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Society - Inequality vs. Equality

   
Society - Inequality vs. Equality

I found this article to be a good read and just felt like sharing:

http://www.bbc.co.uk/news/business-19284017

A question posed about how you would go about constructing wealth distribution in a society from the perspective of not knowing where your position in society is.

I found it interesting and although the article obviously only states an american slant it makes you realise that people can think about the benefit of the whole. Yes, in one way, both situations can be perceived in a sense of selfishness as if you don't know where you are in a society you want to make sure that no matter where you are you're in a position that is beneficial to you while when you know where you stand you constantly want to fight to protect your own interests.

Interesting albeit unsurprising.

It should be noted and stressed that people aren't thinking about the benefit of the whole so much as themselves when they vouch for a more equitable society, as the article points out; their decision is predicated entirely on self-interest. For that matter, all human action is ultimately motivated by self-interest, whether it is conscious, or subconscious, even altruism (because it makes you feel good, and/or precludes you from feeling bad).

That said, I much prefer self-interest that is altruistic in nature as opposed to sociopathic as it's much better for society and everyone as a whole.

I find it interesting that a decision made based on self-interest leads to a more equal society. It goes to show that we're all in this together, and promoting inequality only hinders society.

People don't typically understand what wealth is though. It's kind of a dumb thing to measure. My 4yo with $5 in birthday money has more wealth than my wife and I with college loans, car loans, house loans all offsetting our assets. But you'd be hard pressed to say he's wealthier than we are in anything other than strict accounting terms. Income is a far more reliable source of measurement to determine how well off people are.

That the bottom 40% own .3% of the wealth is actually surprising to me, I figured enough people had debt that it would be a negative number. I assume that with the .3% number that the bottom 25% at least is in the negatives meaning my 4yo son is wealthier than 1 in 4 Americans! How unfair, tax the children!

Ben, I gotta ask, what the hell is your argument there? I honestly can't make heads or tails of it.

Quote:
Originally Posted by Lord Ben View Post
People don't typically understand what wealth is though. It's kind of a dumb thing to measure.
There, that's the simple point.

Wealth: Noun,
3.
Economics . a. All things that have a monetary or exchange value.

In this sense, likely a measure of net worth, which includes income, debt and value of assets.

Right. So if we want to increase the wealth of the least wealthy we should eliminate the biggest cause of negative wealth. College debt! Lets just eliminate student loans not tied to an asset and we'll vastly improve the wealth of nearly every American in the bottom portions of the wealth statistics.

Donald Trump in 1990 had negative $900 million dollars of wealth. I think we should have all stopped a moment back then to think of how much he must have suffered compared to the high school dropout with no debt and a few bucks in his wallet who had vast amounts of wealth compared to Trump's negative $900 million....

It's just a silly number to measure. Most people would think a Doctor fresh out of school with $200k in debt and a well paid job has more money than a fresh retiree at 65 who starts drawing from his meager retirement savings. But the wealth measurement would tell us the Doctor needs pity and the retiree with a few hundred thousand to last them the rest of their lives is quite privileged by comparison. But it's simply not the case.

Quote:
Originally Posted by Lord Ben View Post
People don't typically understand what wealth is though. It's kind of a dumb thing to measure. My 4yo with $5 in birthday money has more wealth than my wife and I with college loans, car loans, house loans all offsetting our assets. But you'd be hard pressed to say he's wealthier than we are in anything other than strict accounting terms. Income is a far more reliable source of measurement to determine how well off people are.

That the bottom 40% own .3% of the wealth is actually surprising to me, I figured enough people had debt that it would be a negative number. I assume that with the .3% number that the bottom 25% at least is in the negatives meaning my 4yo son is wealthier than 1 in 4 Americans! How unfair, tax the children!
First of all, economists in the study of wealth distribution define wealth in terms of marketable, liquid and saleable assets: real estate, stocks, and bonds (and other like property), not illiquid goods such as cars, and other assets that are more utilitarian than saleable. This makes wealth comparisons more meaningful.


Second, income distribution in the States also features widespread inequality. While not as shockingly skewed and unequal as its wealth distribution, it is still awful, with the States having the greatest inequality of income distribution in the first world both before and after transfers and taxes, and it's _growing_.

Before transfers and taxes, US income inequality via the Gini coefficient is worse than that of third world countries (.45), beaten out by such lustrous nations as Iran, Uganda, and Nigeria. After transfers and taxes, it fairs better at 0.378, but is still outperformed by the entirety of the first world. Of the OECD countries, only Mexico, Turkey and Chile are worse off.


Third, income is closely correlated to wealth.


Fourth, while income is an important part of the overall picture, it does indeed make sense to focus on wealth because wealth captures inequality and income/asset growth over a longer time frame, whereas simple income is volatile and temporal. Further, wealth can be easily expended and liquidated to provide for lifestyles. Wealth is also a _creator_ of income. For all of these reasons wealth thus inherently offers a more accurate insight to the distribution of economic power; this is why it is the gold standard of economists for evaluating economic inequity.

It should also be noted that some definitions of income, including that of the US Census Bureau, do _not_ include the likes of capital gains and dividends, which are the predominant source of income amongst the rich.

Noam Chomsky likes to suggest that people deliberately vote against their own economic interests because they know the vote in and of itself won't affect whose interests the politicians defend (i.e. the corporations). I guess he thinks that if people felt more empowered, they'd tend to vote to their own benefit.




 

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