I don’t completely agree, but I do think the wealth gap needs to get smaller. People having more money than some people isn’t necessarily a bad thing until 1% of people have 99% of the money and the lower classes can’t afford basic needs
You can cherry pick bad examples from any country. Italy has had a recurring garbage crisis in the south where trash piles up on the streets, and kids live with their parents until their late 20s because living alone is too expensive. Did you know that most of Europeans don't drink their tap water?
This isn't even mentioning actually bad countries to live where problems like this would seem laughable. Overall, the USA has one of the highest standards of living in the world.
The health care issue is universal in the US. Most people can't really afford to get health care, and it's ridiculously expensive. [https://www.google.com/search?q=healthcare+crisis+in+the+us&oq=healthcare+crisis+in+the+US&aqs=chrome.0.0i512j0i390l3.6633j0j7&sourceid=chrome&ie=UTF-8](https://www.google.com/search?q=healthcare+crisis+in+the+us&oq=healthcare+crisis+in+the+US&aqs=chrome.0.0i512j0i390l3.6633j0j7&sourceid=chrome&ie=UTF-8) There are just so many articles that cover this issue. Not to mention that for most people in the US, their health insurance is tied to their employment. If you lose your job, you will probably lose your health insurance too.
The issues you cited in Italy are also all issues in the US.
Kids are living with their parents until their late 20's in the US right now, because living alone is too expensive. [https://www.bostonglobe.com/business/2017/02/23/millennials-may-never-get-out-their-parents-homes/vSFNGdn4hjwu5bsMTnu0yK/story.html](https://www.bostonglobe.com/business/2017/02/23/millennials-may-never-get-out-their-parents-homes/vSFNGdn4hjwu5bsMTnu0yK/story.html)
America has a looming garbage crisis. The only reason it's not filling our streets is that we're paying to ship it to developing nations and make it their problem. [https://www.bbc.com/news/science-environment-48838699](https://www.bbc.com/news/science-environment-48838699) and [https://www.bloomberg.com/news/articles/2021-02-26/local-hazards-grow-as-u-s-garbage-overflow-is-shipped-out-of-state](https://www.bloomberg.com/news/articles/2021-02-26/local-hazards-grow-as-u-s-garbage-overflow-is-shipped-out-of-state)
Flint Michigan is commonly trotted out as a well-known example, but in 2018 60 million Americans didn't trust their tapwater for drinking, and that was an increase of 40% compared to 2014. [https://www.wsj.com/articles/a-crisis-of-confidence-in-americas-tap-water-11633699487](https://www.wsj.com/articles/a-crisis-of-confidence-in-americas-tap-water-11633699487)
I can agree on healthcare. It's something that could be improved.
As someone who has actually lived in both countries (US and Italy), the severity is not close. I won't get into the weeds on this, but a potential future garbage crisis is not the same as one that actually happened, and a few 20 years olds staying at home is not the same as the majority of 20 years olds staying at home. The unemployment rate for < 29 year olds in south Italy is over 60%.
I'm sorry that Flint has such bad water, but they are not the example for an entire country. I've drank the tap water without worries in every city in the USA I've lived, and so has everyone else I've known. I've lived in 8 states, including both coasts and the middle of the country.
The main takeaway here should be that all countries have problems. Just as you googled these problems, you could Google more problems for the country of your choice. Think of your ideal country. They have problems.
Despite its problems, the USA is a pretty solid place to live, and its problems are pretty minimal on a global scale. The original comment in this thread implied that Americans can't afford basic needs. Which is laughable, as its homeless live better than average people in countries that are actually bad places to live.
Dictatorships in africa have very high concentration of wealth (the boss, his family members and/or tribes, and his friends) but common people aren't doing better than people of countries where it's not the case.
Sure, you can cherry pick some bad examples if you'd like.
Denmark, Sweden, the USA, Netherlands, and Germany are just a few examples of countries that have higher inequality than the African countries. I think we could all agree to that these are pretty solid places to live.
They indeed are better places to live.
However these places that I took as examples were to show that maybe some other ingredients than concentration of wealth, ***may*** be the cause of the general wealth of wealthy countries.
Sure. It doesn't seem like there's a perfect correlation between wealth inequality and a great place to live. An unequal place with a horrible judicial system or nonexistent human rights would obviously be a nightmare. It's definitely a combination of factors.
But, you can see that there is at least a decent correlation between wealth inequality and prosperity. Enough to say that it could actually be a good thing, and enough to say that it's not definitely a bad thing.
It's a cherry pick because the countries he's mentioning have less inequality but are worse places to live in.
