree mostly. The narrative that "the world is being robbed by the rich" is far from being true.
Still, its a problem that we don't understand yet, and we have no economic model to solve. Milton Friedman's economic paradigm does not help. We need something new.
The top 10% share and top 1% share are increasing. The middle 40% and bottom 50% have gotten worse. The data in some of these graphs are for as few as three countries.
It paints a picture of the rich milking the rest of the world for wealth. It does not paint a picture of global improvement for the commoner. (Though, tbf, there isn't data on quite a lot of countries, so we really don't know.)
I think ratio of top to bottom does matter, or can matter. I don't really care how rich the rich are, but I do care that upward pressure on size and amenities for housing in the US means that there is a long standing (going back decades) shortage of genuinely affordable housing in the US. There are people who are homeless in the US in part because they can't find anything for $400 or less a month in rent. We have largely done away with very basic housing, such as SROs and boarding houses. We tore a lot of those down (up to 80% of them in some cities) when the Baby Booomers were coming of age and didn't need something that cheap. We never rebuilt.
So, the US suffers from this idea that all housing needs to be appropriate for a family of four or five while our demographic has moved away from the nuclear family. We have a lot more single people putting off marriage, couples putting off having children or not having them at all or only having one child, seniors whose kids have all moved out, etc. But we don't really have housing designed for the needs of 1 to 3 people.
If we had strong policies to create enough very basic housing to house around 2 percent* of the population, then I likely would agree that I don't really care how rich the rich are compared to me. The problem is that the rich are the only ones being served here. There are huge challenges for the average person in the US.
I think the rich folks at the top are fools for doing this. This is the kind of thing that leads to bloody revolutions.
I won't be leading some bloody revolution. I am doing all in my power to reverse such trends. But I am an incredibly poor divorced single mom with health problems and adult special needs kids that still live with me. There are substantial limits on what I am likely to accomplish.
Doing a little blogging and making comments on forums is the majority of what I can do about this at the moment. Currently, I am also trying to put out flyers locally to promote some of my blogs to try to help put a dent in the high rates of poverty in the town I moved to. Unemployment and homelessness are rampant here.
But I am new to town and I lack connections and have credibility challenges. People think my "how to make money writing online" site is probably a scam. People don't want to approve the flyers for it. When they do get approved, people who see the flyers remain skeptical.
So, the reality is that the fools at the top who are milking the majority for money are the ones with the most power for trying to reverse such trends in some way (and, no, basic income is not the answer -- that is a lazy concept and won't work). I won't be leading the bloody revolution, but if it does happen, I will kind of sit back and laugh at the "victims" of it who brought it on themselves. Cuz, duh, you could see that coming from miles away and did nothing about it, you greedy dumbasses.
I am not talking about morality. I am talking about enlightened self interest here. (A la Henry Ford wanting all of his employees to be able to afford to buy a car.)
For those not into (macro-)economics but willing to
dabble some more, a few more sources included at the bottom.
Enough to last you a scientific lifetime. If your neural net gives meaningful predictions of how institutions, inequality and other measures predict or explain growth or well-being, contact your local Peter H. Lindert, Geoff Williamson or Daron Acemoglu. Know any (worldwide, historic) datasets on institutional arrangements: please comment!
There are a lot of open questions in economic history and many, many more worldwide datasets taking the long view available. Used to be more theory and (econo)metrics than data in growth economics, finally it is starting to come around. Thank the scientists taking the time to create those datasets. Not the easiest route, nor the quickest to tenure so it takes those special ones to take it up.
Ok. So I looked into it and I had my "OHHH!!" moment.
It seems income/wealth inequality got magnified because of the number of opportunities went exponentially higher. Those who were able, took advantage of those opportunities if they had education, business acumen, surplus income, liquid wealth, or were fortunate enough to have ownership in an industry that was not valued very highly before and became very valuable later.
Everybody else got left behind. The numbers everyone seems to be talking about day in and day out is the top 1%. What we should really be looking at is the bottom 50%. How did the bottom 50% end up from owning 20% of the wealth in 1980 and going to 5% of the wealth today?
