Asymmetrical Information

You want to reduce or eliminate the income disparity between us? Improve your education, work smarter, work longer, work harder, make better choices, get married, stay married, stop whining and get your hand out of my pocket!

Pay TV channels to show lots of episodes of _The Young Ones_ and _Eastenders_. Thus giving everyone a reference group who is worse off than themselves.

I've often thought this explains half the appeal of reality TV. Take people just like us and let us watch them so we don't feel like we're schmucks. Or take people slightly better than us (usually meaning more attractive, see the people who populate Fear Factor, Survivor, etc.) and make them do incredibly humiliating, disgusting, or despicable things. Allows for than instant high of feeling superior!

Release the hounds... err, endorphins.

I'm curious if the guy who wrote this article is currently reducing his paycheck and redistributing it.

Well, the New Yorker, especially the ads, makes me feel poor. If that is true of enough people, perhaps we should ban the magazine. (Except, of course, for the cartoons.)

My definition of poverty: Having fewer worldly goods than Jesus did.

In other words, if some people made $10M/day, but some others made $20M/day, the ones making $10M would be "poor".

Unsurprisingly, this question is deeply political, as the Left wants "poor" to be defined in such a way that maximizes its size,

The poverty rate fell considerably in the years before the inauguration of the War on Poverty and stopped falling shortly thereafter. As the article points out, the prevalence of poverty has stubbornly remained around 12% ever since.

Fans of transfers should find no friend in a definition of poverty that expands the ranks of the poor. If there are actually more poor than we officially suspect, then the evidence would not preclude the conclusion that transfers have actually made the problem worse.

Sally Satel and Nicholas Eberstadt unravel the inequality-as-a-public-health-problem idea.

"If incomes were distributed more equally, fewer families would earn less than half the median income. "

Can anyone make sense of the sentence quoted above???

Is it a late April Fool's joke?

Relative poverty is, unfortunately, how it is all defined these days. Even the OECD figures use less than 60% of median household income (adjusted for size of household and housing costs) as the measure of "poverty".
The left has already "won" the argument by framing the debate in this manner.

The basic problem with the author's thinking is that transfers would have no impact on either median or mean incomes. He apparently wants to take funds away from our most productive earners and giving those funds to our least productive earners. And he must somehow believe that the nation's output will remain the same. Of course, his solution - raising the minimum wage - will just harm the incomes of the least productive, as was pointed out.

The real problem is in thinking that any sort of income transfers will help the poor. It is the high incomes of the productive that allows for job-creating investment. It is the desire for higher incomes that lead entrepreneurs to take risks. Remove or reduce those high incomes, and jobs for the less productive aren't created.

Half of the families will always have incomes less than the median value. I think he doesn't understand the difference between the mean and the median.

> "If incomes were distributed more equally, fewer
> families would earn less than half the median
> income. "
>
> Can anyone make sense of the sentence quoted
> above???

Sure. The median income is the income of a person exactly in the middle of the income distribution. It would be theoretically possible, therefore, for nobody to make less than half as much as somebody earning the median. Hell, it's mathematically possible for nobody at all to earn less than the median income. Imagine that 51% of people made exactly $40,000 a year. The median would be $40,000 and nobody would be earning less.

That would be an extreme 'squashing' of the distribution at the low end. But less extreme squashings would reduce the number of people earning less than half the median.

That's not to say whether this is a good or bad idea, but it's not nonsense.

"If incomes were distributed more equally, fewer families would earn less than half the median income. "

Journalism school teaches funny math.

Slocum:

Thanks for the comment. I see what you mean, but I still think it is nonsense. At best, it is simply a definition of some arbitrary version of income equality.

It is as if he said, "if the distribution of incomes were narrower [geeks would say smaller standard deviation], incomes would be distributed more equally". Well, duh!

Are some folks misreading the statement about median income? Slocum has explained it well enough, but I think it's an extreme example he gives. Consider this example:

- median income = $30,000
- half of median income = $15,000
- $100,000 is taken from each of the top 10%
- confiscated funds are distributed to bottom 25%
- median income remains unchanged (perhaps)
- half of median income is still $15,000
- income for a few have risen above $15,000

That's what the author was suggesting, and it is not completely wrong in the short term.

My problem with such thinking is not the math. As I argued above, taking incentives from the most productive workers will ultimately reduce everyone's incomes. Removing incentives for the low income workers to become more productive also reduces everyone's income in the long run.

Yes, that's one problem. Another is: having staked so much on the assumption that people are obsessed with relative income, why does Cassidy make the further assumption that people who make less than half the median income are concerned about that particular fact, and not about the (equally true) fact that they're below the 22nd percentile? Redistribution can fix the former, but can do nothing (short of enforcing complete equality) about the latter.

To look at it another way...

Between 1979 and 2000, the inflation adjusted earnings of the poorest fifth of _Americans_ increased 9 percent.

Poor people in this country were almost 10% better off in 2000 than in 1979. It seems American capitalism is working for the poor.

Rather than compare the American poor to other Americans, how do they compare to the poor in other countries? How is American capitalism performing relative to other economic systems? Where is the country in which wealth redistribution from rich to poor made the poor more happier than making the rich less happy?

I think we all know the answer to those questions (hint: look at all those poor but happy French rioters/protesters).

TV is definitely a huge part of the problem. People on TV always wear designer clothes, eat out every meal, and are able to go hang out in a bar every night. Of course, the absolute worst is all these shows set in New York City showing apartments these characters could never afford! Argh! I'm sure part of the disatisfaction I have with my studio for which I pay alot of money is that you always see these beautiful 3-bedroom Manhattan apartments on TV. Just once, just once, I'd like to see someone living in a studio apartment on TV.

Joshua,

I completely agree with you on the New York apartment/Media portrayal. I work in the city, but have decided to live in New Jersey to afford a reasonable apartment.

By reasonable I mean including a bathroom, closet, enough space for a bed and desk. You know, the real luxuries of life.

Over the weekend I saw the Woody Allen movie Melinda & Melinda. In this film an assistant director (don't know her real world salary, but I am guessing somewhere south of $50,000) and her unemployed actor husband lived in and had purchased a gorgeous loft aparment. It looked significantly above 1200 square feet, and in today's market would probably cost well above 1.5 million.

Both hilarious and depressing when considering my own life.

lannychiu: Maybe she was embezzling from the studio...

My father grew up in the 1930's on a hillside farm near the Ozarks. His family lived off their vegetable garden and what they could catch. (He claims that it is possible to kill woodchucks by sneaking up on them with a rock.) Nobody in this country is that poor anymore, unless they put themselves in that position by disqualifying themselves for welfare or by spending the food and rent money on cigarettes, booze, and drugs. But there were then, and still are, many peasants in Asia and Africa that would be envious of my grandparent's ownership of a house and land that was barely capable of supporting a family.

If you compare present-day America to 100 years ago, or to most of the world's population even now, there's no such thing as a poor American, just Americans that are needy because they've made bad choices.

Even Galt's Gulch had "rich" and "poor." But the difference was their sense of justice. If one is
living in,and believes in, a meritocracy, then there is little or no agitation to redistribute from those who earned it to those who didn't.
Nor is there an absence of goodwill and charity towards those who, through no fault of their own, find themselves in dire economic straits.

