Why relative inequality matters
 

In the thread on inequality recently, a poster claimed that relative inequality is unimportant. This is so clearly fraudulent at the national level that it surprises me that anybody honestly believes it to be true. Obviously, relative inequality would matter simply because of diminishing marginal utility. But, in a paragraph from a recent essay , Chris Bertram summarizes several other reasons why this inequality matters at the domestic level.

"Domestically, it seems to me that relativities in wealth and income matter because of the way that they can impact upon people’s absolute levels of well-being . There are a number of components to this, and I needn’t rehearse the arguments in grim detail. Amartya Sen goes through some of them in his well-know essay “Poor Relatively Speaking”: if wealthier people come to have access to new technologies, and if access to important goods get mediated through access to those technologies, then the poor who lack such access will find it harder and more expensive to supply their needs. You can run this one from everything from cars and out-of-town shopping centres to the internet. Second there are arguments about how inequalities in wealth and income undermine political equality. Third there are the Frank-style arguments about how relativities impact directly upon happiness. Fourth there are the Marmot and Wilkinson (the other one) arguments about how inequality impacts on health. Fifth, there arguments such as those put forward by Adam Swift concerning how people can translate their advantage in wealth and income into better educational opportunities for their children and place them better in the queue for jobs that those of poorer individuals. Some of these arguments may have flaws (I’m inclined to be more skeptical about the Frank ones than the others) but together they make a compelling case for the idea that inequality is bad for people, domestically"

In the rest of the short essay, he goes on to argue that inequalities between nations are less important because these considerations don't seem to apply (obviously, some people consider them to be unfair, and diminishing marginal utility still applies).

Re: Why relative inequality matters
 

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if wealthier people come to have access to new technologies, and if access to important goods get mediated through access to those technologies, then the poor who lack such access will find it harder and more expensive to supply their needs. You can run this one from everything from cars and out-of-town shopping centres to the internet.

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This seems like a very poor argument considering technology usually gets cheaper and more accessible as time goes by. Take cars. When first invented, they were only for the rich man. Then Henry Ford came along and suddenly cars could be had by more and more people. Nowadays, even quite poor people can own a car. Computers are the same way. Started off quite expensive, but now are getting cheaper and cheaper. The incentive to make expensive goods that the rich buy more accessible is massive considering there are far more non-rich people.

Re: Why relative inequality matters
 

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if wealthier people come to have access to new technologies, and if access to important goods get mediated through access to those technologies, then the poor who lack such access will find it harder and more expensive to supply their needs. You can run this one from everything from cars and out-of-town shopping centres to the internet.


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This seems like a very poor argument considering technology usually gets cheaper and more accessible as time goes by. Take cars. When first invented, they were only for the rich man. Then Henry Ford came along and suddenly cars could be had by more and more people. Nowadays, even quite poor people can own a car. Computers are the same way. Started off quite expensive, but now are getting cheaper and cheaper. The incentive to make expensive goods that the rich buy more accessible is massive considering there are far more non-rich people.

[/ QUOTE ] Your comment is a non-sequitur; it does not show that the argument is poor. All your argument says it their is some factor that makes technology cheaper at work; it doesn't change the fact that the claim being made their is true.

I wish I could give you a link to Amartya Sen's (Who recently won the Nobel Prize in Econ) original article on this in case you don't understand it fully from that statement, but it's not online.

It's funny that you mention cars, however. One of Sen's examples is that the invention of the car made things worse for people who didn't have a car, because the invention of the car (predictably) lowered the quantity and quality of other types of transportation, caused jobs to move from the city to the suburbs (harder to reach for people living in the city without a car) and even allowed the affluent who worked in the city to live in the suburbs, decreasing the property values and tax revenue within the city.

This shows how you misinterpreted the argument in another way. Your last line in your critique of the argument is "The incentive to make expensive goods that the rich buy more accessible is massive considering there are far more non-rich people". but the article said "wealthier" vs. "poor"; this factor has it's largest negative effect on those who have lower (especially considerably lower) than the average income. Their are far fewer people who have less than half of the median income (by definition) than their are those who have close to the median income or above; hence, if the market caters to the many instead of the few like you claim, that would in fact strengthen the claim (properly comprehended). In fact, in direct contradiction to your ostensible critique of this argument, generally speaking, the more people who have access to these new technologies, the larger the negative effect on those who do not have access.