They never had anything (like a door or opportunity or a donation box) that could collect some of that wealth flowing from A to B. And that has stifled opportunities for the middle class of the population.
The interplay between wealth and income is a hard one to navigate, but I think important.
Part of the economic story of the last generation (IMO) is embedded in this interplay. Financialization is largely the process of turning future income into current assets. EG, I buy a house, get a house and a mortgage. My wealth is net 0. One house owned. One house-value owed. Part of my future income is now someone else's current asset. They also net to 0 change (mirroring my balance sheet). Yet obviously, something somewhere has changed.
Lending and creating money are interlinked, as is inflation. Monetarists tend towards macroeconomic thinking, and default to regarding of inflation as a single thing. In reality, inflation is microeconomic. More real estate lending, higher real estate prices. Also, "inflation" as an actual phenomenon is not simply devaluation. It is all price and market size increases, including increases in "quality and quantity". More real estate lending, more/bigger houses. Another striking example is american universities. More student loans, more expensive tuition, fancier uni experiences, more students. All that is "inflation" in the "consequences of money supply^" sense.
Another aspect that I would be interested in seeing approached is "inflation by income level." I suspect that this is increasingly important, especially because of housing cost fluctuations and trends. If 40% of your income is spent on housing, a 25% increase in house prices represents 10% inflation assuming all other prices remain constant. Similar calculation for college and such. Your inflation could be 5% pa, while the average inflation is 0%. This is happening now where I live. People's spending habits are very dependant by social-wealth class, so I think it would be worth trying to generate class specific inflation rates. I expect income inequality growth would look faster this way.
^I'm alluding to Firedman's "Inflation is always and everywhere a monetary phenomenon" though I've defined inflation differently to the macroeconomic/monetarist standard which explicitly excluded increases in "quality and quantity." I think it still holds, as long as you swap "always" with "often" which might even be necessary for Milton's.
Wealth inequality changed drastically between 1900 and now. According to the graph, in 1901, the U.K.'s top 1% controlled 73.8% of the nation's wealth. Today it's about 20%.
I wonder what factors caused that change. Wars and emigration maybe have something to do with it?
I think median statistics would enhance the insight available through this tool.
Averages are not particularly useful when confounded by the very shifting distributional patterns this is attempting to illuminate.
I'm the median Chinese worker. Per-adult national wealth has been exploding since 1987. The bottom 50% share of wealth and income has been plummeting, so inequality has been growing, too. But I'm a lot better off than my counterpart 30 years ago, aren't I?
Do I read this correctly in seeing that Wealth Inequality section in the United States shows the top 10% have 73% of wealth, the next 40% of people have 27% of the wealth and the bottom 50% are effectively living pay cheque to pay cheque and have 0 (or slightly negative wealth)?
As in the average of the lower 50% debt equals savings?
This was shared by the New York Times regarding the revelations of the "Paradise Papers." For example, on this site you can explore global inequality - consider how recently the elite have had wealth growth rates nearly double that of the total wealth growth rate.
Wealth is created by people providing products and services to other people and it is not a static quantity "distributed" equally or not equally.
For something as dynamic as wealth is impossible to give any representation of its "distribution".
Neither it is useful to even speak if "inequality".
The idea of "distributing wealth" is the idea based on communism to steal property from those who have it and give it to those who do not have it.
It is partially implemented in income tax systems all over the world.
That fact does not justify its criminal origins.
And it is so often propagated to smart online boys to make them more "fit" for the society in which they are to yell on those who have it, in order to spread it to those who do not have it.
Instead of asking other people's property to become your property without giving them exchange (which is basic of crime) how about doing something helpful?
Maybe those people who belong to the group of not having it "equal" need better environment? Better education? Better chances for survival?
You cannot get better chance for survival by robbing other people's hard earned wealth. It is not fair. You have a car, I do not have a car, so let me rob you. That is criminal.
But you can get better chances for survival with education, knowledge and training to become better producer and service provider.
