Inequality: What Is It and Why Does It Matter? | Economics for People with Ha-Joon Chang
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- Опубликовано: 30 май 2024
- The fight for greater equality has been behind some of the most momentous moments in human history. But since the advent of neoliberalism in the 1980’s, there’s been a view by many economists that inequality is inevitable and any interventions against it are unadvisable. In this eighth lecture in INET’s “Economics For People” series, Ha-Joon Chang explains what inequality is, how we measure it, and why understanding it matters.
About “Economics for People”:
“It is extremely important for our democracy to function that ordinary citizens understand the key issues and basic theories of economics.” - Ha-Joon Chang
Economics has long been the domain of the ivory tower, where specialized language and opaque theorems make it inaccessible to most people. That’s a problem.
In the new series “Economics For People” from the Institute for New Economic Thinking (INET), University of Cambridge economist and bestselling author Ha-Joon Chang explains key concepts in economics, empowering anyone to hold their government, society, and economy accountable.
2:20 "When you think about it, this is a bit of a curious logic because it says that the rich need to be made richer in order to work harder, and the poor need to be made poorer in order to work harder." Just outstanding.
If I only had a penny for every time I have heard a US Republican say stuff like "we should not penalise job creators with high taxes" and "we should not let welfare become a way of life"..
@@dinsel9691 - & job creators are workers who have living wages & disposable income , i.e., customers who have money & desires to purchase real Goods. No one makes a factory to produce Real Goods which cannot be sold
@@thomasd2444 I don't think he said they don't. I don't take his statement as anti job creators
No the rich are rewarded while they sleep from the labour of the poor. Some rich have devised methods of stealing from others and not get caught. Extremely seldom if ever it is from working hard as you put it. Thinking back in the day when land was handed out for free how come some prospered from it and others not? Why could Elvis have a good singing voice why is Einstein intelligence not general. Why does a lawyer that only talks get paid more per hour than the garbage collectors that we cannot do without?
@@thomasd2444 yes but rich people and poor people use their money very differently. You could argue that 100 usd extra in pocket of a poor person is more useful for the economy than 100usd extra in the pocket of a rich person
Excellent lecture. My main takeaway: Economic inequality is NOT inevitable, or something we all should just passively accept. There are many examples in the present day world of ways countries reduce inequality.This is the 3rd lecture by Prof Ha-Joon I’ve watched and I’m now a subscriber. All the programs on this channel that I’ve watched have been highly educational. I greatly appreciate him sharing his work with the world this way.
LME LME such a romantic idea
@@soulfuzz368
It's not a romantic idea, it's inevitable, feudalism had to give way and so the present system, the world keeps changing & evolving, the rise of the far-right is just a symptom of 'elite' paranoia of losing power
Amarji do you think the far right has ties with the “elite”? Also, many countries try to eliminate inequality and fail, miserably.
@@soulfuzz368
Ofcourse, I'm talking about the leaders not the foot dumb soldiers, look at Bolsonaro, Pinera, Trump, Boris, Modi, Putin etc etc they're all rich & funded by rich donors. You say they failed miserably, really? The first lesson about the fall of the roman empire was due to inequality, so that's one of the main reasons why societies perish, this is why the french revolution happened and will happen again & again & again
Amarji obviously we have a very different definition of “far” in this case.
I would never disagree that inequality is bad, only that stupid ways of addressing the problem can be even worse. It’s as simple as this,
when producers feel punished, they stop producing and everyone suffers.
I’m not a right wing libertarian btw, if that’s what you think.
The theory is that rich people are motivated to work when paid large sums of money while poor people are motivated to work when they never have enough money. Unpaid labor goes unrecognized and we ignore the masses of people who have given up and refused to participate or only participate enough to skate by.
