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#1
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I thought the rising tide of the invisible hand was supposed to raise all boats, not raise the boats of the top 10% and sink the rest.
http://www.boston.com/business/globe...idens_in_2005/ Quote:
__________________
Self-fulfilling prophecy: hippopotomonstrosesquippedaliophobia is the fear of long words. |
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#2
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Quote:
Well, you know the old saying, "why is it whenever we see the workings of the invisible hand, it always has its middle finger raised?" However, you have to be careful about how you measure income inequality. I'll just cut and paste from the "income inequality" article at wikipedia. (* * *) Criticisms of Income Inequality Metrics 1. It is not clear how income should be defined. Should it include capital gains, imputed house rents from home ownership, and gifts? If these income sources or alleged income sources (in the case of "imputed rent") are ignored (as they often are), how might this bias the analysis? How should non-paid work (such as parental childcare or doing ones own cooking instead of hiring a chef for every meal) be handled? Wealth or consumption may be more appropriate measures in some situations. Broader metrics of human well-being might be useful. 2. Should the basic unit of measurement be households or individuals? The Gini value for households is always lower than for individuals because of income pooling and intra-family transfers. The metrics will be biased either upward or downward depending on which unit of measurement is used. 3. These income inequality metrics ignore life cycle effects. In most Western societies, an individual tends to start life with little or no income, gradually increase income till about age 50, after which incomes will decline, eventually becoming negative. This will have the effect of significantly overstating inequality. It has been estimated (by A.S. Blinder in The Decomposition of Inequality, MIT press) that 30% of measured income inequality is due to the inequality an individual experiences as they go through the various stages of life. 4. Should real or nominal income distributions be used? What effect will inflation have on absolute measures? Do some groups (eg., pensioners) feel the effect of inflation more than others? 5. How do we allocate the benefits of government spending? How does the existence of a social security safety net influence the definition of absolute measures of poverty. Do government programs support some income groups more than others? 6. Income inequality metrics are seldom used to quantify and examine the causes of income inequality. Some alleged causes include: life cycle effects (age), inherited characteristics (IQ, talent), willingness to take chances (risk aversion), the leisure/industriousness choice, inherited wealth, economic circumstances, education and training, discrimination, and market imperfections. (* * *) But in spite of that, a system where the rich get richer and the poor can barely keep up doesn't exactly do wonders for a country's long-term stability. --JB |
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#4
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Did you read the last sentence of the quoted section?
__________________
Self-fulfilling prophecy: hippopotomonstrosesquippedaliophobia is the fear of long words. |
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#5
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I wonder what the equilibrium income distribution would look like and how it compares to the actual right now.
__________________
Knock my block off. |
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#6
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Here is another point of view. I do not completely agree, but they do make some good points IMO.
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#7
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Those points are mostly moot if comparing inequality within the same society in different (but not too distant) years using the same measurements and methods.
Yes, the middle finger of the invisible hand is raised in a number of ways: - Taxing hard-earned income more than passive income - Corporate tax policies that encourage offshoring - Corporate welfare - Laws that tilt the market to favor big corporations over individuals and small companies (e.g. the overly permissive patent system which allows BigCorps to accumulate massive patent portfolios to use against the small players)
__________________
Self-fulfilling prophecy: hippopotomonstrosesquippedaliophobia is the fear of long words. |
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#8
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So this is the argument, I think: 1. Wealth is a sign of productive individuals. 2. Productive individuals become rich. 3. Therefore, all rich are productive individuals, who earned their cash by the sweat of their brow. Or, restated 1. Egalitarians hate people having more than they do. (One can argue this one to death.) 2. Productivity is a sign of moral good. 3. Since the rich are productive (see above), then they are all morally good. 4. Therefore anyone would would one to curtail the income of a wealthy person, for whatever reason, is evil. 5. Therefore, anyone calling for some solution to the problem of income inequality is evil. Interesting argument. Of course, I'm not going to tell you how I'm defining "interesting" in this case. --JB |
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#9
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I have mixed feelings about income inequality. I think it is OK as long as social mobility really does exist, and someone can work their way out of it. I think that is becoming more difficult with rising education costs and the need to have a higher education to break out of the lower ranks.
I do think that the rich are disproportionately benefitting from the way our society is currently structured and feel that even though they currently pay a big chunk of the countries tax bill - that could be pushes up a notch or two. There is a lot of noise in income inequality, especially as the baby boomers are nearing retirement, so it would be hard to argue that the full 14% increase they have seen is policy driven, but at least some of it very well could be. Our government is what has allowed them to become rich - paying a higher tax rate is just part of the territory that will preserve that policy. |
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#10
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Quote:
__________________
Knock my block off. |
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