Each of us is both the producer and service provider. We are producing products and services for other people, so we help people, and we are creating wealth.
But those writing this kind of nonsense reports wish to sit behind their TV without creating anything for other people and get the money from "social funds" to support their parasitic lives.
That is what those people want who are yelling at you "look at the world, it is not equal".
Top 1% isn't the right metric for finding the problems we want to identify. In certain US states like new mexico, the top %1 is 230k, which any physician could reasonably make. Are we trying to discourage physicians?
The problem with income inequality is people abusing their capital (via compounding interest or political influence) to make more capital. I suspect that applies to the top .01%.
This seems like a misleading graph. The map compares income share to _area_? Wouldn't comparing to density or capita be more helpful?
I happen to know China has more population so seeing it lighter says something to me, but having a better way to compare to the number of people would be helpful.
[+] [-] tuna-piano|8 years ago|reply
2. The whole idea of inequality, while potentially useful, kind of assumes a fixed pie. The question is phrased as, "What percent of the total income pie did the 1% take" and not "How much pie did the top 1% of people produce to make the overall pie bigger?". I don't think either mentality is totally correct, but both are vitally important to understand (and the second belief is non-obvious to many). Did Steve Jobs producing the iPhone (and becoming a billionaire) take any of the poor people's money, or did it increase the overall output of the country? Steve jobs making the iPhone certainly made the country more unequal, but it also made the economy bigger and the country better off.
3. Does anyone care about equality, or do people care about poverty? Would a world where 1% of people had 100 yachts but 99% of people each had 1 yacht bother you? Would you rather live in a poor equal country or a rich unequal country?
[+] [-] BearGoesChirp|8 years ago|reply
Enough inequality allows information control. Enough information control allows government control.
Overall, if things were constantly getting better, I doubt people would care. But once things start stagnating for those at the bottom, they begin to consider not playing by the current set of rules.
[+] [-] frandroid|8 years ago|reply
No. The idea of income inequality assumes that no matter the size of the pie, everyone should have a decent slice of pie that lets them live comfortably.
Industrialization was supposed to reduce the amount of hours we work and increase our quality of life. We seemed to have reached a floor at 40/50 hours a week and many many people are struggling to make ends meet, even if the richest countries in the world. There's a problem.
[+] [-] Chinjut|8 years ago|reply
[+] [-] eighthnate|8 years ago|reply
But the problem is that anyone can build whatsapp. It's not technologically sophisticated or difficult to do.
> but in today's world you can build 1 billion times the communication tools as someone else.
Which depends on market access, free time ( wealth ) and most importantly - access to capital. Most people in the world don't have access to it.
> 2. The whole idea of inequality, while potentially useful, kind of assumes a fixed pie.
That is an argument. But it really doesn't matter if the pie grows if a small fraction of the population gets a greater share of the larger pie.
> 3. Does anyone care about equality, or do people care about poverty? Would a world where 1% of people had 100 yachts but 99% of people each had 1 yacht bother you?
Yes, if yachts = power. The problem in america is that money = power and more importantly, now money = speech.
> Would you rather live in a poor equal country or a rich unequal country?
Neither? You are offering a false dichotomy. It's the same argument posed by monarchists centuries ago. Either we have divine right monarchy or anarchy/complete chaos. How about democratic representative government?
You are offering us two extremes and falsely claiming those are our only two options. It isn't. Extreme poverty and extreme economic inequality are both terrible systems.
[+] [-] clairity|8 years ago|reply
yes, if you are playing an ideal, rational, competitive economic game, one strategy is to "grow the pie" and as a result capture larger economic gains even if your proportion of the market remains the same (or even shrinks).
but when it comes to the real world, with all its complexity, we consider many more consequences than just the economic one (the profit motive).
to answer the false dichotomy (the last question), we care about both. we want fairness (not perfect equality) and we want less poverty. and yes, that's entirely possible and should be pursued rigorously and with singular focus.
[+] [-] ako|8 years ago|reply
Housing prices in the neighbourhood go up, because potential buyers have a large piece of the pie. This causes average house prices to rise, which causes taxes to rise.
