What is the Impact of Income Inequality on Social Problems?

[Al68]

I thought your point was based on a moral argument

Yes, it was, partially.

not on "because the founders said so".

That's right, I said no such thing. I was restating the historical argument used to justify government to do necessary things that can't feasibly be done without government.

So it is not that one is morally evil and the other not, but only that one is more evil than the other, and you draw your personal line of tolerance somewhere between them?

One is a necessary mild evil with no feasible alternative, ie less evil than any practical alternative, while the other is the same mild evil with a major evil added to it. It's like one guy jaywalking to save another pedestrian compared to someone jaywalking then blowing up a school bus. My "personal line of tolerance" would differentiate the two, yes.

But besides that, you are also saying that you find it less oppressive that the Federal Government derive the entirety of its income via the corrupt, protectionist system of import tariffs

Are you suggesting the current tax code is less oppressive for most Americans? Every one must tell government how much money they made, how they made it, and even how they spent it to avoid higher taxes. And people are forced to act as agents of the government to assist in tax collection from others against their will. Less oppressive than import tariffs, seriously?

While this may be a point that could be debated, I can't imagine anyone would suggest a return to the pre-Wilson tariff-based taxation system, given the nature and reach of trade today.

I suggested no such thing. There are much better alternatives. Especially if government didn't spend the bulk of its revenue violating the constitution.

 

[CRGreathouse]

There are much better alternatives.

Please elaborate!

 

[Al68]

This was in response to the limitations of the role of the government. True, garbage collection is sometimes jobbed out, but water service is, to the best of my knowledge, always under the municipal budget. Why? Could it be a matter of health and public safety? If we agree that this is the motivation for municipal water districts, what in the Constitution justifies a government role here?

It doesn't, so it would be unconstitutional for the federal government to interfere. The U.S. constitution is the federal government's charter, not a charter for any state or local government. They each have their own.

Or do you believe that municipal water districts are actually unconstitutional?

Huh? I'm unaware of any local government providing water service against its charter. If you're referring to the U.S. Constitution, that's not where state and local governments get their operating authority, and certainly provides no prohibition on any local municipality, or private company, providing water service.

Firstly, Ron Paul does want to abolish the EPA, so this might easily be considered a libertarian position. However, you do extend the role of government beyond law and order, and national defense. Where does the Constitution sanction the EPA, the USDA, or the FDA?

It authorizes some of the specific things they do. It also provides for the creation of federal departments to do them.

Right now, I am bending to the will of the pro-nuclear crowd because we are running out of choices. Why am I willing to suspend, to a degree, my extreme distrust of industry, in order to allow without objections the building of nuclear power plants? In two words: National Security. There is also public safety. Do you not agree that the ability to provide electrical power to the public, industry, and the commercial sector, is a matter of national security? If so, then how does the Constituiton void government participation here as a lending agency?

I didn't say it did, I just said that the federal government should only cover the costs of federal regulations involved. If that were the case, nuclear power would be profitable to the company, and to private lenders.

 

[Al68]

Please elaborate!

Sales tax, value added tax are a couple. An internet search would turn up others.

It seems pretty silly to suggest that a personal income tax is necessary when the U.S. went from literally nothing to the greatest power in the history of mankind without one.

 

[vertices]

Sales tax, value added tax are a couple. An internet search would turn up others.

It seems pretty silly to suggest that a personal income tax is necessary

Yes, ofcourse there are several ways for a government to raise funds - the issue really is (or should be) this: a fair society is a better one. If you look at Sweden for example, where income inequality is pretty much the lowest in the developed world, people are much happier. What more should a society aspire towards?

One of the reasons Sweden is so successful (both economically and socially) is because they have a progressive (in the sense that the tax is proportional to income) income tax.

 

[mheslep]

... If you look at Sweden for example, where income inequality is pretty much the lowest in the developed world, people are much happier

How do you know this ? How do you go about measuring happiness?

 

[vertices]

mheslep:

sorry, i wasn't exactly that tactful in the way I expressed myself. I've edited that post because I can imagine it might have been a bit offensive (although it totally wasn't meant to be). Can I ask you do the same please with your last post (ie. delete the quotation).

