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Post Inequality of Income
Created by John Eipper on 08/09/12 10:50 AM

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Inequality of Income (Tor Guimaraes, USA, 08/09/12 10:50 am)

John Recchiuti asked on 7 August: "... where in human history has wealth and income inequality not been this severe, or more severe?" Indeed, I believe in general mankind has come quite far in improving the living conditions for most human beings, even though people in some poor, war-torn nations are actually much worse off. Also, we still have slavery, child labor, poverty wages, bad products and services, environment pollution, poisonous food, uncomfortable airline seats, etc. We have no reason not to continue trying to improve the quality of life for all. The only questions should be, how and who should pay?

John Eipper, commenting on Alain de Benoist's post of 8 August, asked: "... is natural inequality a pre-modern idea gone forever, or are we witnessing the gradual chipping away of the ideology of equality, via inflated CEO salaries, the dismantling of the welfare state, regressive taxation, the fetishization of entrepreneurship and the like?" That is what any oligarchy would like to see.

As long as democracy is to remain functional, reasonable income equality will remain important. Brilliant theorists notwithstanding, income inequality is a powerful natural force, because wealthy people can hire the best managers, lawyers, accountants, politicians, bureaucrats, etc. That in turn will slowly undermine democracy, justice, social equality, and allow the privileged minority to increasingly treat people like a commodity. Laws and regulations are indeed risky, and effective laws are not easy to craft, but extremely important in many cases to stop the natural regression to oligarchy, monarchy, and dictatorship of some sort.

John Recchiuti stated: "Income and wealth inequality... I've come to think it is a consequence of capitalist markets (and pre-capitalist ones)." Income inequality always existed everywhere, under communism, socialism, and capitalism. More income for greater performance is a productive rule. Letting a free market decide who should get paid more or less is a fair proposition, as long as the market is not being manipulated somehow. And usually is, it is human nature. As a capitalist I will naturally always try to make more profits. The question is how far will I be willing to break ethics and the law, cut corners, or deceive consumers to maximize my profits. If I am a communist government bureaucrat I still have to answer the same questions regarding laws and ethics regarding possible bribery opportunities. The inequality may not be as sharp (not as admired) under socialism, but it is there.

Regarding John's question, "I am just not clear what policies would keep both the dynamic and expansive elements of capitalism 'firing on most cylinders' (kindle capitalists' animal spirits) while at the same time issue in a more equitable distribution of wealth and income. Overbearing government regulation really does, I think, dampen dynamic and expansive economic growth; while, of course, too little regulation (and/or misplaced monetary policy) can lead to bursting-bubbles." Precisely, that is why regulations must be carefully crafted: intelligent, flexible, and strictly enforced. Just like medicine, if it is not working stop it, modify it, or make it work to enable democracy, truly free markets, and reasonable income distribution. On these three pillars rest a continuously improving future for humanity. As John Eipper said about Gini coefficients: "Look at the rankings by nation, and the lower-Gini countries overall tend to be the ones you'd most like to live in." There is no controversy here. That is what is all about: better standards of living for the middle class.

Finally, Bienvenido Macario commented: "I'm a bit confused by Tor's post. It is as if there are no state and federal laws and government departments, bureaus, agencies and offices to implement existing laws. Is Tor saying there are US corporations that are suspected of breaking the law but could not be investigated? Or the laws are not adequate but Congress is not passing such laws, and therefore it is the fault of the private sector? Congress has not passed a budget in over three years. What does Tor think about this? Whose fault is it that Congress has not passed a budget? A lack of lobbyists?"

The government bureaucracy has been and is clearly getting paid for doing a very poor job with existing laws. Also, the corporations/top managers have "influenced" lawmakers not to pass laws they consider too restrictive or to change the laws so they can't be charged for breaking the previously effective laws. And yes, the media is full of stories about corporations/top managers breaking laws in many cases over the years and lately, i.e. during the last financial crisis.

Bienvenido asked: "Whose fault is it that Congress has not passed a budget and laws" that protect democracy, free markets, and a more fair distribution of income? Ultimately I blame the American people, including myself for not doing enough. People are too distracted, misinformed, or lazy to care about what is going on. Meanwhile their wallets are thinner, have lower quality of living, and their opinions are mostly ignored by their government. Further, we elect to govern too many ignorant, single-issue minded, ideological/religious zealots who are there to further their own agenda. Our own Supreme Court is also destructive of democracy for now allowing unlimited corporate money to influence elections. "A lack of lobbyists?" There are none pushing for the interests of the middle class and there are too many pushing for private interest groups. Guess who is winning?

JE comments: We love to hate lobbyists. So here's a question I've never asked: has anyone in WAISdom actually worked as one? (I don't think we have any active lobbyists in our ranks, but I'm not 100% sure.) Don't most lobbyists prefer to call themselves something different--like consultants?  Facilitators?  Discuss. We haven't subjected lobbying to a thorough WAIS analysis. Ever. As always, it would be good to widen our scope to include an international perspective.


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