We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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Samizdata quote of the day The key point though is that overall wealth inequality just isn’t rising. In fact, wealth inequality is low by historical standards. Looking at the wealth share of the top 10 per cent and top one per cent, it peaked around 1914, and then fell substantially through to the 1970s. Though there is some academic dispute about movements since then, the consensus is that it has either risen very modestly or remained essentially stable since the 1980s.
In other words, levels of wealth inequality are neither unprecedented nor exploding. In fact, they’d look a whole lot lower if implicit wealth entitlements, such as the state pension and healthcare promises by government, were included.
– Ryan Bourne
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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“inequality perked in 1914” in nearly all countries society was better than it had EVER been before in 1914 – therefore the idea (pushed by the education system and the mainstream media) that in inequality is in-its-self a bad thing (leading to terrible consequences) is clearly mistaken.
Someone whose income doubles but is deeply upset because someone else’s income has tripled (or increased by a multiple of ten – or whatever) is sick – and that spiritual sickness is ENVY.
As for the idea of the left that high taxes reduce inequality – if that was the case then California and New York City (which have the highest taxes on the rich) would be known for equality, which is most certainly NOT the case.
Take the case of California – a State of some 30 million (plus) people. In California about five thousand (yes five THOUSAND) people pay almost half the State income tax (the biggest source of revenue for the State government). Would the poor be better off if these five thousand people were taxed to destruction?. No the poor in California would not be better off – in fact they would (if they could not leave the collapsing society) die in heaps.
I never understood why we’re supposed to be exercised about it. I am of very modest means, and it bothers me not a whit that someone else has more money than I do, if he acquired honestly and didn’t pick my pocket.
(Contrarian time.)
I’ve always been a fan of Thatcher, and loved her for her characterization of Simon Hughes’ thought as “he would rather that the poor were poorer, provided that the rich were less rich”.
But the one argument I’ve seen decrying financial inequality that I think has merit is that it isn’t an issue of economic inequality so much as one of political power.
If some small element in society has hugely disproportionate economic strength, then I can always be outbid in any market. But this turns out not to matter as much as it might. The ultra-rich can always outbid me for loaves of bread, but once they have enough, they’re no longer bidding. Plus, while they can buy as many Lamborghini Venenos as they wish, they deprive me of nothing by doing so, and in fact might provide employment for me making said cars.
The danger of inequality comes about when the ultra-rich buy up the bread and hand it out to others in exchange for their votes. This subverts democratic principles. Huge income disparity swings more political power to the small subset who are wealthy.
Why else do progressives always seek to bring in poor immigrants? It wouldn’t boost their own power if they brought in people who had no need for their assistance.
Wealth inequality is nonsense in even a semi-free market system. Bill Gates becoming fantastically rich made everyone else richer too. Even that jerk-ass J.K. Rowling becoming a billionaire made everyone else better off, directly or indirectly.
Why?
Because people engage in voluntary trade to Mutual benefit. People trade $20 for a Harry Potter book only when they want the book more than the $20, or anything else that that $20 would buy.
It’s difficult for people to understand, but both parties in a trade grow wealthier by trading, or both parties would not choose to trade. Wealth creation is positive-sum rather than zero-sum.
That’s the key appeal of the Marxist argument, though. That somehow you would have had the money if the greedy capitalists hadn’t somehow taken it instead.
So, someone who got rich by providing people with goods that they want and that they willingly hand over their money to acquire = Bad. Politician who got rich by picking people’s pockets and maybe giving them something back in return if he feels like it = Good.
Stonyground, why did it take you so long to realize a political truth? Or are you just recapping for the younger Samizdatites?
But the one argument I’ve seen decrying financial inequality that I think has merit is that it isn’t an issue of economic inequality so much as one of political power.
The obvious solution is for the state to have less power.