Excellent lecture. Henry Ford showed, in the beginning of the twentieth century, that if companies paid their workers higher wages, they would then have the means necessary to purchase the goods that companies made, and the profits of those companies rose dramatically. With neoliberal globalization, the corporations abandoned that way of thinking and reverted back to nineteenth century thinking where companies drove wages to the lowest levels possible, and that is what has caused a global economic crisis that the rulers cannot figure out how to solve, due to their ignorance and stupidity. Also, the inequality will never be reduced, because those at the top have convinced themselves that they are at the top because they are superior in intelligence and ability than those at the bottom, and the very last thing they will allow is for their children to compete on a level playing field with the children of those from the lower income levels, because if the children from the lower income levels out perform their children, their sense of superiority will be shown to be a fraud, and that must never be allowed, from their point of view, and they have the power to set the rules to insure the playing field is never made level. This is just an honest, unemotional view of the situation. The situation will never improve if people refuse to acknowledge the barriers that have been erected to prevent their success.
Damn your level of ignorance is so profound a caricature that it can only be the product of a lifetime of public school and media propaganda. Read some economics.
The fact Ha-Joon cited that a country's economic growth is directly pegged to the equality of it--is a game changer, or it should be.
Like Afghanistan?
@@fatpotatoe6039
Afghanistan under the Communists (at least, before the CIA pumped money and stinger missiles into the Mujahideen) was the country with the fastest growing economy, fastest rising literacy rates, fastest growth in life expectancy, and the period was marked by a significant rise in material wealth and industrialisation.
But the government itself never did hold much power out in the hills, which were populated by feudal warlords that were extremely conservative and viewed this kind of progress as a threat to their status.
In the end, the Afghanistan communists were killed off. Some semblance of authority was reinstated by the Taliban, particularly because they were very much against corruption, which legitimised them in the countryside due to how crooked the warlords were. Along comes a man called Osama Bin Laden, and turns what would be a forgettable coup in a forgettable country into a day of infamy on September 11. In a cruel twist of irony, September 11 is also the day wherein General Augusto Pinochet's forces were successful in overthrowing the democratically elected Chilean government and ushered in a practical experiment on the application of neoliberalism.
@@MonMalthias I was just trolling; but now I am genuinely interested. Could you link some sources to Afghanistan's economy during the Soviet era? I vaguely remember something to do with an oil pipeline being proposed by the Soviets, but I fear I may be confusing it with Kazakhstan or something.
@@MonMalthias Also, like Deng Xiaoping, Pinochet wanted to continue central planning until he realised it couldn't be practically continued. Then the Chicago Boys did their dirty work.
I took econ classes in grad school and nobody taught this! Only thing I learned was about profit maximization.
22:28 “Why does Inequality Matter?” I was looking for this, so I assumed somebody else would be looking for this too.
Really enjoyed this. 3rd time listening.
Equality is impossible but i believe we can fix extreme poverty in this world.
Like your style of delivery mate, clear, relatively easy to follow,, and delivered with humanity. Best word I could come up with at this point. Cheers
These lectures are just wonderful.
Excellent lecture. Clear, direct, and unpretentious in terms of laying out the key ideas as well as showing what is inequality and why does it matter. Thank you for this channel to bring knowledge to the world.
Great lecture
This explanation was very well done. Looking at it from these various angles[country to country][rich vs poor] refutes the theories that advocate this being natural.
Great lecture! Neoclassical economics is great for organizing economies, but not so great for organizing societies.
I don't agree with neoclassical economics, but it isn't a theory of organizing economies or societies. It is a set of theories and methodologies concerning HOW economies function.
Neoclassical economics would not be great at organising economies, given that so many of its recommendations have led countries to economic ruin.
- In Chile after Pinochet's coup, the mass privatisation of the Chicago boys spiralled the economy down the toilet. The rate of capital flight was so great and robbing of the nation's wealth so acute that Pinochet himself had to re-nationalise and re-plan parts of the economy, particularly the copper industry.