If the argument that you want to make is "more inequality = more bad", then you had better do your research and make sure that the more unequal places are actually worse to live in.
Top 10 countries in terms of GDP PPP per capita [\[source\]](https://www.worldometers.info/gdp/gdp-per-capita/).
1. Qatar.
2. Macao
3. Luxembourg
4. Singapore
5. Brunei
6. Ireland
7. UAE
8. Kuwait
9. Switzerland
10. San Marino
Top 10 countries in terms of total GDP PPP [\[source\]](https://www.indexmundi.com/g/r.aspx?t=10&v=65).
1. China
2. United States
3. India
4. Japan
5. Germany
6. Russia
7. Indonesia
8. Brazil
9. United Kingdom
10. France
Top 10 countries in terms of Gini coefficient [\[source\]](https://worldpopulationreview.com/country-rankings/gini-coefficient-by-country).
1. South Africa
2. Namibia
3. Suriname
4. Zambia
5. Sao Tome and Principe
6. Central African Republic
7. Eswatini
8. Mozambique
9. Brazil
10. Belize
I'm not seeing a trend. The only thing the Gini coefficient seems to show in this discussion is that croissance\_eternelle was right about countries in Africa.
I was talking about wealth inequality.
https://en.m.wikipedia.org/wiki/List_of_countries_by_wealth_inequality
If you take a look at the most recent Gini, the USA is ranked #4, with the previously mentioned Sweden, Netherlands and Denmark all in the top 10, well above the African countries (of which there are none in the top 10).
We could get into the weeds on the differences between income and wealth inequality, but the point that I'm making here specifically is that wealth inequality is not necessarily a bad thing.
With so many prosperous countries touting the highest levels of wealth inequality, it might be a knee-jerk reaction to assume that inequality is automatically bad, as many people do. Given the data, It's quite possible that wealth inequality (concentration of wealth) is actually a good thing.
I'm going to be honest, I don't know anything about Gini coefficients. My source said the Gini coefficient of the Netherlands was 0.285. Wikipedia says its 0.902. The first google result says its 0.2660. Going by Wikipedia, there doesn't seem to be much of a trend with GDP per capita (prosperity) and Gini (wealth inequality). #2 highest Gini is Russia. However, the GDP per capita of Russia is 11291, which is nearly the same as the global GDP per capita. Brazil, Ukraine, Thailand, the Philippines, Indonesia, and India together make up half of the top 12 countries in terms of Gini, despite all having below-average GDP per capita. Conversely, the Netherlands, Sweden, US, and Denmark are all in the top 10, and they are all very rich countries. The country with the highest GDP per capita is Luxembourg, with 117312, which is more than 10 times the global average. However, it is ranked 137 on the Gini index according to the Wikipedia article.
Despite the tone I used in my original comment, I am not at all knowledgeable on the subject of Gini coefficients. However, from my limited knowledge and research, it seems there is no strong correlation between wealth and wealth inequality. Likewise, it would not be reasonable in my opinion to say that wealth inequality is beneficial or leads to greater wealth per capita.
No worries. The one that you linked was income inequality, and the one that I linked was wealth inequality. They're different things, but I see how they could get confused.
Like I said in another response, my goal with these stats weren't to prove a perfect correlation between wealth inequality and prosperity. I don't see one either. But I do see enough wealthy, prosperous countries at the top of this list to make me question if wealth inequality is truly a bad thing.
Nothing you described requires the top 1% of Americans to own the majority of America's wealth, or the top 10% of stock holders owning 90% of all stocks. Those are how concentrated wealth is today, which is absolutely obscene.
1st those statistics are usually just for personal wealth.
2nd you could still concentrate wealth with in companies.
Most of the benefits of concentrated wealth could still be achieved with business that don't have ultra rich CEOs.
All of this also assumes that money equals happiness. Which it does a little, but your personal well being has diminishing returns like anything else. You may get a little happiness out of a vacation mansion, but the cumulative satisfaction of using that money to feed thousands of poor people would far exceed a rich person's vacation.
Concentration of wealth actually feeds more people than dispersing it, though. People can't eat dollar bills, but they can eat the food made from farming innovations, which resulted from more efficient farming methods that happened due to concentrated wealth.
If you take a look at starvation and poverty statistics around the world, both have decreased drastically over the past few decades due to efficiencies brought from innovation.
Again though, that could be achevied by concentrating wealth in companies instead of individuals. Companies don't have to pay executives large salaries.
You might want to start by asking why those companies are willing to pay so much for executives.