As regards Sweden and measuring happiness- this link maybe of interest: http://www.newstatesman.com/blogs/the-staggers/2010/03/rich-inequality-study-money

Also this one:
http://www.financialjesus.com/how-to-get-rich/top-10-happiest-countries/

 

[CRGreathouse]

Sales tax, value added tax are a couple. An internet search would turn up others.

All of the analyses of an income tax-replacing VAT that I've seen have shown that it would be prohibitively difficult to implement. Pity; it has many nice features.

 

[CRGreathouse]

As regards Sweden and measuring happiness- this link maybe of interest: http://www.newstatesman.com/blogs/the-staggers/2010/03/rich-inequality-study-money

That's amusingly quite opposite the results of the last study I had read on the topic, which suggested it was precisely income inequality (having more than your peers) that caused happiness, rather than income (having a lot period).

Becker & Posner have discussed this; I may post a link.

 

[mheslep]

mheslep:

sorry, i wasn't exactly that tactful in the way I expressed myself. I've edited that post because I can imagine it might have been a bit offensive (although it totally wasn't meant to be). Can I ask you do the same please with your last post (ie. delete the quotation).

deleted. BTW, I didn't take objection to tone, I took objection to the earlier statements made as fact: "Sweden is" and so on.

As regards Sweden and measuring happiness- this link maybe of interest: http://www.newstatesman.com/blogs/the-staggers/2010/03/rich-inequality-study-money

Also this one:
http://www.financialjesus.com/how-to-get-rich/top-10-happiest-countries/

Ok, there's something to discuss. I've seen the happiness polls long ago. How much stock do you put in such poles from the 'World Happiness Database', and conflicting comments such as :

10. Luxembourg – 7.6 points. Living in the worlds richest country inevitably puts a smile on your face!

and then

9. Guatemala – 7,6 points
[...]
56% of all Guatemalans live in poverty

For my part, not much.

 

[vertices]

That's amusingly quite opposite the results of the last study I had read on the topic, which suggested it was precisely income inequality (having more than your peers) that caused happiness, rather than income (having a lot period).

Becker & Posner have discussed this; I may post a link.

That maybe true for individuals - although, the article contends otherwise:

the rich take pleasure in others receiving money as it reduces their guilt over having more than others.

In any case, the argument is a utilitarian one. More equal societies are happier ones.

deleted. BTW, I didn't take objection to tone, I took objection to the earlier statements made as fact: "Sweden is" and so on.

Oh okay, I do think my use of the word 'evil' was inappropriate though. But what I wrote was factually uncontroversial (Lincoln, Madison, etc were all proponents of Mercantilism:

In spite of Adam Smith's repudiation of mercantilism, it was favored in the United States by such prominent figures as Alexander Hamilton[28], Henry Clay, Henry Charles Carey, and Abraham Lincoln...

And this ideology played a large part in making America a great power. As did the Marshall Plan (it wasn't charity, believe it or not - and again, this is totally uncontroversial).

Ok, there's something to discuss. I've seen the happiness polls long ago. How much stock do you put in such poles from the 'World Happiness Database', and conflicting comments such as :

and then



For my part, not much.

Why do you think they're conflicting?

If anything they exemplify the idea that you don't need money to be happy. And btw we're talking about income disparities not absolute numbers in poverty.

We are hardwired to dislike inequality - that is essentially why income inequality makes for a sadder society:(

 

[CRGreathouse]

We are hardwired to dislike inequality - that is essentially why income inequality makes for a sadder society:(

I certainly don't agree with this statement. I tend to think that income inequality (certeris paribus) is bad for societal happiness, but only because I think that absolute income does increase happiness, and with decreasing returns to scale (a bit more money makes poor man happier than the same amount to a rich man). This differs from the study I mentioned above (but does match Becker's opinion, as referenced above; I believe Posner differs, though).

 

[mheslep]

But what I wrote was factually uncontroversial (Lincoln, Madison, etc were all proponents of Mercantilism:

Absolutely, though Hamilton was the main advocate.