Suddenly the original piece of the pie is no longer enough to afford the house you always lived in.
[+] [-] CJefferson|8 years ago|reply
[+] [-] conanbatt|8 years ago|reply
What happens when the next difference is not yatchs, but something substantially different like access to longevity medicine, bionic instrumentation, genetic engineering, armament, whatever.
The great problem of some people being subdued to others clearly stems from the difference in power between them. Marx accounts that an English capitalist of his time could command 3 thousand servants, and as soon as he took them to america, literally all of them scrambled because they didn't have a dependency on him any more.
Not only that, but, there is a big question on why is this happening at all. Is it because the upper classes are better at tax dodging? Is it because its just how capitalism normally works and provides the best results? Is it because we have a crushing difference on how the State benefits one over others?
These are open questions, even Capital by Piketty doesnt have clear answers.
[+] [-] WalterBright|8 years ago|reply
[+] [-] retailbuyout|8 years ago|reply
Also, it’s relative positioning that determines happiness—i’d much rather live in a place where I can look my neighbor in the eye than one where I can leverage my privileges to provide myself many times a better life than my neighbor. I’m american; my quality of life could plummit without affecting my happiness much at all. But I have no idea what could compensate for someone living on my stoop in a tent.
[+] [-] s17n|8 years ago|reply
2. Wealth isn't a fixed pie, but power is (also, real estate).
3. In fact, happiness correlates more strongly with relative income than absolute income.
As an aside, I think that multigenerational wealth is particularly corrosive to society - I would be happy to accept extremely high inequality as long as it couldn't be inherited.
[+] [-] Chinjut|8 years ago|reply
[+] [-] Florin_Andrei|8 years ago|reply
No. It simply says group A has a big pile of stuff, whereas B has a small pile. Which is factually true.
It's about piles, not pies.
Sorry for the awkwardly mixed metaphors.
[+] [-] balance_factor|8 years ago|reply
With software nowadays, you create the first product, and then with the push of a button, can duplicate and distribute it to billions, almost instantly, almost for free. What this means is you are not really making a commodity any more. Which means that in those parts of societies where this mode of production prevails, you're not even really working within a system of capitalism any more. The system of production outgrows the economic system it is in, just like town trade and manufacture outgrew feudalism centuries ago.
2/3) The helpful thing is to look at what is actually happening, as in a scientific experiment. The real world is not people sitting on top of piles of money, like a dragon in some fairy tale. Those who get the fruit of other's labor by rentier means - landlords, lenders and most importantly stockholders and owners, can only spend so much on luxury goods. They also need only so much as that aforementioned stacks of Credit Suisse gold bars stored somewhere for a rainy day. Most of the money is reinvested.
Where is the money invested? New construction projects, new companies, new loans - or further capital for existing projects. At companies owned, San Francisco apartments etc., more and more of wages go to profit and rent, as that is necessary for inequality. So the worker has less money to buy commodities. But more and more capital is being spent to build more and more commodities. The workers/consumers can not buy these increasing commodities made by the more enriched investors. Credit can kick the can down the road for a time, but if things don't go back to equilibrium, things get worse (see the 2008 taxpayer TARP bailout of banks, 2000 dot-bomb crash etc.)
There's a documentary called the One Percent, where a conversation between Bill Gates Sr., Warren Buffett and Chuck Collins (Oscar Meyer heir) is retold. He is talking about the inheritance tax (now corporate spinned to be called the death tax) and says if things are as unequal as they are now without an inheritance tax, what will happen when one does happen?
I myself don't think there's some liberal, social democratic solution. Idle class heirs have this self-destructive tendency to pull more and more power to themselves, to the point where they begin to undermine their own long-term power. At some point a very radical change comes. That has been the history of the past centuries. The US depression of the 1930s was so long ago, it's hard for Americans to fathom it, and I would guess most people think it could never happen again, but it could. It could even be worse.