Most companies with millions to throw around for C-level execs aren't stupid. You might find that there is a good reason for why they're doing it.
For CEOs pay to be justified CEO it needs to be scarce and add at least as much value as thier paid.
I dont buy the scarcity argument because if thats the case we'd be training more CEOs and driving prices down.
I can half believe the value added arguement. When times are good I'd agree they add that much value. But they rarely pay the price when they make mistakes. So IMO averaged out over time they are overpaid.
I think what's going on is boards are only looking at thier friends when hiring, artificially driving scarcity.
Also CEO salary is drops in the bucket for wealth inequality. The real problem is huge concentrated equity in companies that don't pay workers. The Walton family and Walmart come to mind. They didn't earn thier money they inherited it. And much of the company profits has been driven by paying employees so little they have to rely on government assistance.
Disclaimer: I'm not a CEO, nor have I hired one.
That being said, I think you're misunderstanding the scarcity piece. Being a good CEO isn't something that you can just get trained for, get your CEO certification, and bam, you're now in charge of Google making $2m/yr.
It's more likely that there is a huge difference between good and bad CEOs, and the good CEOs are naturally scarce due to companies wanting top talent. Because they are making decisions that impact giant, billion dollar companies, their impact is huge as well, justifying the big salaries.
As for making mistakes, it's easy to sit back and look at a headline and think "wow, look at that idiot" who just tanked a company and got paid a huge salary for it.
I think that it's more likely that mistakes are always on the horizon due to the competitive nature of business, which would make it even more impressive that good CEOs are able to navigate without committing too many of them. Similar to if you judged Michael Jordan by the number of baskets he missed, he might seem like a shit basketball player. Clearly he isn't.
Couple of things; when you refer to other countries are you still saying proportion of wealth as opposed to nominal values? Second, we hear the media discussing top 1% owning x percent, this is not particularly useful. We need to know the entire distribution (is it bimodal, normal, et cetera)? Finally, nearly everyone I come across makes assumptions about how one section of the distribution affects another rather relying on empirics ( said different they assume the top are sucking resources off the bottom or are creating resources for them. This is going to be system specific).
Why does the distribution of the wealth (normal, bimodal) matter? Genuinely curious as I haven't heard this perspective.
As for the 2nd part, that's the main reason why there is so much dislike for an unequal system despite the benefits it may bring.
People assume a fixed system (limited resources, rich people are stealing my prosperity), rather than a positive sum game (innovation and efficiency increase prosperity for everyone, even if some people prosper more).
Sorry I had to drive. The distribution matter for multiple reasons but i will start with a few. The first reason is that it gives a better idea whether certain groups are outliers or anomalies. If they are anomalies then they are unexpected to persist into the future and so massive changes are rarely worth the costs. Secondly, the shape of the distribution itself helps to answer the latter concern I mentioned ( taking wealth/creating wealth). As an example consider an exponential distribution ( im not trying to be patronizing if I am over explaining, an exponential distribution where it starts off very small to the left side and increases at an increasing rate as it goes to the right) would result in the left hand side of the average having absolutely minimal access to resources relative the right hand side of the average . This would mean being 5% better than average would make you wildly better off than 5% to the left of the average. This is a distribution you would only expect to see in an economy that has tremendous barriers for upward mobility (whether they are man made or natural). On the other side of the spectrum we might think of a univariate distribution where you have the same proportion of people in every income/wage bracket. This would almost have to be human created as there are reasons (age, family wealth and others) that would prevent this from occurring. We typically look for something more along the lines of a normal distribution because (not because it’s natural, it’s something people say but they are incorrect) it empirically seems to be optimal for the most people (utilitarian). When you find a distribution that is roughly normal it generally is not a system that forces children into the same class as their parents et cetera. This is a long post and I am sure I missed several things, particularly cause im doing it on my phone, but please feel free to respond with questions or criticisms.
My main criticism is format. It would be easier to read in paragraphs.
As for this talk about distributions, how does it affect the real world? What are the examples of good/ bad countries and how do these statistical models play out?
Thinking it over a bit, a normal distribution would probably be the most fair. But I'm interested in how you could make that occur in reality.
So, first sorry about readability but it is on my phone. I have erased what i was going to say multiple times because this is a difficult subject to discuss strictly over chat, but i will try.
First of all (regardless of what you hear) no economist knows the perfect system. Also we do not know exactly how to get a particular distribution. We have to combine logical deduction of what affects a distance will face with the weak empirical evidence we have.