- In Russia after the fall of the USSR, life expectancy fell 15 years, drug use, suicide, sexual exploitation, violent crime and corruption climbed to unprecedented heights as the IMF conditioned its loans on the privatisation of the Russian economy. Mass looting commenced with entire factories sold for a few thousand rubles and their inventory of machines and tools put on the global market. Nuclear warheads briefly entered black market circulation.
- The stock markets of the UK and US were extremely bullish in the lead up to the 2008 financial crash. All the banks had made massive bets on people being able to pay back their debts...even as they systematically ensured that wage "discipline" would be maintained and so worker's incomes would not rise much above inflation for some 30 years. Bloodletting on the repo market and the mortgage backed securities markets spill into the real economy as financialised businesses dependant upon easy and frequent flows of debt to finance operations suddenly have their lender stop all operations - and in turn grind their business to a halt.
But all of these theories and methodologies were supposed to be so much more efficient! The second and third order effects were supposed to increase societal wealth!
In the end, reality intervened against dogma.
@@MonMalthias I'm interested in your Chile example. Could you please provide some sources so I can do research into it? I'm far more used to the story of a painful free-market cure as critiqued as Thatcher's, followed by dramatic success. I'm not looking for a debate, I just want some sources out of genuine interest. Thanks.
@@fatpotatoe6039
You could do worse than simply read the Wikipedia article on the Chilean military junta and its initial free market reforms prior to Pinochet's renationalisation of industry after the 80s:
en.m.wikipedia.org/wiki/Military_dictatorship_of_Chile_(1973%E2%80%931990)#Economy_and_free_market_reforms
The period culminated in a debt crisis that was fuelled by massive asset value appreciation, grinding investment and consumption to a halt. Unemployment rose to some 20 percent which is just as bad as the depths of the great depression that the US experienced.
It took the nationalisation of productive industries, the nationalisation of the banking system, and bailing out of some agriculture sectors like sugar to bring the crisis under control.
Some economic historians term the renationalisation period 'Socialism with Chicago characteristics' as a form of dark humour.
I am new to economic thinking. I really like Dr. Chang's comparison of countries and his continuous breakdown of beliefs and reasons things are happenng the way they do.
Equality would mean that we either all live in mansions or garbage dumpsters, so maybe we should be focusing on a reduction in inequality instead.
And yes, I'm sure that exceedingly wealthy people would be very happy for things to remain as they are and can come up with numerous justifications why the current set-up is as immutable as the laws of physics, which includes a widening gap between the rich and poor, with the rich exploiting the poor for their personal benefit, thrown in for good measure.
Brilliant. Please don't be shy about using the idea that the rich get richer and thus the poor get poorer, which Tom Pikitty likely found via the 1940s economist and Britain's minister of economy Nicholas Kaldor who wrote the idea within a more complex theory, Kaldor's theory of Circular and Cumulative Causation.
The problem with this theory is when the poor get to a point they are so poor they can’t even live. They will make sure the next person they see also can’t live.
This model typically works for awhile then get totally destroyed in a revolution due to social and economical instability. Happened countless times in history, social problems were created to offset this problem, and it worked for awhile. Just like everything made by human there is no perfection, just have to deal with it.
I need more of ur lectures. I m 60 but I feel like a grade 1 pupil. My mind needs more of this staff.
“Disapproval for claiming social ladder” that hit home, people have no idea how that feel, especially when you want to go to stem field
I lived in Norway for three years and I have seen how equal their economic system is. You do not need to be very educated to earn more. Almost everyone's salary starts from the same range. I meet one guy who is autistic and he doesn't look very abnormal when you see him except he is very slim, he gets 1700 UDS per month from the government, living in his own apartment. Even though I don't like the discriminated world but I still do think there should some differences, people should get paid based on their hard exceptional work. As everyone has the same living standard there, no one cares about anyone, and people are lonely, emotionally unavailable, less knowledge about the outer world. After coming from a developing country when I see that somehow I feel so unlucky that how much I have been gone through to reach some point and some people just born in a lucky world.