And this ideology played a large part in making America a great power.

No doubt, in its early years, as it did for Great Britain in its past.

As did the Marshall Plan (it wasn't charity, believe it or not - and again, this is totally uncontroversial).

Charity refers to motivation, a mindset. Clearly there were several issues at stake, but how can you possibly propose to eliminate all charity from the mindset of General Marshal who proposed it, or of all the legislators who voted for it at the time, or the millions of Americans they represented, and then refer to what can only be your opinion as uncontroversial?

Why do you think they're conflicting?

If anything they exemplify the idea that you don't need money to be happy.

No, the Luxemborg poll comment I referenced exemplifies the opposite. Again

10. Luxembourg – 7.6 points. Living in the worlds richest country inevitably puts a smile on your face!

I don't agree with that poll comment, but there it is none the less.

And btw we're talking about income disparities not absolute numbers in poverty.

This thread is, that poll does not reference disparity in the comments. In general, I argue that attempting to reduce assessment of the human condition to a few questions about 'are you happy?' is absurd on its face. If the answer was that simple, we could then toss out a large part of the literature of the ages that wrestle with the subject, and just pass around joints to everyone before asking if they were happy, guaranteeing a 100% positive response.

We are hardwired to dislike inequality - that is essentially why income inequality makes for a sadder society:(

Unsupportable. I saw the comment, the opinion, by the author of the New Statesman polemic. That doesn't make it a fact.

 

[vertices]

Absolutely, though Hamilton was the main advocate.

No doubt, in its early years, as it did for Great Britain in its past.

Indeed - and ofcourse the central feature of Mercentalism was the "import" in slaves and export of sugar and tobbacco.

refers to motivation, a mindset. Clearly there were several issues at stake, but how can you possibly propose to eliminate all charity from the mindset of General Marshal who proposed it, or of all the legislators who voted for it at the time, or the millions of Americans they represented, and then refer to what can only be your opinion as uncontroversial?

Yes, but I am not talking about the intentions of Gen Marshall nor those of the American public - I am talking about the economic system (that has since changed, but is even more ruthless today). The Plan did transfer a great deal of wealth from Europe to America - this is not an opinion.

Anyway, the point is simply this: the claim that personal income tax wasn't necessary to make America a great power it is evident, but this argument should never be made for obvious reasons.

, the Luxemborg poll comment I referenced exemplifies the opposite. Again
I don't agree with that poll comment, but there it is none the less.

This thread is, that poll does not reference disparity in the comments. In general, I argue that attempting to reduce assessment of the human condition to a few questions about 'are you happy?' is absurd on its face. If the answer was that simple, we could then toss out a large part of the literature of the ages that wrestle with the subject, and just pass around joints to everyone before asking if they were happy, guaranteeing a 100% positive response.

Ofcourse "happiness" is a subjective thing but the way it is quantified seems sensible to me (see: http://en.wikipedia.org/wiki/Gross_national_happiness#Qualitative_and_quantitative_indicators ).

So what I am saying is that in terms of "happiness", there may not be that much of a difference between a population in which 100% live in poverty vs a population in which 100% are very well off. It is inequality within a population that causes unhappiness. Overcourse the example I just used is a bit warped, but only to make the point.

. I saw the comment, the opinion, by the author of the New Statesman polemic. That doesn't make it a fact.

how is it a polemic? This is what it says:

A team of scientists from the California Institute of Technology and Trinity College Dublin have discovered that "the reward centres in the human brain respond more strongly when a poor person receives a financial reward than when a rich person does".

Perhaps most significantly, they found that this pattern of activity holds true even if the relevant brain is that of a rich person, rather than a poor person...

The author is simply reporting a finding. I am at a loss to see how you can possibly refer to the above as an "opinion" and "polemic".

 

[mheslep]

how is it a polemic? This is what it says:

The author is simply reporting a finding. I am at a loss to see how you can possibly refer to the above as an "opinion" and "polemic".