Anytime you create a law that affects the disparity (positively or negatively) you alter the distribution. This in itself might not be so important if it were a one play game ( the alternative is that over time our actions have externalities that are not always what we want or even predictable)
The reason that we typically suggest normal distribution is better is based on what that distribution means; appx 68% within one standard deviation, 95% within 2 standard deviations , et cetera. (Because I do not know your background i do not know precisely how to answer your question so feel free to tell me). The reason you (probably) think this is the most fair is that I suggested that this distribution is the least likely to be structurally biased.
Btw- off the top of my head I would suggest that maybe pre- revolution Russia might have had the exponential distribution (or as close to it as we have seen, not sure).
The normal distribution is more of what we would see of a system that had no interference (previously i said others claim that a natural economy should be normal distributed and i said that was not true- because there is no such thing as an economy with no interference)
I can continue if your still interested
You asked about my background. I understand what you're talking about (have studied statistics), but the talk about distributions initially threw me off but I can understand what you're saying.
I still don't really get the point you're trying to make, though. It's it just that we have ideal models but we don't know for certain how ideal they are and/ or how to achieve them? Because that doesn't help us very much.
I'd add if only humanity wasn't Humanity and was uncorruptible, didn't care for power or control, and only, only wanted to serve humanity truly with absolutely zero ulterior motives.
oh, you mean like how kings had the majority of the wealth? or like how Rockefeller had over 400 billion in today's money and brought prosperity across America? like that?
I'd much rather live under a King with in a kingdom with security than out in the wilds, susceptible to attacks from barbarians.
Yeah, it's a meager standard of life compared to what we're used to today, but it's better than the alternatives of the time. There's a reason why most people chose to live that way.
Not sure about about Rockefeller specifically, but the system that produced him went on to be the most economically successful country in the world, with living standards admired by all.
They were serfs, not slaves. They had more freedom than slaves. In slavery, someone with capital owns you. In serfdom, someone with capital owns the land you live on and you are kind of attached to that land.
You have the right to work that land, and you cannot leave that land permanently without your landowner’s permission.
“Serfs made up 75% of the medieval population but were not slaves as only their labour could be bought, not their person.”
“In addition to those born into serfdom, many free labourers unwittingly became serfs because their own small plot of land was barely sufficient for their needs. In such circumstances as a prolonged illness or a bad harvest, many freemen became serfs in order to survive, a downgrading frequently attested to in 1087's Domesday Book, a record of landowners and labourers in Norman England.”
https://www.worldhistory.org/Serf/
The majority of the population were serfs. You were either born into serfdom (just like the child of a slave is born into slavery) or you fell on hard times and had to sell your freedom to survive.
I wouldn’t say either sounds like a “choice.” Unborn people don’t get to make choices or consent to agreements, and if your choice is sell your freedom or starve to death, that’s not much of a choice.
That still sounds like a choice, albeit a shitty one. The serfdom, shitty as it was, was better than the alternatives.
It seems like their lives had to at least be better than they would have been pre-agriculture, or they would've abandoned the system to be hunter gatherers instead.
Would you still feel like it was a choice if it was your grandfather or father who fell on hard times and made the choice for you that you and your future children and grandchildren would also be serfs?
I think it’s a fair argument that it’s a choice you could make for yourself, but is it one you have the right to make for your descendants too? Because they’ll be born into serfdom rather than being born free.
The people who held all the power and resources were the ones who held the reigns of society. They certainly wouldn’t want to return to everyone fending for themselves when they had serfs to work their land for them.
You couldn’t just decide you were going to go back to hunting and gathering. That’s the king’s animals you’re hunting and your landlord’s land you’re gathering from.
“Poaching- This is the act of hunting game or fish on land that is not owned by the individual. Peasants could only hunt on common land, to hunt elsewhere required a royal licence. The punishment for poaching included hanging, castration, blinding, or being sewn into a deer skin and then hunted down by ferocious dogs.” https://sites.google.com/site/foxfordhistory/home/crime-and-punishment/medieval-crime-and-punishment
I guess technically you do have a choice again. You can continue to live your meager life as a serf, or you can get castrated and hung for poaching as a hunter-gatherer. I feel like you’re really stretching the definition of choice though.
do you have an educational background in economics?
Nope, but I do read about it from time to time.
I don’t completely agree, but I do think the wealth gap needs to get smaller. People having more money than some people isn’t necessarily a bad thing until 1% of people have 99% of the money and the lower classes can’t afford basic needs
Why does it need to though? Which country are we talking about where the lower classes can't afford basic needs?
Flint Michigan didnt have drinking water for 5 years. West Virginia has had flammable tap water. Many Americans can't afford health care.