Thankful for this channel as it brings knowledge for these times. Interesting happens in 2023 and into the future.✒️📚✒️😊😻🐕
There was no comment on correlation or causation between economic freedom and inequality. However, it is noted that those countries with greater economic freedom, are less unequal.
In 2021, no country needs to tolerate any in their population who is a HAVE-NOT
😀
Can someone explain to me further what he means when he says those indicators arent included in market exchange rates?
It is talking about value of currencies.. it is derived from trade between countries not within a country..
For example if there is a lot of people in Turkey buying US goods, but very few Americans buying turkish goods... then you have a lot of demand for the dollar and little demand for the turkish Lira.
Hence, $1 will get you 9 Liras.
And if you measure Turkish GDP per capita, which is $9000... and USA GDP per capita, which is $65000... then it looks like the average American is 7 times richer than the average Turk.
But this does not account for the fact that in Turkey a turkish citizen may be able to purchase a massive home near the beach for $100 thousand, which would cost you $10 million in USA.
Or that a turkish citizen can purchase enough food for a year with $3000, whereas an American would have to spend $15000.
The figures that take these things into account are called "purchasing power parity"..
Turkeys GDP per capita PPP would be equivalent of $28000
Born in 1945 in the USA and grew up in relative poverty, due to the choices made by my Evangelical father, I never-the-less was provided, with my 4 younger siblings, a home in a state sponsored housing project in California, very good education and good health care. The housing, health care and education (including violin lessons) was all supported by the post war investment in the people of the USA. I spent two years in Cal State college and then on to U C Berkely, all supported by state funding, and then on to Medical School in Canada and on to a middle income position which I could then support my children. On it goes. Support the population to thrive, no matter what their beginnings, and we create a happy and prosperous community of caring people. What a shame that by 1980 that all was slowly destroyed by the Reagan collusion and worsening equality. Not Rocket Science!
Just musing: I wonder if this professor has seen Parasite. He'd love it (as did I).
aussieevonne What is Parasite 🦠? A movie, book, series?
@@ridethetiger9092 A new movie, by South Korean director Bong Joon-Ho. It's great.
@@aussieevonne7857 I've seen reviews and if I could afford movies I'd see it.
Measuring Time with Capital seems to be an illusion.
We can abandon the use of Money and live well without it.
Sikh religion propounded by Guru Nank Sahib in Punjab in 15th century ensures equality justice for all and the right to wear arms. Following this Sikhs created a massive Khalsa Sikh Empire led by Maharaja Ranjit Singh sarkar e Khalsa in 18th century that even the British Empire in India were shit scared to attack .
I wonder if it is fair to compare the US as a whole, which consists of 50 States all with very distinct economic activities, population, cost of living, and tax and regulatory policies, to that of individual European nations. 70K household income affords a family a decent middle class lifestyle in a suburb of Springfield, Missouri, while the same would be poverty in Seattle. Tax and welfare policies will look very different for these two scenarios.
The nordic countries, despite having achieved much greater equality, all have populations of 5-10 million, which are smaller than many US cities. They all have their own independent systems of government, and different regulatory, trade, tax, and welfare policies. I wonder if the US would look very differently, if we analyzed the stats and looked at the policies at each state level? Would the American people be better off, if the States had more autonomy to craft their own policies to address their own issues?
After all, the framers of the US constitution was keenly aware of the issue of using a purely population based approach elect federal representatives, as they were concerned about the states with populous, trade heavy port cities to grow and overtime over power the more agrarian states. Hence the two houses of legislative body where while the House seats are delegated based on population, the Senate gets 2 seats per state.
I think the best term for it is the Australianism, "A fair go". You can have a fair society if people each have a fair go at things, that if they're smart although poor, they ought to be able to rise up, and the stupid and lazy and mean, shouldn't attain high position simply because they're born to the right parents or have the right skin color or what have you.