Re: Why relative inequality matters
 

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One of Sen's examples is that the invention of the car made things worse for people who didn't have a car, because the invention of the car (predictably) lowered the quantity and quality of other types of transportation

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As an aside, I would just like to point out that the reason for the lowering of quantity and quality of other types of transportation, trolleys in particular, was entirely due to government and had nothing to do with market forces.

Although, its almost a moot point since the entire transportation infrastructure of the United States is state run.

Google "Taken For A Ride" and read a little bit about it if you are unfamiliar.

Re: Why relative inequality matters
 

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As an aside, I would just like to point out that the reason for the lowering of quantity and quality of other types of transportation, trolleys in particular, was entirely due to government and had nothing to do with market forces.

Although, its almost a moot point since the entire transportation infrastructure of the United States is state run.

[/ QUOTE ] The reason that the quality of the government provided transportation declined was because of the invention of the car; if nobody had a car, then politicans would have to keep these means of transportation running effectively, or people who used this kind of transportation (everybody) would not vote for them.

And, if the "transportation infrastructure" was/is not state run but instead of market forces, than quantity and quality would still decrease. The market forces/gov't dichotomy here is a false one; market forces effect how and what the gov't does (therefore, to claim that because the gov't did something does not show that that action "has nothing to do with market forces"), and if the gov't didn't run all the other means of transportation (which it actually doesn't) then inequality in access would still have made the poor worse off.

Re: Why relative inequality matters
 

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Your comment is a non-sequitur; it does not show that the argument is poor. All your argument says it their is some factor that makes technology cheaper at work; it doesn't change the fact that the claim being made their is true.

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My point was that such situations don't last forever as there are incentives to delivering goods and services that only the rich could once afford. IOW, the inequality is temporary and rectifiable without the need for gov't intervention. Not only that, usually expanding such goods and services gives people new opportunities for jobs.

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I wish I could give you a link to Amartya Sen's (Who recently won the Nobel Prize in Econ) original article on this in case you don't understand it fully from that statement, but it's not online.

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If you find it, please post it. I'd be interested to hear the argument fleshed out further.

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It's funny that you mention cars, however. One of Sen's examples is that the invention of the car made things worse for people who didn't have a car, because the invention of the car (predictably) lowered the quantity and quality of other types of transportation, caused jobs to move from the city to the suburbs (harder to reach for people living in the city without a car) and even allowed the affluent who worked in the city to live in the suburbs, decreasing the property values and tax revenue within the city.

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There are positives to this, however. Goods can be transported quicker, which lowers their cost. People moving out of the cities can keep those cities from being overcrowded. And I'd have to wonder at what the alternatives are as well. Not allow people to leave the city because it might lower some already low property values? That sounds like a type of imprisonment. So I guess to the extent that the bads outweight the goods (assuming for the sake of your argument that they do), the alternatives sound worse.

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In fact, in direct contradiction to your ostensible critique of this argument, generally speaking, the more people who have access to these new technologies, the larger the negative effect on those who do not have access.

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That may be, but with increasingly efficient manners of producing those goods, the small portion that can't afford the new technology shrinks. And again, the alternatives seem undesirable.

My most productive response to date.
 

I have a response to this. It sufficiently demonstrates why structuring the economy to meet the needs of irrational human heuristics is doomed. However, it is very long, and I doubt that anyone other than you will read it; accordingly I don't feel like writing it.

Know that it is good.

Re: Why relative inequality matters
 

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There are positives to this, however.

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I'm not saying that cars (or any other innovations) should be banned, obviously, I'm saying relative inequality should be decreased, mitigating the negative effects that the introduction of and increasing access to new technologies have on the less advantaged.

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IOW, the inequality is temporary and rectifiable without the need for gov't intervention. Not only that, usually expanding such goods and services gives people new opportunities for jobs.