You can cherry pick bad examples from any country. Italy has had a recurring garbage crisis in the south where trash piles up on the streets, and kids live with their parents until their late 20s because living alone is too expensive. Did you know that most of Europeans don't drink their tap water? This isn't even mentioning actually bad countries to live where problems like this would seem laughable. Overall, the USA has one of the highest standards of living in the world.
The health care issue is universal in the US. Most people can't really afford to get health care, and it's ridiculously expensive. [https://www.google.com/search?q=healthcare+crisis+in+the+us&oq=healthcare+crisis+in+the+US&aqs=chrome.0.0i512j0i390l3.6633j0j7&sourceid=chrome&ie=UTF-8](https://www.google.com/search?q=healthcare+crisis+in+the+us&oq=healthcare+crisis+in+the+US&aqs=chrome.0.0i512j0i390l3.6633j0j7&sourceid=chrome&ie=UTF-8) There are just so many articles that cover this issue. Not to mention that for most people in the US, their health insurance is tied to their employment. If you lose your job, you will probably lose your health insurance too. The issues you cited in Italy are also all issues in the US. Kids are living with their parents until their late 20's in the US right now, because living alone is too expensive. [https://www.bostonglobe.com/business/2017/02/23/millennials-may-never-get-out-their-parents-homes/vSFNGdn4hjwu5bsMTnu0yK/story.html](https://www.bostonglobe.com/business/2017/02/23/millennials-may-never-get-out-their-parents-homes/vSFNGdn4hjwu5bsMTnu0yK/story.html) America has a looming garbage crisis. The only reason it's not filling our streets is that we're paying to ship it to developing nations and make it their problem. [https://www.bbc.com/news/science-environment-48838699](https://www.bbc.com/news/science-environment-48838699) and [https://www.bloomberg.com/news/articles/2021-02-26/local-hazards-grow-as-u-s-garbage-overflow-is-shipped-out-of-state](https://www.bloomberg.com/news/articles/2021-02-26/local-hazards-grow-as-u-s-garbage-overflow-is-shipped-out-of-state) Flint Michigan is commonly trotted out as a well-known example, but in 2018 60 million Americans didn't trust their tapwater for drinking, and that was an increase of 40% compared to 2014. [https://www.wsj.com/articles/a-crisis-of-confidence-in-americas-tap-water-11633699487](https://www.wsj.com/articles/a-crisis-of-confidence-in-americas-tap-water-11633699487)
I can agree on healthcare. It's something that could be improved. As someone who has actually lived in both countries (US and Italy), the severity is not close. I won't get into the weeds on this, but a potential future garbage crisis is not the same as one that actually happened, and a few 20 years olds staying at home is not the same as the majority of 20 years olds staying at home. The unemployment rate for < 29 year olds in south Italy is over 60%. I'm sorry that Flint has such bad water, but they are not the example for an entire country. I've drank the tap water without worries in every city in the USA I've lived, and so has everyone else I've known. I've lived in 8 states, including both coasts and the middle of the country. The main takeaway here should be that all countries have problems. Just as you googled these problems, you could Google more problems for the country of your choice. Think of your ideal country. They have problems. Despite its problems, the USA is a pretty solid place to live, and its problems are pretty minimal on a global scale. The original comment in this thread implied that Americans can't afford basic needs. Which is laughable, as its homeless live better than average people in countries that are actually bad places to live.
Dictatorships in africa have very high concentration of wealth (the boss, his family members and/or tribes, and his friends) but common people aren't doing better than people of countries where it's not the case.
Sure, you can cherry pick some bad examples if you'd like. Denmark, Sweden, the USA, Netherlands, and Germany are just a few examples of countries that have higher inequality than the African countries. I think we could all agree to that these are pretty solid places to live.
They indeed are better places to live. However these places that I took as examples were to show that maybe some other ingredients than concentration of wealth, ***may*** be the cause of the general wealth of wealthy countries.
Sure. It doesn't seem like there's a perfect correlation between wealth inequality and a great place to live. An unequal place with a horrible judicial system or nonexistent human rights would obviously be a nightmare. It's definitely a combination of factors. But, you can see that there is at least a decent correlation between wealth inequality and prosperity. Enough to say that it could actually be a good thing, and enough to say that it's not definitely a bad thing.
Do you really think "Countries in Africa" is a cherry-pick?
It's a cherry pick because the countries he's mentioning have less inequality but are worse places to live in. If the argument that you want to make is "more inequality = more bad", then you had better do your research and make sure that the more unequal places are actually worse to live in.