P.S. I thought Seinfeld lived in an apartment somewhat appropriate to his earnings. Ralph Kramden was perhaps the best example of one who lived in a spartan dump given his unionized transit worker wages. If only Alice had gone out to work like most childless married women did.

So, then, let's become a Hindu nation. Rigid social segmentation will make us all happier, and don't worry if you end up on the bottom of the heap, you'll be better of in the next life.

Oh, wait. That sounds a lot like fundamentalist Christianity.

"If incomes were distributed more equally,
fewer families would earn less than half the median income."

This statement is not necessarily true. Imagine, for instance, an economy (call it the Jane Galt economy), where a single woman earns $2 billion annually, and everyone else earns $30,000 annually.

Now imagine that this woman does poorly and gets a reduction in salary, now she earns $1 billion annually and everyone else's income stays the same. This would mean that the income distribution has become more equal (less top-heavy, while the same number of individuals earn less than half the median).

You have to make some other assumptions about the nature of the economy in order for the statement to be correct.

Oh, wait. That sounds a lot like fundamentalist Christianity.

Actually, many people who would likely fit within any general definition of "fundamentalist Christians" believe and participate in various forms of charitable giving, including giving one's own time to charitable efforts -- but at the individual, rather than government, level.

Just how bitter and unhappy ARE you, anyway?

Actually, many people who would likely fit within any general definition of "fundamentalist Christians" believe and participate in various forms of charitable giving, including giving one's own time to charitable efforts -- but at the individual, rather than government, level.

I do think we are operating on different definitions (thus showing that "any general" part misguided): I distinguish between Falwell and Davis.

Just how bitter and unhappy ARE you, anyway?

Not a bit, but thanks for asking. Just how defensive and jumpy are you?

How would raising taxes on the rich reduce economic inequality? It wouldn't reduce their gross incomes, which are counted pre-tax.

Not a bit, but thanks for asking. Just how defensive and jumpy are you?

Hmmm...when folks spout out invective that borders on the non-sequitur and off-topic for no evident reason other than axe grinding? Somewhat jumpy.

Let's see if I understand the underlying premise of this blog-- Libertarian(-esque) ?
This article/post propounds forced segregation of financial classes of the citizenry, state redistribution of incomes, and an FCC-type censorship of images "allowed" to be shown to the said-same citizens.
Is it any wonder the Welfare State, here purported to "solve" poverty, winds inexorably toward a Police State?
Maybe we should remember Franklin's answer to the query inquiring after the Colonies' economic success in the pre-War days, towit: "we simply issue our own currency in proportion to its need(demand), and we do it interest-free".
Anyone?

Sincerely,

MEH

Hmmm...when folks spout out invective that borders on the non-sequitur and off-topic for no evident reason other than axe grinding? Somewhat jumpy.

Comparing the use of social structure of different religions, and showing (in, I admit, a very abbreviated manner) how that relates to one possible proposed solution in the post itself is non-sequitur, off-topic and axe-grinding?

Defensive and jumpy is an understatement, 'mouse.

Mark E. Hoffer: Your computer did not pick up the "sarcasm" font that Jane used to write her commentary. I think you can download that from the Internet.

The definition of poor is either (1) when life is no longer possible, in which case an absolute figure is used or (2) when a level of suffering due to lack of wealth has grown too high, in which case a relative scale is what is used.

Do we help the poor to allow them to survive or to alleviate suffering?

Human beings, and in fact primates in general, have happiness and status (which in our society pretty much equals wealth) linked. Saying that life is better for the poor in America because their income has gone up 9% when the income for other groups have gone up much more is simply wrong. The poor were not at such a level that they were suffering absolute deprivation before. However, their happiness has substantially decreased as their relative status has decreased.

It should also be noted that wealth related status doesn't affect just how you feel about yourself, but also how others feel about you.

One other point is that redistribution also exists in order to reduce the number of people who feel that they would do better without the current system. When a sufficient number of people feel that the system is not to their advantage, the system can only continue by forceful suppression of substantial segments of the population. That's not a situation you want to be in. And, yes, you guessed it, that choice is based heavily on relative, not absolute wealth.

One side note, the US is often seen as a bad guy around the globe. One reason that is often invoked is simply jealousy of America's wealth.

This isn't quite accurate. A lot of societies maintain a relative high level of overall happiness by maintaining a relatively high level of redistribution. This of course has cost their society substantial overall growth, but as long as they are all in it together, overall happiness is maximized. Until...

The US has chosen a high growth strategy with minimal redistribution. This may not make American's terribly happy (as a whole), but that's their society to run as they choose. Except...

With American worldwide media success, *everyone* is aware of America's absolute wealth, which makes their own wealth seem paltry. Suddenly their happiness drops. What's worse, the only way to increase that wealth is to choose policies that increase inequality and thus drop overall society happiness. Damned if they do, and damned if they don't.

*That* is one reason why America isn't widely loved. It's choice towards social inequality has substantially reduced the rewards of everyone else's choice.

No, this doesn't mean that America should change its ways. Simply that a natural outcome of those ways is going to be large scale dislike for making the world a more miserable place :-).

Comparing the use of social structure of different religions, and showing (in, I admit, a very abbreviated manner) how that relates to one possible proposed solution in the post itself is non-sequitur, off-topic and axe-grinding?

Defensive and jumpy is an understatement, 'mouse.

I'll maintain my lead on "jumpy", but I think you're rapidly cornering the market on "defensive." I concede that market into your safekeeping.

Mark E. Hoffer: Your computer did not pick up the "sarcasm" font that Jane used to write her commentary. I think you can download that from the Internet.

Posted by bristlecone at April 12, 2006 05:58 PM

bristlecone, I didn't think I was responding to anything "Jane" said, the post was by "Winterspeak", no?

Clearly, Winterspeak is the new Mindles.

Rich people and poor people could be sharply segregated so that the rich (or even the middle class) never enter the consideration set of the poor.

This may be meant as humorous, but there's some truth there. Many cultures (think 1920's Britian) did ensure that the wealthy and the rest had relatively little contact with each other. Just as important, it was incumbent upon the wealthy not to flaunt their wealth (think of the contempt for the nouveaux riche who would spend ostentatiously). That unspoken compact among the wealthy has broken down, of course, and now wealth is (for the most part) to be splashed in front of as many people as possible. (It probably helps that fear of a people's revolution has disappeared :-))

As well, the media used to be complicit in (usually) keeping the doings of the wealthy away from mainstream coverage. Of course, there's always been the nagging desire among the populace to see how people wealthier than yourself are doing. Just like primates are willing to pay (in grape juice) to look at pictures of high status males, we're certainly willing to pay to look at high-wealth (= high status) individuals.

It's just that until recently, the media was unwilling to meet that need (now, if there's a need to be met, not matter what the cost to meeting that need, there's large number's of people rushing to meet that need). Now, we're exposed on every possible avenue to just how much wealth we don't have, making the happiness cost of inequality even higher.

It's sort of like the desparate need to know our co-workers salary. Almost everybody restrains themselves, and yes, if they do find out that one co-worker is making 25% more, instantly the job that was satisfying and well-paying becomes one that one is tearing down the door to leave (and maybe punch the boss in the nose on the way out).

