Posts Tagged ‘inequality’
“To be wealthy and honored in an unjust society is a disgrace”*…
Scroll a bit, and you come to…
Then scroll… and scroll… and scroll… and scroll… and scroll… and scroll… for a visualization of relative levels of wealth in the U.S., with provocative facts and comparisons along the way: “Wealth shown to scale.”
[TotH to EWW]
* The Analects
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As we wonder if enough is ever enough, we might spare a thought for one of the architects of the economic reality in which we live, Gary Becker; he died on this date in 2014. A Nobel laureate economist with an interest in the social sciences, Becker updated the concept of “human capital” (which dated, of course, back to the days of Adam Smith and slavery), arguing that labor economics is part of capital theory. He mused that “economists and plan-makers have fully agreed with the concept of investing on human beings.” In this and other assertions, he was a defining proponent of the Chicago school of economics.
“So distribution should undo excess, and each man have enough”*…
What makes a person healthy, wealthy, and wise? The UN’s Human Development Index (HDI) measures this by one’s life expectancy, average income, and years of education.
However, the value of each metric varies greatly depending on where you live. Today’s data visualization from Max Roser at Our World in Data summarizes five basic dimensions of development across countries—and how our average standards of living have evolved since 1800…
While there’s absolutely no room for complacency, the details are encouraging: “How the Global Inequality Gap Has Changed In 200 Years.”
* Shakespeare, King Lear (Act 4, Scene 1)
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As we mind the gap, we might recall that it was on this date in 1968 that Science published Garrett Hardin‘s influential essay, “The Tragedy of the Commons.” Hardin was building on an argument from an 1833 pamphlet by economist William Forster Lloyd which included a hypothetical example of over-use of a common resource– cattle herders sharing a common parcel of land on which they are each entitled to let their cows graze, as was the custom in English villages. Lloyd postulated that if a herder put more than his allotted number of cattle on the common, overgrazing could result. For each additional animal, a herder could receive additional benefits, while the whole group shared the resulting damage to the commons. If all herders made this individually rational economic decision, the common could be depleted or even destroyed, to the detriment of all. Hardin generalized this example to all natural resources in arguing that population should be controlled: that left to their own devices, humans would deplete all natural resources, leading to a Malthusian collapse.
Elinor Ostrum received the Nobel Prize in Economics in 2009 for her work demonstrating that humans can, in fact, share– and in so doing, be effective stewards of commonly-“held” natural resources.
“We don’t pay taxes. Only the little people pay taxes.”*…
Nine years ago, Republican lawmakers gutted the IRS’s budget, but didn’t relax its requirement to conduct random audits: in response, the IRS has shifted its focus from auditing rich people (who can afford fancy accountants to use dirty tricks to avoid paying taxes) to auditing poor people (who can’t afford professional help and might make minor mistakes filling in the highly technical and complex tax forms), until today, an IRS audit is just as likely to target low-income earner whose meager pay entitles them to a tax credit is as it is to target a filer from the top one percent of US earners.
Propublica pointed this out in an excellent tax-season report last April, and Senator Ron Wyden [D-OR] took up the issue with the IRS. Now, IRS Commissioner Charles Rettig has provided a report to Senator Wyden admitting that his agency targets poor people because they can’t afford to appeal the audits, making them cost-effective notches on the IRS’s bedpost.
Rettig’s report admits that auditing rich people would turn up more fraud and bring in more money for the US government, but says that he can’t afford to do so unless Congress restores the IRS’s funding. There’s bipartisan support for such a measure, but with Sen. Mitch McConnell blocking any Senate action, there may not be any more appropriations bills in 2019…
The sad story in full at “IRS admits it audits poor people because auditing rich people is too expensive.”
Pair with “The Rich Really Do Pay Lower Taxes Than You.”
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As we shake our heads, we might recall that it was on this date in 2011, a Saturday, that Weezer’s ex-bassist Mikey Welsh passed away. Two weeks earlier, on September 26th, he had tweeted “Dreamt I died in Chicago next weekend (heart attack in my sleep). Need to write my will today,” followed by “Correction – the weekend after next”. He died from a heart attack in his sleep. In a hotel room. In Chicago.
“Any human anywhere will blossom in a hundred unexpected talents and capacities simply by being given the opportunity to do so”*…
Top: A map consulted by President Lincoln in 1861, demarcating the counties with the most slaves. Bottom: A detail from Raj Chetty’s Opportunity Atlas, in which areas with poor upward mobility are shown in red.