Inequality: bankers, insiders and politicians printing money and spending endlessly while the rest watch helplessly.
To be clear, when banks "print money" it's when a person asks for and is approved for a loan. Banks can't just create loans for nothing.
Bigger issue is that economics tries to be unaware that banks do create credit out of signed contracts, and the effects that has on asset prices, and the effects of the growing debt overhang.
When govt "prints money" SOMEONE gets paid, and most of those recipients spend that by paying someone else. grocery. Hairdresser. Utilities. Rent. Etc.
That spending and circulation creates jobs. Obvious, $2 billion given to 2 million people will have more economic impact .. and some rising wages .. than $2 billion given to a few billionaires, who aren't gonna spend it all.
Money is advance tax credits. No doubt, govt has power to create & spend infinite tax credits. Later it redeems *some* of those tax credits to settle tax liabilities it imposes.
@@gg_rider what is "QE" AND "bailout" of failed banking system ? "SOMEONE' gets paid LOL
So now we have again learned the Big Government economic model doesn't work and the search for a redo (again) of the Keynesian economics . Why not just consider M. Friedman's model of smaller government?
social welfare is an essential safety net
2:37 We need to give money to nobody
1:44 After financial & economic crisis, saying this is basically political suicide
Near the start of Ha-Joon Chang's thorough expose he mentioned a chief argument against a welfare state--the slacker. What makes a slacker, the underlying facts of slacking, deserves a deep study.
It's a prejudice masquerading as moral concern. At the level of the whole population "slackers" are a constant proportion - it has nothing to do with anything, and the economy continues regardless. Not only is it a form of snobbery, used to rationalise repression of compassion, but it's ineradicable and therefore pointless to try to punish, just like the non-productivity of childhood, old age and disabilities. A lot of the behaviour labelled as "slacking" is just variations on ADD (bad timekeeping, late starting, impaired concentration etc) and low testosterone. Punitive measures just create more poverty, addiction, trauma etc which in turn create greater costs at the societal level, in terms of mental and physical healthcare costs and having to police homeless people and clean up after them because they have been unhoused.
@@patrickholt2270 furthermore, the current very recent Nobel Prize winning team for economics found that the poor don't slack when given cash incentives but instead work harder.
@@davidfaubion1720 The poor don't slack when given cash incentives? Who would tell you that? I dunno, every economist ever?
@@gluttonousmachina2961 Philosophy and art are a form of work. Watching Netflix and taking drugs is slacking; hardly integral to the functioning and advancement of society. Slackers consume and don't produce. And just because we can afford slackers doesn't mean they ought to live as they do. We can afford murders without destroying the social order - but that doesn't justify them, does it?
@@gluttonousmachina2961 Your substitution of my argument with a strawman displays your inability to understand or address the logic of the principle I espoused. Please do address me with logic and exercise the principle of charity rather than supposing me as dim-witted as yourself.
If this is true, innovation/creativity should decline in US while rising in China/Korea/etc.
But isn't it true, that innovation is rising much more in China than in the US
Yep. And that's what seems to be happening.
It's absolutely indisputable that people are BORN with massive inequality, inequality of talent, inequality of skill, inequality of ambition, etc. How could all this innate inequality NOT result in inequality of produdtivity, which manifests itself as inequality of income and wealth.
This is mentioned in the lecture. While some people are genuinely more skilled and therefore get paid more, when you have let’s say a very talented poor person it becomes harder to move up the latter. Massive inequality makes social mobility harder. I’m not advocating for a completely egalitarian society, but rather making sure it’s easier for talented people (whether from a rich or poor background )to get a good education, not being bogged down in debt because of things out of their control, etc.
Equality and fairness are opposed on a lever. Where we find balance is the most fundamental disagreement we have in these discussions.