How is a lengthy article in the leftist New Statesmen a polemic because it includes a couple sentences from a recent scientific finding? The author provides a limited quote on a finding at Caltech:

"the reward centres in the human brain respond more strongly when a poor person receives a financial reward than when a rich person does"

and then proceeds to make a series of unfounded extrapolations and non-sequitors to support an agenda. In particular, the idea that we might enjoy giving as much as more than receiving does not justify this statement:

We are hardwired to dislike inequality - that is essentially why income inequality makes for a sadder society:(

 

[mheslep]

Indeed - and ofcourse the central feature of Mercentalism was the "import" in slaves and export of sugar and tobbacco.

No, slavery was incidental to the definition of Mercantilism, as its operation in other countries with no slavery demonstrated. Furthermore, though it made some few very rich, slavery does not get credit for a majority share of US 19th century economic progress even before the civil war as the vast economic superiority of the US North by the time of the civil war demonstrated. After the civil war and the end of slavery, US 19th century economic progress dwarfed everything that came prior.

 

[mheslep]

- I am talking about the economic system (that has since changed, but is even more ruthless today). The Plan did transfer a great deal of wealth from Europe to America - this is not an opinion.

Then that idea should be easy to support with a valid reference?

 

[vertices]

How is a lengthy article in the leftist New Statesmen a polemic because it includes a couple sentences from a recent scientific finding?

Erm, its not that lengthy now is it? And "leftists" supporting an "agenda"? Don't know whether to laugh or cry at that.

The author provides a limited quote on a finding at Caltech and then proceeds to make a series of unfounded extrapolations and non-sequitors to support an agenda.

Okay, here is the quotation in full:

Specifically, the team found that the reward centers in the human brain respond more strongly when a poor person receives a financial reward than when a rich person does. The surprising thing? This activity pattern holds true even if the brain being looked at is in the rich person's head, rather than the poor person's.

and consider:

They don't exclusively respond to the rewards that one gets as an individual, but also respond to the prospect of other individuals obtaining a reward.[/B]

the brain responds very differently to rewards obtained by others under conditions of disadvantageous inequality versus advantageous inequality. It shows [the findings] that the basic reward structures in the human brain are sensitive to even subtle differences in social context.[/B]

So what extrapolations are being made exactly?

And I hope you can see that it's not the evil communist author with the malign agenda making these 'extrapolations'.

In particular, the idea that we might enjoy giving as much as more than receiving does not justify this statement:

I'm using science (you know, statistically significant results from MRI scans and so forth) to justify that statement (the findings were published in Nature under the title "Neural evidence for inequality-averse social preferences"). What more do you want?

 

[vertices]

No, slavery was incidental to the definition of Mercantilism, as its operation in other countries with no slavery demonstrated. Furthermore, though it made some few very rich, slavery does not get credit for a majority share of US 19th century economic progress even before the civil war as the vast economic superiority of the US North by the time of the civil war demonstrated. After the civil war and the end of slavery, US 19th century economic progress dwarfed everything that came prior.

Well, a superpower doesn't become a superpower overnight. It's a gradual process - the vast amounts capital acquired through the slave trade gave America the economic clout it needed to assert itself on the world stage, a precursor to its current economic success. What tipped the balance in favour of America was War (Europe being devastated by it). As regards a reference - it is cited in the footnotes of a book I read a while ago by Noam Chomsky which I will try to borrow again from my local library - google isn't being that helpful in this regard. I think he made the assertion that the Marshall Plan was ultimatly a transfer of wealth from the American tax payers and some european nations to US banks and multinationals (ofcourse that's not what they were called back then).

 

[CRGreathouse]

As regards a reference - it is cited in the footnotes of a book I read a while ago by Noam Chomsky which I will try to borrow again from my local library - google isn't being that helpful in this regard. I think he made the assertion that the Marshall Plan was ultimatly a transfer of wealth from the American tax payers and some european nations to US banks and multinationals (ofcourse that's not what they were called back then).

An assertion by Noam Chomsky does not an "this is not an opinion" make.

 

[Pinu7]

After the civil war and the end of slavery, US 19th century economic progress dwarfed everything that came prior.

This is because of industrialization of the North during the Civil War.