[/ QUOTE ] Whether or not the "long run" will eliminate this (which is deeply implausible; cars were introduced 100 years ago and these negative effects are still being felt by people who do not have them. Just how long is this "long run"? 100 years is longer than the life of a human being) is irrelevant to whether or not gov't action is desirable. This sort of mystical belief that "in the long run everything will be ok" is no excuse for not doing anything in the short run. One of the masters has already put this better than I ever could:

"...this **long run** is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again"

-Keynes, giving perhaps the most concise refutation of laissez-faire of all time.

Re: Why relative inequality matters
 

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I'm not saying that cars (or any other innovations) should be banned, obviously, I'm saying relative inequality should be decreased, mitigating the negative effects that the introduction of and increasing access to new technologies have on the less advantaged.

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How do you plan to do that? Especially in such a way that there are still incentives to mass produce the new technology for the rest of the public?

Re: Why relative inequality matters
 

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How do you plan to do that? Especially in such a way that there are still incentives to mass produce the new technology for the rest of the public?

[/ QUOTE ] I can think of a lot of different ways to decrease relative inequality without toppling incentives; most industrialized democracies have used some of them at one point in time. The reason that Japan, Germany, Sweden, Norway (et al) have less relative inequality than the U.S. is not a big mystery but a clear consequence of the rules of the game and government programs.

Over the past 50 years growth and inequality (measured by the Gini) amongst advanced capitalistic nations has been negatively correlated, not positively; correlation is of course not causation, but this is something to keep in mind before you just assume that more equality necessarily leads to less growth.

Re: Why relative inequality matters
 

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How do you plan to do that? Especially in such a way that there are still incentives to mass produce the new technology for the rest of the public?

[/ QUOTE ] I can think of a lot of different ways to decrease relative inequality without toppling incentives; most industrialized democracies have used some of them at one point in time. The reason that Japan, Germany, Sweden, Norway (et al) have less relative inequality than the U.S. is not a big mystery but a clear consequence of the rules of the game and government programs.

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So to answer the question....

Re: Why relative inequality matters
 

Mostly with progressive taxation and universal social programs that tend to benefit the less advantaged the most, along with some more subtle things such as seperating school funding from property taxes. Their are also institutional/structural reasons why U.S. CEOS make close hundreds of times as much as the average worker, whereas German CEOs only make about 20 times the average worker's wage (and it isn't because the average employee makes less in Germany; they actually make more).

Re: Why relative inequality matters
 

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Mostly with progressive taxation and universal social programs that tend to benefit the less advantaged the most, along with some more subtle things such as seperating school funding from property taxes.

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I think you're just using this as an excuse to try and shove this stuff down.

Re: Why relative inequality matters
 

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Mostly with progressive taxation and universal social programs that tend to benefit the less advantaged the most, along with some more subtle things such as seperating school funding from property taxes.


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I think you're just using this as an excuse to try and shove this stuff down.

[/ QUOTE ] ?????????????

Re: Why relative inequality matters
 

More taxes and social programs just seem to be your answer for every perceived ailment of mankind.

Re: Why relative inequality matters
 

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In the thread on inequality recently, a poster claimed that relative inequality is unimportant. This is so clearly fraudulent at the national level [..]

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What's a nation? What's inequality? What's relative in equality?

Re: Why relative inequality matters
 

Your link is broken (at least when I tried it), but the paragraph you quote and the stuff you claim reminds me rhetorically of YEC's who maintain the long discredited notion that the Earth is only 6000-10,000 years old. I find it almost quaint that people still cling to the leftist class warfare nonsense.

Re: My most productive response to date.
 

[ QUOTE ]
I have a response to this. It sufficiently demonstrates why structuring the economy to meet the needs of irrational human heuristics is doomed. However, it is very long, and I doubt that anyone other than you will read it; accordingly I don't feel like writing it.

Know that it is good.

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Excellent post. It contains as much cogent thought as the full one would have, Im quite sure.

Re: Why relative inequality matters
 

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Your link is broken (at least when I tried it), but the paragraph you quote and the stuff you claim reminds me rhetorically of YEC's who maintain the long discredited notion that the Earth is only 6000-10,000 years old. I find it almost quaint that people still cling to the leftist class warfare nonsense.

