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Income inequality exists, but is it a problem, an existential threat? No.

Xelor

Xelor

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The pain in your belly isn't the problem; it's what tells you there is a problem. Your infected appendix is the problem. Doctors can stop the pain very easily, but doing so won't stop your appendix from rupturing.
-- Xelor​


Income inequality (IE) is the disparity between the income earned by any two or more individuals or by any two or more groups. IE exists. The question is this: Is IE itself a problem? IE is not a problem; it is, at best, a symptom of a problem.

Why IE isn't a problem is easily seen:

Consider the following individuals as analogues for various quantities of people (in parens).​


  • [*=1]Pat --> $18K/year (several million)
    [*=1]Tom --> $80K/year (several tens of millions)
    [*=1]Horace --> $180K/year (several tens of millions)
    [*=1]Hank --> $800K/year (several million)
    [*=1]Mark --> $8M/year (tens of thousands)
    [*=1]Bitsy --> $80M/year (several hundred)

So:​

  • [*=1]If you are one of the above individuals, what matters?

    • [*=1]Whether you make enough money to sustain yourself?
      [*=1]Whether someone else makes more money than you or you than they?
    [*=1]Assume we pass a law that forces the Pats' employers to pay a minimum of $32K/year, which is still not enough to sustain oneself.

    1. [*=1]All of the following are likely to occur.

      • [*=1]The Pats' employers raise the price of the goods they sell so as to pay the Pats' higher wages and no suffer an income loss. Everyone, including Pat, via the prices they pay for things, pays for Pat's raise.
        [*=1]The Pats, who now earn more money, may buy more stuff because they have slightly more discretionary income. What happens when demand increases? Prices increase too. So the Pats permanently or temporarily better off? In the long-run, the Pats are just as poor as before, but poor at $32K instead of at $18K.
        [*=1]The Pats' employers consider whether it's cheaper in the long run to replace a Pat with a machine.
      [*=1]Did the Pat's pay raise lower anyone else's income? No.
      [*=1]Is Pat still pissed because he can't sustain himself? Yes.
    [*=1]Perhaps one cares to think of IE as a social welfare (SW) matter. (See post 1 "here" and its linked content to understand what economic SW is and the four models of it.) Of the four extant models, which do you prefer?

    • [*=1]Benthamite/Utilitarian model
      [*=1]Rawlsian model
      [*=1]Nozickian model
      [*=1]Commodity Egalitarian model
Supplemental information:
​
It's high time folks stop griping about IE and start griping about and solving the problems that give rise to IE. The fact that someone makes more money than you isn't the problem. The fact that you don't make enough is the problem. Our society needs to find ways, given the way the capitalist market works, to give people who lack skills that don't command a "sustaining" wage the skills the market demands to the extent that it pays those people a "sustaining" wage. Why? Because wages are nothing other than the price of human physical and mental labor and the current market demands more mental labor and less physical labor.

Only when mankind is using the principle of maximizing the summation of units of marginal indifference in the pursuit of their interests and in the resolution of their conflicts, can mankind proudly declare that it has passed through the era of irrationality into the era of rationality.
-- Yew-Kwang Ng​
 
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Inequality is okay. Inequality through unearned income and exploitation of the poor by the rich is not okay.

fredgraph.png


fredgraph.png


I hope that they crash again.
 
phattonez said:
Inequality is okay. Inequality through unearned income and exploitation of the poor by the rich is not okay.

fredgraph.png


fredgraph.png


I hope that they crash again.
Click to expand...
Red:
The thread question/topic isn't whether IE is okay or not okay. The thread question topic is whether IE is an existential threat or problem and if so, what consequences has it.
 
Xelor said:
Red:
The thread question/topic isn't whether IE is okay or not okay. The thread question topic is whether IE is an existential threat or problem and if so, what consequences has it.
Click to expand...

You stated:

Xelor said:
The question is this: Is IE itself a problem?
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I answered it. And as it is currently established, yes it's a threat. The consequence is that a small clique of idle financial elites will run our economy and dictate policy. That's effectively already what's happening.
 
phattonez said:
Inequality is okay. Inequality through unearned income and exploitation of the poor by the rich is not okay.


I hope that they crash again.
Click to expand...

The poor are not particularly exploited these days with the Government constantly handing them money and services, it is the vast middle that is exploited more, which is killing the middle and which is killing the nation.
 