Although, I agree that the abolishment of slaves did not hurt agricultural production very much since many African Americans were involved in sharecropping, which was very similar.

 

[Proton Soup]

An assertion by Noam Chomsky does not an "this is not an opinion" make.

yeah, i think the post war period is generally recognized as the golden age of the middle class in america.

 

[vertices]

An assertion by Noam Chomsky does not an "this is not an opinion" make.

well, yes I would generally agree with you - don't take authors' assertions as facts - check the sources. Not because authors have a tendency to lie (although some do) but because facts can be spun in a way that totally distorts the actual situation/idea.

However, in this particular case, Chomsky's assertion that capital was transferred to New York banks from Europe, cannot exactly be spun in any way - the figures should be readily available somewhere (although I couldn't find them on google).

But as I said, I'll try and look up source and let you know.

 

[CRGreathouse]

However, in this particular case, Chomsky's assertion that capital was transferred to New York banks from Europe, cannot exactly be spun in any way - the figures should be readily available somewhere (although I couldn't find them on google).

But as I said, I'll try and look up source and let you know.

It will be the figures that would convince me, not the assertion. But please do get back to us when you find the source -- and if there's something online, all the better.

 

[TheStatutoryApe]

I'm using science (you know, statistically significant results from MRI scans and so forth) to justify that statement (the findings were published in Nature under the title "Neural evidence for inequality-averse social preferences"). What more do you want?

It seemingly shows an inherent altruism. The problem here is that we can see a similar activity in the brains of gamblers (I need to get to bed, if you would like a source on this ask and I will look for one later). Gamblers are attracted to risk taking and, more specifically, the prospect of rewards; regardless of whether it is themselves or others. To a person who has millions (for instance) a few hundred dollars is a trifle but to see a man who has little or nothing receive such a reward triggers an "empathic" euphoria as the reward (to them nothing) is so great for the recipient. This study seems only to illustrate yet another venue (other than gambling) in which this reward triggered brain activity occurs. The idea that it is "inequality-averse" is extrapolating. Theoretically we could also surmise from this study (taken in context with other similar reward based brain activity studies) that inequality actually breeds altruism. When one person is more greatly pleased by seeing the less fortunate rewarded because they have little to gain themselves from such rewards they are more likely to be altruistic while persons who are financially (or otherwise) equal are perhaps at least as likely to perceive one another as competition. Then for a species of social animals seeking balance and stability inequality, which perhaps breeds a desire to see others succeed, would be preferable to equality, where your peers are all competitors.

 

[Proton Soup]

well, yes I would generally agree with you - don't take authors' assertions as facts - check the sources. Not because authors have a tendency to lie (although some do) but because facts can be spun in a way that totally distorts the actual situation/idea.

However, in this particular case, Chomsky's assertion that capital was transferred to New York banks from Europe, cannot exactly be spun in any way - the figures should be readily available somewhere (although I couldn't find them on google).

But as I said, I'll try and look up source and let you know.

of course capital was transferred. our allies in europe were borrowing huge sums from us so that they could fight a war. america made money coming and going on the war, first supplying the war effort, and then the rebuilding. and then we were relatively undamaged after the war. add in a bunch of dead soldiers and the relative wealth per man coming back would be higher, too.

 

[Office_Shredder]

of course capital was transferred. our allies in europe were borrowing huge sums from us so that they could fight a war. america made money coming and going on the war, first supplying the war effort, and then the rebuilding. and then we were relatively undamaged after the war. add in a bunch of dead soldiers and the relative wealth per man coming back would be higher, too.

Are you suggesting that the economic boom was helped by people dying? Why wouldn't this effect work in other countries with far higher casualties?

 

[Proton Soup]

Are you suggesting that the economic boom was helped by people dying? Why wouldn't this effect work in other countries with far higher casualties?

yes.

because many of the assets that would be handed down were destroyed, they lost much of their infrastructure, and they were in debt.

 

[CRGreathouse]

because many of the assets that would be handed down were destroyed, they lost much of their infrastructure, and they were in debt.

So Russia benefited the most?

 

[russ_watters]

So Russia benefited the most?