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You find it almost quaint, I alternatively find it absolutely hilarious or frightening.

Re: Why relative inequality matters
 

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The reason that the quality of the government provided transportation declined was because of the invention of the car; if nobody had a car, then politicans would have to keep these means of transportation running effectively, or people who used this kind of transportation (everybody) would not vote for them.

And, if the "transportation infrastructure" was/is not state run but instead of market forces, than quantity and quality would still decrease. The market forces/gov't dichotomy here is a false one; market forces effect how and what the gov't does (therefore, to claim that because the gov't did something does not show that that action "has nothing to do with market forces"), and if the gov't didn't run all the other means of transportation (which it actually doesn't) then inequality in access would still have made the poor worse off.


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Well, as I sort of implied in my first post, this above explanation is a false one. The politicians basically screwed the public at the behest of General Motors and Standard Oil and a few other corporations.

The "market" was not clamoring for cars, nor were they clamoring for streets to drive these cars.

But, "What is good for General Motors is good for America."

Again, google "Taken For A Ride" and read up a little.

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Why Does America Have the Worst Public Transit in the Industrialized World, and the Most Freeways?
Taken for a Ride reveals the tragic and little known story of an auto and oil industry campaign, led by General Motors, to buy and dismantle streetcar lines. Across the nation, tracks were torn up, sometimes overnight, and diesel buses placed on city streets.

The highway lobby then pushed through Congress a vast network of urban freeways that doubled the cost of the Interstates, fueled suburban development, increased auto dependence, and elicited passionate opposition. Seventeen city freeways were stopped by citizens who would become the leading edge of a new environmental movement.

With investigative journalism, vintage archival footage and candid interviews, Taken for a Ride presents a revealing history of our cities in the 20th century that is also a meditation on corporate power, city form, citizen protest and the social and environmental implications of transportation.


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Re: Why relative inequality matters
 

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Your link is broken (at least when I tried it), but the paragraph you quote and the stuff you claim reminds me rhetorically of YEC's who maintain the long discredited notion that the Earth is only 6000-10,000 years old. I find it almost quaint that people still cling to the leftist class warfare nonsense.

[/ QUOTE ] In other words, you have absolutely no reasonable response to my post, so you decided to fill the thread with empty rhetoric.

The link still works for me, but I'll post it again anyway. Link

Re: Why relative inequality matters
 

and of course it has nothing to do with the low population density in the US, which makes mass transit far less efficient than in most industrialized nations. In regions with critical density, the US mass transit system is comparable to most

Re: Why relative inequality matters
 

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Well, as I sort of implied in my first post, this above explanation is a false one. The politicians basically screwed the public at the behest of General Motors and Standard Oil and a few other corporations.


[/ QUOTE ] This isn't false at all; while what you are saying is true to a degree, and a different degree in different nations-and I'm completely aware of the fact that economic inequality leads to political inequality and undermining democracy; that was one of the reasons given in the OP for being concerned about relative inequality-the fact is that even in the U.S. the factor I was giving played a role, and would have played a larger role, if it wasn't for gov't being directly influenced by $/market forces.

Re: Why relative inequality matters
 

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and of course it has nothing to do with the low population density in the US, which makes mass transit far less efficient than in most industrialized nations. In regions with critical density, the US mass transit system is comparable to most

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Additional reading about the inaccuracies that form the basis for "Taken for a Ride".

part II

part 1

Like most conspiracy theories, a blend of fact and fiction can go a long way toward making things appear far different than they actually were.

Re: Why relative inequality matters
 

Hypothetical question for Proprietarian:

If attempts to remedy relative inequality (even successful attempts) slowed down the rate of growth of the economy and the rate of technological progress, would you still be in favor of them?

Two points to keep in mind before you answer: technological growth tends to be exponential, so slowing it down by even .001% may have serious consequences centuries down the line; and population growth is (or at least has been) exponential, so the number of people harmed by even a small delay in technological innovation can be quite large compared to those helped by govt remedying inequality decades or centuries earlier.

Re: Why relative inequality matters
 

While, I'm not propertarian, this is among the strangest hypotheticals I've read.