[+] [-] jackmott|8 years ago|reply
[+] [-] dmix|8 years ago|reply
The world as a whole is moving away from poverty and quality of life is improving which IMO is the most important metric here. Far more important to the average person than the relative wealth ratios at the top vs the bottom, which yes I know will skew the bottom end upwards in these averages, but regardless is still on an upward trajectory overall.
This should be the primary metric which success is measured by. And I hope in the effort to balance the wealth ratios this progress isn't crippled in the name of some abstract concept of equality.
[+] [-] ryandrake|8 years ago|reply
EDIT:
How about Population C, where 9 people have $10 each and one person has $10,000?
[+] [-] evanlivingston|8 years ago|reply
Here's a hypothetical: If a person is moved from a situation where they have no money, but the food, services and mobility they need for a somewhat comfortable and stable life to a system of employment that is less stable and creates dependency on this employmenet is that progress? That person or family might have moved out of extreme poverty but is their situation improved?
I suppose my underlying point is a critique of how wealth and quality of life are connected. People in Cuba get $20 a month but they have have free healthcare and housing. I spend $20 a day and can't afford healthcare and worry every month about how I'm going to pay rent.
How much of the world is moving towards a situation where we're unable to see a doctor and hold down two or three jobs to make rent in a house we could never afford? Is this an upward trend?
[+] [-] tastyfreeze|8 years ago|reply
https://www.youtube.com/watch?v=RUwS1uAdUcI
[+] [-] david-gpu|8 years ago|reply
[+] [-] goptimize|8 years ago|reply
[+] [-] dv_dt|8 years ago|reply
The world economy isn't homogeneous, and what we may be looking at is that the current system is pretty good at taking people in economic/industrialized state A -> B, but bad at going from B -> C. If that's the case, sooner or later more and more people will arrive at state B and we will have a problem. It's even more of a problem if we get to B and it has people slipping back to state A in life qualitative measures (irrespective of imperfect quantitative measures like GDP...).
[+] [-] andreasklinger|8 years ago|reply
Switch to middle 40% and it will be still an increase but definitely does not look exponential - which most likely is the main point of the site creators
[+] [-] meheleventyone|8 years ago|reply
[+] [-] clairity|8 years ago|reply
when it comes to wealth (in)equality, you basically want to balance greed on one side and anger on the other. sure, allow the greedy to amass a little weath to promote their playing by the rules, but only just enough for those ends. and the other side, make sure wealth is distributed enough that people feel collectively prosperous, so we don't have riots and the like (fairer wealth distribution should come from better ways to more equally value the work of all people, not just that of gatekeepers and rent-seekers; and it should especially not come from simplistic wealth redistribution schemes like universal basic income).
wealth inequality has risen sharply over the past 50 years. whether you're a lefty or a righty, most people agree that it's time to level that playing field. there's absolutely no need to worry about stifling progress as we do that.
[+] [-] danbruc|8 years ago|reply
[+] [-] conanbatt|8 years ago|reply
Still, its a problem that we don't understand yet, and we have no economic model to solve. Milton Friedman's economic paradigm does not help. We need something new.
[+] [-] unknown|8 years ago|reply
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[+] [-] vandweller|8 years ago|reply
[+] [-] Mz|8 years ago|reply
It paints a picture of the rich milking the rest of the world for wealth. It does not paint a picture of global improvement for the commoner. (Though, tbf, there isn't data on quite a lot of countries, so we really don't know.)
I think ratio of top to bottom does matter, or can matter. I don't really care how rich the rich are, but I do care that upward pressure on size and amenities for housing in the US means that there is a long standing (going back decades) shortage of genuinely affordable housing in the US. There are people who are homeless in the US in part because they can't find anything for $400 or less a month in rent. We have largely done away with very basic housing, such as SROs and boarding houses. We tore a lot of those down (up to 80% of them in some cities) when the Baby Booomers were coming of age and didn't need something that cheap. We never rebuilt.
So, the US suffers from this idea that all housing needs to be appropriate for a family of four or five while our demographic has moved away from the nuclear family. We have a lot more single people putting off marriage, couples putting off having children or not having them at all or only having one child, seniors whose kids have all moved out, etc. But we don't really have housing designed for the needs of 1 to 3 people.