[Raj] Chetty turns 40 this month, and is widely considered to be one of the most influential social scientists of his generation. “The question with Raj,” says Harvard’s Edward Glaeser, one of the country’s leading urban economists, “is not if he will win a Nobel Prize, but when.”
The work that has brought Chetty such fame is an echo of his family’s history. He has pioneered an approach that uses newly available sources of government data to show how American families fare across generations, revealing striking patterns of upward mobility and stagnation. In one early study, he showed that children born in 1940 had a 90 percent chance of earning more than their parents, but for children born four decades later, that chance had fallen to 50 percent, a toss of a coin…
Now he wants to do more than change our understanding of America—he wants to change America itself. His new Harvard-based institute, called Opportunity Insights, is explicitly aimed at applying his findings in cities around the country and demonstrating that social scientists, despite a discouraging track record, are able to fix the problems they articulate in journals. His staff includes an eight-person policy team, which is building partnerships with Charlotte, Seattle, Detroit, Minneapolis, and other cities.
For a man who has done so much to document the country’s failings, Chetty is curiously optimistic. He has the confidence of a scientist: If a phenomenon like upward mobility can be measured with enough precision, then it can be understood; if it can be understood, then it can be manipulated. “The big-picture goal,” Chetty told me, “is to revive the American dream.”…
* Doris Lessing
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As we ponder possibility, we might send imperial birthday greetings to Alexander III of Macedon (or as he’s better known, Alexander the Great); he was born on this date in 356 BC. After a childhood of tutelage by Aristotle, twenty-year-old Alexander succeeded his father, Philip II, as Basileus (King) of Macedon. He devoted most of his reign to an unprecedented military campaign through Asia and northeast Africa, and by the age of thirty he had created one of the largest empires of the ancient world, stretching from Greece to northwestern India. He was undefeated in battle and is widely considered one of history’s most successful military commanders; indeed, military academies still teach his tactics.
At his death he was Basileus of Macedon, Hegemon of the Hellenic League, Shahanshah of Persia, Pharaoh of Egypt, and Lord of Asia. His legacy includes 20 cities that bear his name (maybe most notably, Alexandria, in Egypt), but more fundamentally, it includes the cultural diffusion and syncretism that his conquests engendered. For example, Alexander’s settlement of Greek colonists and the resulting spread of Greek culture in the east resulted in a new Hellenistic civilization, aspects of which were still evident in the traditions of the Byzantine Empire in the mid-15th century AD and in the presence of Greek speakers in central and far eastern Anatolia until the 1920s.
“Everybody’s talkin’ about hard times / Like it just started yesterday”*…
I welcome the Deaton report into inequality. I especially like its emphasis (pdf) upon the causes of inequality:
To understand whether inequality is a problem, we need to understand the sources of inequality, views of what is fair and the implications of inequality as well as the levels of inequality. Are present levels of inequalities due to well-deserved rewards or to unfair bargaining power, regulatory failure or political capture?
I fear, however, that there might be something missing here – the impact that inequality has upon economic performance…
Chris Dillow, a columnist at the Investors Chronicle, enumerates and explains eight ways in which that impact accrues: “How Inequality Makes Us Poorer.”
Image above, from “The Rise of the Inequality Industry,” also eminently worthy of a read.
* “Everybody’s talkin’ about hard times
Like it just started yesterday
People eye know they’ve been strugglin’
At least it seems that way
Fat cats on Wall Street
They got a bailout
While somebody else got to wait
Seven hundred billion but my old neighborhood
Ain’t nothing changed but the date”
– Prince, Ol’ Skool Company album, 2009
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As we realize that more often than not the greater good is good for us too, we might send carefully-charted birthday greetings to François Quesnay; he was born on this date in 1694. An Enlightenment social philosopher, he was a founding father of Physiocracy, a set of proto-economic theories that held that the wealth of nations was derived solely from the value of “land agriculture” or “land development” and that agricultural products should be highly priced. He published the “Tableau économique” (Economic Table) in 1758, which provided the foundations of the ideas of the Physiocrats. It was among the first works attempting to describe the workings of the economy in an analytical way, and thus can be seen as one of the first important contributions to modern economic thought.
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