Yes! That's why Stalin did it! Stalin killed tens of millions of people partly on purpose and partly resuting from famine (which may or may not have also been on purpose) for the purpose of the economic benefit of consolidating the actrigultural base of the country (aka "collectivization").

 

[Al68]

Yes, ofcourse there are several ways for a government to raise funds - the issue really is (or should be) this: a fair society is a better one. If you look at Sweden for example, where income inequality is pretty much the lowest in the developed world, people are much happier. What more should a society aspire towards?

The real issue isn't whether "inequality" as an end result is good or bad, but whether or not it's a legitimate role of government to control, improve, or "better" society with the use of force against people.

It's not like "inequality" itself is an action that we choose to engage in, it's necessarily the end result of human liberty. It is the use of force against people that must be justified, not the nature of society otherwise.

That being said, if a person had to choose between one scenario in which they were well off, but others were much better off, with high "inequality", and a second scenario in which they were poorer, but so was everyone else, because there was little inequality, and they choose the second one because they think "equality is good", I'd say they were sociopathic.

 

[CRGreathouse]

That being said, if a person had to choose between one scenario in which they were well off, but others were much better off, with high "inequality", and a second scenario in which they were poorer, but so was everyone else, because there was little inequality, and they choose the second one because they think "equality is good", I'd say they were sociopathic.

Shades of 1984.

 

[calculusrocks]

The whole inequality debate misses the point that all levels of income are better off. Although I am 'poor' by the arbiters, and am suppose to feel entitled to monies through arbitrary government (who lines its own pockets while demonizing others for profits), I enjoy more luxury than the 'rich' Carnegie. I have an apartment with air-conditioning, an automobile, internet, a coffee press, etc.

The reason why people miss this point is because they are fixed in a line of reasoning where they believe that the economy is a zero-sum game. If John, Jerry, and Josephine wins, then Alex, Alice, and Adam loses. How possibly could John and Jerry get 'rich' without exploiting Alex and Alice? There is no reason to assume this.

 

[vertices]

It seemingly shows an inherent altruism. The problem here is that we can see a similar activity in the brains of gamblers (I need to get to bed, if you would like a source on this ask and I will look for one later). Gamblers are attracted to risk taking and, more specifically, the prospect of rewards; regardless of whether it is themselves or others. To a person who has millions (for instance) a few hundred dollars is a trifle but to see a man who has little or nothing receive such a reward triggers an "empathic" euphoria as the reward (to them nothing) is so great for the recipient. This study seems only to illustrate yet another venue (other than gambling) in which this reward triggered brain activity occurs. The idea that it is "inequality-averse" is extrapolating. Theoretically we could also surmise from this study (taken in context with other similar reward based brain activity studies) that inequality actually breeds altruism. When one person is more greatly pleased by seeing the less fortunate rewarded because they have little to gain themselves from such rewards they are more likely to be altruistic while persons who are financially (or otherwise) equal are perhaps at least as likely to perceive one another as competition. Then for a species of social animals seeking balance and stability inequality, which perhaps breeds a desire to see others succeed, would be preferable to equality, where your peers are all competitors.

Sure the reward centres of gamblers' brains may get activated if they take risks, but how does this take away from the evident conclusions of the Caltech Study, which show that the brain does indeed respond positively (ie the reward centres get activated) to fairness or equality?

The following observation is particularly interesting:

It [the study] shows that the basic reward structures in the human brain are sensitive to even subtle differences in social context.

This isn't a random glitch in the way our brains have evolved - there is a strong biological basis for this sort of altruism.

 

[vertices]

It's not like "inequality" itself is an action that we choose to engage in, it's necessarily the end result of human liberty. It is the use of force against people that must be justified, not the nature of society otherwise.

The problem is that "human liberty" is not afforded to everyone. I have no problem whatsoever with people pursuing wealth, money whatever and I have no interested in holding people back from realising their dreams whatever they maybe. But the current economic system we have in the West (in the US and well as the UK, where I'm from) is sometimes very unfair - it artificially creates inequalities. It is these imbalances that need to be addressed if we want a happier society.