If we had strong policies to create enough very basic housing to house around 2 percent* of the population, then I likely would agree that I don't really care how rich the rich are compared to me. The problem is that the rich are the only ones being served here. There are huge challenges for the average person in the US.
I think the rich folks at the top are fools for doing this. This is the kind of thing that leads to bloody revolutions.
I won't be leading some bloody revolution. I am doing all in my power to reverse such trends. But I am an incredibly poor divorced single mom with health problems and adult special needs kids that still live with me. There are substantial limits on what I am likely to accomplish.
Doing a little blogging and making comments on forums is the majority of what I can do about this at the moment. Currently, I am also trying to put out flyers locally to promote some of my blogs to try to help put a dent in the high rates of poverty in the town I moved to. Unemployment and homelessness are rampant here.
But I am new to town and I lack connections and have credibility challenges. People think my "how to make money writing online" site is probably a scam. People don't want to approve the flyers for it. When they do get approved, people who see the flyers remain skeptical.
So, the reality is that the fools at the top who are milking the majority for money are the ones with the most power for trying to reverse such trends in some way (and, no, basic income is not the answer -- that is a lazy concept and won't work). I won't be leading the bloody revolution, but if it does happen, I will kind of sit back and laugh at the "victims" of it who brought it on themselves. Cuz, duh, you could see that coming from miles away and did nothing about it, you greedy dumbasses.
I am not talking about morality. I am talking about enlightened self interest here. (A la Henry Ford wanting all of his employees to be able to afford to buy a car.)
* http://projectsro.blogspot.com/2017/10/the-two-percent-solut...
[+] [-] wjnc|8 years ago|reply
Enough to last you a scientific lifetime. If your neural net gives meaningful predictions of how institutions, inequality and other measures predict or explain growth or well-being, contact your local Peter H. Lindert, Geoff Williamson or Daron Acemoglu. Know any (worldwide, historic) datasets on institutional arrangements: please comment!
There are a lot of open questions in economic history and many, many more worldwide datasets taking the long view available. Used to be more theory and (econo)metrics than data in growth economics, finally it is starting to come around. Thank the scientists taking the time to create those datasets. Not the easiest route, nor the quickest to tenure so it takes those special ones to take it up.
[1] http://gpih.ucdavis.edu/ - Income History Group at UC Davis
[2] http://www.rug.nl/ggdc/productivity/pwt/ - Penn World Table currently at Rijksuniversiteit Groningen
[3] https://data.worldbank.org/data-catalog/world-development-in... - World Development Indicators at The World Bank
[4] http://www.macrohistory.net/data/ - Jordà-Schularick-Taylor Macrohistory Database
[+] [-] nashashmi|8 years ago|reply
It seems income/wealth inequality got magnified because of the number of opportunities went exponentially higher. Those who were able, took advantage of those opportunities if they had education, business acumen, surplus income, liquid wealth, or were fortunate enough to have ownership in an industry that was not valued very highly before and became very valuable later.
Everybody else got left behind. The numbers everyone seems to be talking about day in and day out is the top 1%. What we should really be looking at is the bottom 50%. How did the bottom 50% end up from owning 20% of the wealth in 1980 and going to 5% of the wealth today?
They never had anything (like a door or opportunity or a donation box) that could collect some of that wealth flowing from A to B. And that has stifled opportunities for the middle class of the population.
[+] [-] vijayr|8 years ago|reply
Does this mean the bottom 50% in the US are in the red?
[+] [-] dalbasal|8 years ago|reply
Part of the economic story of the last generation (IMO) is embedded in this interplay. Financialization is largely the process of turning future income into current assets. EG, I buy a house, get a house and a mortgage. My wealth is net 0. One house owned. One house-value owed. Part of my future income is now someone else's current asset. They also net to 0 change (mirroring my balance sheet). Yet obviously, something somewhere has changed.