Re: Why relative inequality matters
 

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If attempts to remedy relative inequality (even successful attempts) slowed down the rate of growth of the economy and the rate of technological progress, would you still be in favor of them?

[/ QUOTE ] It depends on the rate. Economic growth is not some god that we sacrifice everything for; if it comes into conflict with other values, those other values may take priority.

I'd also be willing to give up some economic growth for better working conditions and more and better democracy, for example.

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Two points to keep in mind before you answer: technological growth tends to be exponential, so slowing it down by even .001% may have serious consequences centuries down the line; and population growth is (or at least has been) exponential, so the number of people harmed by even a small delay in technological innovation can be quite large compared to those helped by govt remedying inequality decades or centuries earlier.

[/ QUOTE ] But lessening relative inequality can, in some scenarios, give millions of people who don't have access to vaccines, running water, safe working conditions, medicine, etc. that they didn't have at all before.

Both technological advances and decreasing relative inequality can have huge positive effects on human wellbeing when we come up with extreme situations.

And technological advances can be dangerous as well; environmental destruction, advances in weaponry, advances in surveilance, externalities etc. It's not all positive.

Re: Why relative inequality matters
 

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Your link is broken (at least when I tried it), but the paragraph you quote and the stuff you claim reminds me rhetorically of YEC's who maintain the long discredited notion that the Earth is only 6000-10,000 years old. I find it almost quaint that college students still cling to the leftist class warfare nonsense.

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fixed it for you.

natedogg

Re: Why relative inequality matters
 

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if wealthier people come to have access to new technologies, and if access to important goods get mediated through access to those technologies, then the poor who lack such access will find it harder and more expensive to supply their needs. You can run this one from everything from cars and out-of-town shopping centres to the internet.

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Many of these points are based on false premises and hypothetics. There's a lot of "ifs" in that paragraph.

And not only that but his examples are easily refuted. The internet is more accessible today than ever before, *despite* that wealth inequality is supposedly increasing and *despite* that it is a new technology.

It reads like a conclusion in search of reason. this is typical of apologists in general. It reads very much like someone trying to show the earth is actually flat despite everything we know to the contrary.

natedogg

Re: Why relative inequality matters
 

Propertarian-

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In fact, in direct contradiction to your ostensible critique of this argument, generally speaking, the more people who have access to these new technologies, the larger the negative effect on those who do not have access.

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Is the net social effect of a new technology positive or negative? How would we measure such a thing?

If negative, doesn't it logically follow that we should ban all innovations (and probably any self-maximizing activity)?

If positive, why should we care?

Re: Why relative inequality matters
 

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if wealthier people come to have access to new technologies, and if access to important goods get mediated through access to those technologies, then the poor who lack such access will find it harder and more expensive to supply their needs. You can run this one from everything from cars and out-of-town shopping centres to the internet.

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Many of these points are based on false premises and hypothetics. There's a lot of "ifs" in that paragraph.

And not only that but his examples are easily refuted. The internet is more accessible today than ever before, *despite* that wealth inequality is supposedly increasing and *despite* that it is a new technology.

It reads like a conclusion in search of reason. this is typical of apologists in general. It reads very much like someone trying to show the earth is actually flat despite everything we know to the contrary.

natedogg

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BCPVP already made that objection (clearer and with less empty rhetorical phrases) and propertarian already answered it.

Re: Why relative inequality matters
 

Propertarian,

Here are my unvarnished views. Hopefully you may see some merit in what follows.

Relative inequality does indeed matter, but not nearly so much as you seem to think it does. On that you happen to be wrong.

Those who claim that *only* absolute wealth matters and that relative wealth matters not at all, are also wrong. But they are not as far off on this matter as you are. Absolute wealth generally matters much more than relative wealth. Here is an example: would you rather be on the verge of starvation along with all of your neighbors being in a similar predicament, or would you rather have to walk to work 2 miles each way every day while your neighbors drive to their jobs? The former scenario is much worse than the latter scenario, isn't it?