Another point worth making, regarding how French academic Thomas Piketty asserts that investment returns grow faster than GDP over the long run, accentuating inequality, is that it is based on shoddy economics and selective reading of history. For example, here are comments via the CATO Institute about how dynastic wealth dissipates over time:
One of the other obvious faults with the obsession with inequality – and I thought about this last night after watching a shockingly bad TV programme last night…….is it ignores the changes in the composition of the rich over time. Take a freeze-frame photo of wealth distribution, and you will get a picture of X% of the public owning this or that “disproportionately large” share of total wealth, a situation that ignores even such basic facts as that most people accumulate more wealth as they age, as part of savings for retirement. Strip out that factor, as well as the many state transfer payments (not just to the poor), and the effects of QE in boosting asset prices, and political favouritism, etc, the injustices of current wealth patterns largely disappear.
Finally, though he is not universally beloved by some libertarians, Robert Nozick’s classic demolition on egalitarianism in Anarchy, State and Utopia remains one of those writings I recommend to anyone who cares to do so. Also, Equal is Unfair by Yaron Brook and Don Watkins is a great read and covers a lot of useful territory.
Aha! Wealth distribution.
A perfect excuse to refer my honourable colleagues (once again) to the magnificent Hans Rosling:
Hans Rosling debunks myths about the so-called “developing world.”
https://www.ted.com/talks/hans_rosling_shows_the_best_stats_you_ve_ever_seen
The world is getting better (despite the TV and news headlines which don’t report good news)
Does anyone ever attempt to take diminishing returns into account when comparing the wealth of different people? A Rolls-Royce is pretty much the same as a Ford Mondeo, for example.
“In fact, they’d look a whole lot lower if implicit wealth entitlements, such as the state pension and healthcare promises by government, were included.”
Known among the select few as “Worstall’s Fallacy”. To worry about the extent of a problem without considering what we already do to reduce the extent of that problem. We measure income inequality after taxes and benefits, so that we know if we need to do more (or less). We measure wealth inequality *before* all the things we do to reduce it. The welfare state reduces inequality, that’s why it’s done – it makes the poor richer. We must include the effects of the welfare state in our measure of the wealth distribution therefore so that we can decide whether more should be done or not.
We don’t. Even Jamie Galbraith (James Galbraith fils) agrees with me that measuring wealth distribution without considering the welfare state is ridiculous.
To show how bad this is. A funded pension pot is counted as wealth. This is important as pensions savings are a considerable portion of wealth in a modern society tens of percentage points of total household wealth. An unfunded pension isn’t. So those government paid pensions which are funded from general tax revenue, or on a paye basis from current employees, are not wealth. Nor is the state pension wealth.
All three are inflation proofed annuities, payable until you die. But only one of the three is counted as wealth.
Income inequality in the UK goes from 12 to 1 (ratio of household incomes of average of top 10% of households to bottom 10%) counting purely market incomes to 4 to 1 after taxes, benefits and government produced goods and services (this is a TUC number). That second is of course the important one to consider when discussing how much more redistribution we should or should not do. The wealth distribution will be subject to the same effect even if of indeterminate size at this point.
Not only does this get to the gist of wealth inequality, it also gets to the gist of why trade deficit is nonsense. In rational free trade all parties grow wealthier. It’s not at anyone else’s expense. However, stir in stupidity and Promises of political favor as alleged currency , then we have bad trade.
Going by today’s spot price of gold (per Kitco) and of a painted original Queen Anne desk ( http://english-classics.net/furniture/t/queen-anne/http://english-classics.net/furniture/t/queen-anne/ ),
let’s say I have 1/2 oz. of gold and you have such a desk. We trade. (I happen to love that particular desk, and you are Scrooge McDuck.)
If by “wealth” you mean the market financial value of these two assets, neither of us is wealthier than before. Neither is “society,” going by financial worth of the totality of financial assets held by its members (or groups of members).
If by “wealth” you mean ownership of things one loves or highly desires, both of us are wealthier than before.
There is more than one concept of “wealth.” We must be very, very careful to be clear about what concepts our terms refer to.
There is the added difficulty that some people will understand and accept almost at once a given term as referring to your particular concept, at least for the sake of the argument, whereas others have considerable difficulty replacing their own understanding of the term with yours.
None of that is news, and it applies to most concepts deeper than a 1″ puddle, including that of wealth.