Why? Because in our current society, we equate money with our worth. And the poor know that as well (actually, moreso). Almost no-one is happy knowing that society sees them as worth vastly less than their peers.

Isn't envy of those better off than ourselves a good thing? Isn't that the driver for many who actually do achieve success? Don't we need a fairly good proportion of our workers to be driven for success?

If I had never seen the homes and possessions of the upper middle class, I might have been content to be a blue collar worker as my dad was. How would that be good for our nation? or for my employers who benefit from my computer and business expertise? or for the workers in the small businesses I built? or for me?

IMO, segregation of the economic classes, so that the poor or the middle class never consider a better life, would be a disaster for the nation.

Tom: "Human beings, and in fact primates in general, have happiness and status (which in our society pretty much equals wealth) linked." Correct, but go from there to impossible goals. Status is a zero-sum game where ties are impossible. Human nature does not allow equalizing status. We naturally form pecking orders. Someone is always going to be on the bottom.

By making wealth the visible sign of status, Americans are motivated to work to increase wealth, which has made everyone materially better off. There are other forms of status that people have sought in ours and other societies: political power, belonging to the "in group", hereditary (medieval nobility, e.g.), physical power over others, and superior knowledge. IMO, all but the last lead to far nastier results than materialism does. As for claiming status from superior knowledge, I've seen enough of college faculty politics to know that superior knowledge in one field does not make one wise in other areas, and that people who think they have superior knowledge in wider areas are usually self-deluded.

"in our current society, we equate money with our worth. And the poor know that as well (actually, moreso). Almost no-one is happy knowing that society sees them as worth vastly less than their peers."

Money is how society keeps track of how much each person contributes, so that what they take out of the general economy can be balanced against what they've put in. It's far from a perfect system, but some sort of accounting needs to be done, and money is just the tallying method used.

Yes, it makes poor people feel bad to know that they've contributed little to society, at least in an economic sense (if they prefer to contribute in other ways, they're welcome to and may be able to draw satisfaction from it). As JohnDewey and markm pointed out, if people don't feel this pressure, they're likely to contribute less.

The choice that many societies have made is to limit the contributions of the most productive (by removing rewards for those contributions), so that those that are contributing little economically won't be embarrassed that they're doing so much less than others. This hopefully makes them feel better at a significant cost to society in general. Wouldn't we be better off helping them to change their attitudes, perhaps by finding other ways that they can contribute?

Happiness is largely a personal choice. If some people choose to be made miserable by the hard work and contributions of others, should we encourage such selfish preferences, or should we try to change them? As markm said, there's always going to be some sort of hierarchy. Why not have it be (at least loosely) related to a person's contributions to society?

By the way, in terms of relative versus absolute measures of poverty, there's at least one society that has eliminated the kind of relative poverty that the New Yorker was concerned about - North Korea.

Relative poverty makes sense because per-capita income affects prices. If an average American earns 40k and a Chinese 2k, then it's likely that in America a loaf of bread will cost much more than in China.

So a person in USA making 20k is considered poor, but a Chinese making 20k is not, because in USA you cannot buy much for 20k.

Poverty is a quality of life measure, not an income measure.

By the way, in terms of relative versus absolute measures of poverty, there's at least one society that has eliminated the kind of relative poverty that the New Yorker was concerned about - North Korea.

Of the opposite is true - in North Korea there are clearly two classes - the upper management of ruling party, whose members are pretty well off, and the rest, who are indeed very poor.

"because in USA you cannot buy much for 20k."

Is that so? On of my favorite quotes of all time is from Phil Gramm during his first senatorial campaign:

"Has anyone ever noticed that we live in the only country in the world where all the poor people are fat?"

Today he might add to the end of that quote:

"and they all own color televisions and microwave ovens?"

"Has anyone ever noticed that we live in the only country in the world where all the poor people are fat?"

I think Dinesh D'souza may have been the originator of that quote, in somewhat different form.

"and they all own color televisions and microwave ovens?"

There, again, is evidence of what happens when "poor" is redefined broadly to justify the broadest feasible social programs: the genuinely impoverished get lost in the noise.

Max - yes, there's a 'rich' ruling class in North Korea, but it's extremely small. The vast majority have almost nothing. Therefore, by the New Yorker's measure of relative income, there is far less poverty there than here, and in fact there might not be any relative poverty at all. I would guess that there is no one in North Korea that is earning less than half of the median income there (unless they give some token amount to those in concentration camps).

"Relative poverty makes sense because per-capita income affects prices. If an average American earns 40k and a Chinese 2k, then it's likely that in America a loaf of bread will cost much more than in China."

That's actually very, very unlikely, if a loaf of bread can be put on a boat and sailed across the ocean from one place to another. In fact, the difference in prices between countries can't possibly be any more than transportation costs. While this doesn't necessarily apply to bread, it does apply to a vast number of goods. And that affects national allocation of resources on the margin of tradeables vs non-tradeables ...

Most cross-country comparisons of poverty and standards of living are done on a Purchasing Power Parity (PPP) basis. It's imperfect, but it's the best way we know to account for price differences.

"Phil Gramm: Has anyone ever noticed that we live in the only country in the world where all the poor people are fat?"

anony-mouse: "I think Dinesh D'souza may have been the originator of that quote, in somewhat different form."

You may be correct. D'Souza was only 23 when Phil Gramm asked that question in 1984. But Dinesh was an early bloomer.

If Phil did borrow that quote from D'Souza, and not vice versa, it just shows Senator Gramm's skill at choosing an effective campaign message. He was very popular with Texas conservatives.

Status is a zero-sum game where ties are impossible

Wrong. Here's a counterexample to your assertion. Twenty people all work in an identical job with identical pay. The total happiness is x. Suddenly, one person's pay is publicly doubled, and he chooses to flaunt his wealth. His happiness goes up some, but do you really think that it goes up the same amount as the *total* of the happiness of the other 19 goes down?

Status is not a zero sum game.

all but the last lead to far nastier results than materialism does

I don't think anyone is talking about removing economic inequality. The question is whether it is society's interest to shrink that inequality, in which case since many of our programs are geared at reducing poverty, defining poverty in relative terms becomes a means of doing so.

This hopefully makes them feel better at a significant cost to society in general.

First, no-one is talking about removing inequality, simply reducing it. More to the point, the question about whether there is a significant cost to society in general is open for debate. It is true that it makes society poorer, but in a society where no-one is suffering from poverty in an absolute sense (i.e. starving), you could easily claim that society might well be better off in terms of social cohesiveness with less inequality even with lower total wealth. We don't think of America suffering terribly during the 50's and 60's although it was many times less wealthy than it is now. Of course at some point, the cost of redistribution start severely impacting happiness of society at large, but given relative taxes, American society is a long way from that state.

Therefore, by the New Yorker's measure of relative income, there is far less poverty there than here

Let's make it clear. There is absolute and relative poverty, and absolute poverty (i.e. not enough to buy necessities of life) is worse than relative property. Does anyone disagree with this? No. The question is given that relative poverty causes suffering, is this something that society wishes to reduce (not eliminate, given that I think we all agree that the costs of elimination far far outweigh the benefits...) Ann, let's lay this straw man to rest...