SoulfuzZ I think equality and fairness are actually on the same side of the scale. Hear me out. The share of gdp going to labor is down considerably compared to previous decades. If labor got a larger share of the pie, society would be more equal and fair, instead of the massive inequality we see because of an unfair distribution of profits from production.
S P I see where you are coming from and I can appreciate your perspective. I think I disagree because I look at on a more individualistic level.
People aren’t equal so equality isn’t fair. All things considered, I still lean towards equality over fairness but realize that too much of either can be disastrous.
@@soulfuzz368 I don't think we have to find balance. Fairness should always be prioritised; fairness is what we should do, what you should get - equality has no inherent good and is just a cover-up for envy and indignation with the tragic nature of a world of scarce resources.
Fat Potatoe the inherit good of equality is stability. I’ve lived in a very unequal country and I believe that the high crime rate is partly due to this. What happens is that the wealthiest people end up living in gated communities and give up freedom for safety.
@@soulfuzz368 Social inequality can cause crime. I can understand why and I think studies have concluded that. But that is only if communities are juxtaposed, with squalor alongside extravagance. Insofar as both are wealthy and/or if criminal punishment is harsh there would be little benefit to crime. With regards to crime rates I would recommend reading Thomas Sowell's "Vision of the Anointed" where he briefly discusses how looser punishments led to higher crime - which is obvious because it means a lower price of crime and hence a higher quantity of it occurs.
Poverty bothers me
Willem Buiter does not
I just don't care
Thank you. Inequality is such a non-issue. Its just an umbrella for seemingly unjustified claims to national income (such as mere envy or actual subsidy). It is only an issue in the ideological framework that exists and is reinforced by the schooling system that teaches about inequality in class.
@@fatpotatoe6039 Inequality is liberalisms boogeyman as it puts the tabula rasa starting point in question which is a fundamental yet seldom outspoken conviction within liberal ideologies.
@@Daq94 There is a sense of equivocation to your comment. I can interpret liberalism as meaning social-democratic or classical liberal, and it makes sense in a way either way. What sense are you using it in?
@@fatpotatoe6039 The term liberalism is more closely related to "classical liberalism" in political science in Europe. This distinction is usually only important for conservatives when discussing governmental redistribution policy.
Edit: Especially since socialdemocratic ideology is more concerned with class and economic inequality and outspokenly so which is why the distinction between them isn't as subtle as you make it appear.
@@Daq94 Thanks.
Oh trickle down economics… has there ever been a less accurate economic theory?! You would think something that is so far off of the empirical data would die a quick and decisive death… instead, in true economic fashion, it lives on in perpetuity 🤦♂️
Apart from the government induced cronyism and corporatism, income inequality is a good thing. We are all unequal so please stop trying to make excuses for re-distributive-socialist schemes that will lead to disaster, as clearly proven by history.
Inequality is not an economic concept. It is a religious concept. If people want to discuss the topic that's their privilege, but it has no place in any discussion of economics or government or anything serious. Religion, as Marx pointed out, is the opiate of the masses. It's appeal is emotional and sentimental, and doesn't address the difference between actually helping people and just making them feel better. No reputable economist would address the subject.
@@gluttonousmachina2961 clearly has no idea what he's talking about. Might be regurgitating a Reddit comment
In the field of Political Economy , in 2021, no country needs to tolerate any in their population who is a HAVE-NOT
Foolish conclusions based on flawed assumptions as applied by the ‘might makes right’ school of those apt to crawl after walking.
Don’t tell me tell to subway homeless
maybe working less is not such a bad thing? trickle-down is a sham! we have to figure out how to work on the "right kinda things", IMO
Ha Joon Chang's argument that there should be more equality is just a dopey argument that he himself does not personally ascribe to. Does he get paid more than those who struggle ? Of course he does and doesn't see it. Is he part of those he calls "the rich" ?