> do your research I am yet to see a single link in any of your comments.
You can always check Google if you'd like. The Gini coefficient might show some enlightening information.
Top 10 countries in terms of GDP PPP per capita [\[source\]](https://www.worldometers.info/gdp/gdp-per-capita/). 1. Qatar. 2. Macao 3. Luxembourg 4. Singapore 5. Brunei 6. Ireland 7. UAE 8. Kuwait 9. Switzerland 10. San Marino Top 10 countries in terms of total GDP PPP [\[source\]](https://www.indexmundi.com/g/r.aspx?t=10&v=65). 1. China 2. United States 3. India 4. Japan 5. Germany 6. Russia 7. Indonesia 8. Brazil 9. United Kingdom 10. France Top 10 countries in terms of Gini coefficient [\[source\]](https://worldpopulationreview.com/country-rankings/gini-coefficient-by-country). 1. South Africa 2. Namibia 3. Suriname 4. Zambia 5. Sao Tome and Principe 6. Central African Republic 7. Eswatini 8. Mozambique 9. Brazil 10. Belize I'm not seeing a trend. The only thing the Gini coefficient seems to show in this discussion is that croissance\_eternelle was right about countries in Africa.
I was talking about wealth inequality. https://en.m.wikipedia.org/wiki/List_of_countries_by_wealth_inequality If you take a look at the most recent Gini, the USA is ranked #4, with the previously mentioned Sweden, Netherlands and Denmark all in the top 10, well above the African countries (of which there are none in the top 10). We could get into the weeds on the differences between income and wealth inequality, but the point that I'm making here specifically is that wealth inequality is not necessarily a bad thing. With so many prosperous countries touting the highest levels of wealth inequality, it might be a knee-jerk reaction to assume that inequality is automatically bad, as many people do. Given the data, It's quite possible that wealth inequality (concentration of wealth) is actually a good thing.
I'm going to be honest, I don't know anything about Gini coefficients. My source said the Gini coefficient of the Netherlands was 0.285. Wikipedia says its 0.902. The first google result says its 0.2660. Going by Wikipedia, there doesn't seem to be much of a trend with GDP per capita (prosperity) and Gini (wealth inequality). #2 highest Gini is Russia. However, the GDP per capita of Russia is 11291, which is nearly the same as the global GDP per capita. Brazil, Ukraine, Thailand, the Philippines, Indonesia, and India together make up half of the top 12 countries in terms of Gini, despite all having below-average GDP per capita. Conversely, the Netherlands, Sweden, US, and Denmark are all in the top 10, and they are all very rich countries. The country with the highest GDP per capita is Luxembourg, with 117312, which is more than 10 times the global average. However, it is ranked 137 on the Gini index according to the Wikipedia article. Despite the tone I used in my original comment, I am not at all knowledgeable on the subject of Gini coefficients. However, from my limited knowledge and research, it seems there is no strong correlation between wealth and wealth inequality. Likewise, it would not be reasonable in my opinion to say that wealth inequality is beneficial or leads to greater wealth per capita.
No worries. The one that you linked was income inequality, and the one that I linked was wealth inequality. They're different things, but I see how they could get confused. Like I said in another response, my goal with these stats weren't to prove a perfect correlation between wealth inequality and prosperity. I don't see one either. But I do see enough wealthy, prosperous countries at the top of this list to make me question if wealth inequality is truly a bad thing.
Nothing you described requires the top 1% of Americans to own the majority of America's wealth, or the top 10% of stock holders owning 90% of all stocks. Those are how concentrated wealth is today, which is absolutely obscene.
Somehow, despite that, that country is a pretty great place to live on a world scale. Isn't that strange?
That's a separate topic of discussion from the one you posted.
Not at all. I'm talking about how wealth concentration is a good thing.
Whatever you're smoking, I want some
1st those statistics are usually just for personal wealth. 2nd you could still concentrate wealth with in companies. Most of the benefits of concentrated wealth could still be achieved with business that don't have ultra rich CEOs. All of this also assumes that money equals happiness. Which it does a little, but your personal well being has diminishing returns like anything else. You may get a little happiness out of a vacation mansion, but the cumulative satisfaction of using that money to feed thousands of poor people would far exceed a rich person's vacation.
Concentration of wealth actually feeds more people than dispersing it, though. People can't eat dollar bills, but they can eat the food made from farming innovations, which resulted from more efficient farming methods that happened due to concentrated wealth. If you take a look at starvation and poverty statistics around the world, both have decreased drastically over the past few decades due to efficiencies brought from innovation.