Have the proponents of forced equality of results fallen so low that now they claim as a justification that this is necessary because such inequality hurts people's feelings and self-esteem? Originaly it was thought that this was a just goal exactly because there was quite a bit of absolute (rather than relative) poverty in capitalistic societies, and this would be needed to cure that social ill. But Marx wasn't exactly right, was he?

As I see it, what this argument really boils down to is that envy is something that should be catered to by punishing those who the envious despise, and is to be accomplished by pulling them down. It is bad enough to see such a thing in a small child who can't stand the idea that his school chum has a nicer pair of tennis shoes than he does. It is even uglier when you see it in adults. The idea of enshrining it in public policy for the benefit of the morally dysfunctional is truly repulsive.

No matter how you want to dress it up, this is what it comes down to, and it is very ugly indeed.

1920s Britain, the rich and the rest did not mix much? With 20% of the population in domestic service?

Re relative wealth/poverty and social status. If we equalised wealth we’d just find another way to have social status. Man is a status seeking animal.

Tom West: "Of course at some point, the cost of redistribution start severely impacting happiness of society at large, but given relative taxes, American society is a long way from that state."

Are you kidding me? Despite the crap you hear from Bill Gates and Warren Buffet, those who pay high taxes are severely unhappy that so much of their hard-earned income is confiscated. Very few upper middle class folks I know are pleased that 25% of wage-earners get a free ride. Or that millions of non-workers collect government payments for questionable disabilities while lying around in housing paid for by upper income taxpayers.

Of course you can find 60% of the American public who are unconcerned about redistribution of incomes. They're not the ones whose income is being redistributed.

this is necessary because such inequality hurts people's feelings and self-esteem?

I prefer to make policy based on human beings, rather than homo perfectus, who obviously shouldn't suffer from these flaws (although as pointed out by previous posters, we require these flaws in order to continue advancement...)

More to the point, the suffering caused by severe relative deprivation is not just psychological, there are numerous physical symptoms as well. And it isn't just humans. We see examples of much the same thing in primates. "Catering to it" is simply recognizing that fact and choosing to alleviate real suffering.

One can choose to decide that one doesn't want to ease that particular form of suffering, but don't pretend that it doesn't or shouldn't exist.

It is bad enough to see such a thing in a small child

Funny, I think most parents, in seeing a group of children playing with their toys, and a single child sitting watching the others without any, would be making sure their children shared. Sure, our child gets first pick of his own toys - inequality still exists as it should - however, the level of inequality is reduced...

If we equalised wealth we’d just find another way to have social status.

Once again, who is talking about equalising wealth? What is under discussion is whether it is worth *reducing* the level of such inequality.

The "sweet spot" in *any* social condition is almost never found on one end of the spectrum or the other (unless your Ayn Rand or Karl Marx). The question is how far do we go to alleviate inequality?

those who pay high taxes are severely unhappy that so much of their hard-earned income is confiscated.

Indeed, some suffering is caused by taxes. The question is simply how much suffering is alleviated by redistributionist policies versus how much is caused, and of course, how far can one push it until the injustice of forced redistribution outweighs the benefits to society at large?

By the standards of almost every other civilization on earth, the US is a long ways from that point.

Note that as inequality grows larger, it becomes necessary to spend the wealth on suppression of those people who believe there is greater benefit in seizing wealth than in working within the system. One can argue that America spends a lot more on its police/prison system because of its less redistributionist policies.

Tom West -

I think tcobb put it very well. You're advocating the harm of some people simply because other people enjoy it. Suppose we had strong evidence that the majority of people enjoyed seeing harm or humiliation done to fat people, or people with red hair. Should the government mandate this, in order to increase the overall level of happiness? Should we have mandatory plastic surgery to make attractive people ugly, so that ugly people won't feel bad? It's not a legitimate role of government to harm some people purely because it might bring happiness to others.

And you're ignoring the other, earlier point - these people that are earning a lot of money are doing it by contributing to society. Why would you want to prevent or discourage that? True, some get rich by pure luck, and some get rich in ways that harm society. Luck is part of life. Those that get rich by causing harm are a problem, but we try to limit them in various ways.

The debate here is whether we should round up people and take a substantial portion of their money simply because they have it, regardless of how much they've contributed to society. We would be lowering the overall wealth of society, in the hopes that catering to greed and envy will add to overall happiness. Why does this sound good to you?

And by the way, I'm not convinced that the overall level of 'inequality' is that much lower in Europe. Because of the obsession with income, much of the compensation to top workers in non-monetary - use of a ski lodge for several weeks each year, etc. They're distorting their economy and lowering overall growth for an illusion, when in fact they probably have a much more stratified society than we do, with many permanently trapped in the lower class. I think that what they're really doing in Western Europe is bribing the lower classes to stay at the bottom - offering them the pretence of 'equality' in order to prevent any true opportunities for mobility.

"Funny, I think most parents, in seeing a group of children playing with their toys, and a single child sitting watching the others without any, would be making sure their children shared."

Yes, but most parents would at some point expect their children to take responsibility for their own choices. What you're saying is that, if one child works hard all summer to earn money and saves it up, while the other child refuses to work and instantly spends every penny he can get on candy, any good parent at the end of the summer would take money from the child that worked hard and saved, to prevent the other child from feeling bad.

"Status is a zero-sum game where ties are impossible

Wrong. Here's a counterexample to your assertion. Twenty people all work in an identical job with identical pay. The total happiness is x."

How did you get from status to happiness? They certainly aren't equal. The happiest people I know are middle-income people that don't give a damn about status and only work hard enough to live comfortably. Obsessive wealth and status seekers are incapable of happiness and aren't doing themselves much good, but when they channel that drive into creating businesses, they make the rest of us wealthier and happier. That's certainly much better than having them plotting to reach a position in the government that gives them the most possibilities for proving their high status by abusing others.

Tom West,
I've got to tell you, Americasn like you irritate me more than any others I encounter. The gall you have to argue that you are benefitting society at large by stealing money from my wallet and giving it to those who have done nothing to deserve it - other than that they may feel discomfort for not having my money. What's worse is that you simply dismiss your theft with the simple statement "Indeed, some suffering is caused by taxes." But you don't stop there! Despite the fact that the poor in the U.S. have a higher standard of living than 90% of the humans on the planet, you still have the audacity to argue:

"By the standards of almost every other civilization on earth, the US is a long ways from that point."

Did it ever occur to your do-gooder, thieving mind that the reason the U.S. "poor" have such a high standard of living is exactly because we do not take so much from our most productive citizens?

After much thought it occurs to me that there is only one way to define a a 'poverty level'

One's poverty can be measured by how much time it takes one to secure the basic necessities of life. The more time spent doing this the poorer one is.

However, this has the result of making welfare recipients 'richer' than most workers. To recieve welfare, a recipient has to spend X amount of time per year justifying their status, X is invariably a lower number of hours than the total put in by most any full time worker in relation to securing basic necessities.

Therefore it can be said that the welfare recipient is something other than 'poor'

This definition has several things going for it--

It is only relative when taking into account the different 'basic necessities' required for living in different parts of the world.

It's base valuation, time, is a constant

It does not vary according to 'mitigating factors'

Now, I could be totally wrong here, but surely we must come up with a better definition of poverty than one that allows fat, cable watching, people to have loads of personal time while still calling themselves 'impoverished'.