Of course he is since he earns many times what some others in the world in poorer situations earn and he doesn't sare talk about it because he doesn't want others to see what he really is like - a hypocritical economist telling others to do what he doesn't do himself.
That was a pathetic strawman of the argument against higher taxes; higher taxes, especially on the rich who save most of their income for obvious reasons, reduce the rate of investment and hence long-term output and real wages. Instead resources are expended on useless programs that waste taxpayer money on bureaucrats, goods and services people don't want and social programs of present consumption by the poor that subsidise their subsistence in jobless communities and pay them more than they would earn working with their benefits cut, without having to lift a finger and disincentivised from doing so. Otherwise, this money would have paid the wages of the poor and middle classes for their present consumption anyway in exchange for proprietors and the wealthy earning profit and interest from the selling of the future goods yielded by this investment in production.
You say higher taxes decrease investment. But if what you say was true then our economy would do better than ever today now when corporate taxes and top marginal tax rates are bottom low.
And yet have investments fallen instead of increasing. The economy have not become better despite tax cuts.
So more putting carrots in front of lazy horse will not give more work done.
@@nattygsbord Ignorance of ceteris paribus principle. I have given an argument and you have not addressed its logic; instead you have said "So more putting carrots in front of lazy horse will not give more work done" - which doesn't really qualify as an English statement.
A variety of factors, like low interest rates propping up inefficient producers, liquidation of malinvestments and overinvestments lowering the rate of investment after Austrian-style business cycles like the GFC, lower interest rates discouraging saving and production, foreign investments being more profitable than domestic investments due to globalisation, and increased regulations could easily mitigate the effects of falling tax rates.
Anyway, if you want to choose wide-sweeping stats about economic growth and tie them to a single cause when it suits your agenda, then I'll do the same; when the USA cut corporate tax rates in the 60s it led to record economic growth, and when it cut tax rates in the 80s it also led to faster economic growth than the preceding decade. And economists seem to agree that the Trump tax cuts have prolonged the American economic expansion, whether you think its specifics are bad or not, and economic growth has been better than prior in the last years of Obama despite rises in interest rates.
When you say, "...resources are expended on useless programs...," do you feel the same about all state programs (food safety/regulation, law enforcement, war spending, public utilities)? Or do you think that there are examples of tax dollars doing some good? And what do you feel about the rationale offered against high inequality (harm to democracy, poor social mobility, etc)?
@@brennanxyz I will admit that I am undecided on the limits of the State - although I consider a minimal defence budget necessary for maintenance of national and nuclear defence and sufficient expenditure for the enforcement of the law to be rather obviously necessary for the maintenance of private property rights and the institutional framework for the operation of voluntary exchange - but I am certain enough of where the State shouldn't be and currently is; education, banking (especially the Central Bank), social security, the FDA which prevents life-saving medicines from being tried by people who will die anyway, labour markets, healthcare, occupational licensing, unnecessary regulation of the particulars of physical business set-up (like state and local regulations), zoning, energy, ownership and leasing of land, management of indigenous communities and etcetera (whatever else I could mention but can't remember). I can be convinced of government regulations insofar as they define culpability/liability better by properly attributing property rights and responsibilities to internalise externalities.
I have a problem with the broadness of the rationale offered against high inequality. Even if we accept that high inequality in and of itself is harmful, the question remains whether or not higher taxes that curtail investment are not even more harmful - and expenditure of resources on programs rather than capital accumulation that increases the value of the output of everyone, including the lowest skilled workers (because now their wages can purchase more goods and services because investments have increased production and made other goods and services cheaper).
But, in saying that, I won't avoid actually addressing the point; but due to the broadness of the query there is a short essay's worth of content to cover - especially since I have to make it clear that by countering the rationale offered against high inequality I am not defending the social-democratic-neoliberal status quo.