Lending and creating money are interlinked, as is inflation. Monetarists tend towards macroeconomic thinking, and default to regarding of inflation as a single thing. In reality, inflation is microeconomic. More real estate lending, higher real estate prices. Also, "inflation" as an actual phenomenon is not simply devaluation. It is all price and market size increases, including increases in "quality and quantity". More real estate lending, more/bigger houses. Another striking example is american universities. More student loans, more expensive tuition, fancier uni experiences, more students. All that is "inflation" in the "consequences of money supply^" sense.
Another aspect that I would be interested in seeing approached is "inflation by income level." I suspect that this is increasingly important, especially because of housing cost fluctuations and trends. If 40% of your income is spent on housing, a 25% increase in house prices represents 10% inflation assuming all other prices remain constant. Similar calculation for college and such. Your inflation could be 5% pa, while the average inflation is 0%. This is happening now where I live. People's spending habits are very dependant by social-wealth class, so I think it would be worth trying to generate class specific inflation rates. I expect income inequality growth would look faster this way.
^I'm alluding to Firedman's "Inflation is always and everywhere a monetary phenomenon" though I've defined inflation differently to the macroeconomic/monetarist standard which explicitly excluded increases in "quality and quantity." I think it still holds, as long as you swap "always" with "often" which might even be necessary for Milton's.
[+] [-] fragsworth|8 years ago|reply
I wonder what factors caused that change. Wars and emigration maybe have something to do with it?
[+] [-] twoodfin|8 years ago|reply
Averages are not particularly useful when confounded by the very shifting distributional patterns this is attempting to illuminate.
I'm the median Chinese worker. Per-adult national wealth has been exploding since 1987. The bottom 50% share of wealth and income has been plummeting, so inequality has been growing, too. But I'm a lot better off than my counterpart 30 years ago, aren't I?
[+] [-] blobbers|8 years ago|reply
As in the average of the lower 50% debt equals savings?
[+] [-] dpflan|8 years ago|reply
[+] [-] lumberjack|8 years ago|reply
https://www.ted.com/talks/michael_sandel_why_we_shouldn_t_tr...
[+] [-] rcdwealth|8 years ago|reply
For something as dynamic as wealth is impossible to give any representation of its "distribution".
Neither it is useful to even speak if "inequality".
The idea of "distributing wealth" is the idea based on communism to steal property from those who have it and give it to those who do not have it.
It is partially implemented in income tax systems all over the world.
That fact does not justify its criminal origins.
And it is so often propagated to smart online boys to make them more "fit" for the society in which they are to yell on those who have it, in order to spread it to those who do not have it.
Instead of asking other people's property to become your property without giving them exchange (which is basic of crime) how about doing something helpful?
Maybe those people who belong to the group of not having it "equal" need better environment? Better education? Better chances for survival?
You cannot get better chance for survival by robbing other people's hard earned wealth. It is not fair. You have a car, I do not have a car, so let me rob you. That is criminal.
But you can get better chances for survival with education, knowledge and training to become better producer and service provider.
Each of us is both the producer and service provider. We are producing products and services for other people, so we help people, and we are creating wealth.
But those writing this kind of nonsense reports wish to sit behind their TV without creating anything for other people and get the money from "social funds" to support their parasitic lives.
That is what those people want who are yelling at you "look at the world, it is not equal".
[+] [-] 11thEarlOfMar|8 years ago|reply
[+] [-] ulkram|8 years ago|reply
The problem with income inequality is people abusing their capital (via compounding interest or political influence) to make more capital. I suspect that applies to the top .01%.
[+] [-] Dowwie|8 years ago|reply
[+] [-] collinmanderson|8 years ago|reply
I happen to know China has more population so seeing it lighter says something to me, but having a better way to compare to the number of people would be helpful.
[+] [-] known|8 years ago|reply
[+] [-] kevmo|8 years ago|reply
[+] [-] gbajson|8 years ago|reply
Has anyone of you seen similar stats for the middle- and ancient ages?
[+] [-] bhollan|8 years ago|reply
[+] [-] unknown|8 years ago|reply
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