Tom West---

Once again, who is talking about equalising wealth? What is under discussion is whether it is worth *reducing* the level of such inequality.

I would submit to you that it isn't, ever, because once again we are talking about relative rather than absolute terms. When things are "leveled" so to speak, but not totally equalized, differences which were considered trivial in a more unequal society suddenly take on new significance. If the high income people can afford to buy the blue coveralls while the low income people can only afford the drab gray coveralls, in relative terms this is the same gap as between people who drive Hyundais in our society being envious of those who drive a Mercedes-Benz. Their feelings and self-esteem will be hurt because they are the Gray people, and they cannot afford to wear blue. This state of affairs will never end until you do actually equalize all the wealth. The "suffering" that you wish to alleviate will never abate so long as there is any inequality of outcome at all.
Once you start down the road that alleviating the "suffering" of the envious should be a goal of public policy then that becomes the inevitable destination.

But then again, I suspect that most of the people who push such an agenda are fully aware of this.

It's not a legitimate role of government to harm some people purely because it might bring happiness to others.

Au contraire, government is *exactly* about that since the beginning of time. Taxing me to build roads might be considered harming me to benefit others if I don't feel that I benefit from roads. At base, society is simply a collection of choices of who we "harm" and who we benefit.

Why would you want to prevent or discourage that?

It depends on when you think productive people start giving up because they don't accrue enough benefit to their work. I don't think that is happening or even close to happening in the US. Taxes are simply not sufficiently high to discourage (the vast majority of) people who desire rewards from working to obtain them.

while the other child refuses to work and instantly spends every penny he can get on candy

Oh please, the poor are only poor because they *choose* to be poor.

I have to admit I find that particular crutch rather pathetic. If you're going to be a Libertarian, then at least have the courage of your convictions! If it's unethical to confiscate wealth from someone, then it's damn well unethical to "confiscate wealth" from someone no matter *what* the circumstance and *how deserving the beneficiary*. Do you really have to resort to pretending that anyone who suffers *deserves* their suffering?

It's almost as bad as Communists who feel they have to justify their beliefs by saying that all wealth is gained by "stealing from the workers" or some such rot.

There's no uniformity out there, and no sure-fire way of determining the "deserving poor" from the "undeserving poor" any more than you can separate out the "deserving rich" from the "undeserving rich".

How did you get from status to happiness? They certainly aren't equal.

My mistake. However, the general truth is that they are very closely related. And in our current society, wealth is more or less a stand-in for status.

Did it ever occur to your do-gooder, thieving mind that the reason the U.S. "poor" have such a high standard of living is exactly because we do not take so much from our most productive citizens?

That's absolutely true. However, given that there's not a lot of absolute poverty, the poor are likely suffering more from the effects of poverty in the USA than in countries where they are "poorer" on paper (and in lack of material goods).

I cannot think of any sane person who would rather be poverty-stricken nowadays, rather than middle class 80 years ago, although by material measure, the poor today are better off.

When things are "leveled" so to speak, but not totally equalized, differences which were considered trivial in a more unequal society suddenly take on new significance.

Lord give me strength. Look, if you truly believe that the man at the bottom of the totem pole feels about himself (and is treated by others) exactly the same regardless of whether he's earning one quarter the income or 98% of the income of everyone else, I don't think there's much to say, except that this belief contradicts anything we know about human beings.

But then again, I suspect that most of the people who push such an agenda are fully aware of this.

Oh yes. Anyone who feels there is some responsibility incumbent on society to alleviate suffering beyond the barest possible needs of survival is actually an evil communist plotting to destroy the foundations of our society.

Please, can we be grown up about this...

I am sorry, but when "suffering" comes from a repulsive defect in one's personality, whether it be from a predilection for pedophilia or shoplifting, or something out of the criminal sphere such as racism or envy of those more fortunate or competent than yourself, I simply cannot see that there is any valid or beneficial interest to society in having the government placing burdens upon others so as to spare their precious feelings, and that's really what you seem to say that its all about. What's the pscho-babble term for that? Enabler--that's it. You enable their bad characteristics by pretending that their egregious behavior is somehow justified. Is this a good thing?

And when it comes down to the suffering of the envious, all I have to say is that they need to throw off their childish mindset and "be grown up about this." I for one don't wish to be one of their enablers, which is where you and I certainly part company.

Why should people who are prone to characteristics which are generally considered to be bad or repulsive be catered to through public policy? Shouldn't it be the other way around?

Funny, I think most parents, in seeing a group of children playing with their toys, and a single child sitting watching the others without any, would be making sure their children shared. Sure, our child gets first pick of his own toys - inequality still exists as it should - however, the level of inequality is reduced...

The difference being, parents engage in this behavior in hope that when the child is old enough to be responsible for his or her own decisions, s/he will voluntarily carry on this character trait. For example, a worker might choose to give a portion of income to a church tithe or other charitable organization that seeks to help people who are less well-off; but nobody stands over his head with a beating stick and says, "Do it, buddy, or..."

A snarky respondant could argue that once we have some citizens orchestrating this kind of redistribution at a government level, we are back to the level of children again, except that some of the children have gained control of a power apparatus.

" It's not a legitimate role of government to harm some people purely because it might bring happiness to others.

Au contraire, government is *exactly* about that since the beginning of time. Taxing me to build roads might be considered harming me to benefit others if I don't feel that I benefit from roads. At base, society is simply a collection of choices of who we "harm" and who we benefit."

The term "purely" was key, here. Building a road brings actual benefits, even though they may be unevenly distributed. You're talking about harming people simply because others enjoy seeing them harmed. You're saying that if we take resources from the rich and throw them in the ocean, happiness will increase because poor people will love seeing the rich lose out. It's not the role of government to harm people who are not guilty of a particular crime, simply because their harm may possibly be enjoyed by others.

Again, why not disfigure all attractive people? Are you saying that ugly people don't feel genuine discomfort from knowing that there are attractive people out there, somewhere? Wouldn't overall happiness increase if we at least had public head-shaving of all attractive women, since the rest of us could stop feeling bad about the fact that we've made no effort to make our own hair look nice? I would be much happier if all thin people were forced to gain weight. What about my happiness? Shouldn't the government hurt someone to make me feel good?

"Do you really have to resort to pretending that anyone who suffers *deserves* their suffering?"

I wasn't saying that. You were the one who essentially said that any good parent will force equality of outcome, regardless of effort or anything else. I disagreed.

I'm in favor of helping the "deserving poor", and I'm in favor of helping the "undeserving poor", at least to some extent. I'm not arguing against helping low-income people, regardless of how they got that way. But you're going beyond that - you're saying that the rich should be punished because they're rich. You're not arguing that taxes should take from the rich because the poor don't have enough. You're saying that taxes should take from the rich, even if the money isn't needed, simply because the poor are happier if others have less. And you said that good parents would do the same. I think that good parents would reward those that have worked hard and done an outstanding job, and would try to help the other children learn to deal with their jealousy.

"Look, if you truly believe that the man at the bottom of the totem pole feels about himself (and is treated by others) exactly the same regardless of whether he's earning one quarter the income or 98% of the income of everyone else, I don't think there's much to say, except that this belief contradicts anything we know about human beings."