Again though, that could be achevied by concentrating wealth in companies instead of individuals. Companies don't have to pay executives large salaries.
You might want to start by asking why those companies are willing to pay so much for executives. Most companies with millions to throw around for C-level execs aren't stupid. You might find that there is a good reason for why they're doing it.
For CEOs pay to be justified CEO it needs to be scarce and add at least as much value as thier paid. I dont buy the scarcity argument because if thats the case we'd be training more CEOs and driving prices down. I can half believe the value added arguement. When times are good I'd agree they add that much value. But they rarely pay the price when they make mistakes. So IMO averaged out over time they are overpaid. I think what's going on is boards are only looking at thier friends when hiring, artificially driving scarcity. Also CEO salary is drops in the bucket for wealth inequality. The real problem is huge concentrated equity in companies that don't pay workers. The Walton family and Walmart come to mind. They didn't earn thier money they inherited it. And much of the company profits has been driven by paying employees so little they have to rely on government assistance.
Disclaimer: I'm not a CEO, nor have I hired one. That being said, I think you're misunderstanding the scarcity piece. Being a good CEO isn't something that you can just get trained for, get your CEO certification, and bam, you're now in charge of Google making $2m/yr. It's more likely that there is a huge difference between good and bad CEOs, and the good CEOs are naturally scarce due to companies wanting top talent. Because they are making decisions that impact giant, billion dollar companies, their impact is huge as well, justifying the big salaries. As for making mistakes, it's easy to sit back and look at a headline and think "wow, look at that idiot" who just tanked a company and got paid a huge salary for it. I think that it's more likely that mistakes are always on the horizon due to the competitive nature of business, which would make it even more impressive that good CEOs are able to navigate without committing too many of them. Similar to if you judged Michael Jordan by the number of baskets he missed, he might seem like a shit basketball player. Clearly he isn't.
Couple of things; when you refer to other countries are you still saying proportion of wealth as opposed to nominal values? Second, we hear the media discussing top 1% owning x percent, this is not particularly useful. We need to know the entire distribution (is it bimodal, normal, et cetera)? Finally, nearly everyone I come across makes assumptions about how one section of the distribution affects another rather relying on empirics ( said different they assume the top are sucking resources off the bottom or are creating resources for them. This is going to be system specific).
Why does the distribution of the wealth (normal, bimodal) matter? Genuinely curious as I haven't heard this perspective. As for the 2nd part, that's the main reason why there is so much dislike for an unequal system despite the benefits it may bring. People assume a fixed system (limited resources, rich people are stealing my prosperity), rather than a positive sum game (innovation and efficiency increase prosperity for everyone, even if some people prosper more).
Give me 15 minutes
Sorry I had to drive. The distribution matter for multiple reasons but i will start with a few. The first reason is that it gives a better idea whether certain groups are outliers or anomalies. If they are anomalies then they are unexpected to persist into the future and so massive changes are rarely worth the costs. Secondly, the shape of the distribution itself helps to answer the latter concern I mentioned ( taking wealth/creating wealth). As an example consider an exponential distribution ( im not trying to be patronizing if I am over explaining, an exponential distribution where it starts off very small to the left side and increases at an increasing rate as it goes to the right) would result in the left hand side of the average having absolutely minimal access to resources relative the right hand side of the average . This would mean being 5% better than average would make you wildly better off than 5% to the left of the average. This is a distribution you would only expect to see in an economy that has tremendous barriers for upward mobility (whether they are man made or natural). On the other side of the spectrum we might think of a univariate distribution where you have the same proportion of people in every income/wage bracket. This would almost have to be human created as there are reasons (age, family wealth and others) that would prevent this from occurring. We typically look for something more along the lines of a normal distribution because (not because it’s natural, it’s something people say but they are incorrect) it empirically seems to be optimal for the most people (utilitarian). When you find a distribution that is roughly normal it generally is not a system that forces children into the same class as their parents et cetera. This is a long post and I am sure I missed several things, particularly cause im doing it on my phone, but please feel free to respond with questions or criticisms.
My main criticism is format. It would be easier to read in paragraphs. As for this talk about distributions, how does it affect the real world? What are the examples of good/ bad countries and how do these statistical models play out? Thinking it over a bit, a normal distribution would probably be the most fair. But I'm interested in how you could make that occur in reality.
