Re: Economics

"Duncan Rose" <duncan.rose@xxxxxxxxxxxxxxxx> wrote on 26 Jul 2006 13:0:
Are you saying that the only way to narrow the gap is to legislate 'a loss'
on the richest couple of percent?

Pretty much, yes. Wealth is a multiplier in creating new wealth. Left alone,
it's perfectly natural that rich people will get richer faster than poor
people will get richer. These are strong natural forces that you have to take
into account.

I'm not interested in making the wealthy poorer, only the poor wealthier.

Not quite. Your stated goal was to make the poor wealthier FASTER than the
rich were getting wealthier. (Otherwise the gap between rich and poor grows.)

I was proposing an alternative, that you focus your concern on whether the
poor are getting wealthier or not. You have insisted that relative wealth
(the gap between rich and poor) is what matters to you.

These choices have huge impacts on public policy. The easiest and fastest
ways for the poor to get wealthier, as a side effect, happen to make the rich
wealthier even faster. If you insist on capping the growth in wealth of the
rich, you'll generally find that the poor improve their lot only very slowly,
if at all. (On an absolute scale of course -- surely the gap between them
shrinks, by definition.)

I like to hope though that there is indeed a point where the material needs
and wants of a sufficiently large proportion of the (world) population are
met in such a way that people will be able to mark it on their calendars
and point to it and say "this is when the world went from being generally
an unhappy and unjust place to a generally happy and just place".

Do you have an opinion about the current state of the most poor in the US?
It's rare for even a long-time unemployed adult to be in danger of death from
starvation, or from exposure to the elements. Or even random violence, for
that matter. (Most folks worse off than that have additional mental health
problems, leaving them unable to take care of themselves. But the vast
majority of halfway competent adults can locate the resources necessary for
life, from soup kitchens to churches to government welfare.)

Has the US already achieved your desired level of prosperity?

I agree that in objective terms even the poorest in our societies are
far wealthier than they were a few years ago even (ever watch those
'70s cop shows? How depressed the areas they were filmed in look...).
I'm not sure it's really possible for the very poor to be 'happy'
(maybe it is -- certainly some people seem to be able to be happy
whatever circumstances they find themselves in), and it would be
difficult to measure too, but I wonder whether today's poor are happier
or less happy than the poor that went before...

If your goal is happiness, that's yet a different topic (different than
economics) -- but it can also be explored scientifically. Take a look at
books like "The Progress Paradox" (Easterbrook) just as an example. Plenty of
other research on this topic.

The basic conclusion seems to be that long-term happiness levels are more of
function of basic personality than of circumstances. Net worth is only very
loosely correlated with happiness.

Random example: Once you pass poverty levels in the US ($20K/yr?), it turns out
that for a huge range of annual incomes (up to maybe $300K/yr), everybody
reports that all their stress over money would disappear overnight if only they
had "twice as much income" as they currently do. So someone making $30K/yr
is unhappy, but believes they would be ecstatic if only they made $60K/yr.
Oddly, though, someone making $100K/yr is ALSO unhappy, and believes their
problems would be solved if only their made $200K/yr.

FWIW, the field of "economics" isn't about making people happy. It's about
making them (monetarily) rich.

Even given your definition above however I would argue there are far,
far more people in the world now who are unable to provide themselves
with shelter, food, and live under far more immediate threats of death
from disease or violence, infant morality rates, etc. than there were a
couple of hundred years ago. Not in Europe or the US surely, but the
world's a big place.

Well, in absolute numbers, sure -- but only because the world population has
grown so fast. (There may be roughly as many people alive right now as have
ever existed in all of history.)

But in terms of percentage of world population? I doubt it. Pre-industrial
revolution, only a tiny elite was out of deadly poverty. Dying from old age
was the exception, not the norm, until only very recently.

The whole rise of the "middle class" is a relatively recent phenomena.
Before a couple hundred years ago, you were basically either royalty, or you
were poor. There was nothing in between.

Today a much higher percentage of overall population is past the basic needs
of life (food, shelter, etc.), than ever before in past human societies.

Sure, in economic terms, a totally controlled national economy might lead
to a very rapid increase in societal wealth (economic's wealth)

Actually, experience has shown the opposite. Centrally controlled economies
have been horrible at generating national wealth. Decentralized capitalist
economies have far, far outstripped them in long-term GDP growth. The
evidence for this is now overwhelming, especially in so-called "natural
experiments" were most of the variables were close to identical except for
the economic(/political) structure. For example, East vs. West Germany over
the last fifty years; or North vs. South Korea over the last forty years.
Singapore, Hong Kong, etc. vs. Cuba, China, USSR, etc.

I have no desire to return to a pre-industrial society, or to dispose
of technical and scientific advances (if I were I'd just turn Amish I
guess).

Given your goals, I wonder why Amish society doesn't appeal to you more.
Overall, those folks are reasonably happy. Surely more so than the average
yuppie in downtown Manhattan.

-- Don
_______________________________________________________________________________
Don Geddis http://don.geddis.org/ don@xxxxxxxxxx
I am not a vegetarian because I love animals; I am a vegetarian because I
hate plants. -- A. Whitney Brown
.

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