But you're not talking about him "earning" as much as everyone else. Yes, it would be nice if everyone had the same abilities and thus could "earn" just as much (if they tried), but that's simply not true. People vary in many respects, and there's no way to equalize literally every last aspect. Happiness won't be achieved through obsessing over our 'right to be jealous', which is what you're advocating.

Tom West:
"Anyone who feels there is some responsibility incumbent on society to alleviate suffering beyond the barest possible needs of survival is actually an evil communist plotting to destroy the foundations of our society."

You have finally written something that I can agree with.

Your definition of suffering - envy of those with more wealth or income - is the only justification you've provided for your communist preachings. You should at least be honest enough to preface your remarks with the appropriate slogan:

"From each according to his ability, to each according to his envy."

The dogpile is getting a little heavy, no? There is one good argument for placating inequality: The French Revolution. However, that involved an extreme level of inequality where the ruling powers wallowed in wall-to-wall oppulence while the underclass didn't even have enough food.

I posit that revolutions foment among an underclass when two critical factors are met: (1) said underclass is lacking in basic necessities; (2) said underclass is effectively cut off from opportunities to advance upward meritoriously. If it can be shown that one or both of these conditions is reaching criticality, then yes, there is an argument for reducing inequality on security measures.

In the US, one could possibly make some arguments for the existence of case (2), but many of these would devolve back to issues such as, e.g., inadequate primary schooling in low-income districts, and breakdowns of family structure in the same. Equalization payments here would be attacking the symptoms rather than the disease, and have no lasting effect on human behavior (except possibly to enable the existing negative ones, thus assuring more of them).

Anything else, however, is envy; and one cannot placate envy by fulfilling it, any more than gluttony or lust or...well, pretty much any of the other seven. Point to meditate upon: A man's unrestrained desire for something is never fulfilled by a nominal acquisition of the desired item or objective. It's a fool's errand to try and do it.

At that point, redistributions for inequality's sake are little more than deadweight loss. Such redistributions (a) encourage the lower class to believe that they can have without earning; (b) discourage the upper-class from creating new wealth; and (c) promote status-quo-or-less among the middle class, who will correctly perceive that a little less work will qualify a man for receiving handouts, and a little more will result in a man being forced to supply handouts.

This is a recipe for social stratification, economic stagnation, and the creation of a permanant underclass -- or exactly the kind of quicksand that France is trying, mostly without success, to extricate itself from right now.

I am sorry, but when "suffering" comes from a repulsive defect in one's personality

You are simply wrong. It's part of the human makeup, not a defect and has real psychological and physical effects. Occurs in the whole spectrum of vertibrates. Pretending that the suffering shouldn't exist is a cowards way out of the argument.

Allowing that the suffering is real and not a defect, but that we choose not to do act upon that suffering is an adult opinion. After all, a desire for sex is real (not a personality defect) but we choose not to do anything about that.

Building a road brings actual benefits

Why are your road benefits real, but the poor person's benefits not real? Sorry, I'll buy that we spend money on roads because almost everyone believes that they are a benefit, but that's essentially the definition of what the government chooses to fund: what the majority believe to be beneficial.

So, what we're really debating here is whether we consider relieving the suffering caused by relative poverty to be a benefit worth the cost.

Again, why not disfigure all attractive people?

For the same reason that I don't support total equalization. The costs don't equal the benfits. Again, let me make it clear. Even Ann doesn't believe it is wrong to confiscate wealth in order to relieve certain levels of suffering among others. So, we're really talking about a sliding scale, as it goes up, the "harm" we cause to others grows and benefits to others lessen.

Those like myself advocating that poverty be defined as a relative level are simply further along the scale. We believe that the harm caused by an increase in taxes is outweighed by the benefits of such redistribution.

And this isn't simply altruism. I have a stake in having as many people as possible work "within the system". As the suffering of relative poverty increases, there is more incentive for individuals to alleviate that poverty by opting out of society. America is a long way from the French revolution, but the fact that America imprisons more of its population than anywhere else in the Western world is proof that more of its population has opted out of the system.

You were the one who essentially said that any good parent will force equality of outcome, regardless of effort or anything else.

Yea Gods. Some some amount of redistribution is *not* forcing equality of outcomes. My example even explicitly pointed out the remaining inequality. I'm not certain how to make it any more clear!

You're not arguing that taxes should take from the rich because the poor don't have enough.

Actually, that's exactly what I am arguing. It's simply the definition of "enough" that's being debated. Look, the truth is that we could simply preserve the life of the poor for even less than we're doing now - think refugee camps across the globe.

We don't. Why? Because that level of poverty causes too much suffering in our eyes (our=general opinion of society). We know we can afford better (i.e. our relative wealth allows us to treat the poor better because the harm caused in extracting that wealth is less), and instinctively, we know that the suffering of the poor increases as the wealth surrounding them increases. In other words, we've defined "enough" upwards.

So, the vast majority of us already accept that the suffering of relative poverty deserves to be addressed. The question simply becomes "how far?".

for your communist preachings

I've been called a Communist! Do I get a badge or something :-)

but nobody stands over his head with a beating stick and says, "Do it, buddy, or..."

Ah, leave it anony-mouse to poke a cogent hole in my analogy :-).

My justification for confiscation, as opposed to voluntary contribution, rests on a few points.

1. America is a democracy - the redistribution doesn't happen unless the majority of representatives support it.
2. Status is pretty much tied to consumption - giving to the poor doesn't lend much status, so the incentive for many has declined.
3. The free-rider problem, it's pretty easy to forego your voluntary contribution if you assume everyone else is picking up the slack - similarly, it's pretty hard to contribute if you feel that you're the only one doing the heavy lifting. (It's why I don't believe in Randist Libertarianism in general, in order to meet society's needs, enforced contribution from all is needed.)

I'll still stand by my analogy to some degree, in that most parents are instinctively trying to inculcate an understanding of relative poverty (i.e. a child without toys isn't starving (absolute poverty level is 0 and if no-one had toys the children would simply play games with ech other), but has needs caused by the fact that everyone else has lots of toys and they have none.

(Yes, Mr. Dewey, parents have been unwittingly raising generations of Communists :-))

To answer the next hole you'll no doubt put in my analogy, the question becomes whether the parents mean to inculcate that "it is good for you to help the poor" or "it is good for the poor to be helped". I'll argue that both are being promulgated. One leads in a desire to help the poor, the other in a desire to see redistribution to help the poor.

(To be honest, the difference between the former and the latter is generally lost on most of the population. Outside of the Libertarian community, few people are against compelling that which they believe in themselves.)

Tom West -

I'm open to discussions of how much to help the poor. What I object to is the idea that we should take money from the rich purely because we think that they have "too much". Again, your arguments imply that if we took a lot of assets from rich people and simply destroyed them, happiness would increase and hence society would be better off. You're arguing that it's virtuous to harm the rich simply because others may enjoy it.

To answer the next hole you'll no doubt put in my analogy, the question becomes whether the parents mean to inculcate that "it is good for you to help the poor" or "it is good for the poor to be helped". I'll argue that both are being promulgated. One leads in a desire to help the poor, the other in a desire to see redistribution to help the poor.