Many high inequality countries are highly unequal because rent-seekers live at the expense of the poor via public subsidy, nationalised ownership of exported resources, bribery and corruption. Obviously I do not support inequality as a product of coercion like government, and see some case for land reform in countries this historically corrupt. I also do not support inequality as a consequence of central banking (e.g. Quantitative Easing and low interest rates benefiting stock-holders). The point I'm making is that a free market society, one in which property rights are appropriately defined and defended and hence responsibilities, profits and losses/liability rightly defined, has few institutional barriers to social mobility - such as regulations that pose barriers to entry or require incumbents to approve new entrants, bribes or protection of incumbents. Free market capitalism - or rather, consumers as a collective - select the best entrepreneurs to command the means of production; upbringing and social class don't assure you command of the means of production nor do they prevent you from attaining command - social mobility is the defining consequence of capitalism. Relative social mobility - ability to rise to a higher class - and absolute social mobility -higher living standards than previous generations - are both part of capitalism. There are enough self-made men out there from poor backgrounds for this to be obvious; but this is clearly not a satisfying answer, because the point of anti-inequality advocates is that there could be still more. Those from richer families get better educations and a more comfortable upbringing. Who educates people? The State. A competitive, marketised education system where curriculum is suited to supply and demand and personalised to students, rather than dictated by the government and fed to students by teachers who have less incentive to do their best than private sector employees and employers at risk of job loss or financial losses if they do a poor job, would help uplift students from poor backgrounds with poor parents who - even with the best of intentions - can't help them much. As for a more comfortable upbringing; higher real wages and living standards generation after generation, and full employment and hence higher output growth by abolition of minimum wage laws, would serve to make people better off, including, as we have seen, the poorest of the poor because even if the productivity of their job doesn't increase, other goods and services become cheaper and their real wages rise. Ha-Joon Chang saying high inequality means the sheer number of poor people will be higher, which is just misleading nonsense and he knows it. A society could go from having a bottom 20% earning $10,000 per year to earning $50,000 per year and a top 20% going from earning $100,000 per year to $1,000,000 per year. The society is more unequal, but the sheer number of poor people didn't necessarily increase - it probably fell because the poorest in society saw a rise in their average income. And let us not forget that the people in these categories aren't the same people year after year;
ruclips.net/video/FHqePl4uX_0/видео.html
ruclips.net/video/EgVDyBqAQNw/видео.html
The threat of inequality to democracy is small if the power of the State is restricted and can't reward lobbyists with much, not that we shouldn't shy from implementing legal measures such as constitutional amendments that restrict the powers of the State to prevent them from being expanded to serve some special interest.
Thank you for asking and taking the time to read this. I hope my clarity hasn't been sacrificed by my breadth.
@@fatpotatoe6039
Hey fat potato, if you don't like high taxes ( I doubt you earn more than minimum wage) then you can tell your masters to buy their own island and create their wealth without relying on society's infrastructure
I enjoyed this. I wanted remember, so I had ChatGPT summarize it:
4:30 gives us a nice clue about why wealth trickles up and it isn't an awful conspiracy. Wealth concentrates in the global 1-10% because like all dynamical systems the global economy tends towards statistical dynamicisms which are closer to Pareto or Power Law distribution at large scales but our stereotyped, non-critical manner of thinking tends towards assuming observed systems as being closer to normal or constant distributions irrespective of scaling or the ranking of participants. The assumption that talent, opportunity, intelligence, or wealth are or ought to be normally distributed is not just a statistical error but is from a certain perspective morally reprehensible as it negatively exceptionalizes the performant in the name of establishing fairness for all participants which isn't just destructive but hypocritical. It ends up being breaking Lebron's legs so that statistically we all get a tiny bit better at basketball and calling it socioeconomic justice. In practice this is usually more like Pol Pot killing all the guys with glasses.
en.wikipedia.org/wiki/Pareto_distribution
en.wikipedia.org/wiki/Fat-tailed_distribution
en.wikipedia.org/wiki/The_Trees_(Rush_song)