Wealth is Relative

[Kaj]

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The explanation is that as the average income increased, the amount of stuff people need to be average increased as well.

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Thanks, Capt Obvious. Again... what's the point?

[AlexM]

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What's the point?

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Well, right-wingers like to make the argument that the concentration of wealth into the hands of fewer and fewer people doesn't matter, as long as the poor have at least as much stuff as people did hundreds of years ago.

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I've never heard anyone say this in my life.

[AlexM]

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What if I posit that that gap could never appear in the first place in a truly free society?

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You would be completely wrong.

natedogg

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Not only that, but in a truly free society, it would be impossible for that gap not to appear. Everyone has different levels of skill, need, desire, etc. and that's what creates the gap. It's inherent in our diversity.

[tolbiny]

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The explanation is that as the average income increased, the amount of stuff people need to be average increased as well.

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No, that's AN explanation. Other explanations might be that saving is an action of people more likely to become "rich" and those who aren't likely to save aren't going to become rich. Thus your whole sample size is distorted when you try to assume that poor people, middle class, and rich people are all the same except for a lack of money.

[pokerbobo]

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What if I posit that that gap could never appear in the first place in a truly free society?

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You would be completely wrong.

natedogg

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I LOVE NATEDOGG...nuthin like gettin right to the point. You say more with fewer words than anyone in this forum.

[latefordinner]

Linus: I think I know what you are getting at, but you might want to craft your argument around subject wellbeing and happiness being a relatively fixed quantity that wealth distribution has an effect on.

[pvn]

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ACers are just going to respond that absolute wealth certainly isn't relative and has a variety of quatifiable measures and argue that capitalism steadily increases absolute wealth and the overall standard of living for the entire capitalist society.

If you want to make an argument about wealth, much better to use quantifiable measures of wellbeing and explain how an economic system does or does not increase them for some people by decreasing them for others

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Certainly some economic systems increase wellbeing for some by decreasing it for others. The most obvious way to do that would be through a forced transfer of wealth. You're soaking in it.

[John Kilduff]

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Wealth, like other descriptors, is a purely relative measure.

It shares this quality with adjectives like "big," "tall," and "bright," among others.

Nothing, for example, is "big" in and of itself. It's only big in reference to something else. If the universe contained only one object, for example, it's not a big or small, regardless of its size.

If I'm six foot tall, and the average is 5'10", I'm tall. If everyone else starts taking growth hormones, though, and the average becomes 6'4", I become short.

I become short, despite the fact my height has not changed. If there's some social advantage to being tall, I lose that advantage, not because of anything I've done, but because the height of other people has changed.

I realize I'm belaboring the obvious, but for whatever reason, some people fail to realize the same condition applies to wealth.

If I'm "rich" or "poor," it's not because of what I have, it's because of what other people have. My being rich depends on others being poor, just as poverty depends on others being rich.

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Wealth is relative to other people BUT it is also relative to lack of wealth.

This can be seen by the following example: consider a person or family living ALONE on a rural homestead, with no outside contacts. If they have good soil in which to grow crops, they are wealthier and better off than if they have only rocky poor soil. If they have a well or spring that produces a good reliable water flow, they are wealthier and better off than if they have to depend on an intermittent trickle. If they have numerous good tools to farm the land and harvest crops and cut wood and so forth (a plow, harrow, cart, wagon, scythe and various hand tools) they are wealthier and better off than if they possess only a hoe and an axe. If they have a few good laying hens to provide them with fresh eggs they are richer and better off than if they don't have those good laying hens, and they will thereby eat better. If they have a milk cow they are richer, too, for the same reason. If they have good land and good tools (and if they work) they will eat well for the next year. Good tools will allow them to leverage their labor time more effectively and they may then have more time for recreation, or more time to invest in improving their farmstead in other ways.

The same goes for Health, too: health can be measured relative to other people, but it can also be measured relative to states of unhealth. A person with good sound teeth and gums or that same person with decayed teeth and infected gums: in the first instance that person has more health (or less illness). An entire village sick with dysentery or that entire village free from dysentery: which is the healthier? You can be heathier than your neighbor, that is one comparison; but you can also be healthier than you were last winter. The same goes for Wealth: you may be wealthier or poorer than your neighbor, or you may be wealthier or poorer than you were a year ago.

Wealth can be measured relative to others and this has validity. As people compete for certain desirable things, the wealthier have an advantage in many cases.

Those who claim that only absolute wealth matters are seeing only a partial picture, and those who claim that only relative wealth matters are seeing only a different partial picture. The truth is, both comparisons are valid and both matter. I generally think absolute wealth usually matters the more overall, but relative wealth can be very important too at many times.

It doesn't make sense to say either that wealth is only relative or that wealth is only absolute. Both types of comparison have validity, and in certain circumstances one comparison may be more important than the other.

Thanks for reading and I hope this made sense.

[hmkpoker]

So what's the problem of poverty? Is it problematic because some human beings must slave in barbaric conditions for twelve hours a day just to acquire a bowl of rice and another day of life, or because they are "unequal" to those better than them?

[latefordinner]

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Those who claim that only absolute wealth matters are seeing only a partial picture, and those who claim that only relative wealth matters are seeing only a different partial picture.

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I totally agree with this and I think lots of recent psychological research on "happiness" and GDP and economic psychology bears this out. I will possibly make the argument at some point that I was suggesting that Linus consider making (because I think it is what he is intuitively and astutely referring to) but I think /both/ absolute wealth and relative wealth factor into subjective wellbeing, and I would argue that at a certain level absolute wealth is more important and once surpassed, relative wealth becomes /much/ more important to subjective wellbeing/quality of life and that an ideal socioeconomic system would maximize quality of life for all people in that system.