Methinks this misses the real effect by a country mile. A genuine desire to help the poor comes from one's own pocket. Do you appreciate that you have more than enough, even if you don't own all the Big People Toys you thought you should have by now? Do you appreciate it so much that you will make a first-hand sacrifice in your own real income in order to see the less fortunate being helped?

A desire to see government-enforced redistribution, by contrast, is generally favored most by those who expect to see the least real negative impact from it. Worse, it tends to destroy the desire to "help the poor," because if you paid your taxes this year, it's now somebody else's responsibility to actually do it. You don't even have to know who the poor really are or whether they are actually being helped: just throw some fraction of your income into the laundry chute, and hope some fraction of that will eventually be found by those down below.

"How did you get from status to happiness? They certainly aren't equal.

"My mistake. However, the general truth is that they are very closely related. And in our current society, wealth is more or less a stand-in for status."

Tom, I hope you aren't expecting that achieving higher status will make you happy. In my experience, that rarely works and people in the middle range of status are more often happy than the people at the top. With the right attitude, it is sufficient for happiness if you and those you love can go to bed warm and well-fed every day - and this minimal absolute level of wealth is within the reach of nearly all Americans unless they blow their chances by repeated misbehavior. Nor does being at the bottom status-wise and economically necessarily make one unhappy. I recall how happy Henry David Thoreau sounded to be emulating the life of a homeless person at Walden Pond. I've met people of limited intelligence who were quite happy and proud that they could do manual labor at minimum wage. I also know far more people whose bad choices, laziness, and criminality have locked them into a permanent position at the bottom, and they are desperately unhappy - but recall what I said about attitudes. These losers started with a bad attitude, the behavior resulting from that attitude put them where they are, and I've had the misfortune of coming to know some of them well enough to be sure that if you handed them a million dollars all you would get would be a temporarily rich (because they'd blow it) loser with a bad attitude.

Finally, I'm wondering if Tom hasn't exposed the exact point at which left-wing thinking departs from reality: assuming that status=happiness explains so much of the liberal/socialist agenda doesn't it? (Of course, that makes Communism a scheme to bring high status to people that couldn't achieve it through normal means, by giving them the power to decide what work others should do and what they'd get paid for it, and to send objectors to concentration camp.)

Again, your arguments imply that if we took a lot of assets from rich people and simply destroyed them, happiness would increase and hence society would be better off.

A few points - maximizing happiness is not the be all and end all. For example, there is a trade-off with justice. At the extreme, killing an innocent is wrong no matter how many people it makes happy. Another trade-off is with long-term effects. For example, one good argument against redistribution is that too much of it may kill incentive to work oneself out of poverty, and people are happier when they are working themselves to a low standard of living than having it handed to them. (It's why things like the Earned Income Tax Credit are such good ideas.)

However, I'm getting the feeling that part of this debate comes from the framing of it. It's really hard to accept that we should cater to "envy", which we all know is a sin.

I prefer to argue using the terminology that is harshest to my side, but in this case it seems to be getting in the way of the points I am trying to make.

So, let me reframe the debate.

---
Instead, let us say that human beings need respect and dignity, and when denied these, they are in danger of seeking out a different, and often criminal, system that allows them these qualities. Ideally, respect comes from accomplishment and dignity follows, but the reality is that both of these come from how society values you. And the truth is that society values you based on your wealth, and how it weighs against the prevailing wealth.

We can all understand the instinctive shame that comes with those who are in distressed financial circumstance. Most of us, if we are truthful, know how we instinctively shy away from anyone who is obviously poor. Will they ask us for money? Are they trustworthy? We deny them dignity and respect because of their obvious lack of wealth.

I remember well from my youth a fellow applying for some simple temporary clerical work. I overheard the backroom conversation (small temporary organization - informal decisions), with all three hirers agreeing that he seemed like he was up to the job, but two saying that they just didn't feel comfortable with him. I was curious, took a look at the candidate. As far as I could tell, his main crime was that he looked run down. His clothing was a bit tatty (this was when clothing was expensive) amd his shoes obviously old, but nothing too extreme. Probably was already earning minimum wage somewhere else, but (as I realized many years later), he wasn't going to get to the next rung, because he was just too obviously low status for anything besides minimum wage.

It is shallow, but we're a shallow society. We treat the obviously poor badly (there's no workers more abused and taken advantage of than minimum wage workers) *because* they're poor. The less wealth someone has, the less respect we accord them as human beings.

By measuring poverty on a relative scale, we are acknowledging the reality that we human beings measure the respect that they accord someone and themselves by their status, and we accord status by wealth. By measuring poverty on a relative scale, we are saying that our society is wealthy enough that we ought to accord human beings a basic level of respect and dignity, and that level of respect erodes as they becomes relatively less and less wealthy.

A man and wife who work full-time at minimum wage may be able to feed and house his family in the meanest of circumstance. Their basic needs are met, and as such, are not poverty-stricken by absolute measure. They are not deserving of our help by the measure of many people here. Yet, they and their children will have neither respect nor dignity, unless they are one of the *very* rare who can shrug off humanity's judgement. If the children make the mistake of publicly acknowledging their lack of luxuries like a microwave oven, colour TV, etc. they are subject to social expulsion (unless all their peers are similarly impoverished).

Like adults, children will tolerate some diversity in status and wealth, but there's a bottom line that few will cross. The closer to the median income they are, the closer they are to being treated like human beings.

Those who seek to make poverty a relative measure want to acknowledge that having one's basic needs met is not enough to be treated with the respect and dignity due a human being in present day America. They believe we want to strive for a society where everyone feels that they have some basic value beyond breathing and a pulse.

Inequity wasn't always this bad. The relative poverty that we see today is a fairly recent phenomena, a result of our vastly increased wealth for the most fortunate among us. We do not seek to punish the fortunate among us, but simply to continue a tradition in society in which all members were valued, a tradition that has been weathering away as the gap between the poor and the middle has grown. A growth that can be reversed without smothering the incentives that allow the growth that we have seen.

A move to make poverty a relative measure is simply a step to keep society together and maintain respect between all elements of our society.
---

Of course, in the end, it's all about envy and even more important counterpart, loathing and contempt for those who don't have wealth, but that's how I'd sell, as opposed to debate, relative poverty.

p.s. My apologies to Ann for my "choosing to be poor" crack. I've seen it a fair bit around here, but my ire was obviously misdirected.

The dogpile is getting a little heavy, no?

Actually, by *quantity* of verbiage, I fear it's me piling on the others :-) I'll leave measures of *quality* to the readers...

"I cannot think of any sane person who would rather be poverty-stricken nowadays, rather than middle class 80 years ago, although by material measure, the poor today are better off."

1926 is a very good year to pick for this comparison for your point. The American middle class thought they were doing pretty well right then, since they were still able to afford household servants (talk about status inequality!) at the same time they could buy recently invented items like cars, refrigerators, and phonographs. Their doctors did not have antibiotics yet, but they were no longer killing patients by bloodletting and by not washing their hands, and they made house calls. Finally, everyone thought their real wealth was increasing rapidly. Five or ten years later, it wasn't nearly so fun being middle class - you were too proud for welfare, but your ability to make a living was in jeopardy if not gone, and you were probably re-learning a lot of the tricks of getting by on less. Maybe they would have traded that for Medicaid with antibiotics, MRIs, etc., and for welfare paid at a rate that lets those who spend their food and rent money carefully put $100 sneakers on their children's feet and a TV set and DVD player in every room. Except that it's quite unlikely these people would have stayed on welfare long, because they worked.

