A distinguishing characteristic between right and left wing thought is the importance given to the income or wealth gap (or however rich and poor is defined) between the rich and poor. The left places more importance on this statistic than do those on the right.
I am on the right and therefore feel the statistic is given too much importance. A thought experiment illustrates why. Say all the rich earn $100,000 per year and all the poor earn $25,000 per year. The gap between the rich and poor is $75,000 per year. Say I have magical power and can halve or double everyone's income. If I halve everyone's income, the gap between the rich and poor falls to ($50,000 - $12,500) = $37,500. If I double everyone's income, the gap between the rich and poor increases to $150,000.
Which group is happy if I halve their income? The rich sure aren't and neither are the poor. The poor may acquire a degree of psychological happiness due to greater income equality but not enough to offset their drop in income. Greater income equality in this extreme thought experiment results in greater unhappiness for both groups. Income equality can be undesirable.
Those on the left say take from the rich and give to the poor to reduce income equality. Income for the rich declines and income for the poor increases by the amount of redistribution. This is what our society does and is valid to a certain extent. A social safety net is desirable. However, redistribution has limits, especially at the margin. Taking from those who produce results in less incentive for them to produce. They therefore produce less. This helps no one.
There are limits to redistribution. Going beyond the limit harms everyone. Placing too great an importance on the gap statistic leads to a redistribution beyond point of harm.
Right on
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It would be more convincing were you to argue against some actual stated position, preferably as stated by someone who has some authority on the subject. As it is, you don't really seem to grasp both sides.
ReplyDeleteI've noticed these 'wealth gap' articles from time to time. I think they appeal to those who believe in zero-sum economics, and also serve to fuel envy. These are domains of the left and are best ignored.
ReplyDeletewhat don't I grasp?
ReplyDeleteThe difference between a fifty thousand dollar gap vs a 37,500 dollar gap vs a 150,000 dollar gap and a 4:1 gap vs a 4:1 gap vs a 4:1 gap.
ReplyDeleteIn short, your innumeracy is simply staggering, and indicates that nobody should take anything you say that has anything to do with numbers (let alone economics and public policy) seriously.
Well, I should qualify that somewhat. We do know you can add, subtract, multiply and divide.
And anonymous, that's not the only thing they fuel. Large disparities in income fuel social instability, poor economic planning following on regulatory capture, and eventually market collapse.... it's no coincidence that the most recent North American recession came about when the income disparity reached levels last seen on the eve of the Great Depression. Finally, if you want to argue, try making definitive statements rather than leaving yourself the weasel of "it's only my opinion". However, that of course would require you to come up with, you know... evidence supporting your blanket yet strangely incorrect statements.
You seem a little upset.
ReplyDeleteYou like ratios. Are you trying to say that the ratio is all that matters? The absolute disparity doesn't matter. If I earn $8 and you earn $2, we are both poor. There isn't much gap.
Do large disparities in income fuel social instability? We had less redistribution in the past with less social unrest.
Right on, those numbers are meaningless without the context of cost of living. Also, they're a little disengenuous; the real numbers from bottom to top on an hourly basis are eight bucks to 24,000 between a minimum wage worker and CEO making 50 million a year.
ReplyDeleteFinally, less social unrest? You should go take a look at
http://en.wikipedia.org/wiki/Labor_history_of_the_United_States
and tell me how there was less social unrest back in the good old days. Reading that admittedly brief synopsis I count at least six riots between 1850 and 1950 that was at least at the scale of the Rodney King riots... and I'm sure that there are many other smaller riots that didn't make the cut for the wikipedia article.
Yes, large disparities do fuel social instability. The way that instability is kept damped down is with repression. Go pick coffee in Colombia (or Brazil for that matter) and tell me how free those people are.
And no, I'm not upset. Thanks for asking.
http://www.youtube.com/watch?v=zJWNof0et2M
ReplyDeleteNicargaua.....
South America......
oops... here it is...
ReplyDeletehttp://www.youtube.com/watch?v=zJWNof0e2TM
Right on asks what is your point with the video?
ReplyDelete