By the way, you can't use the example of slavery as you did in your other post, because it was not lack of wealth that made those people into slaves, it was force used by others upon those people, with support of the legal system, that made them into slaves. You can however use the example of peasants or serfs in centuries past in some regions, or of the poor today in certain third-world countries, but it does not much apply to those in first-world countries today. Today's first-worlders may not be in very good circumstances compared to their neighbors, but for nearly everyone in first-world countries today, the situation is far from dire.

You may wish to contemplate other examples of relative wealth versus absolute wealth, and which matters more in given circumstances. I think that if you do enough thinking about this, you too will probably reach the conclusion that absolute wealth generally matters more than relative wealth.

Re: Why relative inequality matters
 

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In fact, in direct contradiction to your ostensible critique of this argument, generally speaking, the more people who have access to these new technologies, the larger the negative effect on those who do not have access.


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Is the net social effect of a new technology positive or negative? How would we measure such a thing?

If negative, doesn't it logically follow that we should ban all innovations (and probably any self-maximizing activity)?

If positive, why should we care?

[/ QUOTE ] The harm here is not coming from the innovation exactly; it is coming from the combination of the innovation and relative inequality.

Remember, the name of my post is "Why relative inequality matters" not "Innovation is bad"...

Removing some of that relative inequality is what I am arguing for.

Re: Why relative inequality matters
 

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You may wish to contemplate other examples of relative wealth versus absolute wealth, and which matters more in given circumstances. I think that if you do enough thinking about this, you too will probably reach the conclusion that absolute wealth generally matters more than relative wealth.

[/ QUOTE ] I think what you are saying has generally been true throughout most of human history. However, in the advanced capitalist democracies, this is no longer true in my judgement. While innovations are still important, I think we are well past the point at which increasing absolute consumption is more important than increasing equality.

Some people certainly still suffer from absolute deprivation in the U.S., but that as well could easily be solved by decreasing relative inequality.

Re: Why relative inequality matters
 

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along with some more subtle things such as seperating school funding from property taxes.

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I won't be living in your fantasy world. Neither will the bulk of Americans.

What a grand idea. Underfund the most potentially successful student cohort and overfund dysfunctional schools. DC is currently way, way out in front in the $/student race. Wanna send your kids to those schools? I'm kinda hoping you'll fail to reproduce.

America retains more than enough sense to shun your dangerous social engineering.

Re: Why relative inequality matters
 

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America retains more than enough sense to shun your dangerous social engineering.

[/ QUOTE ] Seems to working out pretty well in all those countries whose school systems are kicking the arse of the U.S. school system; seems like your hierarchichal social engineering is even worse.

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I'm kinda hoping you'll fail to reproduce.

[/ QUOTE ] At least we agree on something.

Re: Why relative inequality matters
 

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Seems to working out pretty well in all those countries whose school systems are kicking the arse of the U.S. school system;

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Makes a pretty solid case against multi-culturalism, don't it?

Re: Why relative inequality matters
 

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along with some more subtle things such as seperating school funding from property taxes.

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I won't be living in your fantasy world. Neither will the bulk of Americans.

What a grand idea. Underfund the most potentially successful student cohort and overfund dysfunctional schools. DC is currently way, way out in front in the $/student race. Wanna send your kids to those schools? I'm kinda hoping you'll fail to reproduce.

America retains more than enough sense to shun your dangerous social engineering.

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wow

Re: Why relative inequality matters
 

post deleted baiting

Re: Why relative inequality matters
 

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You may wish to contemplate other examples of relative wealth versus absolute wealth, and which matters more in given circumstances. I think that if you do enough thinking about this, you too will probably reach the conclusion that absolute wealth generally matters more than relative wealth.

[/ QUOTE ] I think what you are saying has generally been true throughout most of human history. However, in the advanced capitalist democracies, this is no longer true in my judgement. While innovations are still important, I think we are well past the point at which increasing absolute consumption is more important than increasing equality.

Some people certainly still suffer from absolute deprivation in the U.S., but that as well could easily be solved by decreasing relative inequality.

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You are making a normative judgment but advocating an interference into people's free decisions based on your normative judgment. This makes you no different than a right wing christian who wants to put homosexuals in prison. That you can't see that makes it even worse.

natedogg