Xelor said:
Red:
The thread question/topic isn't whether IE is okay or not okay. The thread question topic is whether IE is an existential threat or problem and if so, what consequences has it.
Click to expand...

The consequences is that a select few have the ears and votes of an entire electorate in the senate and executive branch of our government and as such laws and policy are voted on as such.

Tell me, is it easier to change the minds of millions of people, or only a few select CEOs?
 
Praxas said:
The consequences is that a select few have the ears and votes of an entire electorate in the senate and executive branch of our government and as such laws and policy are voted on as such.

Tell me, is it easier to change the minds of millions of people, or only a few select CEOs?
Click to expand...

"The Easy Road is the one to take".

America @ 2018
 
Missing from your example are those between Pat and Tom. Suppose that Fred makes $32K and Jane makes $36K - IRL when you greatly increase Pat's pay (greatly raise the MW?) then Pat gains significant ground on those making up to 3X the MW but who possess much more advanced job skills than Pat does. That can be seen as artificially closing the job skills gap yet many (up to at least 3X the prior MW) will likely lose ground as prices of most (all?) goods/services increase.
 
Hawkeye10 said:
The poor are not particularly exploited these days with the Government constantly handing them money and services, it is the vast middle that is exploited more, which is killing the middle and which is killing the nation.
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Seems the stupid middle class would be better off if they quit their jobs and joined the poor people’s gravy train. I see some very attractive tents in homeless camps near me.

What IS general assistance or welfare in your county? Check it out, you might be better off.
 
Nickyjo said:
Seems the stupid middle class would be better off if they quit their jobs and joined the poor people’s gravy train. I see some very attractive tents in homeless camps near me.

What IS general assistance or welfare in your county? Check it out, you might be better off.
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Maybe we can all just live off of our investments like the idle rich. An entire economy can work that way, right?
 
phattonez said:
Maybe we can all just live off of our investments like the idle rich. An entire economy can work that way, right?
Click to expand...

You know over the last 25 years people have actually been heard making that Argument, that if we structure the economy right most people will no longer need to work or at least they will be able to work only lightly. We may get to that someday, But I doubt it, the New Chinese Empire has no interest in that, and it looks like they are going to be the primary deciders after the current world order crashes.
 
Hawkeye10 said:
Trump is the opposite of the Easy Road travelers....Try again if you like.
Click to expand...

NO, he takes the easy road every time. If someone makes a comment against him, he takes the easiest approach and abuses his power to retaliate instead.
 
Hawkeye10 said:
You know over the last 25 years people have actually been heard making that Argument, that if we structure the economy right most people will no longer need to work. We may get to that someday, But I doubt it, the New Chinese Empire has no interest in that, and it looks like they are going to be the primary deciders after the current world order crashes.
Click to expand...

Not until we have robots doing all of the farming, and robots building all the housing and make all the clothing.
 
phattonez said:
Inequality is okay. Inequality through unearned income and exploitation of the poor by the rich is not okay.

fredgraph.png


fredgraph.png


I hope that they crash again.
Click to expand...

So the poor man wants the dignity of earning the money for his meal instead of begging and asks for a job knowing there isn't an opening but hoping the rich man will give him an opportunity. And the rich man doesn't really need another worker, but wishes to grant that man dignity and gives him a day job picking up trash around the premises.

Which is exploiting the other? Do I exploit my employees when I profit from the work/labor/expertise/experience they provide? Or are they exploiting me by taking wages and benefits that I provide and that they need? If things go as they should, I will profit more from their labor than they individually will profit from the jobs I provide. But then again they don't take the risks that I take in running a business.

Very few of us have the luxury of working for the pure fun of it. The huge majority in any society will be working, as Adam Smith put it figuratively, for its own dinner. And because that is accomplished by interaction with others who are also working for their own interests might be called simple cooperation by some and will be called exploitation by others. Some will have the temperament, instincts, work ethic, etc. that is required to profit enormously while others will profit only modestly. And as long as our choices are voluntary, there is no dishonorable or unethical exploitation involved.