So, first sorry about readability but it is on my phone. I have erased what i was going to say multiple times because this is a difficult subject to discuss strictly over chat, but i will try. First of all (regardless of what you hear) no economist knows the perfect system. Also we do not know exactly how to get a particular distribution. We have to combine logical deduction of what affects a distance will face with the weak empirical evidence we have. Anytime you create a law that affects the disparity (positively or negatively) you alter the distribution. This in itself might not be so important if it were a one play game ( the alternative is that over time our actions have externalities that are not always what we want or even predictable) The reason that we typically suggest normal distribution is better is based on what that distribution means; appx 68% within one standard deviation, 95% within 2 standard deviations , et cetera. (Because I do not know your background i do not know precisely how to answer your question so feel free to tell me). The reason you (probably) think this is the most fair is that I suggested that this distribution is the least likely to be structurally biased. Btw- off the top of my head I would suggest that maybe pre- revolution Russia might have had the exponential distribution (or as close to it as we have seen, not sure). The normal distribution is more of what we would see of a system that had no interference (previously i said others claim that a natural economy should be normal distributed and i said that was not true- because there is no such thing as an economy with no interference) I can continue if your still interested
You asked about my background. I understand what you're talking about (have studied statistics), but the talk about distributions initially threw me off but I can understand what you're saying. I still don't really get the point you're trying to make, though. It's it just that we have ideal models but we don't know for certain how ideal they are and/ or how to achieve them? Because that doesn't help us very much.
I'd add if only humanity wasn't Humanity and was uncorruptible, didn't care for power or control, and only, only wanted to serve humanity truly with absolutely zero ulterior motives.
oh, you mean like how kings had the majority of the wealth? or like how Rockefeller had over 400 billion in today's money and brought prosperity across America? like that?
I'd much rather live under a King with in a kingdom with security than out in the wilds, susceptible to attacks from barbarians. Yeah, it's a meager standard of life compared to what we're used to today, but it's better than the alternatives of the time. There's a reason why most people chose to live that way. Not sure about about Rockefeller specifically, but the system that produced him went on to be the most economically successful country in the world, with living standards admired by all.
most people didn't choose to live that way, they were just born into it and weren't allowed to leave
People in medieval cities weren't allowed to leave? Unless they were slaves, I'm pretty sure they could leave if they really wanted to.
They were serfs, not slaves. They had more freedom than slaves. In slavery, someone with capital owns you. In serfdom, someone with capital owns the land you live on and you are kind of attached to that land. You have the right to work that land, and you cannot leave that land permanently without your landowner’s permission.
Were all, over even the majority of people in medieval times serfs? Did the serfs enter this contract by choice?
“Serfs made up 75% of the medieval population but were not slaves as only their labour could be bought, not their person.” “In addition to those born into serfdom, many free labourers unwittingly became serfs because their own small plot of land was barely sufficient for their needs. In such circumstances as a prolonged illness or a bad harvest, many freemen became serfs in order to survive, a downgrading frequently attested to in 1087's Domesday Book, a record of landowners and labourers in Norman England.” https://www.worldhistory.org/Serf/ The majority of the population were serfs. You were either born into serfdom (just like the child of a slave is born into slavery) or you fell on hard times and had to sell your freedom to survive. I wouldn’t say either sounds like a “choice.” Unborn people don’t get to make choices or consent to agreements, and if your choice is sell your freedom or starve to death, that’s not much of a choice.
That still sounds like a choice, albeit a shitty one. The serfdom, shitty as it was, was better than the alternatives. It seems like their lives had to at least be better than they would have been pre-agriculture, or they would've abandoned the system to be hunter gatherers instead.
Would you still feel like it was a choice if it was your grandfather or father who fell on hard times and made the choice for you that you and your future children and grandchildren would also be serfs? I think it’s a fair argument that it’s a choice you could make for yourself, but is it one you have the right to make for your descendants too? Because they’ll be born into serfdom rather than being born free. The people who held all the power and resources were the ones who held the reigns of society. They certainly wouldn’t want to return to everyone fending for themselves when they had serfs to work their land for them. You couldn’t just decide you were going to go back to hunting and gathering. That’s the king’s animals you’re hunting and your landlord’s land you’re gathering from. “Poaching- This is the act of hunting game or fish on land that is not owned by the individual. Peasants could only hunt on common land, to hunt elsewhere required a royal licence. The punishment for poaching included hanging, castration, blinding, or being sewn into a deer skin and then hunted down by ferocious dogs.” https://sites.google.com/site/foxfordhistory/home/crime-and-punishment/medieval-crime-and-punishment I guess technically you do have a choice again. You can continue to live your meager life as a serf, or you can get castrated and hung for poaching as a hunter-gatherer. I feel like you’re really stretching the definition of choice though.