But why stick to the 20th Century? Why not go back 160 years for this comparison - when many Americans were so desperate for a better life that they would spend their wealth buying could afford a Conestoga wagon, the team to pull it, and the goods to fill it, and go on a hazardous 1500 mile journey through wilderness, deserts, mountains, with hostile Indians, outlaws, rampant deadly diseases, and no doctor within hundreds of miles. (Although a lack of doctors may have sometimes been a blessing.) I don't know if you could call these people middle class, but they certainly weren't poor. That kit was pretty expensive, and no one made loans to people that were likely to die out where it was impossible to retrieve their belongings.

"Look, if you truly believe that the man at the bottom of the totem pole feels about himself (and is treated by others) exactly the same regardless of whether he's earning one quarter the income or 98% of the income of everyone else, I don't think there's much to say, except that this belief contradicts anything we know about human beings."

Tom, actually my experience is that being on the bottom of the totem pole is being on the bottom of the totem pole, period.

Inequity wasn't always this bad. The relative poverty that we see today is a fairly recent phenomena, a result of our vastly increased wealth for the most fortunate among us.

Uh...I beg your pardon? There has always been a drastic discrepancy between the rich and the poor; if anything, it's just more visible now -- because the middle class lives well and can use excessive amounts of credit to live like upper-class, and the advent of cheap, ubiquitous entertainment media enable people to perpetually view a materialistic lifestyle that is usually unobtainable to the majority of the population.

The only solution I see to that is to outlaw every television station except C-Span, close the movie theaters, and de-invent the Internet.

Tom West: "Inequality wasn't always this bad. The relative poverty that we see today is a fairly recent phenomena, a result of our vastly increased wealth for the most fortunate among us."

Inequality in the U.S. is neither good nor bad. It just indicates different priorities. On second thought, inequality of income is good because it shows that our nation is not stealing the well-earned rewards of its most productive members.

"Relative poverty" must be an invention of those do-gooder communists who so desire to control others that they create problems to solve where none exist. As I noted before, the "poor" in the U.S. enjoy a higher standard of living than 90% of the world. They possess material goods that the world's truly poor cannot even envision.

I find it disgusting that anyone would argue wealth is the result of some being the "most fortunate among us". I've worked directly with hundreds of highly compensated corporate executives and business owners. They have high incomes because they've worked harder, they've made better career choices, and they've taken more risks. It's not because they were born with high intelligence. Being highly intelligent is neither a prerequisite nor a guarantee of wealth. Being born into wealth is also not a requirement.

Taking money away from productive part of society will make this country same as european socialists democracies. Non effective and non competitive with less socialism nations even if they are like China.

Instead, let us say that human beings need respect and dignity, and when denied these, they are in danger of seeking out a different, and often criminal, system that allows them these qualities. Ideally, respect comes from accomplishment and dignity follows, but the reality is that both of these come from how society values you. And the truth is that society values you based on your wealth, and how it weighs against the prevailing wealth.

According to one survey, some of the least respected groups in society include lawyers, morticians, and used car salesmen, all of whom tend to have (as a group) higher than average incomes. Soldiers and policemen, who typically don't make that much money, are rated very near the top. How does that fit in with your wealth=status/value to society equation?

And as to dignity, that comes from within. It is not something that can be conferred by a check from the government that you did not earn, and if you truly have it it is not something than anyone has the power to take away from you.

And are you familiar with the concept of "welfare queens?" Working people have contempt for them, whether this is deserved or not, and I submit to you that taking away even more money from the people who produce wanted goods and services to give to those who don't will cause even greater resentment from the people who are being leeched off of. So much for greater social cohesion.

I do not dispute that envy is part of the human makeup, but then again the tendency to want to take another's property (theft) is too. We do not encourage theft, and for very good reasons. I don't really think we as a society should go out of our way to accomodate the envious either, for basically the very same reasons.

The idea of equalizing the wealth is rather old now, and it is based upon assumptions that history has shown to be utterly without foundation. The richest poor in the world are the poor of capitalist societies. But the idea of equality of results remains. For some it is an article of faith beyond argument, much like a Christian's belief that Jesus was divine.

In essence, it is a solution in search of a problem. If alleviating the suffering of the envious is the best justification that its proponents can come up with, it is a very, very feeble problem indeed.

"On second thought, inequality of income is good because it shows that our nation is not stealing the well-earned rewards of its most productive members."

Because we live in a winner-takes-all economy, the richest are absolutely NOT more productive and justly rich in proportion to their wealth.

"Because we live in a winner-takes-all economy, the richest are absolutely NOT more productive and justly rich in proportion to their wealth."

Not sure I understand what you mean by "justly rich in proportion to their wealth".

I have worked for outstanding corporate executives such as Jim Barksdale and Bob Crandall who were easily worth their million dollar salaries. Fred Smith, the founder of Fedex, is a billionaire because of his vision, his drive, his charisma, and his courage.

It's not only these superstars, though, that the U.S. allows to keep the "well-earned rewards of its most productive members." Most wage earners in the top 10 or 15 percent of incomes do produce much more than the average worker. If we remove the financial incentives for performance - if we redistribute their incomes to the low producers - we risk losing their high contributions.

I do not agree that we live in a winner-take-all economy. The Fred Smith's of the world, and also the mom-and-pop niche business owners, are driven to create a bigger economy. We all reap the benefits of their extraordinary efforts.

"Most wage earners in the top 10 or 15 percent of incomes do produce much more than the average worker."

The issue isn't whether a guy making $100K in a non-winner-takes-all occupation like IT is producing more value, I have no doubt of it.

The problem is that people making $1M are mostly likely NOT contributing ten times as much as the guy making $100K, but rather is the lucky winner of a winner-takes-all contest enjoying the fruits of the labors of the contest losers.

"The problem is that people making $1M are mostly likely NOT contributing ten times as much as the guy making $100K ..."

I think they must be, or else those who decided to pay them ten times as much wouldn't continue to do so.

"... but rather is the lucky winner of a winner-takes-all contest enjoying the fruits of the labors of the contest losers."

The several $1 million income guys I've known were not lucky. They had abilities and commitment the market valued.

Great post.

The problem is that people making $1M are mostly likely NOT contributing ten times as much as the guy making $100K, but rather is the lucky winner of a winner-takes-all contest enjoying the fruits of the labors of the contest losers.

Ever try to shop at Montgomery-Wards lately?

Did you noticed the recent CEO shuffle at HP?

The party at the top of any hierarchy typically has SOMEthing that makes a whole lot of other cogs rotate on cue, or else is quickly replaced by someone who does (or, option three, the company falls behind its competitors and ceases to exist).

The ability to successfully lead a group is not necessarily found in every member of that group, even if they nominally perform the same tasks. "Contest winner" talk may have merit in some cases, but can also become just another way for those who didn't get the promotion to spit at the one who did.

Comments are Closed.