And that is why as far back as we can go in recorded history we will find the poor among the rich and everything in between in all societies.
 
phattonez said:
I answered it.
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You just keep thinking that....


phattonez said:
And as it is currently established, yes it's a threat. The consequence is that a small clique of idle financial elites will run our economy and dictate policy. That's effectively already what's happening.
Click to expand...
Irrelevant, unless one is of a mind that the economy of the U.S. has never been "good." From the nation's inception, it has been the case that a "small clique" of financial elites run our economy.
The Founding Fathers didn't give a tinkers' dam about income inequality for good reason: it is a symptom of a problem, not a problem unto itself.
Income inequality, as the IMF wrote income inequality signals a "lack ofincome mobility and opportunity―a reflection of persistent disadvantage for particular segments ofthe society." That it exists tells us there is a a problem that needs solving. One must discern what is causing income inequality, not conjure ways to directly attenuate income inequality itself.

Does acknowledging that IE is but a symptom, rather than a problem, alter anything? Yes. It redirects one's focus to either (1) determining what is the cause of IE or (2) taking actions to abate IE's causes.
 
phattonez said:
Not until we have robots doing all of the farming, and robots building all the housing and make all the clothing.
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That is the Western Wet Dream but the Chinese have no interest in that, according to them work is required to keep the human well functioning, they will insist that work be created if need be.
 
AlbqOwl said:
So the poor man wants the dignity of earning the money for his meal instead of begging and asks for a job knowing there isn't an opening but hoping the rich man will give him an opportunity. And the rich man doesn't really need another worker, but wishes to grant that man dignity and gives him a day job picking up trash around the premises.

Which is exploiting the other? Do I exploit my employees when I profit from the work/labor/expertise/experience they provide? Or are they exploiting me by taking wages and benefits that I provide and that they need? If things go as they should, I will profit more from their labor than they individually will profit from the jobs I provide. But then again they don't take the risks that I take in running a business.

Very few of us have the luxury of working for the pure fun of it. The huge majority in any society will be working, as Adam Smith put it figuratively, for its own dinner. And because that is accomplished by interaction with others who are also working for their own interests might be called simple cooperation by some and will be called exploitation by others. Some will have the temperament, instincts, work ethic, etc. that is required to profit enormously while others will profit only modestly. And as long as our choices are voluntary, there is no dishonorable or unethical exploitation involved.

And that is why as far back as we can go in recorded history we will find the poor among the rich and everything in between in all societies.
Click to expand...

You misunderstand. I love business owners. You do great work and you're critical for a good economy. What I'm complaining about is the IDLE rich, those who live off of unearned income.
 
AlbqOwl said:
So the poor man wants the dignity of earning the money for his meal instead of begging and asks for a job knowing there isn't an opening but hoping the rich man will give him an opportunity. And the rich man doesn't really need another worker, but wishes to grant that man dignity and gives him a day job picking up trash around the premises.

Which is exploiting the other? Do I exploit my employees when I profit from the work/labor/expertise/experience they provide? Or are they exploiting me by taking wages and benefits that I provide and that they need? If things go as they should, I will profit more from their labor than they individually will profit from the jobs I provide. But then again they don't take the risks that I take in running a business.

Very few of us have the luxury of working for the pure fun of it. The huge majority in any society will be working, as Adam Smith put it figuratively, for its own dinner. And because that is accomplished by interaction with others who are also working for their own interests might be called simple cooperation by some and will be called exploitation by others. Some will have the temperament, instincts, work ethic, etc. that is required to profit enormously while others will profit only modestly. And as long as our choices are voluntary, there is no dishonorable or unethical exploitation involved.

And that is why as far back as we can go in recorded history we will find the poor among the rich and everything in between in all societies.
Click to expand...

What is new is the vast numbers of people who have no interest in working, often have no ability to work because they are weak and stupid, and also dont think that they should have to.

This is important.
 
Hawkeye10 said:
What is new is the vast numbers of people who have no interest in working, often have no ability to work because they are weak and stupid, and also dont think that they should have to.

This is important.
Click to expand...

What's the point of working when you can't afford the rent anyway?
 
phattonez said:
You misunderstand. I love business owners. You do great work and you're critical for a good economy. What I'm complaining about is the IDLE rich, those who live off of unearned income.
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That is not new in the least, what we have not seen from the idle rich in a long time is the willingness to do what ever it takes to get more regardless of how much they harm other people in the process...a complete disinterest in the common good, in the health of their societies.

This is cancer, and we know where it goes.
 
phattonez said:
What's the point of working when you can't afford the rent anyway?
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What is the point of working when you can do nothing, claim to be a victim, and have it given to you?
 
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